Geopolitics and McDonald’s

May 17, 2022
Why capitalism and authoritarianism don't mix.

There’s something called the McDonald’s theory of geopolitical conflict: Two nations with McDonald’s outlets are unlikely to go to war with each other.

That theory got tested when Russia invaded Ukraine. It was vindicated, after a fashion, when McDonald’s announced this month that it would pull out of Russia permanently.

McDonald’s isn’t the first company to do this, of course, but it is among the most prominent. McDonald’s came to Russia after the fall of Communism, and its arrival was a major event, with customers waiting in blocks-long lines. Its departure now might very well mean that McDonald’s will serve as bookends to the post-Soviet era – or at least the Putin era.

There is nothing new about dollar diplomacy, of course. Ever since American corporations began to grow to world-rocking proportions, they’ve thrown their weight around globally. The phrase “banana republic” came about because of infamous manipulations of Latin American countries by United Fruit; a scion of what would become Dole, another fruit company, was largely responsible for turning Hawaii into a U.S territory.

I don’t mean to imply that dollar diplomacy is always harsh or negative. It has a fun aspect that is, I think, the key to its appeal: Look at the cool things you can buy from us! The “us” gets conflated into “U.S.”; the appeal of McDonald’s, Pepsi-Cola and other American corporate icons becomes the appeal of America itself. Food & beverage companies are especially likely to benefit from this kind of appeal, because what’s more fun, or more instantly gratifying, than great-tasting food and drink?

But dollar diplomacy has always had a difficult relationship with authoritarianism, in whatever form it takes. Anyone trying to do any kind of substantial business in China knows this. Now Putin, with his brutal, unprovoked aggression against a peaceful neighbor, has turned Russia into a global pariah – and provided a huge incentive for Western corporations to disengage, perhaps forever.

Clashes like this, in my opinion, reflect nothing more or less than the fundamental difference between freedom and authoritarianism. Dollar diplomacy has its roots in capitalism, which in turn is rooted in freedom. Capitalism cannot flourish where there is no freedom to act, nor rule of law to protect the actors. It’s no wonder that Putin’s Russia has become a hostile business environment.

Of course, corporations and capitalism will never be perfect guardians of democracy and freedom. But they make great bellwethers. When they find things uncomfortable, or worse, in a given foreign environment, it’s a good sign of fundamental rot in a system. Call it the McDonald's theory of human rights: If people can’t buy McDonald’s where once they used to, it means there are probably a lot of other things they are no longer allowed to do.