A World Safe for IKEA? The Ukraine Crisis, the global middle class and the New Cold War
How the Westernized global urban middle class could shape the new geopolitical fault lines
The first week of March 2022 was not a good week for Russia. Apart from battlefield woes, two events stood out.
On March 2nd, an overwhelming majority, 77%, of countries at the UN General Assembly voted to condemn Russia’s invasion of Ukraine. (See the yellow countries in the chart).
The split seemed pretty clear: the countries condemning Russia comprised the core of the “Western” world and closely aligned allies and partners committed to the so-called liberal international order, while the two other giants of the Asiatic “heartland” – China and India – together with the five Central Asian “Stans”, Iran, over a dozen African states, and a few Latin American countries, abstained for a variety of strategic and economic reasons rather than throw in their lot with the West. For the time being, the West versus the Rest seems to describe how countries came down on the Ukraine issue. Whether the reinvigorated solidarity of the Western world will hold we will have to wait and see. At the same time the complex logic of geopolitical compromises that do not fit neatly into the democracy vs autocracy binary is already asserting itself as the hedging of countries such as Israel, Turkey, and the Gulf countries amply demonstrates.
The West is a series of institutions and values. The West is not a geographical place.
As I keep using the term the “West”, here is a useful definition from the eminent Princeton scholar of Russia, Stephen Kotkin:
The West is a series of institutions and values. The West is not a geographical place. Russia is European, but not Western. Japan is Western, but not European. “Western” means rule of law, democracy, private property, open markets, respect for the individual, diversity, pluralism of opinion, and all the other freedoms that we enjoy, which we sometimes take for granted. We sometimes forget where they came from. But that’s what the West is.
Only two countries with IKEA stores abstained in the Ukraine vote, China and India
One day after the UN vote, IKEA, the world’s largest retail furniture business, made international front page news when it announced that in response to Russia’s invasion of Ukraine it was closing all its stores and suspending business activities in Russia and Belarus. IKEA is perhaps the most iconic brand name among over 400 businesses withdrawing from Russia, some suspending temporarily, some closing down completely – at least for now.
Here is the updated map of IKEA’s worldwide market locations.
So looking at the two maps I began to wonder if we might get some kind of clue as to the new post-post-Cold War era we appear to have entered by looking at what the presence in countries of stores such as IKEA can tell us about the future trajectory of the changing world order.
The place to start exploring this idea is to recognize that IKEA does not merely sell furniture. It offers a whole package of what sociologists refer to as “urban consumer culture” embodying lifestyles that are perceived to be urban, modern, middle class and all of which are readily labeled as “Western.” As this terrific piece from the Financial Times points out when IKEA first opened in 2000 it became so popular and emblematic of the beginning of new post-Soviet era seeking to leave communist drabness behind that millennials in Russia are known as the IKEA generation. (McDonald’s opened its first branch in Moscow a decade earlier. update 5/16/2022: McDonald’s To Exit from Russia.) Until their closure, IKEA was the anchor tenant to 14 Mega Malls attracting thousands seeking whatever self-expression and personal freedom as well as connection with the Western world they felt these commodities represented. (Similarly the housekeepers in my Moscow hotel in 1977 were eager to buy my US-made Levi’s jeans.)
The Stockholm Consensus? An upgrade to the original American version
So here is my hypothesis: the more a country embraces the entire business package and ethic of IKEA the more it is ready to embrace the Western-led liberal internationalist model of world order. This goes for that country’s support of the necessary business environment and norms expected by an investor such as IKEA as well as being comfortable with broad cultural norms represented by that brand. Embracing IKEA in your country means guaranteeing a minimum degree of healthy and transparent business practices. And the society has to be culturally confident and pluralistic enough not to fear what these allegedly “Western” sofas and dining room set pieces would bring with them. IKEA’s resistance to shakedowns and corruption from local government officials in Russia is legendary – when they were refused electricity for their stores unless they paid bribes, the company bought generators.
Let’s call it The Stockholm Consensus. Maybe it’s the needed upgrade to the much maligned (but generally misunderstood) original American version (the so-called Washington Consensus) that distances itself from neoliberal market fundamentalism. It should appeal to Western progressives attracted to the Scandinavian social democratic model (also often misunderstood as a form of socialism) to make IKEA the standard bearer for a rejuvenated international order based on what political theorists call “embedded liberalism.” (While overlapping in some respects, my proposal should not be confused with the so-called the Golden Arches Theory of globalization put forward by the American writer Thomas Friedman.)
Perhaps the IKEA model can be a vehicle for rejuvenating the social compact that is integral to the European social democratic model. (The original postwar world economy part of the “liberal international order” was designed to combine global markets with the ability of each society to maintain the necessary social welfare provisions to protect populations vulnerable to the “creative destruction” of capitalist globalization and help them adapt. This compromise was undermined by the “turbo-charged” (so-called neoliberal) globalization of financial capitalism. One result has been the populist backlash in some Western countries.)
If I’m right then we should see a correlation between votes against Russia and IKEA stores.
Let’s turn to Tehran. (Instead of telling a tale of the two cities of Tehran and New York in this blog, I’m swapping in Moscow for New York.) Now you will notice from the previous chart that Iran, a large market with a sophisticated, Western-oriented middle class, has no IKEA, now or planned. This is not an accident and the reasons bolster my hypothesis. Iran lacks an IKEA because Iran’s rulers reject many transparent international business norms they contend are US and Western attempts to prevent Iran from pursuing their national goals, such as funding Hezbollah terrorist activities in Lebanon and elsewhere. Iran does not want its hands tied by troublesome money laundering and anti-terrorist financial regulations which they see as coercive instruments of US “imperialist” power and so forth. Iran calculates that the costs of the sanctions they must endure do not outweigh the benefits of being able to support entities that are central to the goals and values of the revolutionary Islamist regime. One consequence of the widespread sanctions is that many foreign businesses fear entering the Iranian market.
IKEA is emblematic of this willingness of Iran’s regime to not be integrated into the global economy and its goal of blocking as far as it can the growth inside Iran of a “Western” urban consumer culture which it fears will ultimately undermine the regime. Islamist rulers have support in this from a significant leftist intellectual strand that rejects malls and those foreign brands that have gained entry using the tired criticisms of consumer capitalism and so forth (these arguments are derived, ironically, from radical culture studies imported from Western universities). When I was living in Tehran I found it somewhat discomfiting to see some stores put up an obviously fake logo on the storefronts imitating IKEA, like the ones I’ve shown here. (I also saw pseudo Starbucks and MacDonalds.) It seemed to me to a painful expression of the chasm between the Iran I loved and lived in and the wider (Western) world I admired and belonged to.
Given I’m taking the vote against Russia as a vote for the Western liberal international order, how does my hypothesis stand up against the evidence of the Ukraine vote?
Only two countries with IKEA stores abstained in the Ukraine vote, China and India. On the one hand, considering just the number of countries is rather strong support for the idea that IKEA stores are a proxy for the acceptance of a global urban, western cultural modernity which is broadly compatible with the liberal international order (because that order makes the world safe for commerce, trade, freedom to consume, and thus stores like IKEA). On the other hand, China and India are rather large exceptions.
India opened its first IKEA store in 2018 and plans to open 30 stores and several malls over the next several years so it appears to want to embrace middle class global urban culture. At the same time, India has moved towards a more authoritarian political system over the last two decades and this, together with being dependent on Russian military hardware, might account for its hedging on the Ukraine vote. Still, so far, the increasing stridency and intolerance of Hindu nationalism does not seem to have impacted foreign or Western investment in the country and the wariness of India against China will remain an obstacle to their drawing too close. As IKEA grows in India, might it bring with it greater willingness to align its political system with the Western preference for international norms buttressing legitimate accountable government?
At the same time, China offers plenty of evidence for the skeptic of the capitalism-leads-to-political liberalization thesis. China has almost 40 IKEA stores and its Beijing store has more visitors in a day than a typical European store has in a week. China’s embrace of market capitalism has been one part of its successful economic growth strategy that has transformed that country’s living standards over the last four decades. It has also formed the basis of a new, first-generation, urban middle class living in gated communities in housing mostly obtained via government channels and who are, in the words of Columbia University China expert, Andrew Nathan “just in the process of forging a way of life, in part by self-consciously emulating what they understand of Western consumption habits.” Yet as he points out, this small, nascent urban middle class combines consumerism with political apathy and resignation and does not demand the democratic reforms that we might wish would come with Western experience.
China’s ability to yoke a market orientation to its autocratic political system explains why we witness the juxtaposition of the popularity of IKEA together with China’s fence-sitting on Ukraine. Yet one is forced to speculate about what IKEA might do if China was to attempt to invade Taiwan or if there was a serious military escalation in the South China Sea.
In sum, the Ukraine-IKEA hypothesis does highlight some important trends and patterns. But the fact that China and India both embrace IKEAs of this world but hedged against the Western condemnation of Russia is possibly an ominous trend we should be looking out for in the years ahead, where autocratic states co-opt their middle classes with stylish furniture. The success of these two countries will encourage some of the over 30 countries who abstained to remain unaligned with the Western bloc.
Alternatively such global commerce – the legacy of globalization – might remain as one dimension of the “thin internationalism” and “compartmentalization” needed for cooperation between liberal and illiberal states on truly global challenges that many pundits say must not be sacrificed to an overly ideological insistence on their differences.
Still, a world safe for IKEA might increasingly be confined to the liberal democratic “Western” world and these demarcations might sketch some of the contours of the emerging geopolitical fault lines.
Well it us safe to assume that these Ikea stores will follow the same path as MacDonalds. MacDonalds closed ll its stotes only to see them reopened under a new Russian company copying its menu and flipping its logo in an advertizing version of giving the finger to the clown. I look forward to seeing how the russians reinvent ikea. It would also be nice to see KFC reemerge as KGB!
Kotkin's definition of “Western” does not reflect the reality of what we are witnessing today. I doubt about the significance of “Democracy” when the public opinion is subtly engineered through the system-directed media, “Free market” being manipulated and controlled by big corporates, and regulatory bodies having conflict of interest with the entities that are supposed to be regulated.