World on fire How Exporting Free Market Democracy Promotes Ethnic Hatred And Global Instability By Amy Chua Arrow Books Pages: 346; Price: £ 4.55

Fire starts in compelling fashion - the author, Amy Chua, an American of Chinese descent, receives news of the murder of her aunt in the Philippines. The murderer was her aunt's chauffeur, who was helped by two maids in the household. The chauffeur and the maids were ethnic Filipinos. Chua talks of her incomprehension about the way the murder is hushed up - the chauffeur disappears and the maids are released. Chua's own family in the Philippines don't want to pursue the matter. The police are apathetic.

As Chua goes on to point out, hundreds of Chinese in the Philippines are kidnapped and murdered each year by ethnic Filipinos. The criminals are rarely caught as they have the sympathy of the police. The reason for this is simple: the Chinese community in the Philippines, though a small minority, are economically the most powerful - they control 60 per cent of the private economy though they make up just 1 per cent of the population. For her tenth birthday, Chua recalls her aunt giving her ten diamonds as a present. The resentment, which deepens into hatred, is almost inevitable from the rest of Filipino population, two thirds of whom live on less than two dollars a day.

The fact that in many countries, a small proportion of the population controls most of that country's economic resources is a fairly straightforward argument. Chua's twist is to focus on the fact that in many cases, these minorities are ethnically different from the majority - the Chinese in the Philippines and Indonesia, the whites in many countries in Latin America, the Lebanese in Africa and the Croats in the former Yugoslavia. Marry ethnicity with free markets and democracy, and you have a potentially explosive combination.

This is because free markets and democracy favour very different classes. In an eco-nomy where a small ethnic minority dominates commercial life, the growth and spread of free markets can further concentrate wealth in the hands of these minorities. Democracy on the other hand, gives power to the majority. Politicians profit by stoking resentment against the minority for political gain. In such circumstances, spreading free markets and democracy, as the West claims to do around the world, can actually create tremendous violence and ethnic strife, not calm it, as the proponents of globalisation have claimed. Arguments for and against globalisation, Chua says, have failed to take into account this ethnic dimension. Efforts by the Americans to spread such 'values' around the world are naïve if they don't take into account such tensions which exist. Attempts to promote democracy in a country will often be opposed by the 'market dominant minority' precisely because they fear this kind of backlash.

As Chua points out, America is itself a 'market dominant minority' in a world populated by a poor, resentful majority. Americans might want countries to have democracy within their borders, she says, but they wouldn't be so sanguine about a world where democracy was practiced between countries, like in the UN, for example. "Like other market dominant minorities, we don't trust the relatively poor, frustrated, resentful majorities surrounding us necessarily to act in our best interests," says Chua.

What makes such efforts worse is that the version of free markets promoted by the West around the world - raw, laissez faire capitalism - is one which they themselves abandoned a long time ago. Capitalism in the West is accompanied by extensive government regulation and redistribution, a facet often absent in the version promoted in 'emerging markets'.

So what's the solution? Chua does dismiss the views of pundits like Robert Kaplan (who argues for free markets first, followed by democracy much later once per capita incomes have gone up, so the transition can be handled more smoothly) by pointing out that authoritarianism is no guarantee of economic progress (quite apart from the humanitarian and ethical aspects).

She makes recommendations like expanding educational opportunities for the majority ethnic community, removing policies which favour the minorities and more generally, 'levelling the playing field'. She also recommends measures to redistribute wealth more equitably in various ways, and affirmative action policies.

And this is where the shortcoming of the book lies. World on Fire is a tho-ught-provoking book - but it's less interesting in the area of proposed solutions. Chua's recommendations are measures which should be taken by the government of any country, market dominant minorities notwithstanding. And some of these measures, in the short term, can exacerbate ethnic strife.

Ethnic strife, and how it interacts with democracy and free markets, is an interesting subject in itself. But it's not clear whether it's a problem which requires a policy treatment dramatically different from what any good government should be doing anyway.

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