Ryan McMaken – May 18, 2022
McDonald’s Corporation has announced that it will permanently leave Russia, closing 850 outlets. The company’s chief executive, Chris Kempczinski, explained that the move was motivated by “the humanitarian crisis caused by the war in Ukraine” and that the current situation does not offer “the same hope and promise that led us to enter the Russian market 32 years ago.” The McDonald’s press release also stated that a continued presence in Russia is not “consistent with McDonald’s values.”
This is quite remarkable coming from a corporation that apparently has few qualms about keeping stores open in places like Saudi Arabia, where war crimes and human rights violations are standard operating procedure. Indeed, McDonald’s has a long history of operating stores in countries with regimes that are hardly kind and gentle.
So why is McDonald’s closing stores in Russia now? It’s difficult to guess exactly what the corporate leadership at companies like McDonald’s is thinking, but the ideological shift toward withdrawing from politically unpopular foreign markets signals a real change from earlier ideas about global corporate investment.
Once upon a time, the presence of American companies in foreign nations was seen as a sign of American superiority over the local regime and an instrument of American “soft power.” Many Communist regimes, for example, officially regarded American companies and brands as a form of Western “bourgeois” imperialism and actively excluded them from local markets. Foreign regimes have long understood that American brands bring American cultural influence.
Today, however, the drive to exclude American brands from foreign markets comes from the Americans themselves. American corporations are withdrawing from foreign markets partly in response to calls for boycotts by American politicians and American social media users. McDonald’s isn’t alone. Starbucks is also withdrawing from the Russian market, and Coca-Cola is pausing its operations there. This new ideological paradigm—which embraces economic isolationism and a Cold War mentality—redefines the spread of American capital and American culture as a form of collaboration with foreign regimes. The woke Twitter mob’s response, in this case, is to call for isolating American capital and American products from foreign markets and cutting international bonds between Americans and the people living elsewhere. In many ways, this attitude is even worse than what prevailed during the Cold War, when American companies and American diplomats nonetheless sought to open the USSR’s markets to American products. Today’s virulent Russophobia is extreme even by the standards of the days when the Soviet Union invaded Afghanistan and American politicians called the USSR the “Evil Empire.”
The Old View of the Spread of American Companies: Cultural “Imperialism”
Until recently, expanding the global reach of American corporate brands was seen as a “win” over foreign regimes that were anti-American or otherwise anti-Western. We can find many examples of this in the Cold War context.
In East Germany, Coca-Cola after the Second World War quickly became a symbol of Western capitalist “decadence.” The East German regime in the 1950s sought to produce its own brand of cola while keeping American brands out of the marketplace. The anticapitalists were sure they could make products that were at least as good as those of the West. The East German version of cola, of course, proved to be inferior in every way, from the taste to the bottle caps. For die-hard communists, however, even attempting to recreate a Coca-Cola-like drink smacked of capitulation to Western ideals. As noted by Milena Veenis, from the anti-Western viewpoint, anything reminiscent of an American soft drink was, “an emblem of the horrific American ‘civilization’—criticized as such in Polish poet Adam Wasik’s 1952-poem ‘Piosenka o Coca Cola’ (song of Coca Cola).”
For decades afterward, Coca-Cola continued to be a symbol of hated Westernization and Americanization. The forces of economic globalization were hard to keep at bay, however, and Pepsi in 1974 managed to become the first capitalist brand produced in the Soviet Union. Because no one wanted Soviet money in the United States, Pepsi settled accounts with the Soviets through a barter system. The Soviets traded vodka for what they needed to produce Pepsi in the USSR. Pepsi sold the vodka in Western markets.
Through all of this, it should be kept in mind that there was nothing about the Soviet regime that could be described as liberal, open, or nurturing of human rights. The regime still operated prison camps for political prisoners and brutally suppressed dissidents. There were no real elections, and certainly no free press or free speech or free religion. Reasonable people, however, recognized that selling cola in the USSR did not equate to support for gulags. Only the most rabid John Birch–style anticommunists thought so.
When the Soviet Union invaded Afghanistan in 1979, however, sales of Pepsi’s Russian vodka declined, and Coke’s longstanding sponsorship of the Olympic games was threatened by the US regime’s boycott of the 1980 Moscow Olympics. Perhaps because there was no Twitter mob in 1980, however, Coca-Cola ignored the boycott and simply insisted that selling soft drinks is something that transcends politics. Although both Coke and Pepsi were by that time bottling their products in the USSR, no frenzy of anti-Soviet sentiment led to demands that American companies shut down their operations. Both companies continued their operations throughout the Soviet-Afghan War.
McDonald’s, Globalization, and the Communist Bloc
Meanwhile, McDonald’s was making inroads elsewhere in the Communist world. McDonald’s opened restaurants in both Yugoslavia and Hungary in 1988. But the arrival of McDonald’s in the Soviet Union in January 1990 was a much bigger deal. It struck at the heart of the Communist world and, as Julietta Bisharyan writes,
As trivial as it may seem, the introduction of fast food in the USSR was undoubtedly revolutionary, as it represented Russia’s struggle between conservatism and capitalist Western ideologies. It stood as a token of America’s efficiency, ingenuity and speed…. “This restaurant [McDonald’s] was the window to the world.”
Anti-Western ideologues notwithstanding, Russians loved the McDonald’s experience. They waited for hours in the cold to get inside, where well-trained and polite workers sold what was—by Soviet standards—high-quality and delicious food.
Note, of course, that the cultural “exchange” did not flow both ways. Americans were not lining up to eat at restaurant franchises with origins in the Soviet Union. Americans weren’t even buying Soviet soft drinks. The world wanted Coca-Cola and McDonald’s. The smell of a McDonald’s hamburger in Moscow was the smell of defeat for the soon-to-be-defunct Soviet regime.
Russian Regime? No, Thanks! Saudi Dictators? Yes, Please!
But now McDonald’s says it wants out. Somehow, the presence of McDonald’s in Russia—for reasons never explained—now signals approval of the regime. Meanwhile, those pushing withdrawal from Russia conveniently ignore that McDonald’s maintains stores in many places where the local regime is infamous for violating human rights and for committing war crimes.
McDonald’s has stores in both Egypt and Saudi Arabia, for example. Egypt is a repressive military dictatorship known for employing torture and illegally imprisoning dissidents. Homosexuals are arrested and sentenced to long prison terms on the basis of sexual preference. Saudi Arabia commits human rights abuses both domestically and in those nations targeted by the Riyadh regime. The Saudi war in Yemen is notable for its brutality. The Riyadh regime executes people for the “crime” of same-sex sexual activity.
Has McDonald’s issued a press release on how it will close its stores in Egypt and Saudi Arabia? Has the McDonald’s CEO declared those places to be in conflict with McDonald’s “values.” No.
Of course, McDonald’s never expressed opposition to the US regime when it was bombing Iraqi cities into rubble and executing an aggressive war that resulted in the deaths of hundreds of thousands of Iraqis. McDonald’s is apparently fine with illegal military invasions so long as they’re carried out by Americans.
Free Trade with All
I don’t point out this hypocrisy in order to claim that McDonald’s should close down its restaurants in Saudi Arabia, Egypt, and other locations where McDonald’s functions under unsavory regimes—such as Jordan, Venezuela, Vietnam, Iraq, and Belarus.
Rather, my point is that the old view of American multinationals is the better view: selling a Coke in a foreign country is not an act that supports the regime. If anything, it undermines the regime, just as the commies of old understood. Moreover, the spread of American capital and American brands is an indication of Western capitalism’s resilience, efficiency, and superiority. Erecting the golden arches in foreign cities only serves as a reminder of how Western capitalism and culture makes the world a better place. Today’s woke warriors who are obsessed with hating Russians should therefore want more McDonald’s, not less.
Originally published at Mises.org. Ryan McMaken is a senior editor at the Mises Institute. He has a bachelor’s degree in economics and a master’s degree in public policy and international relations from the University of Colorado. He was a housing economist for the State of Colorado. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.
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