By Ryan McMaken*
McDonald’s Corporation has announced it will permanently leave Russia, closing 850 outlets. The company’s chief executive Chris Kempczinski explained 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 a continued presence in Russia is not “consistent with McDonald’s values.”
This is quite remarkable 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, McDonalds 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.” For many communist regimes, for example, American companies and brands were regarded officially as a form of Western “bourgeois” imperialism and were actively excluded from local markets.
Today, however, the drive to exclude American brands from foreign markets comes from the Americans themselves. American corporations are withdrawing from foreign markets in response to calls for boycotts by American politicians and American social media users. This new ideological paradigm—which we might call “woke isolationism,” re-defines the spread of American capital and American culture as a form of collaboration with foreign regimes. The “woke” response, in this case, is to isolate American capital and American products from foreign markets and to cut international bonds between Americans and the people living elsewhere. This revived Cold War mentality is the latest nail in the coffin of the Second Era of Globalization which had prevailed for 30 years after the end of the Cold War.
The Old Prevailing 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. That is, anti-American foreign regimes often sought to prevent the entry of American companies into local markets. We can find many examples of this in the Cold War context.
In East Germany, Coca-Cola quickly became a symbol of Western capitalist “decadence,” and the East German regime in the 1950s sought to produce its own brand of cola while keeping American brands out of the marketplace. The East German version of cola, of course, was inferior in many ways. 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 Westernization and Americanization. It was Pepsi, however, that managed to become the first capitalist brand produced in the Soviet Union. The first Pepsi plant opened in the USSR in 1974. 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 to real elections, and certainly no free press or free speech or free religion.
Coca-Cola finally broke into the market with limited sales of Fanta to Soviet distributors. But both Pepsi and Coca-Cola faced new political challenges when the Soviet Union invaded Afghanistan in 1979. 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. Neither Coke nor Pepsi shut down its operations in Russia.
Within a few years, McDonald’s was making inroads elsewhere in the communist world. McDonald’s opened restaurants in both Yugoslavia and Hungary in 1988. But, the entry of McDonald’s into the Soviet Union in January 1990 was a much bigger deal. The arrival of Mcdonald’s in the USSR 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…”
Soviet dictators excluded, 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. With the exception of vodka, the world didn’t need the products coming out of eastern Europe. Western products were simply better, as even the Soviets apparently acknowledged. The spread of American multinational corporations were a daily reminder of this reality. Thirty years later, little has changed.
Redefining American Cultural Expansion as Collaboration with “the Enemy”
Yet, what was once viewed as a symbol of American victory and cultural “imperalism” has now been re-defined as a form of collaboration with “the enemy.” Fueled largely by left-wing activists on social media, calls for boycotts of McDonald’s—and many other companies such as Starbucks and Coca-Cola—have proliferated. In response, these companies have either begun to close stores in Russia, and or have “paused” operations there, as in the case of Coca-Cola.
This woke isolationism follows the same playbook at woke politics at home: identify an enemy and then demand that everyone else shun, ostracize, and isolate it. In America, it was Chik-Fil-A when that company’s owners were supposedly insufficiently in favor of state-marriage for gays. Now, the woke boycotts are deployed for entire countries. American woke activists now demand that tens of thousands of Russian fast-food workers and bottling plant employees be rendered unemployed so that American activists can feel good about hating Putin.
Russian Regime? No Thanks! Saudi Dictators? Yes, Please!
Meanwhile, the virtue signaling against the McDonald’s presence in Russia conveniently ignores 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 the illegal imprisonment of dissidents. Homosexuals are arrested and sentenced to long prison terms on the basic of sexual preference. Saudi Arabia commits human rights abuses both domestically an 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 fine with illegal 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 and Egypt or other locations where McDonald’s functions under unsavory regimes— i.e., Jordan, Venezuela, Vietnam, Iraq, and Belarus.
Rather, my point is the old view of American multinationals was 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.
*About the author: Ryan McMaken (@ryanmcmaken) is a senior editor at the Mises Institute. Send him your article submissions for the Mises Wire and Power and Market, but read article guidelines first. Ryan 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.
Source: This article was published by the MISES Institute