Former U.S. Secretary of State Condoleezza Rice, speaking at an SAP event Thursday, defended American-style capitalism against charges that it led to the global economic meltdown.
The crisis has spurred a backlash against capitalism, Rice said, but she argued that recovery depends upon "a refocusing and reaffirmation of that very model of democratic capitalism that is now under attack."
"I don't think anybody really believes this is the end of American capitalism, though it certainly feels good to say it if you are in, say, Paris or Berlin," said Rice, who is now a political science professor at Stanford University and spoke more candidly than she could as an administration official.
"Secondly, I doubt very seriously that people believe ... that the dollar is done as the currency of choice, although it feels pretty good to say that if you're in Beijing."
She talked for 40 minutes, mostly about the impact of the financial crisis on the world's largest economies. India and China have coped relatively well, she said, while Europe and Russia are struggling.
At one point she criticized European regulators for targeting U.S. companies and suggested they should instead be going after Russia's state-owned gas company, Gazprom. While the European Union struggles to achieve unity, the European Commission has "continued to show its muscle," she said.
"For instance, in anti-monopolistic trade practice laws that have caught in its net companies like Microsoft, [and] that appear ready to catch Google. One might ask the question why it hasn't caught Gazprom in its net, which could most certainly be accused of anti-monopolistic practices."
The recession upset Europe's progress toward a wider union, she said, making it hard for the continent to embrace new member states and harmonize its laws and politics.
"The global financial crisis really laid low those plans. You got instead the weaker economies who needed a certain type of monetary and fiscal policies that the major states -- Germany in particular -- were not willing to adopt."
"I think the question really is, will the European Union ever recover its sense of itself as one economic union, one set of economic policies, or are the strains between the 'haves' and the 'have nots' going to continue? I think you're going to see, most likely, that those strains will continue," she said.
Russia failed to take the opportunity to diversify its economy when oil was at US$140 a barrel, she said. Instead, seeking stability after the "deprivation and humiliation" of the 1990s, Russia embraced Putinism and the formation of "Russia Inc.," marked by "the marriage of politics and the personal fortunes of Russian leaders."
China, she said, has done "rather well" in the crisis, but its growth may still be insufficient to create the 25 million new jobs it needs each year to keep pace with its population. "I don't mean to suggest that China is going to be unstable, China is capable of managing these strains, but we should be aware the strains exist."
If the U.S. is going to lead the world economically and in diplomacy -- "and I'd suggest there really isn't an alternative out there" -- it needs to embrace private-sector free trade, innovation and risk taking, she said. She acknowledged "excesses" in the financial markets but said a more centralized economy is not the answer.
Her remarks earned her a standing ovation from the audience of SAP employees, partners and customers, though she was heckled after her speech by protesters who shouted "torture is illegal." Rice responded by saying, "You know, I'm certainly glad that the people of Baghdad and the people of Kabul can now say what they think as well."
She said the transition from politics to academia has been "terrific."
"Now I can wake up in the morning and read the newspaper and not feel like I have to do something about what's in it."