When China Rules the World (3 page)

Military and political power rest on economic strength. As Paul Kennedy argued in
The Rise and Fall of the Great Powers
, the ability of nations to exercise and sustain global hegemony has ultimately depended on their productive capacity.
¹⁶
America’s present superpower status is a product of its rapid economic growth between 1870 and 1950 and the fact that during the second half of the twentieth century it was the world’s largest and often most dynamic economy. This economic strength underpinned and made possible its astonishing political, cultural and military power from 1945 onwards. According to the economic historian Angus Maddison, the US economy accounted for 8.8 per cent of global GDP in 1870. There then followed a spectacular period of growth during which the proportion rose to 18.9 per cent in 1913 and 27.3 per cent in 1950. This was followed by a slow and steady decline to 22.1 per cent in 1973, with the figure now hovering around 20 per cent.
¹⁷
This still represents a formidable proportion, given that the US accounts for only 4.6 per cent of the world’s population, but the long-run trend is unmistakable.
¹⁸
One could make a similar point in relation to Victorian Britain’s imperial reach between 1850 and 1914. This was made possible because Britain accomplished the world’s first industrial revolution and, as a consequence, came to enjoy a big economic lead over all other countries. Compared with the United States, however, whose share of global GDP peaked at 35 per cent in 1944 (albeit in a war-ravaged world), the highest figure for the UK was a much smaller 9 per cent in 1899. The precipitous decline of Britain as a global power over the last half century has been the predictable result of its deteriorating relative economic position, its share of global GDP having sunk to a mere 3.3 per cent by 1998.
¹⁹
If Britain took its place alongside the United States in Iraq, its military contribution was largely cosmetic. The precondition for being a hegemonic power, including the ability or otherwise to preside over a formal or informal empire, is economic strength. In the long run at least, it is a merciless measure. Notwithstanding this, imperial powers in decline are almost invariably in denial of the fact. That was the case with Britain from 1918 onwards and, to judge by the behaviour of the Bush administration (though perhaps not Obama’s) - which failed to read the runes, preferring to believe that the US was about to rule the world in a new American century when the country was actually in decline and on the eve of a world in which it would find its authority considerably diminished - the US may well make the same mistake, perhaps on a much grander scale. The financial meltdown in 2008 belatedly persuaded a growing number of American commentators that the United States might after all be in decline, but that was still a far cry from a general recognition of the extent and irreversibility of that decline and how it might diminish American power and influence in the future.

It has been estimated that the total budgetary and economic cost to the United States of the Iraq war will turn out to be around $3 trillion.
²⁰
Even with this level of expenditure, the armed forces have come under huge strain as a result of the war. Deployments have got steadily longer and redeployments more frequent, retention rates and recruitment standards have fallen, while the army has lost many of its brightest and best, with a remorseless rise in the number of officers choosing to leave at the earliest opportunity.
²¹
Such has been the inordinate cost of the Iraqi occupation that, regardless of political considerations, the financial burden of any similar proposed invasion of Iran - in practice likely to be much higher - would always have been too large: for military as well as political reasons, the Bush administration was unable to seriously contemplate similar military action against Iran and North Korea, the other two members of its ‘axis of evil’.
²²
The United States is, thus, already beginning to face the classic problems of imperial overreach. The burden of maintaining a huge global military presence, with over 800 American bases dotted around the world, has been one of the causes of the US’s enormous current account deficit, which in 2006 accounted for 6.5 per cent of US GDP.
²³
In future the American economy will find it increasingly difficult to support such a military commitment.
²⁴
The United States has ceased to be a major manufacturer or a large-scale exporter of manufactured goods, having steadily ceded that position to East Asia.
²⁵
In recent times it has persistently been living beyond its means: the government has been spending more than it saves, households have been doing likewise, and since 1982, apart from one year, the country has been buying more from foreigners than it sells to them, with a consequent huge current account deficit and a growing volume of IOUs. Current account deficits can of course be rectified, but only by reducing growth and accepting a lower level of economic activity. Growing concern on the part of foreign institutions about these deficits led to a steady fall in the value of the dollar until 2008, and this could well be resumed at some point, further threatening the dollar’s role as the world’s reserve currency and American financial power.
²⁶
The credit rating agency Moody’s warned in 2008 that the US faced the prospect within a decade of losing its top-notch triple-A credit rating, first granted to US government debt when it was assessed in 1917, unless it took radical action to curb government expenditure.
²⁷
And this was before the financial meltdown in 2008, which, with the huge taxpayer-funded government bail-out of the financial sector, will greatly increase the size of the US national debt. This is not to suggest that, in the short run, the US will be required to reduce its military expenditure for reasons of financial restraint: indeed, given the position that the US military occupies in the national psyche, and the primary emphasis that US foreign policy has traditionally placed on military power, this seems most unlikely.
²⁸
Being an imperial power, however, is a hugely expensive business and, peering into the future, as its relative economic power declines, the United States will no longer be able to sustain the military commitments and military superiority that it presently enjoys.
²⁹

We stand on the eve of a different kind of world, but comprehending it is difficult: we are so accustomed to dealing with the paradigms and parameters of the contemporary world that we inevitably take them for granted, believing that they are set in concrete rather than themselves being the subject of longer-run cycles of historical change. Given that American global hegemony has held sway for almost a lifetime, and that Western supremacy transcends many lifetimes, this is not surprising. We are so used to the world being Western, even American, that we have little idea what it would be like if it was not. The West, moreover, has a strong vested interest in the world being cast in its image, because this brings multifarious benefits. As a matter of course, hegemonic powers seek to project their values and institutions on to subordinate nations and the latter, in response, will, depending on circumstances, adapt or genuflect towards their ways; if they don’t, hegemonic powers generally seek to impose those values and arrangements on them, even
in extremis
by force. For reasons of both mindset and interest, therefore, the United States, and the West more generally, finds it difficult to visualize, or accept, a world that involves a major and continuing diminution in its influence.

Take globalization as an example. The dominant Western view has been that globalization is a process by which the rest of the world becomes - and should become - increasingly Westernized, with the adoption of free markets, the import of Western capital, privatization, the rule of law, human rights regimes and democratic norms.
³⁰
Much political effort, indeed, has been expended by the West towards this end. Competition, the market and technology, meanwhile, have been powerful and parallel pressures fostering the kind of convergence and homogeneity which is visible in many developing cities around the world in the form of high-rise buildings, expressways, mobile phones, and much else. There are, however, strong countervailing forces, rooted in the specific history and culture of each society, that serve to shape indigenous institutions like the family, the government and the company and which pull in exactly the opposite direction.
³¹
Furthermore, as countries grow more prosperous they become increasingly self-confident about their own culture and history, and thereby less inclined to ape the West.
³²
Far from being a one-way process, globalization is rather more complex: the United States may have been the single most influential player, exerting enormous power in successive rounds of global trade talks, for example, but the biggest winner has been East Asia and the greatest single beneficiary China. The process of globalization involves an unending tension between on the one hand the forces of convergence, including Western political pressure, and on the other hand the counter-trend towards divergence and indigenization.

Prior to 1960, the West and Japan enjoyed a huge economic advantage over the rest of the world, which still remained largely agrarian in character, but since then a gamut of developing countries have closed the gap with the West, especially those in East Asia. As a consequence, it is becoming increasingly difficult to distinguish between the developed world and the more advanced parts of the developing world: South Korea and Taiwan, for example, are now to be counted as developed. But as countries reach Western levels of development, do they become more like the West, or less like the West, or perhaps paradoxically a combination of the two? Clearly the pressures for convergence indicate the former but the forces of divergence and indigenization suggest the contrary. Previously, the overarching difference between the developed and the developing world was the huge disparity in their levels of economic development. It is only with the arrival of these countries at the lower reaches of Western levels of development that the question of convergence or divergence becomes pertinent. There has been an assumption by the Western mainstream that there is only one way of being modern, which involves the adoption of Western-style institutions, values, customs and beliefs, such as the rule of law, the free market and democratic norms.
³³
This, one might add, is an attitude typically held by peoples and cultures who regard themselves as more developed and more ‘civilized’ than others: that progress for those who are lower down on the developmental scale involves them becoming more like those who are higher up.

The significance of this debate to a world in which the developing nations are increasingly influential is far-reaching: if their end-point is similar to the West, or, to put it another way, Western-style modernity, then the new world is unlikely to be so different from the one we inhabit now, because China, India, Indonesia and Brazil, to take four examples, will differ little in their fundamental characteristics from the West. This was the future envisaged by Francis Fukuyama, who predicted that the post-Cold War world would be based on a new universalism embodying the Western principles of the free market and democracy.
³⁴
If, on the other hand, their ways of being modern diverge significantly, even sharply, from the Western model, then a world in which they predominate is likely to look very different from the present Western-made one in which we still largely live. As I discuss in the prologue to Part I, modernity is made possible by industrialization, and until the middle of the last century this was a condition which was exclusive to a small part of the world. As a result, before the second half of the twentieth century the West enjoyed a de facto monopoly of modernity, with Japan the only exception, because these were the only countries that had experienced economic take-off. It might be argued that the Soviet Union also constituted a form of modernity, but it remained, contrary to its claims, far more backward than Western nations in terms of GDP per head, the proportion of the population living in the countryside, and its technological level. Moreover, although it was Eurasian, the USSR was always dominated by its European parts and therefore shared much of the Western tradition. Japan is a fascinating example which I will consider at length in Chapter 3. Until the Second World War it remained a relative outsider, having commenced its industrialization in the last quarter of the nineteenth century. After 1945 Japan became a powerful economic competitor to the West, and by the 1980s it had established itself as the second largest economy behind the United States. Japan, however, always sought to assert its Western credentials and play down its political and cultural distinctiveness. Defeated in the Second World War, occupied by the United States until 1951, endowed with a constitution written by the Americans, disqualified from maintaining a significant military force (and thereby dependent on the US-Japan security pact first signed in 1951 for its defence), Japan, if not a vassal state of the Americans, certainly enjoyed an attenuated sovereignty.
³⁵
It is this which largely explains why, although it is a highly distinctive country which culturally shares little with the West, it has nonetheless persistently sought to emphasize its Western characteristics.