Power shifts, economic change and the decline of the west? Really?

Jan 25, 2015 · 43 min read

Professor Michael Cox London School of Economics and Political Science

0.1 Abstract

It has become the new truth of the early 21st century that the western world we have known is fast losing its pre-eminence to be replaced by a new international system shaped either by the so-called BRICs, the “rest” or, more popularly by that very broadly defined geographical entity known as Asia. This at least is how many economists, historians and students of world politics are now viewing the future of the larger international system. This essay does not dispute some self-evident economic facts. Nor does it assume that the world will look the same in fifty years time as it does now. It does however question the idea that there is an irresistible “power shift” in the making and that the West and the United States are in steep decline. Specifically it makes a number of critical arguments concerning the new narrative. First, it suggests that this story by reasonably focusing on what is obviously changing in the world unfortunately ignores what is not; as a result it underestimates what might loosely be termed the continued structural advantages still enjoyed by the United States and its major western allies. Secondly, while it is true that many new states are assuming a bigger role in the world economy, their rise needs to be looked at more carefully than it has been so far; indeed, when such an examination is undertaken, it becomes increasingly clear that the rise of others — China’s included — is still hemmed in by several obstacles, internal as well as external. Thirdly, though the Asian region, and China as part of it, is assuming an ever more important role in the wider world economy, this development does not in of itself represent a major challenge to the West as such. Indeed, as I suggest at the end, the shifts which have so preoccupied writers over the past five and ten years might even be viewed less as challenges to the West and more as additions to it.

0.2 Introduction

Memory can often play tricks on even the most historically-minded of individuals, particularly those who have had to live through the last ten turbulent years. Indeed, it is almost impossible now to recall how self-confident so many in the West seemed to be during the decade immediately following that most unpredicted of world shattering events known generically as the “end of the Cold War”. To be fair, some observers did sense that there was something distinctly unreal, possibly temporary, about the new post-Cold War order. 1 A few even forecast that we would all soon be missing the Cold War.2 But that is not how most commentators viewed things at the time. On the contrary. Having witnessed the speedy collapse of the Soviet project followed by a decade of global market expansion (otherwise known as globalization) most pundits came to believe that a successful marriage between free markets, democratic enlargement and US power would guarantee order well into the next millennium.3 Certainly, the West at the time looked as if it was definitely in the ascendancy, restructuring once planned economies, opening up previously closed systems, incorporating former enemies, and smashing down political and economic doors that had at one been time been closed. Admittedly, it sometimes failed to act, as say in Rwanda; and very often it ignored the fact that some actors (who later made their name on 9/11) were clearly not becoming socialized into that fabled entity known as the “international community”. But as one century gave way to another, it appeared as if the western world from the Pacific coast of the United States to the middle of a newly united Europe could look forward to decades of self-confident prosperity and peace.

Nowhere was this mood of optimism more prevalent than in the land of the last remaining superpower. Indeed, the US appeared to be in an especially enviable position. Some continued to wonder whether the „unipolar moment‟ was really an illusion.4 One or two analysts even speculated about the possible limits of US power.5 And the occasional maverick continued to repeat the old Paul Kennedy line that the United States was in decline.6 Few but the most pessimistic envisaged that any other power would likely rise to balance its vast power in the future. On the contrary, after having seen off the USSR, and then having experienced an eight year economic boom of its own, America and Americans could reasonably look forward to another very American century.7 In fact, so buoyant was the mood by the end of the 1990s, that several writers began to talk of the United States as the new Rome on the Potomac, even a modern “empire” possessing global reach, an infinite surplus of soft power, and a vast military machine to match. For some indeed the US had become the greatest power in history with one very obvious distinguishing feature: unlike its great power predecessors from the Romans to the British, this one would never decline.8

It is often said that before every great fall there is a period of grace. So it was perhaps with the last hubristic decade of the twentieth century. But the fall when it came was profound indeed; to such an extent that one American magazine was later forced to concede that the years between 2000 and 2010 had been nothing less than „the decade from hell‟.9 It began of course with 9/11 and the strategically inept response to this by the Bush administration.10 It continued with the gradual erosion of economic certainty which finally culminated with the great geopolitical setback of the western financial crisis.11 And it went from bad to worse in some eyes when it became increasingly clear that the West itself was facing a massive challenge from other non-western players in the world capitalist economy. When Goldman Sachs launched the idea of the „BRICs‟ in 2001, only economists (and not many of them) took the idea very seriously.12 But as the years passed, and the economic data began to flow in, it began to look as if the author of the original notion, Jim O‟Neill, had been brilliantly prescient.13 Indeed, his core idea based on careful economic study — namely that the future economic order would be less dominated by the West than it would be by giant economies like Brazil, Russia, India and China — seemed to provide irrefutable proof that the world was in the midst of a global revolution.14 The causes of this were multiple. But one thing was obvious. The axis of the international system which had for several centuries revolved around the Atlantic was moving elsewhere — either towards Asia as a region,15 or more generally towards something vaguely referred to by the influential columnist, Fareed Zakaria, as the “rest”.16 Nor was this Zakaria or O‟Neill‟s view alone. In 2004 the then editor of Foreign Affairs had warned the West that there was a potentially disturbing “power shift in the making”. 17 A few years on and one of the more influential liberal writers on world politics made much the same point. It was no longer a question of whether wealth and power were moving away from the West and the North, according to John Ikenberry. That much was self-evident. The big question now he continued was “what kind of global political order” would emerge as a consequence.18 The less liberal Niall Ferguson concurred. But in his view it was not just the once “app-laden” West that was in retreat.19 So too was his adopted country of choice. The “hyper-power” was hyper no more.20 America’s best days were behind it. The empire was on the slide. 21

Unsurprisingly, these seismic alterations generated much intense debate around the world: nowhere more so than in the West itself. 22 Here opinion veered between the deeply pessimistic — all power transitions it was assumed could only lead to intensified global conflict 23 — through to those who insisted that the new emerging economies could only add to the stock of the world’s wealth by bringing more states within the fold of the world market. It was the rise of China however that occasioned the greatest discussion of all, and for very sound material reasons as Robert Art has observed.24 In fact, almost overnight, it seemed as if everybody had something significant to say about China.25 Opinion differed sharply with one or two writers claiming that China was fast becoming a responsible stakeholder in international society, 26 a few that its rapid economic expansion was the only thing standing between the West and a global depression, others that it constituted a real threat to US hegemony,27 and many more that if it continued to grow while the West lurched from low growth to no growth at all, it might soon be running Asia28 or possibly even the world.29 But however one assessed China, one thing looked startling obvious. This “restless empire” 30 had at last been aroused from its slumber following a relatively uneventful decade (one writer in 1999 even suggested that we should not be taking China too seriously) 31 and was now set to take its seat at the top of the world‟s table. A gravity shift was taking place32 — or so it was argued — and whether or not one viewed China‟s economic rise as a foregone conclusion,33 necessary corrective to its nineteenth century period of humiliation,34 worried about its impact on the global economic and political order,35 or assumed that its rise was bound to lead to increased „intense security competition‟, 36 one thing was certain: the international system was undergoing what even western governments now believed was a transformation that would alter the world for ever.37

In what follows I want to address the issues raised by what many are now assuming to be irreversible changes in the world order. I do so not by asking what all this means, if anything, for IR theory (this has been done elsewhere)38 but rather by wondering whether the now popular argument that we have moved into a “post-western world” is in fact true.39 Clearly I do not dispute some self-evident economic facts.40 However, as Carr noted many years ago, the facts do not always speak for themselves; and even if some seem to think they do, they can still be arranged in a certain way to paint a less than complete picture of the modern world.

I make several arguments in what follows. One is that this modern story, exciting and interesting though it is, tends to focus almost entirely on what is rapidly changing but says little about what is not — and what is changing much less than some are now suggesting is America’s position in the world. 41 There has also been a confusion about terms. Nobody serious would want to deny that there have been measureable changes in the shape of the world economy over the past few years. However, too many writers have either assumed that a shift in economic gravity is the same thing as a power shift (it is not); 42 or, they have concluded that as these economic changes continue, they will either lead to a transfer of power from one hegemon to another (this is questionable), 43 or to the creation of something now regularly (and dubiously) referred to as a new “Asian Century”.44 As I will seek to show, these assertions contain serious analytical flaws. Equally flawed, I would insist, is the idea that we can make bold predictions about the where the world will be in the future. But as Dan Gardner has convincingly shown, getting the future right has in the past proven to be a fool’s errand.45 This I would want to argue, has important lessons for those now confidently predicting a major power shift over the coming decades. 46 The “rest” may now be growing fast while the US and the EU languish. However, as more sober analysts have pointed out, the crisis in the West may not last for ever, while the many problems facing some of the rest — including India47 and China48 — could derail their apparently irresistible rise up the economic league table. Nothing of course endures for ever. And a new world might indeed be in the making. But it might not be the one now being talked about so feverishly around the world today.

0.3 American economic decline?

As we have already suggested, a large part of the case in favour of the notion that a “power shift” is underway rests on the assumption that the leading western player — the United States of America — faces an irresistible economic decline that will, if it continues, either allow others to take advantage of its weakness or reduce its ability to lead. Certainly many ordinary Americans, and those who comment on the United States today, believe this to be the case.49 Of course, the story can be, and has been, told in very different ways. For some the process is likely to be slow and can be managed rather easily, “politely” even.50 For others, it is bound to have enormous consequences, not only for the conduct of US foreign policy but for the world at large. Certainly, if one accepts the theory of hegemonic stability (and believes that the hegemon is now in decline) then the future of the world looks very problematic indeed.51 Either way, with its share of world trade falling, China rising economically, its debt increasing, its economy in slowdown since 2008, and its dependency on foreign purchasers of its debt on the rise, it looks to many analysts at least as if the United States will either “need to retrench”52 or, more problematically, pass on the baton to other more capable powers.53

The debate about US economic decline is hardly a new one.54 Indeed, ever since the late 1960s, one pundit after another has been forecasting dire things for the United States on the grounds that it was becoming, as one writer put it in 1977, a very ordinary country.55 A decade later Paul Kennedy made much the same point, 56 as did Immanuel Wallerstein in 2002,57 and then David Calleo a few years later.58 In fact, there has hardly been a point in time since the late 1960s — with the possible exception of the “unipolar moment” in the 1990s (and not even then) — when there has not been speculation about America’s economic future. But this time, we are reassured, the decline, is for “real”. With an education system no longer fit for purpose, a middle class in retreat, a and a political system in gridlock, the United States according to one recent study (written by a British journalist) is in free fall with little time left to recover.59

There can of course be no doubting America’s many economic problems. Nor should there any doubt either that in simple its share of world GDP is much less today than it was, say, twenty five year ago, let alone at the end of the Second World War when it was the only serious player in the world capitalist system.60 But this is hardly the same thing as suggesting that the US is in irreversible economic decline — now a common view — or that China has now overtaken it — an equally popular view. Even on the simplest of GDP measures the United States is still well ahead of China. Thus whereas China with a population of around 20% of the world’s total generates something between one seventh and one tenth of global GDP, the United States with only 6% of the world‟s population still manages to produce between twenty and twenty five per cent. Indeed, by a simple GDP measurement, the US economy remains more powerful than the next four biggest economies combined: that is to say China, Japan, Germany and the UK. Comparisons between average living standards around the world reveal an even grater gap, especially when the comparison is made with the BRIC countries. Clearly life is improving for many millions of people in these countries; poverty is falling; and a new middle class is being created. Still, in each of the BRICs (India and Brazil most obviously) there are still vast pools of poverty. Furthermore, in terms of living standards, the USA continues to be ahead by a long way with an overall average four times higher than that of Brazil, six times higher than that in China, and as much as fifteen times higher than in India.61

Now none of this would come as any great surprise to a developmental economist. Oddly though it would come as something of a shock to the American public who by 2012 had come to the somewhat bizarre conclusion that the United States had been economically overtaken by China, and would, presumably, fall further and further behind its great economic rival on the other side of the Pacific. 62 Indeed, the gap between perception on the one hand, and the facts on the ground on the other, was cleverly illustrated in a recent study by The Economist. In this the authors challenged the „declinists‟ not by comparing the United States with other national economies, but comparing other national economies with specific states within the Union. The results were telling. To take one example: California. In GDP terms it alone remains slightly more wealthy than Brazil and Russia respectively, and almost twice as wealthy as both Turkey and Indonesia (two economies now discussed in increasingly glowing terms). The Texan economy meanwhile is nearly as big as Russia‟s and just slightly smaller than India‟s. 63 This hardly sounds like an economy on the wane.

If the United States is hardly the declining economic superpower portrayed in much of the literature today, it also continues to be able to do things that others can only dream of. In part this a function of its size; in part a function of geographical luck (the US possesses enormous quantities of oil, gas, coal, and food); and in part a function of its embedded position in the wider world economic system. As Carla Norloff has recently shown, despite a gradual economic decline since the end of the World War II, the United States still possesses critical features that give it what she calls “positional advantages” over all other states. She even challenges the now fashionable view that America’s hegemonic burdens are outweighing the benefits. She suggests otherwise: Washington actually reaps more than it pays out in the provision of public goods.64 The United States also has one other, very special, advantage: the dollar. As Doug Stokes has convincingly argued, this particular form of “financial power affords the US a broad range of privileges”, a by-product, in the last analysis, “of others willingness to purchase, hold and use the dollar”. They do this of course not because they especially love Americans, but in order to hold up an economic system upon whose health their own prosperity continues to depend. Furthermore, as Stokes goes on to argue, even the financial crisis has not weakened the position of the US anywhere near as much some have assumed. Indeed, in a world where uncertainty reigns (most obviously in the European Union) “money” in its purest form has fled to safety, and nowhere is regarded as being as safe as the United States. To this extent the financial crisis, ironically, has only affirmed US financial power rather than weakened it. 65

We also have to judge economic power not just in terms of the size of an economy but by the qualitative criteria of „competitiveness‟. Economies like China, India and Brazil are undoubtedly large, and will no doubt get larger over time. But this does not necessarily make them competitive in relationship to most western countries or the United States. In a recent survey, the United States came fourth in the world in a group of fifteen countries. Moreover, eleven within the fifteen were definably western, while the other four included Japan, Taiwan, Hong Kong and Singapore — countries all closely tied to the West and to the US. As for the BRICS they came well down the list. Thus China came in at twenty seven, India at fifty one, Brazil at fifty eight, and Russia at sixty three.66 Other studies have arrived at not dissimilar conclusions concerning the qualitative gap which continues to exist between a number of the “rising” economies and many of the more established ones, the United States in particular. In terms of cutting edge research in science and technology the US continues to hold a clear lead. Thus in 2008 the United States accounted for 40 percent of total world R&D spending, and 38% of patented new technology inventions. More significantly, scientific research produced in the US accounted for 49% of total world citations and 63% of the most highly cited articles. The United States also continued to employ around seventy of the world’s Nobel Prize winners, and could lay claim to two thirds of its most-cited individual researchers in science and technology.67

Innovation is also an American strength. 68 Other countries are clearly beginning to catch up. The United States however is still a country that continues to innovate across the board. Critics would no doubt point to the fact that the US is slipping down the league table. However, it still ranks 4th in the world. China meanwhile only came in at 54th in 2009, India at 56th, and Brazil and Russia even further behind. Of course, this does not take account of change over the longer term, or of the fact that a country like China is making a concerted effort to build a more innovative economy.69

But as even the Chinese would accept, it still has very long way to go. Indeed, in spite of official efforts to encourage what is termed in China a “capacity for independent innovation”, there remain several weaknesses in the Chinese political economy. Amongst the most significant, it has been noted, are “poor enforcement of intellectual property rights, an educational system that emphasizes rote learning over critical thinking, and a shortage of independent organizations that can evaluate scientific progress”.70 There is also wider political restraint as well. Innovation usually requires open debate, a capacity to challenge established truths, and incentives to think the unthinkable; and none of these, to be blunt, are much in evidence in modern China today.71

Finally, in terms of global economic power, the United States is still well ahead in one other vital respect: corporate strength.72 Some of the emerging economies are beginning catch up; and some of America‟s closest allies in Europe and Asia run it a good second.73 But the US clearly remains in ‘poll position‟ with American companies constituting 4 of the top 10 corporations in the world, 14 of the top 30, and 25 of the top 50. Western companies more generally still out-perform all others, with the US and the EU together representing 6 of out of the top 10 global corporations, 22 out of the top 30, and 37 out of the top 50. Some of the BRIC economies do have some very large companies with China, unsurprisingly, leading the way with 4 out of the top 10, 8 of the top 50, and 61 out of the top 500; a remarkable achievement for a country which only twenty five years ago was virtually irrelevant in the world economy.74 Still, as a recent Brookings study has shown, it does not follow that these companies are internationally active or should even be regarded as “multinationals” in the true sense of that word. Indeed, 49 of the top 57 mainland companies in China remain under state control; and with a very few exceptions the overwhelming all operate predominantly within the country — and for several good reasons including a shortage of mangers with the necessary linguistic skills and experience of working abroad, a lack of transparency, poor global brand presence, and a very real difficulty in adapting easily to foreign legal, tax and political environments.75

0.4 Hard Power — Soft Power: What is Power?

If the US retains some very formidable economic assets, the same can just as easily be said about its still very powerful position within the larger international system. This is no longer a fashionable view to defend of course. Indeed, as we have already suggested, a combination of an ill-judged war in Iraq, the use of torture in the “war on terror”, the near meltdown of the American financial system in 2008, and the slow recovery of the American economy since, has led many to question America’s capacity either to lead others or garner support for its policies abroad. Buzan has probably theorized this best. America‟s claim to represent the liberal future he argued back in 2008 was “blighted”. At the same time. the American model no longer inspired admiration. The number of states who wanted to follow it was fast declining. More generally, he continued, hegemony had become increasingly „illegitimate‟ in international society. As a result America‟s position in the world was becoming more and more “fragile”.76

Obviously, there is something to this, which is one of the reasons why this kind of argument has proved so popular amongst those who now hold to the view that we are now in the midst of a “power shift”. But one of the problems with it, clearly, is that it seriously understates how much hard power the United States can still mobilize, even after the very limited cuts proposed by President Obama.77 It might be intellectually fashionable to argue that military power is becoming less and less salient in an age of asymmetric war where the weak can do a great deal of damage to the strong. However, the very fact that the United States is able to mobilize the military manpower it can (currently it has more men and women under arms than it had on the eve of 9/11)78, can project power to every corner of the earth, is still the main provider of security in Asia and Europe, and spends as much as it still does on “defence” — about 45% of the world’s total — suggests that the country has a very long way to go before one can talk about it becoming less of a superpower. The military power of other states moreover does not compare, even China’s with its huge standing army (which has not fought a war since the disastrous invasion of Vietnam in 1979)79 and its increasingly large blue water navy that now includes one aircraft carrier.80 Indeed, when its first aircraft carrier was finally given its first sea trials in 2011, the alarm bells went up in the region.81 However, China’s one aircraft carrier hardly compares with America’s eleven carrier groups. Nor has the ongoing modernization of China’ss military brought it anywhere close to US levels. The most recent figures show that the US not only expends five times more on national security than China. Taken together its many allies in the region (including amongst others Japan, South Korea, India, and Australia) also spend more on their military forces than China, and do so by a significant margin — nearly $200 billion compared to China’s $115 billion. 82

This in turn should alert us to yet another aspect of America’s impressive position in the world: its formidably wide alliance system. Buzan may be right. There might be fewer states willing to “follow” the US in ways that they did during the Cold War. There are also a few “problem” countries like Pakistan, Turkey and Egypt that have increasingly difficult relations with Washington. Nonetheless, even those who have doubts about American leadership skills, still find that they have no alternative but to ally themselves with it. This is obviously true of the Europeans who can see no other security guarantor than the US. But it is also true of key states in Latin America, Africa and Asia. If anything, it has become even more true in Asia; in fact, as China has risen, most Asian countries (including communist-led Vietnam) have demanded more, and not less, of an American presence in the region. China as a result now finds itself in the paradoxical position of having greater economic influence in Asia but fewer friends.83 To this degree, its growing economic power has not translated into it having more political influence as well.84 Nor have its heavy- handed policies in Asia helped. On the contrary. By laying claim to the South China Seas85 and remaining silent about the aggressive behaviour of its single ally North Korea, it has actually made America‟s position stronger rather than weaker.86 Indeed, precisely because China does not “inspire confidence” , it has been possible for the US to be viewed by most countries in the region as that well known “indispensable nation” upon whose continued presence their own safety ultimately depends.87

America‟s continued presence in Asia raises a wider question about whether “power” in the broader sense is in fact tilting away from the West as is now so often claimed. China may well be the new engine puling along the world economy. Its economic role in Africa, Brazil and Australia may have become crucially important. And its new middle class may be buying more and more of the high end products that the West is only too happy to sell it. Yet thus far, China has been much less than successful in winning friends and building relations of trust with other countries. It might be an exaggeration to say that China “is generally held in suspicion” around the world.88 But China does confront some serious difficulties when interacting with the world. In part the problem is cultural. This is still a country after all that for all its new openness continues to harbour a suspicion of “foreigners”. The overwhelming majority of its people moreover are deeply insular in outlook and have little experience, and hardly any understanding of, the world outside of Chinese borders.89 Indeed, this is even true of many of its senior policy-makers, the bulk of whom travel abroad infrequently, do not speak foreign languages with any degree of fluency, and who have been brought up politically in the hidden world of the Chinese Communist Party. But there is also a larger ideological and political issue. China might be a trading superpower. But it has no vision and no sense of what it might take to become a serious superpower in a leadership position with all the responsibilities and dangers that would entail. If anything, China is extraordinarily ill-equipped to lead with its defensive, almost suspicious view of the world, and its constant reiteration of the old Westpahalian mantra that states should keep their noses out of other people‟s business. Nor is there much sign that it is keen to do so. In this of course the Chinese themselves have been perfectly candid. Our foreign policy goal, they repeat, is to create an international environment that will permit us to focus on domestic affairs and economic growth at home; and anything disturbing that derails us from this very long-term task stretching over several decades should be avoided at all costs.90 It is not even certain that China even regards itself as a model for others to follow. Indeed, how could it do so in a world where democracy — however imperfect — has become the political norm? People abroad may admire China for what it has achieved; a few may even hope that its rise will lead to a degree of balance in the international system. But when it imprisons dissident artists, repeatedly attacks the much admired Dalai Lama, and then seeks to punish another sovereign state for an entirely independent committee awarding a peace prize to one of its citizens, this is hardly likely to win it converts in the wider world.91

If China has a real problem in projecting a positive and confident picture of itself or of the world it would like to build, the same can hardly be said of the United States.92 The republic may have lost good deal of standing in the world because of the Iraq War; and the western economic model more generally might have suffered a blow because of the economic crisis. However, the first was partially vitiated by the election of Obama in 2008; and the second has not led to anybody serious proposing an alternative. Moreover, the “West” for all its faults — growing inequality, ethical standards in decline and all the rest — still looks a more attractive proposition than anything else on offer. As a recent study has shown, “soft power” is almost entirely the preserve of western, or more precisely democratic, countries with the United States still leading a league table that includes most West European countries as well as two countries from Asia — Japan and South Korea. China on the other hand comes in 20th, just ahead of Brazil at 21st , followed by India at 27th,and Russia 28th out of a total of 30 countries assessed.93

There are several reason why the West continues to score well in terms of soft power, the most obvious being that western countries have a pluralist political culture where having dissident views, will not, by and large, end up with one spending a rather long-term in prison or worse. But another reason — clearly connected — has to do with its open system of higher education. Here even the much-maligned US continues to have great magnetic pull, nowhere more so than in China itself judging by the enormous number of Chinese students who every year seek a place in US institutions of higher learning. Many of them may in the end return to China. However, they clearly believe that getting an education in a US college will improve their job prospects in an increasingly tough Chinese job market.94 Nor is this temporary “brain drain” a mere accident of history. Indeed, one of the more obvious signs of continued western and American strength is its university sector.95 Other countries and continents obviously have universities. But very few of them rank especially high in international terms.96 The BRIC countries in particular seem to face almost insuperable difficulties in raising standards. Brazil and India for example have no universities in the top 100, Russia only one, and China a mere 5 — three of these being in Hong Kong. The United States meanwhile is home to 8 of the top 10 ranked universities in the world, 37 of the top 50, and 58 of the top 100. Even the United Kingdom does well having 17 ranked universities compared to a total of 13 in the whole of Asia.97

If standards in higher education are still being set in the West, the same can also be said about the rules and associated institutions that govern international relations more generally. Admittedly, many of the most important institutions in the world today are not functioning as well they might: and over time, it seems clear that changes in the international economy will have to be reflected in the way the world is managed. Hence the ongoing debate about the world moving from being a G-8 world to a G-20 world. The fact remains however that nearly all of the key rules governing the global economy, and most of those dealing with critically important issues such as nuclear non-proliferation, trade liberalization, women‟s rights, and the protection of intellectual property rights, have been laid down by, and are still more likely to be upheld by, countries in the West.98 Furthermore, while many of the emerging economies might have many entirely legitimate complaints about how the West has behaved in the past, and how the US still behaves now, none of them have either the desire or the capability of really challenging the West in any meaningful way. This in large part has much to do with their still very high dependency on western markets and western Foreign Direct Investment. But more importantly, it is because they realize that their own success over the past twenty five years has been in some part determined by them adopting broadly western economic rules. This is not to play down their own contribution to their own success. Nor should we assume that countries like China and India have adopted a pure western model. They have not. Nonetheless, their much-heralded rise only began in earnest when they abandoned one, rather self-sufficient way of doing economics, and started the long journey towards a global economy that was western in design, liberal in outlook, and market-oriented in fundamentals.

0.5 A New Asian Century?

If, as I have suggested, the West has far more global influence than many writers of late have suggested, how, then, do we explain what now seems self-evident to many analysts: that we are moving into a new Asian century in which the West as traditionally understood will have far less wealth and altogether less power?99 Is this merely a matter of ignorance, wishful thinking, or simply a misunderstanding? Or is it in fact true as writers like Paul Kennedy have insisted, 100 and the American public now seem to believe? According to at least one opinion poll, the majority of Americans now view Asia as being of much greater importance than Europe.101 This too would seem to be the view of many US policy-makers — the Obama administration in particular, which without ignoring Europe altogether, has shown a much greater degree of activism and interest in Asia than probably any other part of the world.

On a number of issues concerning modern Asia there can be no serious disagreement. Its weight in the world economy has clearly got bigger. It can boast two of the BRICs — China and India. It presents major investment opportunities. And it is home to an increasingly significant regional organization in the shape of ASEAN. Asia‟s rapid growth over the last two decades has also been accompanied by a dramatic reduction in poverty. In East Asia and the Pacific region alone, the percentage of the population now living on less than $1.25 day has dropped from 55% in 1990 to only 17% in 2006. China alone has taken nearly 200 million people out of poverty over the last twenty five years.102

These achievements are all real enough. Moreover, when set alongside the miserable economic situation currently pertaining in many parts of Europe, they look almost miraculous. But one should beware hyperbole, especially when it comes to announcing an “Asian Century” that has not yet arrived. Asia‟s weight in the world has certainly risen. But I would suggest by much less than is commonly assumed. Indeed, a closer look at the figures indicate that the shift in economic power from West to East can be overstated. In 1995 for instance Asia‟s total share of world GDP (in nominal terms at market exchange rates) was already 29%. Fifteen years later it was no higher. As for the now widely accepted view that Asian producers were fast acquiring an ever-larger slice of global exports, the figures indicate that the region as a whole could lay claim to 28% of the total in 1995, but only 31% by in 2009, a rise of only 3% over fifteen years. Nor do these base figures take account of other significant indicators, many of which point to important flaws in the Asian economies. None of the Asian giants for example is yet blessed with endogenous technical progress. The quality of Chinese products does not match world standards. And in crucial cutting edge areas such as hardware and software technologies, the United States still dominate.103 In short, Asia still has long way to go before it catches up with the West — a West by the way, whose combined output is still double that of the East. 104

If we are nowhere near arriving at a so-called “Asian Century” one of the other reasons for this is that the entity we call Asia hardly exists as a collective actor. As many observers have pointed out, one of the more remarkable features of Asian political landscape is how fragmented it happens to be. Thus many in Asia (China in particular) harbour deep resentments towards Japan. Japan in turn bitterly resent China‟s rise. And India has problems with nearly all of its Asian neighbours, China especially. Most Asian nations also have a very powerful sense of post-colonial identity. This not only fosters quite a degree of suspicion of each other; it also weakens any sense of common purpose.

Finally, before we can talk of a new Asian Century we should remind ourselves that there are other parts of the world where relations between states are a good deal more settled and amicable — most notably between those countries making up the Transatlantic relationship. Asia may be rising and the BRiCs emerging. However, one should not underestimate the many strengths possessed by the key states constituting the wider Transatlantic space. Even in the midst of the crisis, the United States and the European Union still account for over 40% of the global economy.105 The most important international banks are also to be found in Europe and the United States. Europe and the United States moreover play host to nearly all of its major business schools; and in areas such as oil exploration, aviation and chemicals, they still lead the way. The two together are also the world‟s most important source of Foreign Direct Investment, and by far and away the world‟s most important markets too. They also invest in each other‟s future in vast amounts. Indeed, in 2010, the United States invested far more in Europe than it was ever likely to do in Asia or China — three time more to be precise. Meanwhile the EU had eight times more invested in the United States than it had in the whole of Asia. Americans today may not view Europe as being terribly exciting. And no doubt Europeans will continue to worry as to their current status in a Washington fixated on nearly everything else except the European Union. But that does not make the economic relationship any the less significant. As one writer has put it, for all the hype about the emergence of new economic powers, and talk of the West‟s imminent decline, „the transatlantic economic inter-regional link remains easily the largest…in the world‟. The author might also have added that without this continued link and the prosperity it has engendered, the “rest” might never have emerged in the first place. 106

0.6 Conclusion

I have made the strong claim in this article which challenges the notion that we are in the midst of some larger power shift. This in my view not only misunderstands the complex notion of what constitutes “power”. It is empirically dubious too. As I have tried to show here, the United States still has a great deal of power, much more than any other country in the world, now and for the foreseeable future. China meanwhile confronts several basic problems at home and abroad (as indeed do the other members of the so-called BRIC family). And the idea that we are moving ineluctably into what some have termed an “Asian Century” is unsustainable. In making this case, I am not implying that the world is an entirely static place. Nor am I making a plea for the status quo. Rather, I have tried to go behind the headlines and to call things by their right name. Not only is this important for purely intellectual reasons. In my view, it is strategically important too. After all, if a country like China really does come to believe that one day it really will be ruling the world, and Americans fearing the worse see no alternative but to combat this in whatever way they see necessary, this could very easily lead to an increased, and in my view, a quite unnecessary escalation of tension between these two very powerful states.

I draw two other very important conclusions from the foregoing analysis.

The first concerns the lessons we should be drawing from the past, Here the Cold War looms large in my thinking. I am not naïve enough to think that it would have been easy to have avoided some form of competition between the US and the USSR after World War II. But there is little doubt either that western worse case thinking based on exaggerated fears of a rising Soviet Union did make the conflict far more intense and long-lasting than it might have been otherwise. In the same way, though in a very different context involving a very different kind of state, there is a very real danger today that if the policy-makers and analysts begin to talk up Chinese strengths without recognizing its very real limits, they could easily end up creating yet another security dilemma.107

This brings me in turn to the future. As I earlier suggested, too much of what has become the new mantra predicting an almost inevitable revolution in world politics, with one part of world declining and another rising, is based on the altogether questionable notion that we can easily know what the world and the world economy is going will look like in five, ten, fifteen, or nearly fifty years time. All I would make a plea for here is a little more modesty and a lot more circumspection. After all, only a few years before the end of the Cold War it was predicted that the USSR would remain the same — and it didn‟t. It was then predicted that Japan would become „number one‟ in the world — and its financial system collapsed. And in 2005 the then head of the Federal Reserve in the United States told policy-makers in the US that the market could never fail — and it did, rather dramatically only three years later. The conclusion to be drawn is obvious: why should we be any more confident today when economists and pundits tell us that the rise of the BRICs is a foregone conclusion and that it is only matter of time before China (like Japan before it) also becomes number one?

Finally, I want to make a plea here for a far more subtle theory of the modern international system. Too many writers over the past few years have talked of the world as if it were like a series of billiard balls banging up against each in some zero-like contest in which states and regions in one part of the world rise, while others in other parts of the world fall. This might make perfect sense to some realists.108 However, it ignores just about everything else, including the fairly self-evident fact that the modern international economy is now so interdependent that even if we accepted the perfectly reasonable idea that certain states can make relative gains here at the expense of other states there, in the end most states — including most obviously the United States and China — have become entirely dependent on each other for their prosperity and security. To this degree we no longer live in a world composed of clearly specified friends and well-defined enemies, but rather in one where partnership has become a necessity. Once upon a time this way of looking at the world was branded by its critics as liberal idealism. In the 21st century it has, in my view, become the highest form of realism.

0.7 Acknowledgements

This much revised paper is adapted from the Kenneth Waltz Annual Lecture delivered to the Department of International Politics, Aberystwyth University on 9 March 2012 entitled “The decline of the West and the rise of the rest: myths of power shifts and economists”. I would like to thank Ken Booth for inviting me to give the lecture, and to develop my thoughts above.

  1. Michael Cox, Ken Booth and Tim Dunne, eds. The Interregnum: Controversies in World Politics. (Cambridge: Cambridge University Press, 1999)

Originally published at www.gov.uk.


Written by


Zihin zamandan bağımsızdır…