The World America Made (9 page)

Indeed, in recent years the world has witnessed a
small but steady decline in the number of democracies. The Arab Spring may or may not turn the tide back again, but it is worth speculating whether there would even have been an Arab Spring in a world where the autocratic great powers, China and Russia, were relatively stronger and the United States relatively weaker. Would the Europeans have played the same pro-democratic role in the face of a stronger China’s opposition, knowing that a weaker United States lacked the ability or the desire to back them up? The opening in the Arab world might have been crushed, as the movement for change in Europe was crushed in 1848. Then, too, there had been a rough balance of power between the liberal governments and the conservative autocracies, but it had not been enough to save the liberalizing movements. The British, in particular, felt constrained from supporting liberals on the Continent lest this upset stable relations with the other great autocratic powers. In a new, multipolar order, presumably, the United States would be similarly constrained.

China as a rising economic power has already put a weight on the scales in favor of authoritarianism. In Africa especially, it has provided large amounts of money to dictators in exchange for guaranteed access to raw materials. Nor should one expect it to behave differently. Russia has used its energy resources to penetrate the political systems of neighboring countries, sometimes manipulating the oil and gas spigot to support favored candidates and parties, as in Ukraine and Belarus. That is at least one reason why the former territory of the Soviet Union is one of the least democratic regions in the world. In a more evenly balanced world in which the United States had declined to a
position of first among equals, both Chinese and Russian influence would be proportionally greater, with negative effects for global democracy. History shows that the distribution of world power at the top affects the course of smaller and weaker nations across the globe. When fascism was in vogue among the European great powers in the 1920s and 1930s, fascist governments began cropping up elsewhere, even in Latin America. When the Soviet Union became the world’s second superpower after World War II, communist movements sprang up around the world, and leaders took up the cause of revolution. When the Soviet Union collapsed and the United States emerged as the sole superpower, the number of democracies around the world shot up. If the balance were to shift again, we can expect to see a similar change in the general trend.

What about the liberal economic order? Would it survive a redistribution of power away from the United States? Most observers assume it would. After all, they argue, all the rising powers, including the most important one, China, have benefited enormously from the economic order put in place by the United States and its allies after World War II. China has lifted itself out of poverty and is on its way to becoming the largest economy in the world in terms of overall GDP. Its economic growth is driven by exports and therefore depends on an open trading system. Its domestic development relies on access to foreign investment and foreign technology. The same holds true for Brazil, India, Turkey, and other rising economic powers. Why would any of them want to kill the goose—the liberal economic order—that lays the golden eggs?

That may be the wrong question. These powers may
not want to bring down the liberal order from which they benefit. But do they have both the will and the capacity to uphold it in the absence of predominant American power? As we have seen, liberal economic orders are not self-sustaining. Historically, their creation and survival have been the work of great powers willing and able to support open trade and free markets, and to do so using all the necessary tools, including military power, to keep avenues for trade open. Would these other nations step in to fill the gap left by declining American power?

One key element of the liberal economic order over the past two centuries has been control of the seas. Today, although we live in a digital age, goods are not beamed through the ether. Much of the world’s oil and gas, raw materials, ores and minerals, and food and grain still travel by ship, which means that free trade still requires open trade routes on the high seas. Yet throughout history, shipping lanes have often become victims of international crises and conflicts, as nations have sought to control waterways and deny access to adversaries. The United States went to war twice—in 1812 and in 1917—partly in response to efforts by other great powers to blockade American trade in wartime. Since World War II, the United States has used its dominance of the oceans to keep trade routes open for everyone, even during periods of conflict. But it is not enough to have an interest in free trade. Today, Portugal and Singapore have an interest in free trade and open oceans, but they lack the capacity to keep trade routes open. Only the United States has had both the will and the ability to preserve freedom of the seas. Indeed, it has done so largely by itself, policing
the world’s oceans with its dominant navy with only minor assistance from other powers, while other trading nations, from Germany to Japan, from Brazil to India, from Russia to China, have been content to be “free riders.” This has been one of America’s most important contributions to the present liberal world order.

But what would happen if the United States ceased to carry this burden? If American decline means anything, it would have to mean an end to this hegemony on the high seas. Would today’s free riders decide to take on the burdens and the expense of sustaining navies that could take over some of the tasks now handled by the Americans? And even if they did, would this actually produce an open global commons, or would it produce competition and tension? For as it happens, both China and India are increasing their naval capabilities. This has produced not greater security but a growing strategic competition between them in both the Indian Ocean and, increasingly, the South China Sea. The fact that China is trying to use its growing naval power not to open but to close international waters offers a glimpse into a future where the U.S. Navy is no longer dominant.

The move from American-dominated ocean ways to a collective policing by multiple great powers—even if it occurred—might turn out to be a formula for competition and conflict rather than a bolstering of the liberal economic order. In the nineteenth century, British naval dominance undergirded peace and global free trade, except in times of war, when Britain itself closed the avenues of trade to its enemies and their trading partners. When the world’s navies became more equal—with the
rise of not only the German navy but also those of Japan and the United States—both peace and the international free-trade system became imperiled. Historically, a liberal economic order has flourished under only one set of conditions—a great power with a globally dominant navy and a profound interest in a free-trade, free-market international system, the situation that existed in the latter half of the nineteenth century under British naval supremacy, and again after World War II, under American naval supremacy. The multipolar eras that preceded British supremacy and that existed between the two world wars, prior to American naval supremacy, did not give rise to liberal economic orders.

Even if one sets aside the problem of who will police the commons, it is not clear that the great powers in a new, multipolar era would be able to sustain a free-market, free-trade international system, even if they wanted to. They might kill the goose inadvertently, despite their dependence on it, simply because of the nature of their own political and economic systems.

By far the most important player in the future in this regard will be China. Its economy is projected to overtake that of the United States, at least in terms of sheer volume, at some point in this century. China’s ability and willingness to support the liberal economic order will go a long way toward determining whether or not that order survives. But even optimists about China’s development foresee possible problems.

Two aspects of China’s economy raise doubts about whether it could or would play the role of defender of the present system. One is the fact that although the Chinese
economy may become the largest in the world, it will be far from the richest. The size of its economy is a product of its enormous population, but in per capita terms China remains a relatively poor country. In 2010, China’s GDP was the third largest in the world, behind the United States and the European Union. But while the United States, Germany, Japan, and other powers had a per capita GDP of over $40,000, China’s per capita GDP was a little over $4,000, putting it at the same level as Angola, Algeria, and Belize. Even if optimistic forecasts are correct, by 2030 China’s per capita GDP will still be only half that of the United States, putting it roughly where Slovenia and Greece are today.

This will make for a historically unique situation.
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In the past, the largest and most dominant economies in the world have also been the richest. That was certainly true of the eras of British and American dominance. And consequences flowed from this. Nations whose peoples are such obvious winners in the relatively unfettered economic system have less temptation to pursue protectionist measures and more incentive to keep the system open. So although they are dominant, they use their dominance in such a way as to permit other nations to grow rich, too.

Chinese leaders, however, may face a different set of problems and temptations. As heads of a poorer and still developing country, they may prove less willing to open sectors of their economy. They have already begun closing some sectors to foreign competition and are likely to close others in the future. The pressure to find better-paying jobs for their people climbing out of poverty into a large lower middle class could lead them to protect certain
industries that provide those jobs. A more protectionist China would be neither evil nor unprecedented. Many nations go through protectionist phases during their economic development. The United States certainly did. The problem is that China’s protectionist phase could coincide with its rise to dominance of the global economy. That
would
be unprecedented. The United States was highly protectionist throughout the latter half of the nineteenth century, but as it grew to become the world’s dominant economy, it gradually shed protectionism because it could make more money in an environment of free trade. Britain similarly moved from protectionism to free trade as its economy became dominant. China may be different.

Even optimists about Chinese economic and political development believe the liberal economic order will require “some insurance” against a scenario in which “China exercises its dominance by either reversing its previous policies or failing to open areas of the economy that are now highly protected.” For were it to do so, “given its size, the resulting conflict could undermine the post–World War II system.”
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As the political scientist Ian Bremmer asks, “What happens when the Chinese leadership decides that its development strategy no longer depends on so much foreign investment and prefers instead to use all the tools at the state’s disposal to support local companies and shelter them from foreign competition?”
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American economic dominance was welcomed by much of the world because, by and large, like Hyman Roth in
The Godfather
, the United States always made money for its partners. Chinese economic dominance, however, may get a different reception.

A second question concerns the nature of Chinese capitalism, for it is different, too. Much of the Chinese economy, though market oriented, is dominated not by private entrepreneurs but by the government. Chinese capitalism is to a large extent state capitalism. State-owned enterprises dominate vital parts of the economy—the energy sector, for instance—and amass earnings in huge sovereign wealth funds under government control. As Bremmer notes, the purpose of state capitalism is not only to maximize profits but also to maximize “the state’s power and the leadership’s chances of survival.”
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China is not alone. Russia and, to a lesser extent, Brazil, Mexico, and other rising powers all practice some degree of state capitalism, especially in their control of national energy companies. But China’s economy is most directed at national as opposed to corporate interests. For the China National Petroleum Corporation, for instance, profits are less important than securing long-term contracts with oil suppliers so that China need not fear a future cutoff. The company is willing to pay more for security, in the interest of the Chinese nation, than it would if driven purely by considerations of profit and the interests of the company and its shareholders. The result is, among other things, a distortion in the market that drives up prices for everyone.
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Whether this is good or bad, the point is that it is different. Over the past two centuries, during the eras of British and American preeminence, the leading economic powers were dominated largely by private individuals or companies. Surpluses gained from trade wound up mostly in private hands. To the degree the state benefited,
or had influence over corporate decisions, it was indirect. China’s system is more like the mercantilism of previous eras—Britain, France, and Spain in the sixteenth, seventeenth, and eighteenth centuries, for instance—in which governments amassed wealth in order to secure their continued rule and pay for armies and navies to compete with other dynasties and other great powers. Today, too, “China’s surpluses lead to concentrated acquisition of resources in the hands of the state,” which keeps the rulers in power and gives them the ability “to project power internationally.”
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Would such a power—and China is not the only one—be a reliable supporter of a liberal economic order, or would it, as Bremmer fears, threaten “the future of the global economy”?
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To those who insist that China would never have an interest in undermining an order in which it has prospered, the answer is that it might not be able to help it. In the fable of the scorpion and the frog, the frog nervously agrees to carry the scorpion on its back across a stream only after the scorpion insists that it has no interest in stinging the frog, since both would die. But then, halfway across the stream, the scorpion does sting the frog, and when the dying frog asks why he did it, the scorpion answers: “Because I’m a scorpion. It’s my nature.” China, and Russia, could end up damaging or upending the liberal economic order not because they want to but simply because it is in their nature as autocratic societies to seek above all else to preserve the state’s control of wealth and the power it brings.