China’s rise as a great power in all dimensions – military, economic and diplomatic – ended the unipolar era that followed the Cold War – if such an era really existed. Instead of producing a bipolar world order, China’s rise to power is creating a multipolar world order, allowing second-tier powers like Russia and Turkey and others to maneuver between Washington and Beijing.
The return of a multipolar world of great power rivalries is forcing American strategists to rethink the relationship between military, security and diplomatic influence, on the one hand, and industry and commerce, on the other. During the Cold War, these were usually treated as separate subjects. The Soviet Union and, to a lesser extent, Communist China were military and ideological rivals, but not commercial adversaries. Japan and West Germany were commercial adversaries, but not military and ideological rivals. In contemporary China, however, the United States, for the first time since the defeat and dismemberment of Germany in 1945, faces a rival on all fronts simultaneously. It is as if in the 1950s the United States not only competed with the Soviet Union in the arms race and offers of influence in post-colonial countries, but also competed with the Soviets for the share of the global aviation market while defending the US home market against subsidized Soviet auto imports.
Although in 1990 Edward Luttwak defined âgeoeconomicsâ in terms of âconflict logicâ combined with âcommercial grammar,â there is no precedent in living memory for the type of competition of greatness. full spectrum power embodied in the Sino. – American rivalry. Current members of the U.S. foreign policy establishment grew up in a rapidly disappearing world in which the National Security Advisor oversaw defense, defined in terms of war and terrorism, while international trade was managed. by the US sales representative. In the divided brain of the US foreign policy elite, one hemisphere was programmed by international relations theory, which paid almost no attention to trade and investment, while the other half of the brain was programmed with a free market economy which assumed a world of perpetual peace.
One might have expected realist thinkers to challenge this separation of commerce and the art of governing. After all, the history of the modern world before 1945 is largely a history of attempts by the great European powers, and later the United States and Japan, to use military might and diplomacy to control resources and control. foreign labor and secure foreign markets for their domestic manufacturers. and investors. But while “classical realists” took these factors into account, late 20th-century American academic “neorealism” focused excessively on national security (narrowly defined) and turned away from obscure models of polarity and seduced by the dream of pseudoscientific rigor. If national security thinkers had dared to venture into topics of international trade and industrial structure that academic economists claimed to be their own preserve, they would have come under attack by the Capitol geese who protected the Washington Free Trade Consensus / Free Market from barbarians, such as economist and expert Paul Krugman.
As a result, American strategists are not at all intellectually prepared to face the emerging world order, in which national security and national economic policy can no longer be separated.
IN ORDER to think clearly about the national strategy, it is necessary to distinguish Power of Security, and richness of prosperity. To use game theory jargon, power and wealth are “zero-sum” games, and security and prosperity are “non-zero-sum” games.
Power and wealth are relative. A country cannot be more powerful or richer than compared to other countries.
Security and prosperity, on the other hand, are absolute concepts. All countries can become safer or more prosperous at the same time, although some countries become relatively more powerful and relatively richer than others.
To simplify it somewhat, the dream of a certain idealist stream of liberalism for generations has been to replace a world of zero-sum rivalries for relative power and relative wealth with a world of non-zero-sum mutual cooperation among all country in promoting absolute security. and absolute prosperity. Realists argue that this is neither possible nor prudent in a world of independent states without a single world ruler.
In the military domain, the different objectives of absolute security and relative power are reflected in different methods: arms control and disarmament. The policy of arms control implicitly takes for granted the continued existence of a competition for relative power between major powers (if not minor states) for relative military advantage. The aim of arms control is not to eliminate national armed forces, or even to eliminate arms races, but to reduce the danger and cost of particular arms races for both sides in a geopolitical conflict.
In contrast, the goal of the proponents of disarmament is absolute and universal human security through the eventual abolition of national armies and weapons of war everywhere. All countries could become more immune to threats of invasion, for example, if all armed forces that could be used offensively to project power across borders were eliminated.
The problem with disarmament, realists would argue, is that if a country becomes aggressive and chooses to rearm later, its neighbors may be forced to rearm hastily to deter invasion or intimidation. If they didn’t do it on time, they could sacrifice vital interests or even lose their independence. Much better for all nations to maintain minimally adequate armed forces that can be expanded in response to threats, rather than risking disarmament, even if, temporarily, all countries were to disarm at the same time.
The difficulty with American strategy since 1945 is that it has been informed by the zero-sum logic of arms control in the military realm and by the non-zero-sum logic of disarmament in the economic realm. In the military arena, the United States in the Cold War entered an arms race, not to build a war machine that would allow it to invade the Soviet Union and its client states, but to gain a position. a force from which to negotiate arms control treaties that benefited the United States and its allies. In the economic realm, however, the trade policy of the United States in the same period was engaged in economic disarmament. The purpose of several rounds under the General Agreement on Trade and Tariffs, the establishment of the World Trade Organization and regional free trade agreements such as NAFTA / USMCA, has been to strip country, including the United States, various tools traditionally used to protect and promote their own industries, such as tariffs and subsidies, local content requirements and sourcing preferences.
Why would a great industrial power like the United States favor a world trade regime that makes illegal any industrial policy for the benefit of American producers and workers? At first glance, given the dependence of military might on national industrial capacity, this policy seems irrational, especially because the United States during and since the Cold War tended to turn a blind eye to violations of free trade ideals by allies like Japan and rivals like China.
US SUPPORT for a rules-based international economic order that binds the United States itself is not as strange as it sounds. Under conditions which have existed for some time, both multilateral and bilateral economic disarmament could make sense in realistic terms.
According to the tradition of economic nationalism informed by Alexander Hamilton, Friedrich List, Alexander Gerschenkron, Raul Prebisch and others, a country’s foreign trade strategy should depend on its stage of industrialization. (I will limit the discussion to the small number of large populated military and industrial powers, two categories that tend to overlap. Small and weak countries – the majority in the world – have much less choice and little bargaining power and must seek the protection of greater powers and access to the markets of populated nations on any terms they can obtain.)
An agrarian country attempting to industrialize should engage in protectionism or import substitution industrialization for a period of time. Tariffs, non-tariff barriers, local content requirements or other measures can exclude imports from more advanced countries already industrialized and reserve the domestic market for its own national “infant industry” companies, which, although inferior to companies in advanced countries, must learn by doing over time. Infant industry companies do not need to be national; they can be local subsidiaries of foreign companies, as long as they build a national industry and transfer technology to national capitalists and skills to national workers.
Once a country industrializes, its trade strategy should change. Its industries are now of equal quality to those of other countries, so that it no longer needs the “wheel drive” of infant industry protectionism. The emphasis should shift from protecting its own market to accessing foreign markets, without however completely sacrificing its domestic market to foreign companies.
The trade strategy the nation pursues in this second era depends on its own relationship with other powerful industrialized nations. If the newly industrialized country is only one of the great powers, then it can benefit from access to affluent consumer markets, most of which are found within the other great military-industrial powers at a similar level of development. . At the same time, in a multipolar system, the country should be careful not to become too integrated and dependent on other great powers that could turn against it in the future. In a multipolar system, the wisest course for great powers is to increase their access to foreign markets or foreign investment through reciprocal trade liberalization agreements, while limiting their trading partners to military or neutral allies. and by protecting their national enterprises of their strategic industries against competition even with the enterprises of friendly allies in some cases.