Wednesday, November 09, 2005

Simon is the Hong Kong based, anonymous proprietor of the highly regarded and enormously popular Simon World blog. Simon's timely postings, steady output and incisive, crisp, commentary on Asian and world affairs have won him many devoted readers in an ever more competitive blogosphere.

Globalization and war

by Simon

The upcoming WTO conference in Hong Kong has everyone on edge. Hong Kong’s security forces are preparing for the inevitable anti-trade protests. The governments’ participating are inching towards an agreement, but it is by no means certain. Hong Kong’s government frets it will play host to a giant farce, with nothing agreed and everyone’s time wasted. Yet the WTO represents one of the greatest economic achievements of the modern era: trade liberalization. And Hong Kong embodies the free trade spirit better than almost any place on Earth.

Can an economically integrated and trading world go to war? It certainly managed to in 1914. China’s ongoing stirring of nationalism, especially against the Japanese and Taiwan, serves a political purpose that is at odds with the economic benefits trade and investment between these places. On the other hand, China has become in the naughties what Japan was in the eighties to America – the trade and economic bogey-man. There are plenty on both sides of that fence that can envisage war between two of the world’s biggest trading partners. It might not be good for Wal-Mart but a confrontation over Taiwan is a possibility.

And yet globalization could well act as a mitigating circumstance. Will China’s rulers, for all their bluster, squander the value of their massive holdings of US government debt, the massive benefits that export-led growth has brought to China’s economy? Certainly one consequence of globalization is it has made war more costly. Not just first order costs, but broader economic costs as well. Upping the costs and reducing the benfits of going to war makes globalization a force for moderation and peace.

But wait, there’s more. The flipside of this is the globalization of war and especially the global market for military weapons and technology. Pakistan made a business of exporting nuclear technology. It is widely thought China has exported military technology to unsavory regimes, and North Korea is famous for its missile exports. So in that regard globalization has become a force for war.

There’s more again. China’s opening up to the world through globalization has seen it create a vigorous appetite for commodities and energy. With its leadership primarily focused on economic growth at almost any cost, combined with a “flexible” ideology and foreign policy, has meant China has formed alliances and invested in far flung corners of the world that are inherently unstable or alien to liberal democracies. There are examples from the Middle East, Central Europe and Africa that all fit into this category. Whereas it could be argued that America’s foreign policy is not solely or even primarily driven by economic concerns, China’s is and that leads to allies you wouldn’t want to take home to your Mum. Chalk it up as another minus for globalization.

But I’m not here to finish on a pessimistic note. I am a firm believer in free trade and globalization for both its economic benefits, especially to the poor, and as a driver of a more peaceful and safer world. The globalization of culture is often characterized as the “Disneyfication” (or McDonaldisation, or Hollywodisation, whichever American cultural icon you choose) of the world and is derided as a “bad thing”. But these companies and groups provide products that are popular with consumers the world over. No-one is forced to visit Disneyland, or eat a Big Mac, or watch a movie. But people want to. Moreover America remains the favoured destination for immigrants and would-be immigrants the world over, including in China. The American dream is a global one. This success sometimes drives envy, but America’s prosperity is widely admired. The foundations of that success? Liberal capitalist democracy. If globalization can bring images and ideas of liberal capitalist democracy to those who live without it, it can only serve to drive people to aspire to such a society. America’s model is not the only one. But it is the biggest and most successful (and note that I’m an Australian). As people grow richer in countries like China, they will start demanding more secure property rights, rule of law, less tolerance of corruption, more say in how they are governed. Globalization makes countries richer while at the same time constantly exposing populations to the most successful economic and political model the world has devised.

As globalization brings economic growth, it will bring political growth. Countries that are economically successful and growing do not, as a rule, go to war. In a world where there are numerous flashpoints and delicate balances to be maintained, globalization is a key force pushing towards peace. It is that complicated. And that simple.
Great points, Simon. I don't honestly believe that China and the U. S. will go to war but a chilling thing about the prospect is that it's almost entirely outside our control. But if the Chinese regime sees it to their domestic political advantage, i.e. it creates greater harmony at home, then I do believe that war between the two countries is possible and that there's very little we can do to prevent it.
Hi Dave,

Part of the problem relates to the opaque and factionalized nature of top-level Chinese decision making.

The PLA has become far more professional in the last thirty years but that professionalism has come at the price of separation from the civilian party leaders, though the generals still retain inordinate influence collectively. Far more than their Russian counterparts ever did under the Soviet Union.

Nor have we really effectively mapped out the influence of business-oriented "princelings" on major Party trends and how they relate to official channels of decision-making.

Again to borrow a Soviet reference, China's nomenklatura is more complex and harder for the U.S. to read.
Very interesting choice - the WTO.

Re the global economy, the UK Minister for Defence Procurement said in September that the MoD would be taking into account 'appropriate sovereignty' when buying military hardware. This suggests some form of protectionism. More and more countries are protecting themselves against the global economy for strategic reasons - security of energy supplies is one excuse.

Agricultural subsidies could also be seen as ensuring security of food supplies. And the riots in France have now introduced a concern for securing national stability.

Moreover the EU still has no common energy policy, as a new publication notes: "It should not accept Russia’s use of its energy resources as a means of exerting political pressure on its neighbours. If the EU is united and steadfast on such issues it will be immune to any pressures
that Russia may try to exert." Within this framework, the takeover of ScottishPower by the German energy giant E.ON is meeting much opposition.

For light relief, the Guardian pointed out the direction of the protectionist stance.

The progress today on WTO concessions was much less than hoped. Lots of scope for friction. Doha development round?
Talking about war with China? It can take several forms. For example, the US and China can have a geopolitical -- or geo-economical -- war. They could even engage, to some degree, in a proxy war. Then again the tentacles of economic interaction could thread through both societies to the point of strangling the chances for hostile relationships. I'm an optimist myself. No one can predict the future, of course. I think your article merits consideration. As for 1914, the world was younger then in many ways. I’m considering today’s communication, alliances, and stronger West (European/USA/Japan) relationship, like NATO and of course nuclear “stand off” weaponry. I would not discount Indian participation in global events so as to rival China's. These are exciting times.
A couple of comments on the comments.

Dave: I disagree that it is out of our control. If American politicians find "bashing China" to no longer be a vote winner, that helps. If there's greater public awareness of the benefits of seeing China as a partner rather than rival, that helps. The point about splintered decision making in China is also a good one. The clear outlier is Taiwan, but even the US seems to be pushing for a continuation of status quo, hemming in the pro-independence forces on the island.

Rob: The world might have been "younger" in 1914, but the European powers considered themselves the epitome of civilisation before they commenced 4 years of quite futile and barbaric fighting. Thin vaneer of civilisation and all that. Perhaps the world is more integrated these days, which is the basis of my optimism, but history shows the world is not immune to war because it's integrated.

There's a choice to be made, and it needs to be made actively.
Editorial Note:

Although I am going to collect and publish rebuttals after everyone has had their say, I have to note that Dr. Sam has rebutted Simon in a post at The Useless Tree :o)

"As people grow richer in countries like China, they will start demanding more secure property rights, rule of law, less tolerance of corruption...".
If many of the (fast) enriched people had come to their fortune by corruption, as it seems to me to be the case in the echoing feudalistic system developping countries, then their will for a "clean" society it would be questionable (i have a sad-critical eye on the realities of the country where i live in).
We may have to agree to disagree, Simon. As I said in my first comment, I don't believe that the U. S. and China will actually go to war. And I absolutely do not believe that the United States would go to war with China without severe provocation. Could China offer such a provocation? I think the answer is “Yes”—if internal Chinese political considerations warrant it.

The United States has, essentially, zero ability to influence internal Chinese politics in any but the most indirect, “soft power” sense. IMO that “soft power” BTW is the greatest danger to the Chinese regime. Influence requires access and we just don't have that.
In the 1990s, the world awakened to a post-Communist order, one in which global capital was largely unfettered to come and go as it pleased. Soon it became apparent that not just capital, but people, ideas, goods, services,sportsbook and every manner of human transaction, physical or otherwise, was enabled by technology and the
fall of the USSR to spread as never before. This entire phenomenon came to be known through the shorthand term of "globalization."
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