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Emerald Group Publishing Limited
Copyright © 2012, Emerald Group Publishing Limited
Rethinking the future
Article Type:Editorial From: International Journal of Commerce and Management, Volume 22, Issue 1
Former aide to President Ronald Reagan and George H. Bush, James P. Pinkerton, warned, in 2005, that “in the 21st century, the looming great powers [will be] China and India. So if history is our guide – and it should be – we can expect forthcoming collisions with those countries as well.” So when, in November 2011, Secretary of Defense Leon Panetta declared that “We face the threats from rising powers – China, India, others – that we have to always have sufficient force protection out there in the Pacific to make sure they know we’re never going anywhere”, responsible people have to take note.
Pinkerton made two points clear. First, the history of the USA “is the history of confrontation, even conflict, with the other great powers of the earth” and Washington has a tendency to use force to achieve its economic goals. Second, unlike previous conflicts with other superpowers, England and France, China is a formidable rival. Thus, his advice to policy makers in Washington was to devise a new “strategy for dealing with China, a country we can’t contain and can’t afford to fight.” Pinkerton suggested that an effective strategy to countering the rising influence of China is “the power-balancing mode.” He speculated that Washington would be in a position to play the three powerful nations in Asia – China, Japan, and India – against each other. He further assumed that Washington would be capable of keeping these powers in relative balance, therefore preventing the emergence of any threatening hegemon. The outcome of this strategy, according to Pinkerton, would be that conflict, if it erupted, would be in other countries first.
However, though this approach might appeal to some quarters in Washington, keeping a proper balance of power among China, Japan, and India is anything but certain. Furthermore, it demands a deployment of crucial talent to monitor these countries and discreetly manage their affairs. Moreover, Pinkerton ignored the fact that these countries have established institutions and, like the USA, are driven by their own national interests. It is easy to manipulate small and weak countries, but for great nations with deep rooted traditions manipulation may be costly, if not impossible.
Likewise, the logic of “the power-balancing mode” assumes that the world is a collection of tribes and that the largest and most powerful one (the one with the strongest army) will dictate what other tribes must do. In addition, it implicitly assumes that others have no capacity to craft and execute their own strategies. However, this thesis is inconsistent with the premise of globalization and the trend for enlarging the market instead of fragmenting it. Today’s nations have interests in maintaining an unobstructed flow of commerce and in upgrading their infrastructures and improving their innovative capacities.
President Obama and several leading conservative politicians have in recent months raised their rhetoric against China. In fact, President Obama, in his attempt to ride a populist sentiment against China, has accused it of keeping its currency, the yuan, artificially low, declaring that American people “understandably, feel that enough is enough.” Likewise, Mitt Romney, a Republican presidential hopeful, has been more forceful stating, “We can’t sit back and let China run all over us.” Arguably, political rhetoric is just for public consumption and is harmless. However, aggressive rhetoric is a sign of political immaturity and for this very reason it is risky and constitutes a threat to international peace and global trade.
Back in 2006 we stated that an aggressive and militaristic approach to international affairs is not only a threat to the welfare of the international community but also a serious threat to the expansion of free trade and economic prosperity. Though this is still valid, it takes on an added value in today’s global economy because the future of the global economy depends heavily on economic growth in leading emerging nations such as China, India, Russia, and Brazil. Under the current global economic downturn, any attempt to obstruct economic development in these nations will lead to a global economic recession, if not a total crash.
The Wall Street Journal’s CEO Council (2011), while acknowledging that emerging economies are a powerful engine for global economic growth, argues that the relationship between the USA and China has to be strengthened for the sake of global economic health. It states:
The US-China relationship has been pivotal to global economic stability, providing significant benefits to both nations. Today, the relationship hangs in a delicate balance, threatened by issues ranging from security concerns, to resource competition, currency imbalances and intellectual property rights.
The Council, too, has reported that the US and Chinese economies will be the top two economies in 2050 with China, more likely, becoming the world’s largest economy by 2018. In its survey of global executives, the Council found that the majority believed that to improve US-China relationships, China has to provide stronger protection of intellectual property. However, US executives who participated in the survey gave priority not only to better protection of intellectual property in China but also to reducing the budget deficit in the USA.
Furthermore, The Wall Street Journal’s CEO Council points out to certain issues that will shape the future. First, corporations in the developed world face a new competitive challenge: aggressive, cash-rich firms from emerging economies that are now able to invest heavily in technology and innovation. Second, economic growth in emerging markets has produced an unprecedented spike in global demand for natural resources and global commodity prices have skyrocketed. Third, national competitiveness increasingly depends on how well – and how quickly – states and private corporations are able to address the health issues that challenge the global workforce. Fourth, by 2030 more than 90 percent of global middle-class spending will happen outside North America and since the majority of US firms used to enjoy a large domestic market it is not sure that US-based firms will adequately adjust to this newly emerging trend. Fifth, corporations across the globe are rethinking how they can organize, connect, and collaborate to encourage innovation.
The above trends coupled with a changing global political landscape necessitates that fresh thinking is needed to address how to be a responsible global actor. Political paradigms and militaristic gestures of the past will be irrelevant in the future and will lead to diverting scarce resources and paralyzing global economic growth. Furthermore, narrow nationalistic views which might appeal in some domestic quarters may not be received well globally, thus reinforcing mistrust among emerging and established global powers and deepening pessimism among citizens in the developed and developing world.
As the global economy experiences a sharp shift in favor of emerging economies and as consumers in various parts of the world become increasingly independent and sensitive to political and environmental changes, looking at the world through yesterday’s lenses may prove to be fatal. In addition, policymakers in advanced have to view global growth in emerging economies not as a sign of decline or a weakening of their respective countries’s global status but as an enlargement of the economic pie that benefits all participants.
The growing role of emerging nations in the global economy is a pervasive reality and a way for the future. It is necessary for global prosperity and for a more stable and promising world. This growing role is impossible to freeze, to change its direction, or to hold it back. Instead of obstructing this historical necessity, governments should give priority to talent cultivation, purposeful discovery, and innovative capacity.
The current global economic crisis proves without any doubt that the global economy is characterized by interdependency and connectivity. Indeed, the depth and scope of the crisis discredits the unipolar world hypothesis which has been advanced by neo-conservatism ideology. This ideology seeks to militarize the globe and forcefully polarize it into friends and insignificant others. The ideology assumes that the world is in a state of perpetual instability and needs a hegemonic militaristic power. It is driven by pessimism and ignores history, while discounting the ability of the global community to progress and thrive. This ideology of the past is antithetical to optimism and the prospect of a bright future; a future where multiple powers compete on a global stage guided by principles of shared fate and a faith in the ability of human beings to creatively and collectively overcome economic difficulties and setbacks.
If history is any guide, relying on military power instead of economic influence and common sense will lead to human disasters and tragedies. Positive changes are the outcome of competing responsibly and prudently. Indeed, a thriving global economy, the best hope for the global community, is possible only through active competition and cooperation in the global marketplace. In a thriving global economy, as inclusive and sustainable, shared benefit is a predictable outcome.
Abbas J. Ali
(The) Wall Street Journal’s CEO Council (2011), “Toward a new global order”, available at: www.pwc.com/us/en/executive-business-briefing/us-china-relationship.jhtml (accessed November 21)
Ali, A.J. (2006), “In defense of Angellism free trade”, Competitiveness Review, Vol. 16 No. 1, pp. 1–2
Pinkerton, J. (2005), “Superpower showdown”, American Conservatives, Vol. 74 No. 21, pp. 7–15
(The) Wall Street Journal (2011), “Leon Panetta makes foreign policy gaffe”, Wall Street Journal, November 17, available at: http://blogs.wsj.com/washwire/2011/11/17/leon-panettas-herman-cain (accessed November 21)