Living in a world without the West

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An Asian century? By 2040, China’s share of global GDP is expected to dwarf that of the US and the European Union
An Asian century? By 2040, China’s share of global GDP is expected to dwarf that of the US and the European Union. Photo: AFP

In 1983, Belgian economist Paul Bairoch presented a study of the world economy that caused a furore in western academic and political circles. In Economics and World History: Myths and Paradoxes, he said that in the year 1750 China’s share of global GDP was 33 percent, India’s 24.5 percent, and the combined share of Britain and the US was 2 percent.

Shaken and stirred by these figures, the Organisation for Economic Cooperation and Development (OECD) constituted the Development Institute Studies under Professor Angus Maddison of the University of Groningen to investigate Bairoch’s claims.

The data Maddison compiled affirmed — what nearly every Indian school child knew but was mysteriously unknown to the West – that India was among the richest countries in the world until the British arrived and utterly ruined it. His figures showed India had the largest economy on the planet for 1,700 of the past 2,000 years.

From 1 CE to 1000 CE, India had a 32 percent share of global GDP. During the second millennium, foreign invasions disrupted economic activity considerably, and India yielded the top spot to China. Still, India’s share remained at 28- 24 percent between 1000 and 1700 CE.

A new world order
Since Bairoch and Maddison presented those paradigm-shifting studies, the world has moved at warp speed. In its latest annual report on global economic activity, the International Monetary Fund (IMF) says China has unseated the US as the world’s largest economy and India has overtaken Japan to take the No. 3 spot. China’s economy is still smaller than America’s in US dollars, but its GDP balloons to $17.6 trillion — vs America’s $17.4 trillion — on the basis of purchasing power parity (PPP).

(PPP provides a more realistic picture because it tells us how much a country’s currency can purchase at home. It is the best way to compare the size of economies rather than using volatile exchange rates.)

What has surprised everyone — including economists — is how rapidly China has grown, ignoring all projections. For, as recently as 2005, China’s economy was less than half of the US. The National Intelligence Council, which oversees the US intelligence community, had predicted China would overtake the US only in 2020.

Now chew on this figure — $123,000,000,000,000. For the numerically challenged, that’s $123 trillion. In January 2010, US economic historian and scientist Robert Fogel wrote in Foreign Policy magazine: “In 2040, the Chinese economy will reach $123 trillion, or nearly three times the economic output of the entire globe in 2000. China’s per-capita income will hit $85,000, more than double the forecast for the European Union, and also much higher than that of India and Japan as China moves from a poor country in 2000 to a superrich country in 2040.”

America’s per-capita wealth may be higher, says Fogel, but “China’s share of global GDP — around 40 percent — will dwarf that of the US (14 percent) and the European Union (5 percent)”.

Despite dethroning Japan, not much attention has focussed on India because the country’s economic growth that had risen to dizzying heights is coming to terms with gravity. But if India can play its cards well, it could become the world’s leading economy in the 2060s when China’s population begins ageing.

Marginalising the West The emerging economies are laying the foundations of a new system autonomous from the western international order
Marginalising the West The emerging economies are laying the foundations of a new system autonomous from the western international order. Photo: Roberto Stuckert Filho/PR

Economic wasteland
Even as Asia grows richer, the West is declining at a pace faster than previously estimated. The worst affected are the PIGS — Portugal, Ireland, Greece and Spain — where economic turmoil is hollowing out the middle class. In Spain, for instance, the unemployment rate is an astounding 25 percent. An entire generation of European youth is growing up without the assurance of jobs — forget the cradle-to-grave security their parents and grandparents took for granted.

Others aren’t any better. Canada’s Globe & Mail newspaper wonders if Britain’s current condition is an indicator of the West’s future. It says, “Intergenerational poverty, rare in most countries today, has become a factor in a notable British subculture.” That tallies with a British government report which shows that if you are born poor, you stay poor.

Across the Atlantic, the US media is finally, although reluctantly, talking about the havoc the recession has unleashed on ordinary people, such as the 50 million Americans suffering from chronic hunger. The US reports a jobless rate of around 6 percent, also called the “propaganda rate”. But if you include people who have stopped looking for jobs and dropped out of the market after months or years of fruitless search, the jobless rate is 17 percent.

Crumbling fortress
This double whammy — the erosion in economic status and the resulting loss of global hegemony — is causing considerable disquiet in the West. American archconservative politician and one-time presidential candidate Patrick Buchanan is horrified at the prospect of a diminished global status even as much of what was once the ‘Third World’ is roaring up the growth charts.

Buchanan’s book Suicide of a Superpower, about America’s decline, has been called racist and homophobic by critics, but it nevertheless has some grounding in reality. “America is disintegrating,” he screams. “The centrifugal forces pulling us apart are growing inexorably. What unites us is dissolving. And this is true of western civilisation… Meanwhile, the state is failing in its most fundamental duties. It is no longer able to defend our borders, balance our budgets, or win our wars.”

Another right-wing demagogue, Zbigniew Brzezinski, who spent the better part of his life advocating the destruction of Russia so the Eurasian landmass could be turned into a lebensraum for the West, is now realising the West has been checkmated on the “Grand Chessboard”.

Brzezinski claims credit for the strategy that drew Russia into Afghanistan. Now he has done an abrupt U-turn in his new book Strategic Vision: America and the Crisis of Global Power, in which he asks Russia be included in “a larger and more vital West”. The Pole’s chameleonlike transformation from hawk to dove shows his desperation.

That’s not all. Western clubs like G7 (ex-G8) are on life support. US inaction in Ukraine — in the face of a resurgent Russia — was described by a Chinese general as a symptom of America’s strategic “erectile dysfunction”. And the World Bank and the imf, the twin organs of American power, now face competition from the New Development Bank formed by the brics.

Allies and vassals of the West such as Saudi Arabia, Qatar, Kuwait, Turkey and Georgia will also face an uncertain future.

That is tomorrow’s world without the West.

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Rise of the East Three of the four largest economies in the world are Asian

Routing around
The concept of a “World Without the West” was first articulated in 2007 by American academics Steven Weber, Naazneen Barma and Ely Ratner, who wrote: “For the first time in a century, a set of large, populous and increasingly wealthy states — this time China, India and Russia — are on the cusp of achieving great-power status.” These rising powers are keen to break the dominance of the current order by increasingly “routing around” the West.

For years, the East vs West debate has been framed largely in terms of whether emerging powers will integrate into or challenge the existing international system built by the West. Weber and his associates contend rising powers are opting for neither.

“By preferentially deepening their own ties among themselves, and in so doing, loosening relatively the ties that bind them to the international system centred in the West, rising powers are building an alternative system of international politics whose endpoint is neither conflict nor assimilation with the West,” they say.

This works in two ways. One, the rising powers deepen their trade, defence and cultural ties among themselves, creating a new parallel international system. So, in effect, by not playing by the rules set by the West, they are creating an alternative arrangement in which they neither enter into conflict situations with the West nor enter into subservient alliances (like those offered to South Korea and Japan).

Crucially, the developing world is routing around not just the West but also the idea of the West, making it increasingly difficult for western narratives to penetrate the developing world.

This makes the West simply irrelevant.

As the emerging economies grow in size, it gives them the critical mass to lay down the foundations of a new system that is autonomous from the western international order.

For instance, Russia is using its vast oil and gas resources to shut out western companies from the great new pipelines snaking out of Central Asia. Russia’s $400 billion gas contract signed in May locked in China for the next 30 years, and offers a hint of the Siberia-sized deals that will be common between the brics.

China’s trade with emerging markets has grown so fast in the past decade that it can now offset any weakness in the American and European markets.

With the West enmeshed in wars it cannot win, India and China are racing each other to buy up the world’s resources. Indian companies are buying farmland across Africa to secure future food supplies for a billion people. China has turned Australia into a virtual mining colony.

The BRICS are building brand new cities, factories and malls in Africa. When the Chinese finish a mega project, they are known to throw in a $100 million luxury hotel or hospital as a free gift. Which US company can match that?

In short, the West is literally being squeezed out.

No longer a role model
One reason for its growing irrelevance is that the West’s economic model is sputtering. Corruption in the financial centres of New York and London is rife. Banks and financial institutions have violated nearly all the 10 Commandments — they have lied to their customers and stolen billions of dollars. Western economies are no longer role models.

Another reason why the emerging countries want to establish an autonomous order is America’s blatant misuse of the dollar. The US Federal Reserve ‘creates’ money by electronically ‘transferring’ dollars into the US banking system. That is, printing of dollar bills has been given the go-by. In fact, defying the laws of economics as well as physics, wealth is being created literally out of thin air. Financial expert Max Kaiser says, “Countries like Russia, China and Brazil are trying to divorce themselves from the US dollar because it’s a completely toxic currency that’s just right for the counting fraud. It supports an empire that’s just too lazy to compete.”

The BRICS are now increasingly resorting to renminbi, rouble and rupee trade. If it catches on and the dollar loses its status as the reserve currency, it will be a huge blow to the US because it is the unrestrained printing of dollars that pays for America’s wars and expensive military toys.

The loss of absolute power doesn’t mean the West will be eating grass in the future. Its decline is only relative and it will retain many core strengths. The overall quality of life, for instance, in the US and Europe is far higher than in China or India. Western multinational corporations still control a good chunk of global manufacturing. Their universities attract hundreds of thousands of students from emerging countries.

But the days when the West was unchallenged and could steamroll countries are over. With each passing decade, China, India and Russia will only get richer and militarily more powerful. The world will become polycentric with no single country able to dominate.

The transition to a post-western world has started — and you have front row seats.

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