Who’s Afraid of a Changing World Order?

July 18, 2017
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Who’s Afraid of a Changing World Order?

There is, of course, an obvious answer to the question, “Who’s afraid of a changing world order?”. Winners and losers emerge when shifts occur in world order. By world order I have in mind who’s number 1 in the world, who’s number 2, and so on; or, more generally, world order is the distribution of power and responsibility, and the set of shared understood relations across nation states.

Those who stand to fall in the rank ordering of nation states fear a changing world order. Those set to rise welcome such change.

But such reasoning is simple and linear, and economics cautions that in any interesting situation gains and losses are hardly ever straightforward. Instead, any perturbation comes with tradeoffs in cost and benefit. The benefit one gains from fighting to achieve primacy in a unipolar international system might come at considerable cost to oneself in global instability and conflict. Straining every sinew to preserve the ability to write the rules of the game is wasteful if everyone else agrees those rules are exactly what they themselves would have written anyway. Winning the contest of hard power might come at the expense of losing respect and admiration and yet other dimensions of soft power.

In one traditional view of rivalry between West and East, the West seeks to engage everywhere it can in defence of “core values”. But that rings hollow if ultimately the East is not what the West might suppose it to be: China is not a North Korean kind of authoritarian state; and Asia is not an illiberal, undemocratic nest of corruption and cronyism. And how does the West know what the East wants for itself?  If people in the East can succeed under a duties-oriented, rather than rights-based, governmental structure, what does a liberal West gain by illiberally insisting that Eastern governments must comply with what it thinks to be the unique pathway to political maturity? Economics says that different configurations of fixed costs and big-push needs in a developing economy call for different combinations of state intervention and free-market operation: the developed West therefore faces emerging-country trading partners who need to balance gain from access to larger markets with loss in incomes from lowered efficiency. An absolutist “no state intervention” policy is not appropriate for everyone, and does not imply a level playing field. Yet, a universalist one-size-fits-all approach has , inappropriately, continued to be America’s default position on international trade.

The trick is to identify accurately key tradeoffs. A nation can make the right decision only by calibrating the slopes of those margins of exchange, i.e., quantifying elasticities of supply and demand schedules. Without that clarity, predictions go wrong, and analyses mislead for how world economy and society will draw benefit or disadvantage from change.

No one should trust nations to do good for others, only that they pursue their own self-interest. However, the second critical message from economic reasoning is that rationally pursuing one’s own gain is not inconsistent with doing good for all. Indeed, the fundamental theorems of welfare economics are about uncovering the conditions under which these two — doing well for oneself, doing good for all — exactly align.

How far can these two insights from economics take us in analysing a changing world order? These ideas are, for one, already implicit in many qualitative analyses of world and regional order. But I want to advance a stronger position. These two insights from economics, combined with empirical quantification of the large changes in global society and politics, and of the shifting world economy, and incorporating Ramsey-like theorems for analysing global public goods and externalities, can take us a long way in re-interpreting world order, and in providing alternative insights and policy proposals from that typical in more conventional narratives.

Asia and the New World Order

Asia and the New World Order

To make the analysis concrete, however, it helps to begin with specific, historical examples, rather than immediately launch into a formal model. Start then with the current international system. For concreteness, take that to be a caricature of John Ikenberry’s subtle and nuanced conceptualisation of the liberal world order. Style it as unipolar, led by the United States, and call this the American Century. If the world is now to segue to the Asian Century, as articulated by Kishore Mahbubani and others, what exactly does Asia want that is different? What would Asia — China, Japan, ASEAN — seek to change in world order?

In “Can Asia Lead the World?” I describe how that change might be minimal but at the same time profound. (For convenience, I reproduce the text below.) Resistance is futile.

It’s a hypothesis. But many others are possible. To narrow matters down, greater scrutiny is needed.

In subsequent letters/chapters, I take up that investigation.

(Text reproduced below just for the convenience of the reader)
Quah, Danny. 2017. “Can Asia Lead the World?” South China Morning Post (07 April).

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Can Asia lead the world? Some Asian writers have begun to argue the time has come for Asia to champion the liberal world order that allowed it to develop and prosper. But how?

To begin, Asia can simply support that order and talk it up. But Asia already does that, and powerfully. Asia provides proof of concept by showing how economic success comes with being part of that liberal world order.

But more, Asia can champion the liberal world order by rising to lead it. Leadership does not mean brandishing more guns and bombs, wielding greater economic and financial firepower, or having a bigger geographical and population footprint. If that were what it takes, world order would be liberal only as farce, and already damaged beyond repair.

Notwithstanding the last 50 years of US-centred unipolarity, in a liberal world order, leadership does not, by logic or necessity, come with being the dominant power. Instead, leadership just means calling the meeting, lighting signposts in a complex uncertain world, being the adult in the room. This view of leadership does not deny collaboration. It simply says someone needs to make the first move.

For Asia to succeed at this, it must do two things: First, Asia must continue its trajectory of economic success; no one listens to failure.

Second, Asia needs a story.

There was a time when America had a story. Lee Kuan Yew once told Joseph Nye that on the grand chessboard of world order, America would always be ahead of China. This was because, while China might boast a population of 1.3 billion people, America could draw on the talents and goodwill of the more than seven billion of all humanity.

In that account, LKY reckoned America had a good story but China did not.

Does Asia?

Trump could well be steering the US towards protectionism, but still many observers will ask if Asia’s values are genuinely compatible with those of the rest of the world, even as Asia casts itself as champion of internationalism, free trade, and the liberal world order.

So, for Asia to lead, it is necessary for Asia to show its economic prowess. However, that is not sufficient. Asia needs a story of attraction, respect, and liberal compatibility. Asia needs a soft-power story.

More than ever, the significance of this reasoning is evident. America’s hard power – its military footprint, its economic might – did not vanish overnight. Instead, what has driven re-examination of America’s centrality in world order is the dramatic drawing down now of the respect and admiration it attracts from the rest of the world.

America’s story used to be a narrative of openness and liberal values. That was an America in which there was an uncensored and self-disciplined press that valiantly held power to account. That America had an independent judiciary and a system of governance that separated powers of rule and provided checks and balances. That America had democratic institutions that struggled and evolved to defend its people against the worst ravages of xenophobia and racism.

None of this is to suggest that the world bought wholesale into what is sometimes referred to as the Washington Consensus and the American version of liberal democracy. The most enduring traits of liberal democracy do not require, as a matter of logic, an extreme interpretation of a rights-based social contract, ballot-box elections, or a one person/one vote, direct deliberative democracy. Many people in the world are satisfied with a duties-based, rather than rights-based, contract with their government. Many in the world see hypocrisy when liberal parts of the West decried how the popular vote was ignored in Trump’s Electoral College victory, while the same liberal narrative lamented how the Brexit referendum was irresponsibly thrown open to ordinary people to decide, rather than left to their elected, responsible representatives.

Do Western liberals only want one-person, one-vote when it’s their side that wins?

The most enduring values of liberal democracy are simply what get schoolchildren through sports day: There is a level playing-field; no one is excluded from playing; everyone gets a fair shot. The rules are transparent, and cannot be changed mid-contest. Afterwards, there are winners and losers, and that’s okay. Everyone competes fiercely to win, but those who don’t succeed wish the winners well, and exit on friendly terms. Winners behave with good grace; they do not bully or display arrogance.

The form that Asia’s soft-power story will take remains a work in progress: Asia’s intellectuals still need to forge that vision. In some circumstances, networks can usefully replace multilateral agreements. In many situations, a duties-based social understanding can perfectly substitute for a rights-based one. Reverence for learning and scholarship is not a Western monopoly. Gentle pluralism beats arrogant universalism. And that fetishism that for creativity one needs space to rebel, flies in the face of all manner of important disciplined scientific investigation. All these sit easily with and, indeed, are on ample offer in Asia.

But certain other things need to be excluded right away from Asia’s narrative. When Trump and his circle display xenophobia, racism, anti-Islamic policies, nationalist populism, and an extreme zero-sum mentality, Asia needs to NOT say, “We see no problem with that.” When Trump undermines the free press and subverts America’s democratic institutions or America’s judiciary, Asia can NOT say, “We are okay with Trump and his people doing those things; we have the same problems here. “ Asia must NOT say, “Let’s focus on Trump’s business acumen and deal-making instincts” – for that too is what Asia knows best and likes most.

These ideas have no place in Asia’s soft power narrative; Asia must categorically reject them.

Otherwise, Asia has no story.

(Why?)

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