Shadow of the Lack of a Hegemon

Christopher Layne, a professor of government at Texas A&M, and his co-author Benjamin Schwarz have written an excellent column detailing exactly what I think is the main danger facing the world today:

The international order that emerged after World War II has rightly been termed the Pax Americana; it's a Washington-led arrangement that has maintained political stability and promoted an open global economic system. Today, however, the Pax Americana is withering, thanks to what the National Intelligence Council in a recent report described as a "global shift in relative wealth and economic power without precedent in modern history"...

At the heart of this geopolitical sea change is China's robust economic growth. Not because Beijing will necessarily threaten American interests but because a newly powerful China by necessity means a relative decline in American power, the very foundation of the postwar international order...

The Obama administration and the Federal Reserve have adopted policies that have dramatically increased boththe supply of dollars circulating in the U.S. economy and the federal budget deficit, which both the Brookings Institution and the Congressional Budget Office estimate will exceed $1 trillion every year for at least the next decade. In the short run, these policies were no doubt necessary; nevertheless, in the long term, they will almost certainly boomerang. Add that to the persistent U.S. current account deficit, the enormous unfunded liabilities for entitlement programs and the cost of two ongoing wars, and you can see that America's long-term fiscal stability is in jeopardy...

Going forward, to defend the dollar, Washington will need to control inflation through some combination of budget cuts, tax increases and interest rate hikes. Given that the last two options would choke off renewed growth, the least unpalatable choice is to reduce federal spending. This will mean radically scaling back defense expenditures, because discretionary nondefense spending accounts for only about 20% of annual federal outlays. This in turn will mean a radical diminution of America's overseas military commitments, transforming both geopolitics and the international economy...

Since 1945, the Pax Americana has made international economic interdependence and globalization possible. Whereas all states benefit absolutely in an open international economy, some states benefit more than others. In the normal course of world politics, the relative distribution of power, not the pursuit of absolute economic gains, is a country's principal concern, and this discourages economic interdependence. In their efforts to ensure a distribution of power in their favor and at the expense of their actual or potential rivals, states pursue autarkic policies -- those designed to maximize national self-sufficiency -- practicing capitalism only within their borders or among countries in a trading bloc.

Thus a truly global economy is extraordinarily difficult to achieve. Historically, the only way to secure international integration and interdependence has been for a dominant power to guarantee the security of other states so that they need not pursue autarkic policies or form trading blocs to improve their relative positions. This suspension of international politics through hegemony has been the fundamental aim of U.S. foreign policy since the 1940s...

The entire fabric of world order that the United States established after 1945 -- the Pax Americana -- rested on the foundation of U.S. military and economic preponderance. Remove the foundation and the structure crumbles...The result will be profound changes in world politics. Emerging powers will seek to establish spheres of influence, control lines of communication, engage in arms races and compete for control over key natural resources...

The coming era of de-globalization will be defined by rising nationalism and mercantilism, geopolitical instability and great power competition. In other words, having enjoyed a long holiday from history under the Pax Americana, international politics will be headed back to the future.

Quite right. A few points here:

1. Layne and Schwarz are not interested in assigning blame for this situation (and neither am I). Obama's stimulus spending was necessary to keep the economy from heading off a cliff. Cutbacks in military spending will simply be necessary to balance the budget. And though they don't mention it, Bush's folly in Iraq only accelerated America's relative decline, it didn't cause it. Or relative decline was the result of a force outside our control - the economic opening and modernization of China.

2. I think Layne and Schwarz overstate the effectiveness of the global Pax Americana in the latter 20th Century. America was only ever powerful enough to police half the world, while the other half slumbered in the grip of communism. And even then, we had the considerable help of our allies - Japan, the UK, Germany, and France - in keeping the peace.

I think that Layne and Schwarz are absolutely right about the danger to the world economic system posed by national rivalries in the wake of the end of U.S. hegemony. But they don't ask the next question: What will put a stop to the new "age of great power competition"? Remember, last time it took the utter devastation of all but one of the world's great powers to bring the world back to a stable hegemonic situation. This time around, that could only happen via nuclear holocaust - a high price to pay for stability and free trade.

The only answer has to be that a coalition of nation-states must re-establish hegemony. This coalition will have to be more broad-based and more equal than the U.S.-led "West" that kept order in the Cold War. I propose a combination of the old "West" gang (U.S. + Europe + Japan + Korea) with the major new populous developing democracies - India, Brazil, Indonesia, and South Africa (the "South"). These new powers have an interest in keeping trade lanes open and avoiding wars as their populations make the slow climb to wealthy status. Their presence in our coalition will gain us more legitimacy among developing and undeveloped nations than our club of mostly former imperialists enjoyed during the Cold War. The economic growth and young populations will assure the world that the new hegemonic grouping s here to stay. And, perhaps, most importantly, they will share our democratic values.

My idea is in some ways similar to John McCain's proposed "League of Democracies," but where he proposed a formal military alliance, I propose a loose coalition that regularly comes together to take multi-lateral actions in arenas like finance, trade, peacekeeping, and the environment. Challengers to the international order - i.e. China and potentially Russia - will get the message that this loosely affiliated gang is ready to back each other up if push comes to shove. The loose coalition can be bolstered by official and unofficial diplomatic ties, free trade agreements, military ties, arms sales, etc.

Meanwhile, fiscal consolidation, infrastructure revitalization, education reform, alternative energy, socialized health care, and a long-term political truce between liberals and conservatives could keep America's absolute power from waning.

The alternative is to step back, let the world descend back into economic nationalism and great-power rivalry, and hope that our distance from the Eurasian fray keeps us as safe as it did the last time around.