The Future Balance of Economic Power

The Economic Confidence of the West has Taken a Battering in Recent Years While the East has Flourished. Is this how it will be for the Long Term?
Reference work entry

Do we progress? The conviction that mankind is moving towards some sort of promised land gains popular currency when times are good. Some years ago a sample of college leavers was asked to grade the events in their lives to date and then to say how they saw the future. When their answers were transposed on to a graph, the early part showed a roller coaster of ups and downs while expectations were represented by a smooth rising curve. Needless to add, this was in the days of economic boom when higher education was a passport to a safe and well-paid career. If the experiment was repeated today, the prospects would not look so rosy.

Future? What Future?

The dark mood that weighs on much of the western hemisphere appears to float away over that part of the developing world embraced by the example of India and China. After generations of underachievement or no achievement at all, these countries are finding hidden strengths that have raised the competitive stakes in the global economy and are causing unease or downright fear among those who have had it so good for so long. When jobs are lost and incomes remain static or decline, there is always someone to blame.

But the highs and lows can both be overdone. If it is too soon to write off the West, by the same token the emerging superpowers may soon be in for a few knocks to their self-confidence. This is not to suggest a catastrophic reversal of their economic fortunes though clearly that is always a possibility. Rather, the headlong rush towards prosperity will engender social and political pressures that will upset the timetable.

The history of the industrial powers that had their start in the steam age provide a salutary warning. As the ruling oligarchies of Europe and America gave way to the class of wealthy entrepreneurs they had helped to create, so it will be in China. Can popular democracy be far behind? And what will that do for tightly managed economies?

As a functioning democracy, albeit with oligarchic tendencies, India might be said to enjoy a head start in accommodating rapid growth. But with millions still in abject poverty, one does not have to be a Marxist to anticipate disruptive, possibly violent, demands for a more equitable distribution of national wealth.

Then again, everywhere there are powerful underlying movements which weigh against unbridled expansionism. This certainly happened in the second half of the nineteenth century when Britain was at the peak of its commercial and imperialistic power. The industrial revolution, parallel in many ways to what is happening today in the once quiescent nations of the East, spurred a fierce reaction from the opponents of materialism, those who believed that the ‘dark Satanic mills’ brought nothing but misery and degradation. Incredible as it must now seem, the favoured antidote to change was a cult of medievalism, the conviction popularized by some of the outstanding intellectuals and commentators of their day (including, incidentally, Thomas Carlyle, the originator of The Statesman’s Yearbook) that everything was so much better in the thirteenth and fourteenth centuries. The image was of a social idyll, with benevolent rulers watching over the lower orders, who, snug and secure, were content to live their simple lives. The reality, of course, was hunger, violence, dirt and disease when, as Thomas Hobbes observed, lives were brutish and short.

Rival powers to Britain created their own legends to offset the pain of industrial expansion—for example, hundreds of Western movies have fixed the image of the sturdy independence of the New World settlers, beholden to no man and ready to overcome all obstacles in the pursuit of the American dream. The money men had no part to play in this drama, except as villains. We might expect the developed countries to have dispelled their fantasies about the ‘good old days’. Yet in times of crisis there are many who gaze longingly in the rearview mirror. In the States, support for the Tea Party comes largely from disaffected voters who somehow imagine that the country can run itself perfectly well without the attention of politicians and bureaucrats. Similarly, in Europe, the far-right parties and the far right of the main parties trade on a populist agenda that would have them backtrack on a European union that has delivered peace and prosperity unprecedented in any single member country.

Fortunately, on both sides of the Atlantic the democracies are sufficiently resilient to combat narrow nationalism and bigotry. When voters are focused on choices that really matter, as in national elections, they can usually be relied upon to reject rule by the rednecks. Countries in transition have a long way to go before they reach this level of maturity. Which is why we should not visualize their progress as an uninterrupted upward curve. Who can doubt that there are countercultures, looking back to a supposed golden age, at work today in India and China? In Russia, there are even those who reflect fondly on the days of Stalin.

There are many other imponderables, more or less significant depending on how events unfold. One is the knowledge explosion which is louder in the US than anywhere else on earth. Whatever the next big breakthrough—something, say, on the scale of the internet—the balance of probability is that it will have its start in Silicon Valley. The point here is simply that economic advance is not a precise science. The rise of the East, if it continues, need not be accompanied by a decline of the West, even if the present omens suggest otherwise.

In countering the doom merchants we need to remind ourselves that while the Western model of mixed economy capitalism has its fault lines, notably the widening gap between the affluent and an underclass frustrated by its inability to realise its potential, there is no reason why, given time, imaginative politics cannot meet the challenges.

Do we progress? Yes, but only in fits and starts.

Barry Turner, 2012

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