Language : English 简体 繁體
Economy

No New Cold War

Jun 13 , 2020

Many people are talking about a new “cold war” between the USA and China. I don’t see it. One reason I reject this hyperbole is that I know that America is bigger than President Trump. There are particular reasons why Trump, in his desperation to win re-election, is eager to cast his own failures onto China, or indeed anyone but himself. His eagerness to play the blame game should be obvious to all. Amid the sound and fury of Trump’s rhetoric, there is also a strong yearning among a growing majority of American people for a return to something like normal, or even better than the previous “normal” that enabled him to win the election in 2016 in the first place. 

The return to something like normalcy will also necessarily return US-China relations to something much more normal than the recent years under Trump. As we contemplate relations after Trump, it is also important for Americans to remember that China as well is bigger than its President Xi Jinping. There is much more to every country than merely its leader or even its governing party. 

I teach a branch of international relations called “international political economy” (IPE), which focuses on how nations relate to each other as across the broad range of interactions that involve the entire people and economy, not just the government. Within IPE, I emphasize private power and strategy more than many of my colleagues because of my conviction that if you do not understand the interests and initiatives of great, private forces in a society, you are unable to understand its government or policy either, since these derive from the societies they govern. Every society has internal conflicts over how it should relate to the outside world, but these first exist in society at large before they can empower or constrain what governments do. It is temptingly simple to personify an entire country by its leader— or its warlord-in-chief— but in a world where the future is largely determined by economic development rather than by military conquest, this is an absurd caricature. 

The original Cold War between the USA and the USSR, each with their respective allies and dependencies, did not become World War III because World War II was bad enough; every world leader understood the senselessness of a thermonuclear reprise. Albert Einstein famously said, “I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones.” It would have been the end of civilization. We could even think of the Cold War in this light as an extremely positive era: despite intense mutual antagonism, the USA and the USSR both understood that peaceful coexistence was necessary, at least among the superpowers. The supreme virtue of a cold war is that it is cold and not hot. 

The original Cold War ended by the same means that today prevents a recurrence of a new cold war: economic interdependence. There is a false narrative about the end of the original Cold War involving tough words by Ronald Reagan and his military spending boost. In fact, his policies tended to prolong it. Much more subversive were the less well known public and especially private policies that created powerful mutual incentives in both the West and the Soviet bloc to seek mutual prosperity rather than mutual ruin. The Cold War started with the Soviet bloc already segmented from the global economy thanks to state management of trade during the world war but ended with its reintegration into it. 

The USSR and Eastern Europe became much more integrated into the global economy, starting in the 1960s and accelerating during the 1970s when the USSR emerged as a major oil and gas exporter. The completion of a gas pipeline from the USSR to Western Europe in 1984 created the wealth and conditions for a major segment of the Soviet elite to subvert the USSR from above. The rapid expansion of bearer bonds within Europe provided a covert way for the rising capitalists in the USSR to stash billions in the West, thereby effectively investing in the demise of monolithic state planning. I will not describe all of these policies and incentives here. More detail can be found in Chapter 13 of my book, International Political Economy: The Business of War and Peace. Needless to say, the net effect of economic integration during the late Cold War was to create broad mutual economic incentives that favored cooperation over the Cold War. The need to survive kept the Cold War from turning hot, but the mutual desire to thrive terminated the Cold War and now mitigates against a repetition. 

China is the world’s largest trading nation. It is at the center of the global economy, not an isolated periphery like the old Soviet bloc. Most of the world’s largest corporations that are not Chinese have extensive operations in China and, therefore, big stakes in the future of global cooperation that includes China. Whereas there will always be struggles over the detailed rules of the global business system, these are details of implementation rather than existential challenges. 

The drumbeat for a new cold war comes not just from Trump, but also from an alliance of national security and internet-telecom business. I say “business” because whether the proponents are temporarily occupying government offices or in corporate boardrooms, the competition has to do with global business powers masquerading as “national interest.” The “military-industrial complex” that President Eisenhower warned about has morphed into a military-internet-telecom complex that profits from the public acquiescence to overweening monopoly power over the collection and commercialization of private information on a scale never before possible. The internet, smartphone, and “artificial intelligence” revolutions have made it possible to concentrate power as never before. Conservative pundits have seen this as a conspiracy of the “deep state,” but it is more accurately portrayed as the business model of the new internet giants like Google and Facebook that pioneered the way to profit from unregulated centralization of commercial intelligence and power.

Whereas China is well integrated into the global goods economy of the postwar liberal world order, it is also the site of the most significant resistance to the global dominance of US-headquartered internet-telecom giants. Originally China did protect and subsidize its own private internet-telecom companies to prevent their early demise while they were still infant industries. Now they are so successful they might out-compete the high-priced USA monopoly telecom in much of the world if allowed to compete according to the rules of the liberal order. Therefore, US defenders of monopoly business power stoke false “national security” fear to isolate Chinese competitors commercially since they are unwilling to forgo monopoly profits and compete for the liberal way, with lower prices and better service. Business competition is the real excuse for empty “cold war” talk.

You might also like
Back to Top