American News

The World Order After the US Steps Back

Is Trump’s US exiting the global economy stage left to enter again stage right? The Cold War II is between laissez-faire capitalism and state capitalism.
New World Order, Cold War, Cold War II, US news, American news, Peter Isackson, Donald Trump, Rana Foroohar news, Donald Trump news, Rana Foroohar

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December 06, 2019 12:00 EDT

The Financial Times claims that a major shift is taking place in the world order. Rana Foroohar writes: “Anyone who still doubts that the US is economically decoupling from the rest of the world should take a look at a proposal the commerce department put forward last week.”

This assumes that the current state of affairs corresponds to the relationship of a couple, an existing marriage between the United States and the rest of the world. If that is the metaphor the author had in mind, it would entail thinking of the two entities as roughly equal consenting partners.

But there could also be the suggestion of a metaphor similar to the uncoupling of a train. In that case, one side would be a wagon or a series of wagons and the other the locomotive. Up until now, the US has been seen as the locomotive or even the locomotive and a number of boxcars transporting its resources. What does the decoupling bode for the future?

Here is today’s 3D definition:


Separating an item from another item to which it was previously attached, which in the case of political or geographical entities (states or nations) may take place even if — during the time of being attached — the party that decides to decouple behaved in a way that made it appear to be unattached due to its belief in its superiority to the other(s) and its status of being qualitatively different from them

Contextual Note

Foroohar draws no conclusions about the meaning or even the goal of this process. She simply remarks that the process has already begun. Neither does she judge, since she avoids expressing an opinion one way or the other as to whether decoupling is a good or bad thing. Rather, she paints the process as historically or economically necessary, something either bound to happen or already happening under our eyes.

Other questions arise. Can it be managed? And if so, by whom and with what strategy in mind? As so often in such reporting, the level of uncertainty rises dramatically as soon as the name Donald Trump is mentioned. A senior executive at an unnamed  “strategically important US technology company” explained to Foroohar how it has become “legally tricky for him even to speak to his counterparts in Europe, because of the various restrictions that the Trump administration has put in place.”

It is not even clear where the impetus behind this apparently observable event is coming from. Is it the consequence of President Trump’s impetuous and seemingly indiscriminate launching of sanctions and tariffs against any nation that has momentarily fallen out of his favor? Or is it part of a general trend caused by an unanticipated democratization of technology, a process that may be impossible to stop?

Unlike the efforts made during the Cold War to limit the production and stockpiling of nuclear weapons based on the shared realization that civilization would be better off without them, every government is eager to play a role in developing and spreading emerging technologies, which are presumably designed for the good of humanity — to make things more efficient and convenient.

Concerning long-term strategy, Foroohar remarks that “one of the most important things the US could do right now to ensure both national security and its own position in the 21st-century digital economy would be to work with allies on transatlantic standards for emerging technologies like 5G, artificial intelligence and so on.” That means seeking harmony among nations and defining optimal terms of collaboration and cooperation across the globe.

But that doesn’t seem to be the current agenda for key politicians in the US. Reuters quotes US Commerce Secretary Wilbur Ross’s comments on the current threat of trade war with France, designed as a punishment for that country’s attempt to impose a digital tax on tech giants: “Europe has always had a hair trigger against the United States and that’s nothing new.” Ross’ description of relations with Europe more closely resembles that of bitter adversaries in a war than one of dialogue between nations harmoniously coupled together. 

Historical Note

Rana Foroohar sums up the quandary for the US in these terms: “[I]t is becoming a given that the US needs a more coherent national economic strategy in a world in which state capitalism is in the ascendant. The question is how to get there. And that’s where the internal contradictions in America’s laissez-faire, free-market system start to become a problem.”

By definition “laissez-faire, free-market” means that the governing rule of that system is competition, not harmonization. For Trump — but apparently also for politicians as diverse as Democratic Senator Elizabeth Warren (and, as we have seen, Republican Senator Marco Rubio) — protectionism and nationalistic competition rather than harmony is the way forward. Foroohar’s mention of “state capitalism” should be read as a code word for China, which Rubio is less cagey about identifying: “China has a whole-of-nation effort underway to dominate innovation and high-value manufacturing in this century.”

Over the past half-century, the US has dominated the technology landscape both politically and economically through its military investments and the gifts the military-industrial complex has systematically given to private industry, a phenomenon Italian-American economist Mariana Mazzucato has highlighted. This follows a similar strategy that, in the wake of World War II, allowed the US to dominate the world’s economy thanks to the preeminent role of the dollar (later complemented by the petrodollar) as the universal reserve currency.

The problem for the West begins to resemble the squaring of a circle. It boils down to the need to transform the chaotic relations that reign amongst a group of powerful, hyper-competitive, monopolistic firms fighting for market share and focused on profit — firms that acknowledge no authority higher than their own boards — into a self-sustaining economic system that can rival in efficiency the Chinese state capitalist model.

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The Chinese have a singular cultural advantage that the West has never quite managed to take on board. The central core value in Chinese culture is harmony. US core values, in the Ayn Rand tradition that attracts so many people active in business and politics, tend toward extreme self-interested individualism. This has led to the refusal to even acknowledge a need to define collective interest except in the domain of military defense.

This cultural contrast means that the majority of the billion-plus Chinese can be counted on not only to align with official policy (like the Russians) and perceive that alignment as a collective endeavor in which all participate (though not necessarily the Uighurs nor the individualistic Hong Kongers, contaminated by Western values). The Russians, in contrast, accept to align mainly because they are resigned, as throughout their history, to being dominated by a faceless bureaucracy, from the tsars to the Politburos and on to Vladimir Putin’s method of ruling through a fusion of KGB and mafia tactics.  

Google, Apple, Facebook, Amazon, Microsoft, Oracle and their ilk take orders from no one, though they are happy to receive orders from customers in every region of the globe. They will not voluntarily harmonize their methods with US global strategy because they are accountable only to their shareholders (or, in the case of Facebook, only to their founder and CEO). These companies act as the strategists who have created the conditions for US domination.

Donald Trump’s instinct in his approach to the rivalry with China has been to come out swinging with what is essentially a broken stick in his hand. He is certainly aware of the challenge but not about to change his methods. The great historical question lying ahead for humanity (alongside climate change and nuclear proliferation, to name just those two) appears to lie in the global contest between two contrasting though not necessarily competing productivist models of the economy. It’s their principles of efficiency — sometimes identical to ideology — that are at polar opposites. The US model focuses on profit as the key to power. The Chinese model focuses on power as the key to profit.

The West has succeeded in turning the two great communist, collectivist adversaries of the first Cold War (1947-89) into capitalist economies, which seemed at the time like a rousing victory that would stand for the ages. But their misunderstanding of culture prevented them from anticipating the type of capitalism they would adopt. It even prevented them from imagining that there could be another type than the one developed in the US. Francis Fukuyama was wrong. The battle he witnessed at the end of the 20th century for the last phase of history was a Pyrrhic victory. The current Cold War II promises to lead to a different end of history. And it is just beginning.

*[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news.]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

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