The weaponizing of geopolitics: A lid on global wars
Allison’s Thucydides Trap – the proposition that when a rising power, in this case Beijing, threatens to eclipse an established hegemon, Washington, armed conflict is more likely than not – is focused on global military competition. But over the century the world has transformed. After World War II, when several countries joined the nuclear club, the threat of war has diminished. Weapons of mass destruction reined in the powerful hegemons. For 40 years the US and the Soviet Union muted their global competition in a Cold War, fanning proxy wars around the world.
Following a Monroe-Doctrine-style framework of maintaining separate spheres of influence, the US and the Soviet Union carved out their own geopolitical jurisdictions. In 1962, the Cuban Missile Crisis, brought on by the Soviet Union’s challenging what the US considered its sphere – in this case, the Caribbean – pushed the world to the brink of a nuclear war. The winner of the Cold War was neither the US nor the Soviet Union. In 1992, US Senator Paul Tsongas called it: “The Cold War is over, and both Japan and Germany have won”.
The economic competition: The capitalist alternative
Tsongas’ declaration underscored the important economic changeover in the global power game. Under the patronage of the US defense umbrella, both Japan and Germany rose out of the ashes of defeat in World War II and became global economic winners. By the 1970s, the US had largely lost its position as an industrial power and become a consumer society, a change that severely undermined its economic balance of trade with other producing countries.
Japan became the second-most-powerful economic power and by 1985, Harvard University Asia specialist and social scientist Ezra Vogel believed Japan would be the global leader in a “Pacific century”. Worried about Japanese economic influence, the West bullied Tokyo into signing the Plaza Accord in 1985, which led to a fixed exchange rate of 120 yen to the US dollar in 1988, three times its 1971 value.
In 1989, the Berlin Wall collapsed, the Soviet Union disintegrated, democracy triumphed, and capitalism vanquished the Marxist command-economy system. The breakthrough of liberal democracy and capitalism in the bastions of Marxist states led Francis Fukuyama, in his 1992 book The End of History and the Last Man, to question whether the Hegelian concept of history had ended.
Enter China, the game changer
In the same decade, Deng Xiaoping, then China’s paramount leader, launched a reboot of its communist system in favor of “socialism with Chinese characteristics”, a brand of state-centered capitalism, as the road for China’s economic development. The floodgates opened to foreign investment. China engaged the world and its gross domestic product grew from US$174.94 billion in 1977 to US$13.28 trillion in 2018. The rising dragon was the darling of investors in the developed world, economically feted, coaxed and pampered, leading to it becoming the factory of the world.
With China’s turning and the demise of the Soviet system, the world essentially began operating on one universal economic system – capitalism. The US dollar was further entrenched as a global currency of transaction thanks to the petrodollar system, under which oil is priced in US dollars, creating surpluses of greenback reserves among oil-producing countries, which are then invested in dollar-denominated assets. The current concept of globalization began to evolve from the 1970s, capitalism underwriting its appeal as a promising framework for the development of the global economy.
For three decades since 1980, China has ridden on the Western capitalist system, and economically grew from strength to strength, dumbfounding skeptical Western politicians with its entrepreneurial prowess. The rivalry between West and East, between China and the US, has not been in military gunmanship. As the dictum goes, it is the economy, stupid. Chinese factories have been producing the products that are commonplace in every American home, from candles to cameras, toys to t-shirts. China has become a global economic power, using its capitalistic muscle as leverage to gain inroads into Western companies and even buy many up.