Global Trends 2030
May 31, 2012
by John Lee
The economic rise of countries outside the post-WWII Western alliance provides a potential challenge to the pre-existing liberal order — for the simple reason that these emerging powers had little role in the creation of the liberal order. American leverage and influence must be understood within the context of the global liberal order. Any successful challenge or dilution of this order will weaken America's global role and leadership. Although we cannot predict the future, we can point to important and difficult-to-alter domestic and structural factors that will significantly influence how these emerging powers view the future global liberal order, and their place within it.
As the two most populous nations, there is understandable attention to the re-emergence of China and India. It is widely assumed that authoritarian China will have far more difficulty integrating into the liberal order than democratic India.
This assumption is correct, but nevertheless poorly analyzed or understood. It is well known that the international liberal order is characterized by rules-based competition, dispute resolution processes and open economic and trading systems. Less well understood are the implications of such an order.
No liberal system can function effectively without the significant separation of political, economic, legal and administrative agency and agents. Governments genuinely committed to a liberal system of rules and competition use the tools of state to uphold the agreed rules of the game, most notably when it comes to protecting the agreed rights of their citizens against their own officials. In economic activity, they voluntarily give up much of their capacity to intervene in legitimate competition between firms, engineer economic outcomes, and determine the winners and losers in the hurly-burly of global economic competition. Conflating economic, political and foreign policy goals should be the exception rather than the norm.
This is the problem with the seductive belief that authoritarian China will be increasingly 'integrated' into the liberal order and emerge as a defender of such an order. China is moving in the opposite direction of what 'responsible stakeholders' in a liberal order ought to be doing.
The country's failings in protecting the fundamental rights of its own citizens and in subjecting the Communist Party (CCP) to the 'rule of law' are well known. When it comes to economics, its state-dominated political economy is deliberately designed to ensure that the CCP retains an interventionist and decisive role in engineering economic outcomes through support for and protection of its state-owned-enterprises – domestically and increasingly internationally.
It is clear that the separation of economic, legal, judicial and administrative agency from politics would necessarily entail the dilution of the CCP's relevance, standing and therefore power. The structure of the Chinese political-economy – and the CCP's mindset – is instructive. And if this mindset will be as difficult to alter as I suspect it might, the prospects of authoritarian China emerging as a constructive player in a global liberal order are slim.
India is also emerging from a socialist past, albeit a softer and democratic one. However, the separation of political, judicial and economic power is already established in India, albeit imperfectly enforced. Moreover, the driving forces behind India's economic emergence are the private rather than state sector. This means that New Delhi has no option but to increasingly relinquish its control over the economy and society for India too continue its rise.
Indeed, the domestic habit of separating economic and foreign policy from regime objectives is already well-grounded in India and is likely to continue. Although India will continue to have significant disagreements with America over important foreign policy issues, the nature of India's rise is far more conducive to it emerging as a constructive contributor (if not defender) of the global liberal order.
The analysis of domestic structures, which give rise to government habits and behavior, can be applied to other emerging giants such as Brazil and Indonesia. Both are young democracies. But the natures of their political economies are less established than in China or India.
The entrenching of agreed limits on the government's role over the economy, bureaucracy and courts in these countries will bode well for their willingness and ability to rise as effective contributors to any future liberal order – and make it more difficult for countries such as China to resist, challenge or alter key aspects of the existing liberal order. But their emergence as authoritarian economic powers will mean the weakening of the global liberal order, and reduce America's capacity to exercise leadership and influence in a future time.
John Lee is a Hudson Institute Visiting Fellow and an Adjunct Associate Professor and Michael Hintze Fellow for Energy Security at the Centre for International Security Studies, Sydney University. He is the author of Will China Fail? (CIS, 2008).
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