- By Clyde Prestowitz
Clyde Prestowitz is the founder and president of the Economic Strategy Institute (ESI), where he has become one of the world's leading writers and strategists on globalization and competitiveness, and an influential advisor to the U.S. and other governments. He has also advised a number of global corporations such as Intel, FormFactor, and Fedex and serves on the advisory board of Indonesia's Center for International and Strategic Studies.
Do you remember the mantra of the Clinton era officials and commentators on globalization — that free trade would make all nations rich, and that being rich they would become democratic and being democratic they would become peace-loving because democracies don’t go to war with each other?
In view of rising tensions between China, Korea, Japan, and the United States, along with strong opposition to peace efforts in the Middle East, it might be time to reexamine the assumptions of that facile line of logic.
That globalization should mean peace is an old story. Prior to World War I, the world economy was more globalized and integrated than it would be again until the mid-1990s. As John Maynard Keynes famously wrote:
"The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit and reasonably expect their early delivery upon his door-step; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages; or he could decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend. He could secure forthwith, if he wished it, cheap and comfortable means of transit to any country or climate without passport or other formality, could dispatch his servant to the neighboring office of a bank for such supply of the precious metals as might seem convenient, and could then proceed abroad to foreign quarters without knowledge of their religion, language, or customs, bearing coined wealth upon his person, and would consider himself greatly aggrieved and much surprised at the least interference. But, most important of all, he regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement."
It was precisely this global economic integration that led Norman Angell to publish his famous book, The Great Illusion. In it, he argued that war was madness and obsolete because the high degree of global economic integration meant there could be no winner.
Angell, of course, turned out to be correct, but that only became apparent after the devastation of World War I had proven the truth of his insight. Nor did that proof prevent a repeat of the war on a grander scale in 1939-45.
What is usually left out of the debate is discussion of two important possibilities. One is that economic development may not automatically lead to democracy. The other is that, by making countries rich, globalization can give them the means by which to act upon the settling of old grievances or demonstrations of manhood in a variety of dangerous ways. Becoming rich did not make early 20th century Germany a democracy but it did whet Berlin’s appetite for "a place in the sun" and to match the might of the British navy. Being rich, democratic, and globally integrated did not induce Britain to cease exploiting its empire or to abandon the policy of keeping its navy twice as powerful as Germany’s.
These facts suggest that policies aimed at stimulating globalization cannot be divorced from strategic considerations on the basis of the easy assumption that they will inevitably serve strategic ends by creating increasingly democratic conditions among trading partners. For a long time this has been the situation with regard to the policies of the United States and many other countries with regard to China. There has been much talk by top officials and leading commentators of encouraging, welcoming, and cajoling China into becoming a "responsible stakeholder" in the western-designed and largely western-managed global trading and investment system. Such talk not only condescendingly assumed that China would want to be a member of the western club rather than creating its own club, but also that having a seat at the western high table would soften its ambitions for sovereign equality and recovery of old territories and spheres of influence.
Now the contradictions of conflicting policies are becoming apparent. On the one hand, the United States promotes continued U.S.-China economic integration by accepting the asymmetries between the consumption-oriented laissez faire U.S. system and the investment-oriented Chinese system of mercantilism and industrial policy. Thus, Washington encourages companies like General Electric to respond favorably to Chinese policies that induce transfer of avionics and other technology to joint ventures in China while it refrains from offsetting the impact of China’s currency management policies on U.S. domestic production. This is on the grounds that globalization is economically always a win-win proposition and that in any case it leads to democratization and thus to peace.
On the other hand, Washington has made the "pivot to Asia" the centerpiece of its foreign policy, has pushed for conclusion of a Trans-Pacific Partnership Free Trade Agreement that is aimed at reassuring Asian nations of America’s commitment to them and excludes China, and now is challenging China’s right to impose an Air Defense Identification Zone in the East China Sea despite the maintenance of such zones by U.S. allies Japan and Korea who actually inherited them as part of administrative apparatus of the U.S. Occupation of Japan and oversight of Korea during the Korean War. All of this, of course, is based on the perception that China may be a threat.
The current tensions over China’s ADIZ suggest that it may be time to decide what America really thinks of China. If China is no threat and is on to becoming a democracy as a result of globalization, then there is no reason to challenge its right to establish an ADIZ over the Senkaku/Diaoyu islands similar to the one Japan already maintains or to exclude China from the TPP free trade deal. On the other hand, if globalization is really not working to create democracy and peace, and if China really does pose some kind of threat to the United States, then Washington should explain what exactly that threat is and should reconsider its trade and investment policies with regard to China.
Too often in the past, we have seen that globalization has contributed to war rather than peace. We should not want that to happen again.