The Post-American World - Fareed Zakaria [12]
It is an accident of history that, for the last several centuries, the richest countries in the world have all happened to have small populations. The United States was the biggest of the bunch by far, which is why it has been the dominant player. But such dominance was possible only in a world in which the truly large countries were mired in poverty, unable or unwilling to adopt policies that made them grow. Now the giants are on the move, and, naturally, given their size, they will have a large footprint on the map. Even if the average person in these countries still seems poor by Western standards, their total wealth will be massive. Or to put it in mathematical terms: any number, however small, becomes a large number when multiplied by 2.5 billion (the approximate population of China plus India). It is these two factors—a low starting point and a large population—that guarantee the magnitude and long-term nature of the global power shift.
The Three Forces: Politics,
Economics, and Technology
How did all this come to be? To answer that question, we have to go back a few decades, to the 1970s, and recall the way most countries ran their economies at the time. I remember the atmosphere vividly because I was growing up in India, a country that really didn’t think it was playing on the same field as the United States. In the minds of India’s policy and intellectual elites, there was a U.S.-led capitalist model on one end of the spectrum and a Soviet-led socialist model on the other. New Delhi was trying to carve a middle way between them. In this respect, India was not unusual. Brazil, Egypt, and Indonesia—and in fact, the majority of the world—were on this middle path. But it turned out to be a road to nowhere, and this was becoming apparent to many people in these countries by the late 1970s. As they stagnated, Japan and a few other East Asian economies that had charted a quasi-capitalist course succeeded conspicuously, and the lesson started to sink in.
But the earthquake that shook everything was the collapse of the Soviet Union in the late 1980s. With central planning totally discredited and one end of the political spectrum in ruins, the entire debate shifted. Suddenly, there was only one basic approach to organizing a country’s economy. This is why Alan Greenspan has described the fall of the Soviet Union as the seminal economic event of our time. Since then, despite all the unease about various liberalization and marketization plans, the general direction has not changed. As Margaret Thatcher famously put it in the years when she was reviving the British economy, “There is no alternative.”
The ideological shift in economics had been building over the 1970s and 1980s even before the fall of the Berlin Wall. Conventional economic wisdom, embodied in organizations such as the International Monetary Fund and the World Bank, had become far more critical of the quasi-socialist path of countries like India. Academic experts like Jeffrey Sachs traveled around the world advising governments to liberalize, liberalize, liberalize. Graduates of Western economics programs, such as Chile’s “Chicago Boys,” went home and implemented market-friendly policies. Some developing countries worried about becoming rapacious capitalists, and Sachs recalls explaining to them that they should debate long and hard whether they wanted to end up more like Sweden, France, or the United States. But, he would add, they didn’t have to worry about that decision for a while: most of them were still much closer to the Soviet Union.
The financial force that has powered the new era is the free movement of capital. This, too, is a relatively recent phenomenon. The post