Tuesday, April 19, 2011

Review: The Second World: Empires and Influence in the New Global Order, by Parag Khanna

New York: Random House, 2008, pp. 440.

Recent years have seen a slew of books swapping talk of a "unipolar moment" and visions of global American imperium for a portrait of a polycentric, globalized order, like Fareed Zakaria's The Post-American World (2008), or Thomas Barnett's Great Powers: America and the World After Bush (2009). The New America Foundation's Parag Khanna's The Second World is one of them, and in its particular analysis, the world is already dominated not by one empire, but by three--the United States, the European Union, and China. (Khanna consigns other large states, like Russia, India and Japan, to the second tier, not on a par with the "Big Three," but playing the role of balancers.) All three empires are expanding (the EU moving east and south, China becoming the hub of its region, etc.), in the process forwarding the process of globalization, even as they pursue their geopolitical interests, the two forces continually interacting with one another. One result is that the relationship among these three actors is both competitive and cooperative, each seeking to maximize its advantages even as they become increasingly reliant on the prosperity of the other empires to preserve and extend their own prosperity.1

Crucial to the development of the relations among the three empires, and the international system as a whole (and not least, the question of whether globalization will triumph in a world of great power peace, or geopolitics will get the upper hand, perhaps even culminating in a new world war), Khanna argues, will be the development of "the Second World." The term, formerly used to denote the Soviet bloc, refers to states which are neither "First World," nor LDCs (Least Developed Countries), epitomized by the nations typically labeled "emerging markets." It is the aim of Khanna's book to explore these regions, in particular Eastern Europe, North Africa, Southwest Asia, Mexico, South America, Central Asia and Southeast Asia, with Russia and "Greater China" each getting a measure of attention. (By contrast, India is treated only briefly, and sub-Saharan Africa is almost wholly left out, with even South Africa not getting a mention.)

Khanna's approach, which the author parallels with Arnold Toynbee's world tour following his completion of A Study of History, is comprised largely of brief, impressionistic, journalistic descriptions of particular countries, most running for less than ten pages. Depth is unavoidably sacrificed to breadth, the strokes he paints with are broad, and a good many factual errors do turn up in his pages. (The Turkish siege of Vienna was in 1683, not 1687, to name but one.) Nonetheless, it is broadly informative, and while anyone acquainted with the regions and countries he visits will find few surprises, or run across the striking detail that will change the way that they look at these countries, collectively the pieces convey a strong sense of the Second World's "middleness":
Second-world countries are frequently both first- and third-world at the same time . . . some percentage of the population lives a modern lifestyle . . . but coexists with a narrow middle class and the mass of the poor . . . As in the first world [they] have growing public economies and inward investment, but like the third world, they have vast black markets and Potemkin villages . . . the capital city generating a majority of national income--and retaining it . . . [so] they grow poorer in concentric circles (p. xxv).
Still, to his credit, Khanna displays an eye for telling details, not least the condition of these countries' roads:
In the first world, roads are well paved, and the view is clear for miles, whereas clogged third-world roads are obscured by dust and exhaust; second-world roads are a mix of both . . . Garbage is recycled in the first world and burned in the third; in the second world, it is occasionally collected but is dumped off hillsides. Corruption is widely invisible in the first world, rampant in the third--and subtle in the second (pp. xi-xii).
Additionally, Khanna is not without insight into the larger picture. By and large Khanna hews to economic orthodoxy, seeing globalization as a positive force and being bullish on the development prospects of much of the "Second World." I'd say he's overoptimistic, especially about the prospects of energy exporters escaping the resource course (Nigeria's lot is unfortunately much more common than Norway's), while paying insufficient attention to the indispensability of a solid manufacturing base to balanced development. Still, his take is more nuanced than the unqualified gushing about Golden Straitjackets of Thomas Friedman and others of his ilk, more conscious of the existence of a world outside the offices and hotels of national elites, and more alert to the failings of neoliberalism and the successes reaped by walking a different path—as in his assessment of the performance of countries from Chile to China. (He even criticizes the Washington Consensus in so many words.)

Khanna's grasp of geopolitics is also reasonably solid, especially in the more analytical chapters, and he does on many occasions break with conventional opinions. Khanna takes a rather more favorable view of the EU than is fashionable among American commentators, the European Union appearing in his portrait an attractive and dynamic social model, one that is actually far more energetic and effective at fostering democratization and development than the U.S. through its strength in building the institutions required for democratic governance and economic development.2 (Indeed, Khanna favorably compares the EU's performance in Eastern Europe and Turkey with the U.S.-Mexico relationship under the North American Free Trade Agreement.) He is also quite bullish on China, and sees both these actors expanding at the expense of Russia, with a Turkey that has become the commercial hub of its region "from Budapest to Baku" (p. 37) merging with Europe, and China on track to emerge on top in Central Asia, Mongolia and Siberia due to the depth, intricacy and continuing dynamism of its economic (and demographic) penetration of those regions.3 (In particular, he is impressed by its dynamism in laying down economic infrastructure in developing nations where Western aid accomplished little.)

Unsurprisingly he is sharply critical of the course the U.S. has followed. Just as was common in the '80s, Khanna points to the U.S.'s deindustrialization and balance of payments problems; its deteriorating public services (education, health, transport, even disaster relief) and infrastructure; its energy profligacy and consumption beyond its means; its widening inequality and declining living standards; and all the associated social ills (like increased crime, and the primarily punitive response to it), weakening the material bases of its strength, while political cleavages (from the weight of corporate special interests to the prospect of cultural Balkanization) threaten paralysis and worse. The difference is that these problems are all rather more advanced than when the declinists of the '80s pointed them out, and that the international balance of power is all the less propitious to U.S. influence, which has further been damaged by the alienating course the U.S. followed in the War on Terror (from visa rules that send international conference planners elsewhere, to the spurning of the United Nations in favor of "coalitions of the willing").4 As a result,
America's false assumptions of dominance are laid bare in every Second World region: The EU can stabilize its East, the Chinese-led SCO can stabilize Central Asia, South America can reject the United States, Arab states can refuse American hegemony, and China cannot be contained in East Asia by military means alone. The geopolitical mutiny is under way (pp. 322-323).
Of course, the U.S. is not the only actor facing obstacles: Khanna recognizes the cost of expansion to the EU, and the massive social and environmental costs of China's rapid rise. Nonetheless, despite their limitations to date (in military capability, for instance, a point to which Khanna devotes little attention), and the vulnerabilities that are both particular to them and shared by all (not least, common association inside the global economy with all its troubles), they are still enlarging their resources and influence. By contrast, the fact that they can be regarded as competing empires is inseparable from the U.S.'s diminished relative position, while the country "needs a Marshall Plan to stay where it is" (p. 333). Indeed, Khanna goes so far as to characterize the U.S. as a First World country that may be bound for Second World status.

At the time of this writing it has been nearly four years since Khanna finished his book. The price of oil hit $150 a barrel the summer of 2008, a reminder of the tightness of energy supplies, and the vulnerability of first, second and third world countries to supply shocks. Later that year the developing financial crisis shook the global system, revealing the frailties not just of the "nervous" Second World, but of all three of the empires he wrote about. Europe's fiscal crises (which made states like Greece look less first world and more second), and the austerity measures with which the region's conservative governments chose to meet the situation (despite widespread popular opposition) are making the common European house look more ragged than rugged, and their economies and social models likely to look more like the U.S.'s in the most problematic ways.5 Meanwhile the U.S. has come to resemble Europe in the high structural unemployment that American conservatives once regarded as "Eurosclerosis" of the kind that "couldn't happen here," while the Federal budget deficit hit $1.5 trillion this year--all while the U.S. seems further away than ever from the kind of action needed to rectify its problems. (Indeed, the libertarian right most averse to such reforms has become more influential.) China fared better, but the falloff in purchases of its exports revealed the limits of its growth strategy. Chinese authorities responded with a stimulus package that was relatively larger than anything attempted anywhere else, and spoke of shifting to a more consumption-oriented economy, but whether this will actually be forthcoming (and whether it will be able to sustain the growth rates seen these last three decades) remains an open question.

All three empires, in short, may be emphasizing the protection of their positions rather than extension for some time to come, and the chances of success are anything but certain. This is not only because of what has happened to date, but because of the resource, climatic and other challenges further limiting their scope for maneuver, and all too likely to make them run harder to stay in place.

1. The U.S. consumes a fifth of China's exports--some $300 billion of them annually--making it the largest single importer of Chinese goods, while Chinese purchases of American Treasury bills finance American debt.
2. While some American commentators have taken a favorable view of European domestic policy (as with Jeremy Rifkin's writing about the "European dream"), perhaps the only other one I can think of to take Europe seriously as a geopolitical actor in this way has been Charles Kupchan in The End of the American Era.
3. For all its petrodollars, Russia is "the state whose map is most likely to change unfavorably in the coming century," Khanna observes. Khanna, pp. 74-75.
4. French demographer Emmanuel Todd made a similar (though more harshly phrased) argument in 2003's After the Empire: The Breakdown of the American Order. Todd, however, scarcely mentions China, and seemed rather more sanguine about a reconciliation between a reformed Russia and Europe.
5. One might add to this the point that Britain, one of Europe's "Big Four," is in much the same boat as the United States with respect to the problems threatening to turn it from First World to Second (like deindustrialization, balance of payments problems and inequality).

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My Writings on the Recession (A Listing)
Freefall: America, Free Markets and the Sinking of the World Economy, by Joseph Stiglitz
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The Next 100 Years: Another View
The Next 100 Years: A Forecast for the 21st Century, by George Friedman
The Future of War, by George and Meredith Friedman

New and Noteworthy (Next Financial Crisis?, Tunisia, Artificial Leaf)

In today's edition:

* Oliver Wyman's scenario for the next financial crisis. (The Atlantic offers a summary here.)

* The Washington Post on the spark that started the wave of revolutions across the Middle East--fruit vendor Mohamed Bouazizi's protest against Tunis's corrupt and abusive cops.

* A story in the Daily Mail on an improved version of the "artificial leaf" that may make a contribution to the expansion of renewable electricity production.

Review: In Praise of Hard Industries: Why Manufacturing, Not the Information Economy, is the Key to Future Prosperity, by Eamonn Fingleton
New and Noteworthy (Unemployment, Supporting 9 Billion By 2050)
New and Noteworthy (Energy Report, The Future Faces of War, The Middle East)
Revolution and Rebellion in the Postmodern World

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