Advance Praise for
ZERO-SUM FUTURE
“With his inimitable combination of dry wit and analytical clarity, Gideon Rachman gives us the latest thirty years of world history in three distinct phases, from the genesis of the Eighties, through the hubris of the Nineties and early Noughties, to the nemesis of the
Great Recession. What makes this book so readable is the author’s keen eye for the microcosm: the individual who personifies a big theme. No one else can make a solemn subject like nuclear non-proliferation live and breathe the way Rachman can.”
--Niall Ferguson, author of Colossus: The Rise and Fall of the American Empire and High Financier: The Lives and Time of Siegmund Warburg
“Zero-Sum Future addresses the most important geopolitical issue today: whether the United States and Europe will be able to lead the world to a more prosperous and benign future through economic and political cooperation or whether they will lose confidence and fall victim to the fashionable myths of Asian ascendancy, counter-globalization, and the attempt to revive the market-defying State. Though Rachman writes with dispassionate clarity, his message is fundamentally a moral one. This is a superb book.”
--Philip Bobbitt, Herbert Wechsler Professor of Federal Jurisprudence at Columbia University Law School and author of Terror and Consent
“With Zero-Sum Future, Gideon Rachman has crafted a shrewd, comprehensive, beautifully written account of a world in quick transition. It’s an essential map that details where we are, how we got here, and where we’re headed. His account of American anxiety in an age of Chinese and Russian-style capitalist authoritarianism is dead on the money. The story is engaging, the arguments are persuasive, and the forecast is a must-read."
--Ian Bremmer, president of Eurasia Group and author of The End of the Free Market: Who Wins the War Between States and Corporations?
“The aftermath of the Great Recession highlights the new reality—a rebalancing not only of the global economy but also of world politics. That is the timely story that Gideon Rachman, the wise foreign affairs columnist of the Financial Times, so incisively tells—of how what was supposed to be a more open globalized world turned into a more fragmented one. Drawing on two decades of first-hand observation, he presents a vivid portrait of the rise of the Age of Optimism and how it gave way to this new and more-dangerous Age of Anxiety. He points to a constructive way forward. But, reflecting the realities of which he writes, his own optimism is laced with more than a little sobriety.”
--Daniel Yergin, author of The Prize: the Epic Quest for Oil, Money and Power and The Commanding Heights: the Battle for the World Economy
--This text refers to an out of print or unavailable edition of this title.
PROLOGUE
DAVOS, 2009Every January, political leaders from all over the world gather in a Swiss mountain valley. At the World Economic Forum in Davos, the assembled politicians agree to set aside their differences and to speak a common language. Closeted together in a ski resort, they restate their commitment to a single, global economy. They mingle cheerfully with the same multinational executives and investment bankers. They campaign to attract foreign investment and trade. For five days, the world’s leaders seem to agree on a narrative about how the world works. At Davos, even the most intractable political differences are temporarily smothered by the globalization consensus.
But at the Davos forum in 2009, it was clear that something had gone badly wrong. The meeting took place just four months after the collapse of Lehman Brothers had tipped the world into the biggest financial crisis since 1929. The international bankers who normally strutted proudly around the Davos cocktail circuit were in hiding as their institutions reeled and public opprobrium mounted. The Obama administration—locked in desperate economic negotiations at home—was conspicuous by its absence. With the Americans out of the way, Wen Jiabao, the prime minister of China, was the star of the Davos show.
One late afternoon, an audience of the world’s leading businessmen crowded into a seminar room to hear his views on the gathering economic storm. With China now the world’s largest exporter and the biggest single buyer of American government debt, the audience had every reason to listen intently. There was nothing overtly charismatic about Wen. A slight man in a suit and spectacles, his style was that of a senior manager reporting to the board. Toward the end of his talk, the Chinese premier dropped his bureaucratic manner and grew philosophical. In an effort to understand the crisis better, he said, he had been “rereading Adam Smith.” Perhaps showing off a little, Wen made the point that the book he was consulting was the eighteenth-century economist’s Theory of Moral Sentiments, rather than the much better known Wealth of Nations. For anyone with a sense of history, it was a bizarre moment. A leader of the Chinese Communist Party was openly turning to the founding father of free-market economics for guidance.
But while a communist leader was coming to the support of capitalism in Davos, some of the leaders of the major capitalist powers seemed to be flirting with communism. In the immediate aftermath of the collapse of Lehman, Nicolas Sarkozy, the president of France, had allowed himself to be photographed reading Marx’s Das Kapital, while Peer SteinbrÜck, Germany’s finance minister, observed that “certain parts of Marx’s thinking are not so bad.”1
This political and ideological confusion was understandable. The financial and economic crisis unleashed by the Wall Street crash of September 2008 threatened the globalization consensus that the leaders of the world’s major powers had all accepted. It created something close to panic in prime ministers’ offices and presidential palaces across the world.
Faced with the most serious economic upheaval since the 1930s, politicians fearfully looked back to the politics of the interwar period. Ed Balls, a British cabinet minister and the closest ally of Gordon Brown, the country’s then prime minister, observed gloomily just after the Davos meeting of 2009 that the world was facing a financial crisis that was even more serious than that of the 1930s, adding “we all remember how the politics of that era were shaped by the economy.”2
Over the next twelve months the world suffered its deepest recession since the Great Depression. Yet fears of a return to a 1930s world of bread lines, political extremism, and fascist marches did not materialize.
So was it all a bad dream? A scare story? Might it be possible to go back to international business, as it was conducted before the crash of 2008?
It would be a mistake to believe that. It is the argument of this book that the international political system has indeed entered a period of dangerous instability and profound change.
Over the past thirty years the world’s major powers have all embraced “globalization”—an economic system that promised rising living standards across the world and that created common interests between the world’s most powerful nations. In the aftermath of the cold war, America was obviously the dominant global power, which added to the stability of the international system by discouraging challenges from other nations.
But the economic crisis that struck the world in 2008 has changed the logic of international relations. It is no longer obvious that globalization benefits all the world’s major powers. It is no longer clear that the United States faces no serious international rivals. And it is increasingly apparent that the world is facing an array of truly global problems—such as climate change and nuclear proliferation—that are causing rivalry and division between nations. After a long period of international cooperation, competition and rivalry are returning to the international system. A win-win world is giving way to a zero-sum world.
Both as individuals and as a nation, Americans have begun to question whether the “new world order” that emerged after the cold war still favors the United States. The rise of Asia is increasingly associated with job losses for ordinary Americans and with a challenge to American power from an increasingly confident China. The crash has heightened awareness of American economic vulnerability and the country’s reliance on continued Chinese and Middle Eastern lending. Of course, even after the crash, the United States remains the most powerful country in the world—with its largest economy, its most powerful military, and its leading universities. But the United States will never recover the unchallenged superiority of the “unipolar moment” that began with the collapse of the Soviet Union in 1991.
Meanwhile, the European Union, the other main pillar of the Western world, is going through its most serious crisis since it began life as the European Economic Community in 1957. The steady progress toward “ever closer union” in Europe over the past fifty years was built on a win-win logic. The nations of Europe felt that they were growing stronger and more prosperous by merging their fates. The creation of a single currency and the doubling in the size of the Union between 1995 and 2007 fitted perfectly with the logic of globalization. Economic and political barriers between nations were being torn down. But the threat of contagious debt crises across Europe has provoked bitter recriminations within the Union, as countries like Germany worry that they will be dragged down by their neighbors. The process of European integration is threatening to unravel.
Zero-sum logic, in which one country’s gain looks like another’s loss, has led to a sharp rise in tensions between China and the United States. Zero-sum logic is threatening the future of the European Union as countries squabble over the costs of managing a single currency. Zero-sum logic has prevented the world from reaching a meaningful agreement to combat global warming. The United States, China, the EU, and the major developing economies all hesitate to move first—for fear of crippling their domestic economies, and so boosting the relative power and wealth of rivals. A similar competitive rivalry blocks the world’s ability to find cooperative solutions to nuclear proliferation, with the major powers maneuvering for advantage rather than acting decisively to combat a common threat. Zero-sum logic hovers over other big international challenges, such as shortages of energy, food, and water as the world’s biggest powers struggle to secure resources.
The emergence of a zero-sum world undermines the key assumptions of U.S. foreign policy since the end of the cold war. Both Bill Clinton and George W. Bush believed that it was in America’s interests to encourage the rise of major new powers, such as China, because globalization was bending history in America’s direction. In 1999 Bush captured the conventional wisdom of the age when he observed, “Economic freedom creates habits of liberty. And habits of liberty create expectations of democracy. … Trade freely with the Chinese and time is on our side.”3 Clinton even came to believe that globalization was changing one of the oldest rules of international relations, the notion that rising and established powers would clash with each other as they jostled for power. His aide James Steinberg later recalled that the president “didn’t see that there had to be inherent competition among nations. The success of some was not threatening to others. It was their failure that was threatening.”4
Clinton’s belief in the possibility of a win-win world was not a personal eccentricity. One of the most influential political ideas of the thirty years between 1978 and 2008 was the theory of the “democratic peace.” The idea was that capitalism, democracy, and technology would advance simultaneously—and global peace would be the end product. In a world in which all the major powers embraced democracy and market economics—and globalization and high technology drew people together—war might become a thing of the past. Consumerism and connectivity would trump conflict. People would visit McDonald’s rather than fight each other. They would surf the Internet rather than riot in the streets.
The notion of a win-win world did not seem incredible in the heyday of globalization, for this was also an Age of Optimism in much of Asia and in the European Union. Predictions that the Chinese miracle woul...
