Download Global Trends

GLOBAL TRENDS
C
hange is constant,’ is the kind of cliché I am accustomed to
Eurozone apart. And just a month ago, you could have counted
hearing in corporate videos and chief executives’ speeches.
on the fingers of one hand the number of Middle Eastern experts
The historical reality is that change is anything but constant. For
anticipating a wave of revolution spreading from Tunisia to Egypt
long periods there can be a kind of equilibrium in the world.
and on to Jordan and Yemen.
‘
People grew accustomed to British primacy before 1914, just as
they grew accustomed to superpower rivalry after 1945, or the
We need therefore to realise that the domain of uncertainty is
European balance of power before 1789.
far greater than the domain of calculable risk. The unknown
unknowns are far more numerous than Donald Rumsfeld’s known
But then the complex system of relations between states ‘goes
knowns and known unknowns.
critical’; it tips over the edge of chaos. Suddenly, the world lurches
in an unexpected direction until it finds a new equilibrium. Far
So what can we say with any degree of certainty as a new year
from being gradual and cyclical, historical change is fast and non-
gets underway? My first observation is that, after nearly half a
linear – and hence very hard to predict.
millennium of Western ascendancy, we are living through a great
economic reconvergence of East and West. That is surely the
That is what makes ‘global trends’ so very difficult to discern.
biggest story of our times.
Each year the Economist magazine makes predictions about the
year ahead in its special World in… supplement. Looking back on
About five hundred years ago, a few small kingdoms and republics
their past forecasts, the authors have been wrong roughly half
at the western end of Eurasia embarked on an extraordinary epoch
the time. Trends that seemed well established prior to publication
of global expansion.
mysteriously fizzle out before the next twelve months have
passed, while events occur which had no previous trend-line
These days it is fashionable to claim that for most of recorded
to forewarn us.
history China’s was the biggest economy in the world. I have
even heard it asserted that Asia was not overtaken by the West
A year ago precious few European experts anticipated the
until the 1850s. This is surely wrong. Chinese per capita gross
sovereign debt crisis that would come so close to blowing the
domestic product stagnated in the Ming era (1402-1626) and was
3
significantly lower throughout the period than in pre-industrial Britain. The main reason for this was that China was still overwhelmingly
an agricultural economy, with 90 per cent of GDP accounted for by low productivity cultivation, a much higher share than in earlymodern Britain. Moreover, for a century after 1520 the Chinese national savings rate was actually negative. There was no capital
accumulation in late Ming China; rather the opposite. Already in 1600 British per capita GDP was 60 per cent higher than Chinese.
What happened after that was that China continued to stagnate and even, in the twentieth century, to retreat, while the Englishspeaking world, closely followed by north-western Europe, surged ahead. By 1820 US per capita GDP was twice that of China; by 1870
it was nearly five times greater; by 1913 the ratio was nearly ten to one. Calculated in current dollar terms the differential at its peak was
over 70 to one.
In my forthcoming book, I argue that this Great Divergence happened because the West developed six ‘killer applications’ that the Rest
lacked. These were:
1.
Competition, in that Europe itself was politically fragmented and that within each monarchy or republic there were multiple competing corporate entities;
2.
The Scientific Revolution, in that all the major seventeenth-century breakthroughs in mathematics, astronomy, physics, chemistry and biology happened in Western Europe;
3.
The rule of law and representative government, in that an optimal system of social and political order emerged
in the English-speaking world, based on private property rights and the representation of property-owners in elected legislatures;
4.
Modern medicine, in that all the major nineteenth and twentieth-century breakthroughs in healthcare, including the control of tropical diseases, were made by Western Europeans and North Americans;
5.
The consumer society, in that the Industrial Revolution took place where there was both a supply of productivity enhancing technologies and a demand for more, better and cheaper goods, beginning with cotton garments; and
6.
The work ethic, in that Westerners were the first people in the world to combine more extensive and intensive labor with higher savings rates, permitting sustained capital accumulation.
Those six killer apps were the key to Western ascendancy. The story
global lead? In particular, could the sheer size of China’s industrial
of our time – which which can in fact be traced back to the reign
revolution have negative environmental effects that outweigh the
of the Meiji Emperor in Japan (1867-1912) - is that the Rest finally
benefits of raising Chinese living standards closer to those enjoyed
began to download them.
in the richer but less populous West?
Today per capita GDP in China is 19 per cent that of the United
The first point is that Japan too was supposed to overtake the
States, compared with 4 per cent when economic reform began
United States and to become the number one global economic
just over thirty years ago. It would be a brave man who bet against
superpower. So, the argument goes, China could one day suffer
China following the same trajectory in the decades ahead that was
the fate of Japan after 1989.
previously taken by Hong Kong, Japan, South Korea, Singapore
and Taiwan.
The counterargument here is that an archipelago off the East
Coast of Eurasia was never likely to match a continental power
Goldman Sachs continue to forecast that China will overtake the
like the United Sates. It was credible to predict even a century
United States in terms of GDP in 2027, just as it recently overtook
ago that Japan would catch up with the United Kingdom, its
Japan. According to the Conference Board, it could happen
Western analogue – as it duly did in 1980 (in terms of per capita
even sooner.
GDP). Moreover, Japan’s defeat in 1945 meant that throughout
the period of its economic ascent it was dependent on the United
The financial crisis that began in the summer of 2007 should
States for its security, and therefore had to submit to more or
therefore be understood as an accelerator of an already well-
less mandatory currency appreciation, not least under the 1985
established trend of relative Western decline. The big question
Plaza accord.
is: could anything trip up the Chinese dragon before it takes the
4
Bear scenario 2 is that China succumbs to social unrest, as has
Coming to terms with a new global order was hard enough after
so often happened in its past. As my Chinese friends kept
the collapse of the Soviet Union, which went to the heads of many
reminding me, China remains a poor country, ranked 86th in the
commentators (who now remembers American hyperpuissance
world in terms of per capita income, with 150 million of its citizens
without a wince?) But the Cold War lasted little more than four
– nearly one in ten – living on the equivalent of $1.50 a day or
decades and the Soviet Union never came close to overtaking the
less. Inequality has risen steeply since the introduction of
US economy. What we are living through now is the end of five
economic reforms.
hundred years of Western predominance. This time the Eastern
challenger is for real, both economically and geopolitically.
Yet only a fevered imagination could build a revolutionary scenario
on these weak foundations. The capitalist-communist regime
Crucially, too, China’s challenge is environmental. Such is the
currently enjoys uniquely high levels of legitimacy in the eyes of its
insatiable appetite of China’s rapidly industrialising economy for
own people. Survey data suggest that Chinese people today are
energy that it is now measurably increasing the risk of deleterious
more committed to the idea of the free market than Americans.
climate change. According to the International Energy Agency,
China will be consuming a fifth of global energy by 2035 – up
The real social threat to China’s stability is demographic. By 2030
75 per cent since 2008. China accounted for nearly half of all
the share of the population aged 65 and over will be 16 per cent,
global coal consumption in 2009. In the long term, the Chinese
compared with 5 per cent in 1980. And the gender imbalance in
government has vowed to leapfrog to the front of the race to
provinces like Anhui, Hainan, Guangdong and Jiangxi is already
perfect commercially viable green energy technologies. In the short
quite without parallel in a modern society, with between 30 and
run, China is the problem, not the solution.
38 per cent more males than females. The next Chinese revolution,
if there is going to be one, will be led by frustrated bachelors. But
And even if the environmental dangers of burning fossil fuels have
history suggests that young men without women are as likely to
been exaggerated, the effects of China’s rise will still be profound.
embrace radical nationalism as revolution.
There is not a region of the world that is not being touched in
some way by China’s ultra-competitive exports of manufactures or
Bear scenario 3 is that a rising middle class could, as so often in
by its insatiable appetite for raw materials – not to mention other
Western history, demand a bigger political say than they currently
people’s intellectual property.
have. Not only is a middle class rapidly growing in urban China;
the rapid spread of mobile telephony and the Internet means
In short, this the biggest change in world history since the rise of
that they can form their own spontaneous horizontal networks as
the West after 1500. It’s also the fastest. Those who fail to grasp
never before.
its implications will be as doomed to irrelevance as the mandarins
of imperial China, who refused to accept that the ‘barbarians’ had
The counterargument here comes from a 20-something Beijing-
overtaken them. ■
based television producer I got to know in 2010. ‘My generation
feels like it’s the lucky one,’ she told me one night. ‘Our
***
grandparents had the Great Leap Forward, our parents had the
Niall Ferguson is the Philippe Roman Chair in History and
Cultural Revolution. But we get to study, to travel, to make money.
International Affairs at LSE IDEAS. ‘Civilization: The West and
I guess we really don’t think that much about the Square thing.’
the Rest’ will be published by Penguin in March.
At first I didn’t know what she meant by that. And then I realised:
She meant the Tiananmen Square ‘thing’ – the pro-democracy
protest crushed by military force in 1989.
The final Sino-bear scenario is that China so antagonises its
neighbors that they gravitate towards a balancing coalition led by
an increasingly realist United States. There is certainly no shortage
of resentment in the rest of Asia about the way China throws
its weight about these days. Yet these frictions are very far from
sufficient grounds for what would be the biggest shift in US
foreign policy since Richard Nixon and Henry Kissinger established
diplomatic relations with the PRC in 1972. And the current
incumbent of the White House seems a very long way removed
from the realist tradition in American foreign policy.
5