by Uddipan Mukherjee
The following article is slated to be published in print at the sidelines of the G-20 Summit in Seoul in November 10-12, 2010
Abstract: The world is facing a multitude of problems. Chief among them are the financial crisis and Islamist fundamentalism. In this backdrop, a few pertinent questions are: Will liberal-democracy remain the only form of political economy for the future? Are communism and militant nationalism totally dead? In the November Summit, it becomes imperative for the G20 leaders to follow a holistic approach in solving the pressing problems of the day whereby they can begin history.
On 30 September 2010, the Washington based Brookings Institute released a paper on ‘governance studies’ by William A. Galston and Maya MacGuineas. The authors express concern that the US federal budget is on an ‘unsustainable’ trajectory. Public Debt is about 60 per cent of the Gross Domestic Product (GDP). According to them, by 2011, the ratio is projected to go up further by 1000 basis points.
And alarmingly, it can skyrocket to 109 per cent in the 2020s. It is time the US Federal Reserve and the policymakers fasten their seat belts as a Public Debt to GDP ratio beyond 100 per cent reminds us of the Second World War. Simply put, the money owed by the federal government of USA is in dangerous proportions to the net output of the country.
One of the obvious reasons for the aforementioned scenario has been the recession that the US faced since its housing bubble burst. Global interconnectedness in a post-1991 world led to a rapid proliferation of the same.
To add, a more recent Euro Crisis is also directly linked to a ballooning Public Debt. It ultimately paved the way for a bankrupt Greece. Countries like Latvia, Lithuania and Estonia, which pegged their currencies with the Euro, also suffered significant damages. Now, interestingly, the US-recession is ascribed to a ‘lack of prudent intervention’ by the Federal Reserve which led to a fragile banking system. On the other hand, serious fiscal mismanagement is considered to be a major reason that exacerbated the crisis in Greece and other ‘sick’ countries of Europe.
In any case, it is affirmed by most analysts that rising Public Debts, compounded by a huge liquidity are the major financial problems faced by the nation-states of today.
Are these features a discernible signature of decay of the philosophy of free market and its political acolyte; the Western liberal democracy? If such a thesis is acceded to, then what happens to Francis Fukuyama’s by now historical assertion of 1989: “What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of postwar history, but the end of history as such: that is, the end point of mankind's ideological evolution and the universalization of Western liberal democracy as the final form of human government.”
On the flip side, are these financial disruptions mere periodicities of crests and troughs and we are just witnessing a temporary nadir of such a curve? At least, neo-classical economists would vouch for the latter.
Naturally, questions which perturb us at this critical juncture are: In the future, will Western liberal democracy survive as a form of political economy? Will the ‘newly poor’ of the North be able to keep their hold over the ‘newly rich’ of the once upon a time ‘colonized’ South? Will the ‘other’ strands of ideology like that of Communism or Militant Nationalism be completely won over by the equations of supply and demand?
Nevertheless, at least in the foreseeable future, it appears unlikely that there shall be a re-emergence of Communist Chauvinism or National Socialism in International Relations. However, that does not necessarily mean that those ideologies are ‘dead’ as Fukuyama may force us to believe. There are internal contradictions within the liberal-capitalist system and these may magnify in the form of reactionary regimes or ultra-leftist movements.
Interestingly, even the Third World would experience such instabilities; both in the political and social domain. In essence, globalization seems to have implanted a First World inside every Third World while the former continues to possess an egotistic worldview.
Strategically speaking, the world shall chart a path of counterinsurgency for some time to come. There will be an inevitable struggle of narratives between a First World (dominated by the US) and a Third World (of Columbia, Sri Lanka et al). However, that is not likely to suppress any alternative measures adopted by emerging powers like China in Xinjiang, India in its ‘red corridor’ or a re-emerging Russia in the Caucasus.
That an economic turmoil has strategic repercussions cannot simply be discredited as facetious. However, the world is definitely not exhibiting yet another apocalyptic ‘power block’ arrangement so as to engender a war. Rather, we are more into accepting the premise of non-state actor led insurgencies. And the pathology may be remedied by the troika of Diplomacy, Strategy and Tactics.
In 1979, Kenneth Waltz talked about neo-realism in world politics. He believed that the very existence of a ‘superpower’ over and above the emerging powers, shall curtail the latter’s ambitions of waging a war against each other. If that is the case, then in a unipolar world of today, wars are far-fetched. At the same time, admittedly, the world is yet not completely free of the inherent possibilities of a conventional war.
However, by all means, International Relations shall find itself in a cobweb of environmental, socio-economic, political and religious problems. Nation-states are likely to keep on facing volatile security issues, both of domestic as well as of trans-national nature. The economic backbone of organizations like Al Qaeda and Taliban needs to be broken. Otherwise, the challenges from their side can turn out to be grave.
In this light, it becomes imperative to posit a counter-argument to Fukuyama that International Relations, as it stands today, is just not preoccupied with only economics. Politics and strategy have not taken back seats. Sino-India bilateral relation is a glaring example in this regard as a voluminous trade is unable to assuage the political climate.
Thus, when the G20 leaders meet at Seoul this November; they would have to contemplate on a spectrum of issues ranging from fiscal stimulus to currency exchange rates to carbon trading to international security.
They have the chance to begin history; by a holistic synthesis of the North with the South. They have to engineer adroitness through novel instruments. A peer-reviewed format to manage future malfunctions in the banking system is one such.
The undercurrent of contradictions in the liberal-capitalist system has to be properly evaluated and preventive measures ratified. A blind adherence to the ideology of end of history may be ahistorical.