ADAM TOOZE AND THE REALITY OF CONTEMPORARY MACHTPOLITIK

"On particular historical example offers a powerful analogy to the current transition of economic leadership and also political power. Great Britain's economic position took a bad tumble in the financial crisis of 1931, when the pound was taken off the gold standard, but it was only some 25 years later that the full implications for power politics were really felt. In 1956, the humiliating fiasco of the Suez Crisis combined military incompetence and failure with vulnerability to financial pressure, and marked the end of Britain's claim to be an arbiter of the international order....There is an obvious parallel between Great Britain at the time of the Suez and the travails of the United States after the 2003 invasion of Iraq and its confusion at the prospect of a shift in the geography of economic influence and political power. Moreover the parallels have become even closer in the aftermath of the ill-prepared and politically divisive intervention in Libya...."

Harold James, "International Order after the Financial Crisis" International Affairs, (May 2011), pp. 525-537. Originally delivered as a lecture at Oxford University on 4 November 2010 as the Cyril Foster Memorial Lecture. Unfortunately, the article cannot be accessed via the Internet.

The US is, by some measures, about to cede to China its place as the largest economy. Some say that an era of Chinese world leadership cannot be far behind. But cast an eye over the history of America’s own rise, and one thing is clear: power did not come from economic might alone. America’s trajectory was unprecedented. It took the first world war – an earth-shattering convulsion in global politics – not just to hoist the US into the role of global leader but even to create that role.... At the heart of this rearrangement of world affairs stood one fact: the rise of the US as the first superpower. Victorian Britain had commanded far-reaching influence. London was the acknowledged leader of the coalition against Germany. But it owed this to its empire; the UK itself was a modest-sized power. When the US supplanted it, it did so as a nation state. US influence was undoubtedly anchored on its affluence. It became the world’s largest economy in the early 1870s. But economic capacity alone is not a source of power; it must be harnessed. And in the late 19th century, America lacked even the most basic institutions of a national economy. It was a peripheral member of the world economy, with prohibitively high tariffs and doubtful commitment to the international gold standard. The Federal Reserve board did not come into existence until 1913. It was the suicide of European power – the vast financial cost of the first world war, and the crisis of political legitimacy that followed the horrendous bloodbath – that opened the door to the assertion of American leadership.... No such opportunity presents itself to China. Its relative financial and economic power is far less than America’s was in the early 20th century. Principal regional powers are not desperate to form alliances with it. Is Beijing about to proclaim a new crusade for modernity with Chinese characteristics? Surely not. In any case, the search for this kind of simple historical analogy misstates the cognitive challenge of our own era. When we ominously announce that history is “restarting” and that “geopolitics is back”, let us not confuse those undeniable truths with the proposition that “history is repeating itself”. There is no doubt that China’s resurgence will be the defining story at least of the early 21st century. Still, America’s path to power suggests that there is a complicated relationship between economic, political and strategic heft. Furthermore, the unique circumstances of America’s ascent – two world wars that convulsed Eurasia – are hardly likely to be repeated in the present era.

Adam Tooze, "Economic Might is not enough to make China a superpower". The Financial Times. 24 May 2014, in www.ft.com.

Yale Professor of History, Adam Tooze article, which is in fact a précis of a very important and most be read book, spells out cogently enough, something which has been stated and re-stated in this journal low this many years now. As I noted back in 2011, in response to the Harold James article quoted above:

"The mere fact that the USA had a greater GDP than the UK, did not for almost fifty years have any significant geopolitical ramifications. Indeed, sans the tremendous struggle put up by Kaiserreich Germany in the Great War, one is tempted to say that it would have been another fifty years before the greater American economic size, would have made itself felt geopolitically speaking. In the case of the PRC and the USA, the likelihood that the former will be able to oust the latter from its pinnacle as the leading hegemonic power is not something that is easy to fathom in either the near or mid-term future. Vis-`a-vis both the PRC as well as every other military power on the planet, the Americans still enjoy unparalleled military and strategic superiority. Far greater than what the Americans enjoyed during the Cold War, much less what the UK enjoyed vis-`a-vis the non-European world during the so-called Pax Britannica 5. And while one may argue that the PRC has now acquired the economic ability to outspend the Americans on arms, the fact is that history shows (the best example being the USA circa 1880-1940) that the mere circumstance of the ability to spend does not necessarily indicated that power x, y or indeed z shall indeed spend monies on armaments 1".

Or as the then First Lord of the Admiralty, Lord Selbourne, noted circa 1901, that while the Americans, could at that point in time: "chose to pay for what they can easily afford, they can gradually build up a Navy, firstly as large and then larger than ours", the Americans singularly failed to do so 2. Something which did not change until World War II.

1. Charles Coutinho, "Harold James & the International Order after the Financial Crisis: A Comment". Diplomat of the Future. 2 August 2011, in www.diplomatofthefuture.blogspot.com

2. Lord Selbourne, quoted in: The Crisis of British Power: The Imperial and naval powers of the Second Earl of Selbourne, 1895-1910. Edited George Boyce. (1990). p. 115.