639 Journal of World-Systems Research Journal of World-Syste1ns Research_, 1995, Volu1ne l, Number 14 http: //jwsr. ucr. edu/ ISSN 1076 -l56X Future Hege1nonic Rivalry between China and the West? Erich Weede Forschungsinstitut fur Soziologie Lindenburger Allee 15 50931 Koln Ger1nany Fax 49 -221/470-5180 Copyright (c) 1995 Erich Weed e ABSTRACT Currently, there is a unipolar distribution of power. The United States reigns supre1ne. Russia's econo1nic power will re1nain insufficient to underwrite a renewed atte1npt to establish global leadership. While the European Co1mnunity still co1mnands sufficient resources for exercising global leadership, it lacks the political foundation for unitary action. Moreover, the European addiction to the welfare state under1nines European co1npeti ti veness. Japan is too 1nuch of a 'trading state' and unlikely to beco1ne a first -rate 1nilitary power, before she is overtaken by China in econo1nic size. So, count Russia, Europe and Japan out as conceivable challengers to United States hege1nony. China is the only plausible candidate. Its econo1nic growth rate is nothing less than spectacular. Moreover, the Chinese govern1nent see1ns capable of extracting the necessary resources for waging a hege1nonic rivalry fro1n a society that is likely to re1nain quite poor for at least another generation. There are a nu1nber of conceivable scenarios for the e1nerging Ainerican -Chinese relationship. The future will depend on the relative speed of the Alnerican decline and the rise of China as well as on the openness of the global econo1ny. The 1nore open the global econo1ny, the better the prospects for rising per capita inco1nes in China beco1ne, the better the prospects for so1ne 1nellowing or even de1nocratization of the Chinese regi1ne. Only if the West sticks together under Ainerican leadership and if creeping capitalis1n in China leads to creeping de1nocratization later, is hege1nonic rivalry likely to re1nain benign and peaceful. [Page l] l. From Bipolarity to Unipolarity Econo1nic decline has been the root cause of the collapse of co1mnunis1n in the Soviet Union and elsewhere in Central and Eastern Europe. As has been noted by two Ger1nan econo1nists (1), the end of the cold war, caused by the collapse of co1mnunis1n, is a kind of corroboration of so1ne Mar xi st propositions. For Marxists, the political and ideological superstructure depends on the underlying econo1nic forces. If the econo1ny declines, if politics and ideology beco1ne fetters for the develop1nent of productive forces, then the superstructure is swept away. This has happened. Co1mnunis1n has persistently been a failure in the production of consu1ner goods. Co1mnunis1n was never good at providing incentives, or at inventing new processes and products, or at efficiently allocating resources. Still, the Soviet Union and its allies were capable of co1npeting with the 1nore populous and 1nore affluent VJest in the ar1ns race for decades (2). VJhile Soviet econo1nic perfor1nance eroded over ti1ne (3), the external challenge si1nultaneously beca1ne 1nore serious. Because of the Alnerican rear1na1nent during the first Reagan adninistration and the strategic defense initiative (SDI), the Soviet Union had to face the possibility that the United States and the VJest 1night start to participate in a serious rather than leisurely way in the ar1ns race. An i1nplication of this possibility - which, under worst case assu1nptions, however, 1nust have looked like a real prospect to Soviet leaders - was the conclusion that econo1nic decline endangers the technological basis [Page 2] of 1nili tary power in the long run, and that therefore the deficiencies of the Soviet econo1ny had to be re1nedied. Seriously thinking about the causes of Soviet econo1nic troubles had to under1nine the ruling ideology, i.e., the root cause of the troubles. Although econo1nic decline and renewed Alnerican pressure under Reagan pro1nised a dark future to the Soviet Union, there was little reason to panic. The nuclear balance of terror, the military strength of the Soviet Union, and the de1nocratic character of Soviet adversaries provided 1nili tary security for the Soviet Union for so1ne ti1ne to co1ne. Instead of seeking relief by 1neans of 1nili tary adventures - obviously a dangerous strategy in the nuclear age - the USSR could consider do1nestic refor1n. For the USSR faced not only econo1nic decline and Reagan I s challenge epi to1nized by SDI, but also an easily appeasable opponent. As Deudney and Ikenberry (4) have put it, "a world do1ninated by liberal states affords re1naining illiberal states both a need and an opportunity to liberalize". Under Gorbachev the Soviet Union has atte1npted three 1nodes of re1nedial action: perestroika, glasnost, and I new thinking 1 • Out of these, the restructuring of the econo1ny has been the 1nost ti1nid at the beginning and the least successful. The Soviet or Russian econo1ny could not i1nprove without first reintroducing scarcity prices as well as private property rights, i.e., nothing less than the substance of capi tali sin. Glasnost and the se1ni -free elections in spring 1989 1nay have changed the Soviet Union fro in a totalitarian and fully repressive syste1n of govern1nent to se1ni - de1nocratic and se1ni -repressive one. In general, se1ni -repressiveness pro1notes violence and political instability (5). The southern periphery of the Soviet Union soon illustrated this relationship quite forcefully. Moreover, glasnost has 1nade it 1nore difficult to hide the ills of the Soviet econo1ny and the lack of tangible progress of perestroika. Already in 1988, Brzezinski predicted that do1nestic refor1ns in the Soviet Union would result in a 1najor crisis: "Unintentionally Gorbachev's policies are thus contributing to the buildup of a [Page 3] potentially revolutionary situation. His refor1ns are creating 641 Journal of World-Systems Research constituencies for change. They are unleashing hopes that are a lino st fated to be disappointed. They are creating dislocations that, in the 1neanti1ne, are actually worsening the quality of life for the average person. They are also reducing the level of political fear - even as they raise the level of social frustration. Such a combination is inherently explosive." (6) In another respect, Brzezinski's prediction was as true as the one above, but 1nuch 1nore precise, na1nely: "To decentralize a state-owned econo1ny, one has to decentralize the political syste1n as well. In effect, that is ta nta1nount to the dissolution of the e1npire." (7) Although the 'new thinking' in the Soviet Union looked suspect to 1nany observers (including 1nyself) at the beginning, it ulti1nately led to an understanding of the Soviet national interest "as a search for relief fro1n burdens" (8) and to the replace1nent of the Breshnev doctrine by the Sinatra doctrine that per1ni tted for1ner Soviet clients to do it their way. Jaruzelski could co1npro1nise with Solidarnosc and per1ni t a se1ni -free election in Poland that the Co1mnun ists decisively lost to Solidarnosc. Thus, in su1mner 1989 Poland replaced a Co1mnunist govern1nent by a non -Co1mnunist govern1nent. The protracted struggle of the Polish people against Co1mnunis1n throughout the 1980s had paid off. This was an extre1nely powerful de1nonstration that protests against Co1mnunis1n need not be in vain. Instead of the Soviet [Page 4] protecting ruling Co1mnunists against the local Union occasionally ca1ne closer to pushing the1n peoples, aside. At the very least, Gorbachev' s visit to East Ger1nany in fall 1989 clearly docu1nented his lack of interest in 1naintaining a regi1ne which was installed and 1naintained by Soviet troops. When de1nonstrators challenged the East Ger1nan Co1mnunist govern1nent, Soviet troops re1nained in their barracks. The Sov iets per1ni tted revolutionary change in spite of the ready availability of about 380, 000 troops to put it down. Soviet inactivity in East Ger1nany and elsewhere in Eastern Europe was a li t1nus test de1nonstrating so1ne truly 'new thinking' . Under Gorbachev the Soviet Union no longer wanted to overburden itself by continuing confrontation and an ar1ns race against the United States, Western Europe and Japan. In order to end the Cold War, the Soviet Union has given up its Central and East European e1npire. The failed coup in August 1991, the break -up of the Soviet Union, and Yeltsin' s succession to power in the Russian core of the for1ner Soviet Union testify to the de1nocratic progress which Russia and so1ne other parts of the for1ner Soviet Union have 1nade. But thi s progress re1nains vulnerable. De1nocracy 1night still fail with econo1nic refor1n. By and large, you need a capitalist econo1ny and a high standard of living in order to 1nake de1nocratic rule feasible and stable (9). It is hard to see how Russian de1nocracy can be stabilized on the basis of persisting poverty and falling standards of living. For 1991, the World Bank esti1nates that the purchase power corrected Russian GDP per capita was 31. 3 '.:, of the Ainerican value. Few, if any, experts believe that it has i1nprov ed since then, or is [Page 5] likely to significantly i1nprove in the coining years. The Russian population was 58. 5 '.:, of the Alnerican. Thus, the econo1nic size of Russia was about 18. 4 '.:, of the Alnerican (10). This econo1nic size together with political and econ 01nic tur1noil is clearly insufficient for a renewed Russian challenge to the V'Jest. Given the a1nple stocks in nuclear and other weapons, Russia could be a valuable partner in a coalition, but on its own Russia cannot 1nake it. If allied to the United States, Russia would beco1ne a junior partner. If allied to China, Russia would start as an equal and beco1ne a junior partner quite soon. An alliance with a united Europe looks inconceivable to 1ne. Russia would 1natter 1nost if it were allied to Ger1nany. This woul d be a challenger coalition of the losers of V'Jorld V'Jar II and of the Cold V'Jar, a kind of super -Rapallo. In so1ne respects the conte1nporary European order looks like an invitation to a combined Russian-Ger1nan challenge. Never in the last three centuries were the borders of the two 1nost populous countries in Europe and their states, i.e., of Russia and Ger1nany (or Prussia before 1871), so unfavorable to both of the1n at the sa1ne ti1ne. V'Jhile Hitler planned and began large scale ethnic cleansing in Eastern Europe at the expense of Poles and Russians to provide roo1n for Ger1nan settle1nents, V'Jorld V'Jar II ended with 1nore than 10 1nillion Ger1nans beco1ning victi1ns of large -scale ethnic cleansing for the benefit of Poles, Czechs and (in northern East Prussia or Kaliningrad oblast) Russians. Russians did not (or not yet?) suffer a si1nilar fate in the newly independent republics which for1nerly belonged to the Soviet Union. But 1nany of the1n live under [Page 6] 'foreign' rule and resent it. Moreover, Russian nationalists are not yet resigned to the loss of the Ukraine which contains what so1ne regard as the birthplace of 'Russian' political identity, i.e., Kiev, and the Cri1nea with a Russian 1najority and i1nportant naval bases, and the loss of 1nuch of the coastline of the Baltic Sea. On top of these potential de1nands for correction of the 1nisfortunes of recent history, there is the issue of northern East Prussia or Kaliningrad oblast. A look at the 1nap de1nonstrates that this Russian exclave is unlikely to endure as it is. Either the Russians 1night want to reconnect it with their 1nainland, i.e., by annexation of Belarus and the Baltic states, or they might offer it (against so1ne kind of co1npensation) to Ger1nany. In either case it is hard to i1nagine this happening peaceably. Al though causes for resent1nent 1nay drive Russians and Ger1nans into each other's ar1ns, such a coalition would suffer fro1n imbalance and 1nutual suspicion fro1n the beginning. Russia could contribute 1nili tary power and Ger1nany econo1nic power. After sharing the sp oils of reexpansion in Eastern Europe, renewed suspicion, or even hostility, would be a lino st inevitable. Both sides would know it and 1night therefore be deterred fro1n trying such a policy. Al though Russians - especially those who voted for Zhirinovsky in the December 93 elections - 1nay be 643 Journal of World-Systems Research desperate enough for such a coalition (ll), prosperity or gentle decline is likely to protect Ger1nans fro1n this te1nptation. l1oreover, even a Ger1nan -Russian spoiler combination would not suffice for a serious challenge to Alnerican hege1nony. Such a coalition beco1nes 1nost likely if the Ger1nan and the Russian econo1ny [Page 7] experience grave difficulties at the sa1ne ti1ne, which, of course, thereby reduces the weight of the challenge. This spoiler combination 1nay produce war or speed the decline of the West. It cannot replace Alnerican hege1nony. 2. Potential Challengers to Alnerican Hege1nony a. Europe Since the collapse of the Soviet Union, the United States has achieved 1nili tary hege1nony by default. Econo1nically, the A 1nerican situation still is quite co1nfortable. A few years ago, Sa1nuel Huntington (12) reassured his fellow Alnericans: "If hege1nony 1neans producing 20 to 25 percent of the world product and twice as 1nuch as any other individual country, Alnerican hege1nony looks quite secure." He added: "The 1nost probable challenge to this prediction could co1ne fro1n a united European Co1mnuni ty. The European Co1mnunity, if it were to beco1ne politically cohesive, would have the population, resources, econo1nic wealth, technology a nd actual and potential 1nili tary strength to be the pree1ninent power of the 21st century. Japan, the United States and the Soviet Union have specialized respectively in invest1nent, consu1nption and ar1ns. Europe balances all three." This is not a prediction. It 1nerely is Huntington's second best guess, if his expectation of continuing Alnerican hege1nony turns out to be wrong. Still, the European Co1mnuni ty that has rena1ned itself I European Union I is a candidate hege1non to be discussed. It exceeds the United Sta tes in [Page 8] population, in GDP, in exports, and even in active ar1ned forces (13). Essential to all scenarios of renewed European greatness is European unity, i.e., a unity that overco1nes bickering about agricultural subsidies, and who pays for them, and replaces it by a unity of political purpose and a unified, but purely European (rather than NATO) 1nili tary structure. It is quite certain that this transcendence is not going to happen within a decade. It is uncertain whether it will ever happen, or whether even a unified Western Europe will be sufficient in the 2020s. Although I a1n very skeptical about European readiness to unite politically and 1nilitarily, another reason why I cannot i1nagine European hege1nony is that a unified Europe is likely to dee line even faster than a Europe of nation-states. In 1ny view (14), the rise of Europe co1npared to the great Asian civilizations over the past 500 years owes 1nore to political frag1nentation and the resultant li1ni tat ion of govern1nental power than to any other single cause. In contrast to the great Asian civilizations which were often united under i1nperial rule, like China, Europe was politically disunited. There were interstate rivalry and wars. The 1nere existence of an interstate syste1n contributed to the 1 i1nitation of govern1nental power over subjects and to decent govern1nent. If a European ruler or govern1nent was 1nore superstitious in religious, ideological or philosophical affairs, or, in particular, 1nore inclined to confiscate the property of 1nerchants and producers than other European govern1nents were, then the 1nisgoverned territory tended to lose people, talent [Page 9] and capital to neighboring countries, so1ne of who1n were always hostile and ready to welco1ne refugees and their financial as well as hu1nan capital. Co1npeti tion and hostility a1nong European rulers provided an opportunity for exit to subjects. Therefore, European rulers had to resist their exploitative and kleptocratic desires and to concede relatively secure property rights to their subjects, in particular to 1nerchants and to urban people. Therefore, private property rights were always safer in Europe than in the great Asian civilizations. Li1nited govern1nent, private property rights and 1narkets are essential to pro1note econo1nic growth for a number of reasons. First, they provide producers with an incentive to work hard by establishing a link between effort and reward. By contrast, kleptocracy or socialis1n 1nerely elicit shirking. Second, private property rights and 1narkets per1ni t the exploit at ion of knowledge which is scattered over thousands and 1nillions of heads. No ruling authority has ever known or can ever know who knows what, or how to produce which goods or services 1nost effectively. Third, private property rights pro1note innovation by protecting private decision-1naking fro1n social or political interference. As Chinese explorers of the high seas and overseas 1nerchants learned in the 15th century, when the 11ing court outlawed overseas exploration and trade, govern1nental coercion can suppress innovation. A consensus require1nent would be nearly as bad (15). If all inventions and their applications had depended on social consent, we 1night still be in the stone age. Fourth, there can be no scarcity prices and, therefore, there can be no efficient [Page 10] resource allocation without a large number of independent property owners and traders. In principle, a united Europe on the one hand and li1nited govern1nent, private property rights and 1narket exchange at freely established scarcity prices on the other could be co1npatible with each other. Observation of political practice 1nakes one suspicious, however. The conunon agricultural policy is still the 1nost costly endeavour of the European Conununi ty or Union. It always has been an orgy of interventionism, inefficiency and injustice. By establishing 1ni1ninu1n prices, the European Union guarantees overproduction. Price supports benefit rich far1ners 1nore than poor far1ners. Si1nultaneously, high food prices hurt poor consu1ners 1nore than rich consu1ners. 11oreover, exports of European far1n products at subsidized prices hurt Alnerican far1ners and thereby burden transatlantic relations, and hurt Third World or East European far1ners, thereby reducing the chances of poor countries catching up 645 Journal of World-Systems Research with the rich countries. In a nutshell, professional economists would be hard pressed to invent a policy doing as 1nuch har1n for as little good as the European co1mnon agricultural policy. The 1nore general point is that the Europeanization of econo1nic policy -1naking establishes the opportunity to co1mni t policy errors on a 1nuch grander scale than has been possible in 1nost of European history. Politicians 1night exploit such opportunities. European agricultural policies are also useful to 1nake another point. Decisions are 1nade to serve special interest groups or distributional coalitions, not to serve anything like national, [Page ll] European, or cos1nopolitan interests. According to Olson (16), aging political regi1nes in general, and aging de1nocracies in particular, are likely to beco1ne prisoners of interests groups and to pursue ever less efficient econo1nic policies. Govern1nents intervene in the 1narket, distort prices, transfer inco1ne - and interfere with efficient resource allocation. The older an established regi1ne for exa1nple, a de1nocracy - beco1nes, the 1nore it suffers fro1n institutional sclerosis and declining econo1nic growth. Al though e1npirical support for this proposition has been quite weak where A..1nerican states have been co1npared with each other (l 7), Olson's proposition received fairly strong and consistent support where industrialized de1nocracies have been analyzed (18). Moreover, econo1nic decline was further reinforced by high govern1nent revenues, expenditures, or transfer pay1nents (19). So1ne European countries, like Britain and Sweden, suffer fro1n being old de1nocracies (and therefore afflicted with strong distributional coalitions) and having high govern1nent expenditures si1nultaneously; others suffer fro1n at least one of these ail1nents. Since European nations are sti 11 fairly close to the leading edge in technology, there is also little room to boost growth rates by capturing the 'advantages of backwardness'. Thus, Europe is likely to be outperfor1ned by 1nore dyna1nic regions elsewhere (20). If you add slowly declining econo1nies and a proven record of not being capable of collective action in the security field, then the prospect of European hege1nony displacing A..1nerican hege1nony looks poor. [Page 12] If a united Europe is not a plausible contender for hege1nony what about its strongest co1nponent, Ger1nany? I cannot take Ger1nany seriously as a contender. First, on the eve of the reunification of Ger1nany, the West Ger1nan share of the European Co1mnuni ty I s GNP was about 25 '.:,. Even if East Ger1nany were to beco1ne as productive as the West, the Ger1nan share in the European Co1mnunity GNP would not exceed 30 '.:,. Second, Ger1nany has seriously 1nis1nanaged econo1nic unification thereby postponing recovery in the East (21). Third, since purchase power -corrected average inco1nes in West Ger 1nany in 1991 were slightly less than 90 '.:, of A..1nerican inco1nes, and since the entire Ger1nan population was slightly less than 32 '.:, of the A..1nerican population (22), it is hard to see how Ger1nan GNP can even touch a third of the A..1nerican GNP in the foreseeable future. Even a fairly desperate challenger coalition of Ger1nany and Russia would find it difficult to exceed 50'.:o of A..1nerican econo1nic size within this century (23). b. Japan Japan is another candidate for hege1nony. Since the end of V'Jorld V'Jar II, it has outperfor1ned all other industrialized econo1nies. The Japanese econo1ny is larger than any other, except for the Alnerican econo1ny. Trend extrapolation see1ns to give Japan so1ne chance of overtaking the United States early in the 21st century. Nevertheless, one 1night suspect that Japan cannot sustain its past perfor1nance: so1ne of the past success of Japan has to be attributed to the catch-up pheno1nenon. Japan could i1ni tate best practices fro1n 1nore advanced countries, especially the United States, and [Page 13] therefore grow faster than other developed countries. l1oreover, Japan still had a large agricultural sector in the 1950s and 1960s. By reallocating labor fro1n less productive agriculture to 1nore productive industry, Japan could boost its growth rate. But these sources of enhanced growth are largely exhausted. So is the co1nparati ve weakness of distributional coalitions. In the post-V'Jorld V'Jar II world, Japan I s de1nocracy was one of the youngest. According to Olson's theory (24), institutional sclerosis should have been a less effective brake on growth in Japan than elsewhere. Over ti1ne, this Japanese advantage should di1ninish. Finally, Japan largely avoided the welfare state trap. The greyer Japan beco1nes, the 1nore difficult it will be to avoid this European disease. Therefore, I think that extrapolation overesti1nates Japan I s potential (25). l1oreover, currently (in 1993 -94) the Alnerican econo1ny does better than the Japanese. Even if Japan could sustain its past growth rates, Japan is not yet a first-rate 1nilitary power. It still lives under the Alnerican nuclear umbrella. Increasing defense expenditures in any way other than by stealth has been difficult in post -V'Jorld V'Jar II Japan because of a growing econo1ny and an allocation of about one percent of GNP to the 1nili tary. Al though Japan 1nay have the capability to beco1ne a great power, it has yet to develop the will to beco1ne one (26). In 1ny view, the Japanese face a fast -closing window of opportunity. V'Jhile Japan still co1mnands a larger econo1ny than China, China grows 1nuch faster and is likely to overtake Japan and the United States, if it can sustain current growth rates for another decade or two. Once China has overtaken Japan in econo1nic [Page 14] size, a peaceable and underar1ned Japan will find it difficult t o acquire nuclear ar1ns against its protector I s (i.e. Alnerican) objection, and its nearby potential rival's (i.e. China's) objection (27). Japan is likely to re1nain richer than its giant Chinese neighbor, just as Switzerland is richer than larger France or Ger1nany. High average inco1nes con1bined with 1nili tary inferiority are not the stuff to 1nake a candidate for hege1nony. c. China According to the V'Jorld Bank and the Econo1nist (28), in 1991 China was already number three in the world GDP league, placed about halfway between Japan and Ger1nany. Of course, GDP per head was only between eight and nine percent of Japanese or Ger1nan inco1nes, and 647 Journal of World-Systems Research less than eight percent of Alnerican inco1nes. But three characteristics 1nake China a serious contender: first, the sheer weight of numbers; second, its spectacular econo1nic growth rate; and, third, its 1nilitary power that already includes possession of nuclear weapons. Since China (29) had about 4. 55 ti1nes the population of the United States and O. 076 ti1nes its GDP per he ad in 1991, it already has 1nore than 35 percent of the econo1nic size of the United States. By the way, this is approxi1nately twice the size of the Russian econo1ny. Other sources esti1nate the size of the Chinese econo1ny to be between 45 and 60 '.:, of the A.Ineri can (30). Still, this would be a poor econo1nic base to challenge the United States, if Chinese and [Page 15] A.Inerican growth rates were si1nilar in order of 1nagnitude, or if Chinese and A.Inerican state capabilities and willingness to i1npose burdens on their peoples were closely 1natched. Neither of these conditions applies. For the 1980 -91 period the VJorld Bank reports a Chinese per capita growth rate of 5. 8 percent, and an A.Inerican growth rate of 1.7 percent. Looking to GDP growth rates (31), China scores 9 .4, while the United States scores 2.6. If the Chinese advantage in growth rates persists, the Econo1nist expects the Chinese econo1ny to 1natch the A.Inerican in size by 2010 (32). Of course, it is risky to 1nake growth predictions for nearly two decades. Political tur1noil after Deng Xiaoping I s death 1nay throw the Chinese econo1ny back for decades. After all, Co1mnunist -ruled China did suffer fro1n terrible policy 1nistakes and tur1noil in the past. The great leap forward in the late 1950s, the people's co1mnunes, and the resulting 1nass starvation cost between 15 and 40 1nillion lives. Later, the cultural revolution killed at another 2 or 3 1nillion people or 1nore. Adding together all those who lost their lives because of Chinese Co1mnunis1n yields esti1nates up to the order of 1nagnitude of 60 to 80 1nillion victi1ns (33). Thus, persistent Co1mnunist rule does per1ni t the repetition of tragedy. But a case for opti1nis1n can be 1nade. Charis1natic, powerful and evil dictators - 1nurdering people by the 1nillions, like Hitler, Stalin, and 11ao Zedong - are rare. VJi th out being struck by a cala1ni tous leadership twice in a short period of history, China stands a chance of catching up with the United States in econo1nic size within a generation or less. [Page 16] Of course, a tacit assu1npti on in any scenario where China prospers is political stability. Stability is not easily 1naintained in a country with significant regional disparities (34), where about hundred 1nillion people have left the countryside for uncertain work and housing prospects in the cities and tens of 1nillions 1nore are ready to go. 11oreover, there is inflation, a succession crisis to co1ne, and so1ne depletion of regi1ne legiti1nacy (35). Therefore, I opti1nis1n I about China I s future, political stability, and econo1nic prospects in no way rules out future i1nposi tions of stability by brute force and repression, as in 1989. Even now, the China -United States econo1nic size ratio is co1nparable to the Soviet -Ainerican ratio during the Cold V'Jar. This in itself de1nonstrates that a Co1mnunist dictatorship with between a third and half the econo1nic power base of a de1nocratic hege1non can 1nount a serious challenge. Re1nember Luttwak' s dictu1n, according to which Co1mmnunist leaders 1nay be five ti1nes as effective as the V'Jest in getting 1nilitary power out of an econo1ny (36). V'Jhile China does not overburden itself by an ar1ns race in the sa1ne way as the late Soviet Union did, China's 1nili tary spending and ar1ns acquisition do certainly indicate a serious interest in great power status. Starting as a nuclear power and with real 1nili tary spending recently growing at double digit rates (37), China builds the basis for a future challenge now. The prospects of a Chinese bid for hege1nony depend 1nainly on two factors. First, will China be capable of continuing its spectacular [Page 17] econo1nic growth for another decade or two (38)? Ruling out another period of govern1nent -i1nposed folly, as during the great leap forward or the cultural revolution, the prospects are good. Part of the extraordinary growth rate of China 1nay be accounted for by the advantages of backwardness, i.e., by the possibilities to i1nitate best practices already applied in 1nore advanced countries and to reallocate labor fro1n agriculture to 1nore productive industries. This source of growth is unlikely to be exhausted soon. Another widely accepted source of econo1nic growth is hu1nan capital for1nation. Pri1nary school enroll1nent is universal, and secondary school enroll1nent is better than it was in South Korea in 1970 or than it currently is in Thailand. Thus, hu1nan capital for1nation is sufficient to underwrite a continuation of the Chinese econo1nic 1niracle. Another widely accepted source of growth is invest1nent. Chinese gross do1nestic invest1nent was significantly higher than elsewhere in the 1980s, and its growth rate has been surpassed only by South Korea (39). Again, invest1nent provides no reason why the Chinese econo1nic 1niracle should run out of stea1n soon. The 1nore difficult issues affecting the growth prospects of China are private property rights, co1npetition, innovation, the size of the public sector, price distortions, openness and export-orientation of the econo1ny. It has been argued that a chief reason why i1nperial China was overtaken by the V'Jest was the insecurity of property rights in China because of an arbitrary govern1nent (40). The Co1mnunists, of course, did not respect private property rights in the first decades of their rule. They [Page 18] expropriated and 1nassacred 1nillions of rich peasants and capitalists dee1ned to be adversaries of the revolution. Then they forced peasants into cooperatives, and later into people's co1mnunes, thereby thinning out property rights and reducing incentives to work. Since 1979, however, the ruling Co1mnunists under the co1npetent stewardship of Deng Xiaoping did again decentralize property rights and return rights to work the land to individuals, fa1nilies, or s1nall groups of fa1nilies (41). Thus, work incentives were reestablished in countryside. Since the overwhel1ning 1najori ty of the Chinese population lived in the countryside and worked the fields in the 1980s, and since rural inco1nes grew three -fold 649 Journal of World-Systems Research in only eight years (42), this was the beginning of the Chinese econo1nic 1niracle. However, while later refor1ns did per1ni t the establish1nent of private 1nanufa cturing enterprises, and while private enterprises significantly outperfor1n state -owned industrial giants (43), the security of private property rights 1nust re1nain under suspicion in a regi1ne still no1ninally co1mnitted to socialis1n. Concerning co1npeti tio n, the situation is 1nuch better for two reasons. The weight of agriculture in the econo1ny does guarantee co1npetition between 1nany producers, i.e., between peasants. l1oreover, the devolution of econo1nic power to the provincial or district or township levels itself reinforces co1npetition. Where a township, village or rural district owns a textile factory, it has to co1npete with si1nilar enterprises owned by other local govern1nents, collectives, or private entrepreneurs. Often the [Page 19] co1npeti tion is ferocious. In contrast to central -govern1nent -owned enterprises, local -govern1nent-owned enterprises are subject to hard budget constraints. To so1ne degree, decentralized decision -1naking and co1npeti tion in the1nsel ves foster innovation. l1oreover, China can adopt innovations 1nade elsewhere. The large population of overseas Chinese in Southeast Asia and elsewhere 1nay serve as a trans1nission belt. Private property, co1npeti tion, and openness tend to under1nine price distortions. Al though China still suffers fro1n state-controlled prices and distortions, and although there is not yet a free (i.e., hire and fire) labor 1narket, the situation did 1narkedly i1nprove in the last 15 years. The 1nost successful econo1nies in the Chinese neighborhood, including l1ainland China's hos tile s1nall brother Taiwan, grew by export-orientation (44). How export -oriented is China? According to World Bank data, the Chinese GDP in 1991 was 1. 67 ti1nes the size of the Indian GDP. In general, larger econo1nies trade less than s1naller ones. Nevertheless, the ratio between Chinese and Indian exports in the sa1ne year was 3 .12 (not so1newhat less than 1. 67, as could be expected). By this 1neasure, China's orientation towards global 1narkets is nearly twice as strong as India's. And India is the only country co1nparable to China in population, poverty, and potential 1narket size. l1oreover, in the 1970s the growth rate of China's exports was already twice as high as India's, although only about half as high as Taiwan's. In the 1980 -91 period, however, the gap (ratio) between China's and India's export growth rates so1newhat narrowed because of a big Indian i1nprove1nent and a lesser, al though still encouraging, Chinese i1nprove1nent. [Page 20] In this 1nore recent period the Chinese export growth rate fell between the Taiwanese and South Korean rates. l1oreover, in 1991 China was the second largest recipient of foreign direct invest1nent, after l1exico, which of course benefits fro1n the closeness of the United States. By contrast, India received less than the World Bank's reporting threshold of one 1nillion dollars (45). l1oreover, investor interest in China see1ns to grow. In the first half of 1993 direct foreign invest1nent pledges were four ti1nes as high as they were in the corresponding period of 1992 (46). While these are all fairly crude indicators, they provide no reason to doubt that China can sustain the growth rates which it experienced in the 1980s. In order to realize its potential for growth, China has to reestablish 1nacroecono1nic stability. The central govern1nent I s deficit is large and growing. Of course, this is related to provincial self -assertion and to inefficient and subsidy -dependent state enterprises. Too 1nuch of the budgetary shortfall is financed by the printing press and therefore fuels inflation. High and accelerating inflation generates distortions and dissatisfaction. l1oreover, it is likely to reduce growth. But a serious atte1npt to reduce inflation cannot avoid hurting powerful interest groups: the 1nili tary, if defense spending is cut; for1ner urban wo rkers with state enterprises who have to be laid off, if their enterprises try to beco1ne profitable - or if they fail and go bankrupt; or even businesses with close fa1nily links to the top party leadership, if credit availability is reduced. If the central govern1nent fails to stand up to special interests and gets the 1nacroecono1nic funda1nentals wrong, then the prospects for China are darkened (47). [Page 21] 3. Alternative Scenarios for the New Age of Sino -A..1nerican Bipolarity Al though A..1ne rican decline has been be1noaned too early and too often, the ascendance of China would i1nply so1ne relative decline. Per1nanent unipolarity is an illusion and new great powers will arise (48). In 1ny view, China is by far the 1nost plausible candidate. Even if the econo1nic size of China and the United States will be about equal, A..1nerican per capita inco1nes 1nay still be about five ti1nes as high as the Chinese. Thus, even then China will still enjoy so1ne I advantages of backwardness I and grow 1nuch 1nore rapidly than the United States. If the United States is not ready for the 1nanage1nent of decline, there will be only a single obvious option: VJestern unity, perhaps so1ne kind of confederation between North A..1nerica and Europe. There is a conunon cultural background and a conunon historical heritage (49). A VJestern or North Atlantic Union in, say, 2010 would al1nost inunediately reestablish VJestern leadership (50). l1oreover, VJestern unity 1night reassure the VJest sufficiently to 1nake possible constructive engage1nent with Chin a. The rise and decline of great powers has always been difficult to 1nanage peaceably (51). In the nuclear age we have to try. Even a Sino-A..1nerican cold war would be a catastrophe. The United States and the VJest could not rely on winning once 1nore. The Chinese 1night not oblige by 1nis1nanaging their econo1ny, as the Soviets did. There [Page 22] would be another ar1ns race and another chance for nuclear deterrence to fail (52). l1oreover, another cold war would al1nost certainly rule out a collaborative effort to 1nitigate the environ1nental proble1ns that 1night urgently require action in the early 21st century. In fact, the economic rise of China and neighboring Asian countries by itself 1nay well double the pollution problem (53). A united and secure VJest would enjoy the 1nargin of safety to choose collaboration rather than confrontation with China. In the 21st as in the 20th century prosperity will rest on free trade and a global 651 Journal of World-Systems Research di vision of labor. Only free trade (or preferential 1narket access, because free trade has been 1nore likely within alliances, such as the Alnerica-centered alliance syste1n, than between alliances) per1ni tted Ger1nany and Japan to recover after V'Jorld V'Jar II. Only free trade per1ni tted South Korea and Taiwan to outgrow poverty. V'Jithout free trade, especially without access to the Alnerican 1narket, even t.1ainland China will stand little chance. There is a reason why I refer to the two 1najor losers of V'Jorld V'Jar II and to the 1najor s1nall tigers of East Asia. By now, all of these countries are secure de1nocracies. V'Jho would have dared to predict so in the 1950s? These countries benefited from a causal chain running fro1n free trade to prosperity, fro1n prosperity to de1nocracy, and fro1n de1nocracy to peace with other de1nocracies (54). The do1ninant task for hu1nankind in the 21st century will be to let China trade its way to prosperity (55), to let prosperous Chinese establish de1nocracy on the t.1ainland (56), as prosperous Chinese did in the late 1980s and early 1990s on Taiwan, and to [Page 23] establish so1ne kind of de1nocratic peace between the V'Jest and China - just as there has been a secure peace for a long period between the British and the Alnerican de1nocracies. Thereafter, 1naybe in a century, even the decline of the V'Jest need not be 1nore worriso1ne than the decline of Britain co1npared to the United States was in the 20th century. Arunittedly, free trade with China is a risky policy, especially if it succeeds in pro1noting capi talis1n and prosperity without producing de1nocracy. I do understand why Betts (57 ) worries: 11V'Jith only a bit of bad luck in the evolution of political conflict between China and the V'Jest, such high econo1nic develop1nent (in China, E. V'J.) would 1nake the old Soviet 1nili tary threat and the 1nore recent trade frictions with Japan see1n co1npara ti vely 1nodest challenges. 11 Only Atlantic unity can give the V'Jest the strength and self-confidence to help China grow rich and prosperous by free trade. The rise of Asia in general, and of China in particular, 1nakes ever closer ties between the United State s and (V'Jestern) Europe 1nore rather than less i1nportant. It is the only insurance we can buy. Notes 1. Gerlinde und Hans -V'Jerner Sinn: Kal ts tart. Volkswirtsc haftliche Aspekte der deutschen Vereinigung. t.1Jnchen: Beck (dtv), 1993 (3rd ed.), pages 1-5. [Page 24] 2. See Edward N. Luttwak: The Grand Strategy of the Soviet Union (New York: St. t.1artin's Press 1983), p. 115, for an evaluation of this achieve1nent: 11 So1newhat 1nechanistically, we 1nay esti1nate the 'power efficiency' of the Soviet e1npire by its ability to convert GNP into power. By that standard, we 1nay say that the Soviet syste1n is roughly five ti1nes as efficient as the alliance that embraces the United States, NATO Europe and Japan, since the combined GNPs of those countries are roughly five ti1nes as great as the Soviet, while their conjoint power is at best equal. 11 Luttwak's 'power', of course, refers to 1nilitary power only. 3. See Peter t.1urrell and t.1ancur Olson: "The Devolution of Centrally Planned Econo1nies", Journal of Co1nparative Econo1nics 15, 1991, 239-265. 4. Daniel Deudney and G. John Ikenberry: "The International Sources of Soviet Change", International Security 16(3), 1991 -92, 74-118. 5. See Edward N. t.1uller: "Inco1ne Inequality, Regi1ne Repressiveness, and Political Violence", Alnerican Sociological Review 50, 1985, 47-61; Erich Weede: "So1ne New Evidence on Correlates of Political Violence", European Sociological Review 3, 1987, 97 -108. 6. Of course, a book published in 1989 1nust have been written no later than 1988. See Zbigniew Brzezinski: The Grand Failure. The Birth and Death of Co1mnunis1n in the Twentieth Century. New York: Charles Scribner's Sons, 1989, pp. 100 -101. [Page 25] 7. Op. cit., page 99. Soine observers attribute even a willingness to destroy Co1mnunis1n to Gorbachev. See Charles H. Fairbanks: "The Nature of the Beast", National Interest 31, Spring 1993, 46 -57, especially page 57: "Gorbachev, the leader of the country's co1mnunists, forced his own 1nove1nent to co1mni t suicide ... The Bolshevik tradition inspired Gorbachev. The institutions and custo1ns of de1nocratic centralis1n e1npowered hi1n. With that inspiration, and that power, he destroyed the state that he co1mnanded." 8. See Stephen Sestanovich: "Inventing the Soviet National Interest", National Interest 20, Su1mner 1990, 3 -16, page 14. 9. For a su1mnary of the evidence, see Peter L. Berger: The Capitalist Revolution (New York: Basic Books, 1986) and the literature quoted there. 10. For numbers, see World Bank: World Develop1nent Report 1993 (New York: Oxford University Press), pages 239 and 297. Although these nu1nbers are outdated, they al1nost certainly exaggerate the econo1nic size of Russia in 1993 or 1994. Recently, the Econo1nist (Vol. 329, No. 7841, Dece1nber 11, 1993, page 23) wrote: "Russia's output has fallen 1nore in the past three years than Alnerica' s did during the Great Depression ... " 11. Zhirinovsky see1ns ready to of fer to Ger1nany the territories that Ger1nany lost in the two world wars - without asking Poles or Czechs for their opinion. See Jacob W. Kibb: "The Zhirinovsky Threat". Foreign Affairs 73 (3), t.1ay -June 1994, 72-86. [Page 26] 12. Sa1nuel P. Huntington: "The U.S. - Decline or Renewal?" Foreign Affairs 67 (2), 1988/89, 76-96, quotes from pages 84 and 93. 13. "Survey: The European Co1mnunity". The Econo1nist (vol. 328, No. 7818, July 3rd, 1993). 14. See Erich Weede: Wirtschaft, Staat und Gesellschaft (TJbingen: t.1ohr, 1990) or "Ideas, Institutions and Political Cultu re in 653 Journal of World-Systems Research VJestern Develop1nent", Journal of Theoretical Politics 2 (4), 1990, 369-389. My thinking has been very 1nuch influenced by Eric Jones: The European Miracle (Cambridge: University Press, 1981) and Friedrich August von Hayek: The Constitution of Liberty ( Chicago: University Press, 1960). 15. See Nathan Rosenberg and L. E. Birdzell: How the VJest Grew Rich (New York: Basic Books, 1986), page 310. 16. See Mancur Olson: The Rise and Decline of Nations (New Haven, CT: Yale University Press, 1982), also Murrell and Olson, op. cit. note 3. 17. See v-irginia Gray and David Lowery: "Interest Group Politics and Econo1nic Growth in the US States." A.Inerican Political Science Review 52 (1), 1988, 109 -132. Clark Nardinelli, Miles S. VJallace and John T. VJarner: "Explaining differences in state growth: Catching-up versus Olson." Public Choice 52, 1987, 210 -213. Richard v-edder and Lowell Gallaway: "Rent -seeking, distributional coalitions, taxes, relative prices and exonomic growth." Public Choice 51, 1986, 93-100. John J. VJallis and VJallace E. Oates: "Does Econo1nic Sclerosis Set in with Age?" Kyklos 41 (3), 1988, 397 -417. [Page 27] 18. See Peter Bernholz: "Growth of Govern1nent, Econo1nic Growth and Individual Freedo1n." Journal of Institutional Econo1nics 142, 1986, 661-683. Kwang Choi: "A Statistical Test of Olson I s Model". Pp. 57-78 in Dennis C. Mueller, ed.: The Political Econo1ny of Growth (New Haven, CT: Yale University Press, 1983). Jan -Erik Lane and Svante Errson: "Political Institutions, Public Policy and Economic Growth." Scandinavian Political Studies 9, 1986, 19 -34. Erich VJeede: "The i1npact of state power on econo1nic growth rates in OECD countries." Quality and Quantity 25, 1991, 421 -438. 19. See Bernholz and VJeede, op. cit.; see also Fred C. Pa1npel and John B. VJillia1nson: Age, Class, Politics, and the VJelfare State (Cambridge: University Press, 1989) for an analysis of the welfare state and its defects. 20. The EC share in world 1nanufacturing exports has been falling since 1980. Then it was above 22i. Now it is below 18i. "Survey: The European Co1mnunity." The Econo1nist (vol. 328, No. 7818, July 3rd, 1993, page 12). [Page 28] 21. For the numbers as well as the evaluation of unification policies, see Sinn and Sinn, op. cit. note 1, esp. page 4. Also: Erich VJeede: "The Poli tics and Econo1nics of Ger1nan Reunification: Are There Lessons for Korea?" Korea and VJorld Affairs xv-II (4), 1993, 648-670. 22. For numbers, see VJorld Develop1nent Report 1993, op.cit. note 10, pages 239 and 297. 23. For Russia see the calculations at the end of the first section of this paper. 24. Op.cit., note 16. 25. At first glance, a 1nore opti1nistic reading of the Japanese future is possible. See J. Bradford De Long and Lawrence H. Su1mners: "Equip1nent Invest1nent and Econo1nic Growth". Quart erly Journal of Economics 106, 1991, 445 -502. They argue (page 455) "that differences in equip1nent invest1nent account for essentially all of the extraordinary growth perfor1nance of Japan relative to other countries." The prediction that Japan 1night overtak e the United States can be based on the fact that "the absolute level of industrial invest1nent in the United States has fallen below that of Japan". See V'Jayne Sandholtz et al.: The Highest Stakes. The Econo1nic Foundations of the Next Security Syste1n (New York: Oxford University Press, 1992, page 8). In 1ny view, equip1nent invest1nent itself is likely to fall, as Japan beco1nes 1nore si1nilar to European rent -seeking societies. [Page 29] 26. See Peter J. Katzenstein and Nobuo Okawara: "Japan's National Security: [Page 30] Structures, Norms and Policies." International Security 17 (4), 1993, 84 -118. Or Tho1nas U. Berger: "Fro1n Sword to Chrysanthenu1n: Japan I s Culture of Anti -l1ili taris1n." International Security 17 (4), 1993, 119 -150. Even if Japan developed the will, it 1nay be argued that Japan suffers fro1n a co1nparati ve disadvantage in international security rivalries. See l1ichael 11. l1ay: "Japan as Superpower?" International Security 18(3), 1993 -94, 182- 187. l1oreover, even those who take Japan to be a very serious chal lenger have to acbnit that co1npetitive defense production in Japan still lies 10 to 25 years in the future. See Sandholtz et al., op. cit., page 67. 27. For an extre1ne scenario see: "A V'Jorld History, Chapter 13: The disastrous 21st century". The Econo1nist (V-ol. 325, No. 7791, December 26th, 1992, pages 17 -19). 28. The Economist (Vol. 328, No. 7819, July 10th, 1993, page 63: Econo1nic giants). 29. See V'Jorld Develop1nent Report 1993, op.cit. note 10, pages 238-239 and 296-297. 30. The Econo1nist (V-ol. 325, No. 7787, November 28th, 1992. Survey: V'Jhen China V'Jakes, esp. page 5). See also V'Jillia1n H. Overholt: The Rise of China (New York: Norton, 1993). 31. See World Development Report 1993, pages 240 -241. [Page 30] 32. If you add Hongkong and Taiwan to the PRC, then the econo1nic size of China 1nay 1natch the United States already in 2002. "Survey: Asia. A billion consu1ners". The Econo1nist (vol. 329, No. 7835, October 30th, 1993, page 16). Or Nicholas D. Kristof: "The Rise of China". Foreign Affairs 72(5), 1993, 59-74, especially page 61. For a 1nore pessi1nistic evaluation of Chinese prospects, see "Econo1nic Focus: China". The Econo1nist (vol. 331, No. 7861, April 30th, 1994, page 77). 33. See J]rgen Do1nes: The Govern1nent and Poli tics of the PRC (Boulder, CO: V'Jestview, 1985) and Jurgen Do1nes and l1arie -Luise Nath: Geschichte der v-olksrepublik China (l1annhei1n: B. I. -Taschenbuch, 1992). The lower esti1nates co1ne fro1n the earlier 655 Journal of World-Systems Research book (pages 38, 49 and 212); the higher numbers co1ne fro1n the 1nore recent book (pages 46, 6 2 and 121). So1newhat lower figures are provided by Lowell Di tt1ner: China Under Refor1n (Boulder, CO: VJestview, 1994), pages 14, 72. 34. Al though per capita inco1ne in the richest region is about seven ti1nes as high as in the poorest province, it is a gross and 1nisleading si1nplification to say that so1ne coastal provinces boo1n and the interior does not. In the 1985 -91 period, the fastet growing province was Xinjiang, in the northwest of China. Moreover, Yunnan in the southwest grew as fast as 1nuch advertised Guangdong. For relevant data and further reasons why a territorial disintegration of China is unlikely, see Overholt: The Rise of China, op. cit. note 30, especially chapter II. Another recent discussion of regional autono1ny and conceivable disintegration is Gerald Segal: "China's Changing Shape". Foreign Affairs 73 (3), May-June 1994, 43- 58. [Page 31] 35. See Gerrit VJ. Gong: "China's Fourth Revolution". The VJashington Quarterly 17(1), Winter 1994, 29 -43. Or, Eric Jones: "Asia's Fate: A Response to the Singapore School". The National Interest 35, Spring 1994, 18-28. Or, Ditt1ner: China Under Refor1n, op. cit. note 33. 36. See Luttwak: The Grand Strategy of the Soviet Union, op.cit. note 2, page 115. More generally, it has been found that Marxist regi1nes are capable of i1nposing twice to three ti1nes as high 1nili tary burdens on their peoples as non -Marxist regi1nes. See Ja1nes L. Payne: lfJhy Nations Arin (Oxford: Blackwell 1989), esp. page 111. 37. See: "Asia's Ar1ns Race: Gearing up". The Econo1nist (V-ol. 326, No. 7799, February 20th, 1993, pages 21 -24). Or Kristof, op. cit. note 32. Or Des1nond Ball: "Ar1ns and Affluence: Military Acquisitions in the Asia -Pacific Region". International Security 18 (3), 1993-94, 78-112. 38. So1ne esti1nates for 1993 run as high as 14 '.:, . See: "China's perpetual revolution". The Econo1nist (V-ol. 328, No. 7824, August 14th, 1993, pages 53 -54). [Page 32] 39. All of this infor1nation co1nes fro1n the data appendix of the VJorld Develop1nent Report 1993, op.cit. note 10. For reasons why I focus in these variables, see, for exa1nple, lfJorld Bank: The East Asian Miracle (New York: Oxford University Press, 1993). 40. See Eric Jones: The European Miracle (Cambridge: University Press, 1981). Tai-Shuenn Yang: Property Rights and Constitutional Order in I1nperial China (Bloo1nington, IN: VJorkshop in Political Theory and Policy Analysis, 1987). 41. For infor1nation on these issues, see Do1nes or Do1nes and Nath, op.cit. note 33. But "the state retains ownership and has ada1nantly refused to forswear the possibil i ty of eventual resu1nption of control, despite the chronic insecurity this arouses a1nong peasants." Quoted fro1n Di tt1ner: China Under Refor1n, op. cit. note 33, page 201. 42. "Survey: VJhen China \"Jakes". The Econo1nist (vol. 325, no. 7787, Hovember 28th, 19 92, page 4). 43. Inefficient and loss -1naking state fir1ns still e1nploy about 107 1nillion people. Moreover, these f ir1ns si1nul taneously constitute welfare syste1ns for workers. Their deficits contribute to the central govern1nent' s deteriorating finances and inflationary pressure. See "China's perpetual revolution." The Econo1nist (vol. 328, no. 7824, August 14th, 1993, pages 53 -54). In contrast to Soviet-type econo1nies, 1nanagers at Chinese state - owned enterprises are rewarded or punished for their perfor1nance . If unsuccessful, they 1nay lose about half of their salary. VJhile factory workers have jobs for life, 1nanagers 1nay be de1noted or fired. See "Survey: VJhen China \"Jakes". The Econo1nist (V-ol. 325, No. 7787, Nove1nber 28th, 1992, page 15). Moreover, the size of public sector in total e1nploy1nent in the PRC should not be exaggerated. It is [Page 33] 44. See VJorld Bank, op.cit. note 39. VJorld Bank: VJorld Develop1nent Reports 1987 and 1991 (New York: Oxford University Press, 1987 and 1991). David Dollar: "Outward-oriented Developing Econo1nies Really Do Grow More Rapidly: Evidence fro1n 95 LDCs". Econo1nic Develop1nent and Cultural Change 40 (3), 1992, 523 -544. So1newhat disagreeing: Robert \"Jade: Governing the Market (Princeton: University Press, 1990). 45. For the nu1ne rical infor1nation, see the data appendix of VJorld Bank: VJorld Develop1nent Report 1993 (New York: Oxford University Press, 1993). 46. "China's perpetual revolution". The Econo1nist (V-ol. 328, No. 7824, August 14th, 1993, pages 53 -54). 47. For a very pessi1nistic evaluation, see Richard Hornik: "Bursting China's Bubble". Foreign Affairs 73(3), May -June 1994, 28-42. 48. Co1npare Christopher Layne: "The Unipolar Illusion: VJhy New Great Powers Will Rise." International Security 17(4), 1993, 5 -51. In contrast to 1ne, however, Layne takes Ger1nany and Japan seriously as potential challengers. [Page 34] 49. On the i1nportance of these 1natters, see Sa1nuel P. Huntington: "The Clash of Civilizations?" Foreign Affairs 72(3), 1993, 22 -49. 50. It is the co1nparati ve decline of the \"Jest on both sides of the Atlantic that necessitates North Atlantic cooperation vis -a-vis dyna1nic East Asia. It is absolutely essential that VJestern Europe and the United States are not lured by strategic trade theory into 1nercantilis1n and a 'cult of the econo1nic offensive'. See Michael Borrus, Steve VJeber, and John Zys1nan, with Joseph VJillihnganz: "Mercantilis1n and Global Security". The National Interest 29, Fall 1992, 21-29. On the political econo1ny of strategic trade theory see Jagdish Bh agwati: The VJorld Trading Syste1n at Risk (London: Harvester and VJheatsheaf), or Paul Krug1nan: "Is free trade pass,?" Journal of Economic Perspectives 1(2), 1987, 131 -144. 657 Journal of World-Systems Research 51. See A.F.K. Organski and Jacek Kugler: The V'Jar Ledger. Chicago: University of Chicago Press 1980. Robert Gilpin: V'Jar and Change in V'Jorld Poli tics. Cambridge: Cambridge University Press 1981. Daniel S. Geller: "Capability Concentration, Power Transition and V'Jar." International Interactions 17, 1992, 269 -284. 52. V'Jhile I a1n on record as a believer in the effectiveness of nuclear deterrence as a 1neans to reduce the risk of war, it is hard to believe that nuclear deterrence always works perfectly. See Erich V'Jeede: "Extended Deterrence by Superpower Alliance." Journal of Conflict Resolution 27(2), 1983, 231-254 and 27(4), 1983, 739 where 1nisprints are corrected. [Page 35] 53. "Pollution in Asia: Pay Now, Save Later". The Econo1nist (V-ol. 329, No. 7841, Dece1nber llth, 1993, 60 -61). Already, China is the third largest source of greenhouse gase s. It 1night well beco1ne the largest source of acid rain by 2010 and e1nit three ti1nes as 1nuch carbon dioxide as the United States by 2025. Unless so1nething constructive is done, Chinese econo1nic growth 1nay kill forests in Siberia, Korea, and Japan. Its i1npa ct on cli1nate and sea level 1nay inundate Bangladesh. See Kristof, op.cit. note 32. 54. This causal chain has been analyzed by Erich V'Jeede: "Econo1nic Policy and International Security: Rent -Seeking, Free Trade and De1nocratic Peace." Paper prepared for pre sentation at the European Public Choice Conference, v-alencia, Spain, April 6 -9, 1994. This paper builds on a large nu1nber of studies. Here, I quote only a single study on each link in the causal chain. For trade and prosperity, see Jagdish Bhagwati: The V'Jo rld Trading Syste1n at Risk (London: Harvester and V'Jheatsheaf, 1991). For prosperity and de1nocracy, see Sey1nour M. Lipset: "The Social Requisites of De1nocracy Revisited." Alnerican Sociological Review 59, 1994, l -22. For de1nocracy and peace, see Bruce M. Russett: Grasping the De1nocratic Peace (Princeton: University Press, 1993). [Page 36] 55. V'Jhether supporting China by opening V'Jestern 1narkets to Chinese exports actually is in the V'Jestern interest, of course, depends crucially on the assu1nptions that a new c old war between China and the United States, or China and the V'Jest, can be avoided, and that de1nocracy stands a good chance to develop in a future prosperous China. But if the V'Jest decides to deny China the chance to grow by trading itself out of poverty, then this 1night well be received in China as a kind of pree1npti ve declaration of a new cold war. Al though opti1nistic scenarios about China need not turn out to be self-fulfilling prophecies, pessi1nistic scenarios tend to be self - fulfilling. Co1npare Cha line rs Johnson: "Rethinking Asia". The National Interest 32, Su1mner 1993, 20 -28, especially page 24. 56. For reasons why capi tali sin pro1notes de1nocracy, see Peter L. Berger: "The Uncertain Triu1nph of De1nocratic Capitalis1n", and Kyung-won Ki1n: "Marx, Schu1npete r, and the East Asian Experience", pp. l-25 in Larry Dia1nond and Marc F. Plattner, eds.: Capitalis1n, Socialis1n, and De1nocracy Revisited (Bal ti1nore: Johns Hopkins University Press, 1993). The prospect of "authoritarianism un1nodified by successful growth" is also labeled "least probable" by Eric Jones: "Asia's Fate: A Response to the Singapore School". The National Interest 35, Spring 1994, 18 -28, especially page 28. 57. See Richard K. Betts: "VJealth, Power, and Instability: East-Asia and the United States after the Cold VJar". International Security 18(3), 1993- 94, 34-77, especially pp. 53-54. Volume1Issue1Weede_Page_01 Volume1Issue1Weede_Page_02 Volume1Issue1Weede_Page_03 Volume1Issue1Weede_Page_04 Volume1Issue1Weede_Page_05 Volume1Issue1Weede_Page_06 Volume1Issue1Weede_Page_07 Volume1Issue1Weede_Page_08 Volume1Issue1Weede_Page_09 Volume1Issue1Weede_Page_10 Volume1Issue1Weede_Page_11 Volume1Issue1Weede_Page_12 Volume1Issue1Weede_Page_13 Volume1Issue1Weede_Page_14 Volume1Issue1Weede_Page_15 Volume1Issue1Weede_Page_16 Volume1Issue1Weede_Page_17 Volume1Issue1Weede_Page_18 Volume1Issue1Weede_Page_19 Volume1Issue1Weede_Page_20