Branko Milanovic worries that in the new global constellation a second cold war—with China—could be in the offing.
Most of the world with some political influence seemed to have breathed a sigh of relief: Donald Trump had finally left the White House. Four years of chaotic policies, interspersed with racist invective, had come to an end.
United States liberals had fended off another existential challenge—this time from within their own nation. The current mood might be subdued by the ravages of the pandemic but, when this is over, would they not go back to the celebratory triumphalism of the early 1990s? There are indeed strong similarities between then and now.
Democratic victory
The end of communism was a victory for democratic capitalism and, in the US, for the coalition of conservatives and liberals established in Harry Truman’s postwar presidency and lasting through that of Ronald Reagan in the 1980s. Around the late 60s, communism had ceased to be an internal threat, as communist parties in western countries became less important politically and step-by-step transformed themselves into social democrats. Eventually they mostly self-extinguished.
But externally the power of the Soviet Union was formidable. It could destroy the US (and be in turn destroyed) within less than half an hour—as recently released documents about a 1983 US exercise precipitating Soviet preparation for nuclear attack show. The coalition of democratic states prevailed when the Soviets decided to jettison communism and join the richer western coalition.
The winning coalition of conservatives and liberals in the US then felt free to engage in the building of a ‘new world order’ and in quick succession launched a number of wars: on Panama, Iraq (twice), Serbia, Afghanistan and Libya. The North Atlantic Treaty Organization expanded into the former Soviet sphere in eastern Europe and US military outposts—now numbering around 800—were established around the world.
Ideological belief
What underpinned this extraordinary manifestation of power was the ideological belief that all challenges to liberalism had been shown to be politically and economically weak. Those who had yet failed to embrace the nostrums of Washington, the story went, had not done so only because they were not allowed to express their deeply-held desires—or were incurable ‘Islamo-fascists’, a term coined specially for the second Iraq war. In March 2003 the neoconservatives dominant in the administration of George W Bush and the majority of liberals who supported the war claimed that the streets of Baghdad would be strewn with ‘garlands and flowers’ for the conquering ‘coalition’ armies and that a newly democratic Iraq would join democratic Israel in ensuring peace and prosperity in the middle east.
Reality in Iraq plus the global financial crisis, followed by domestic insurgencies in the international centres of liberalism, put paid to these views. As the liberal-conservative coalition had to deal with ‘internal enemies’ in most important countries—ranging from the gilets jaunes in France to Brexiters in the United Kingdom and Trump in the US—the last few years were quiescent in foreign affairs.
Now, with this latest threat successfully subdued, the danger is that the triumphalism which accompanied the end of the cold war may return. And that could precipitate another cold war, this time with China.
Hysterical behaviour
Trump already did all the preparatory work. However gratuitous was the trade conflict between China and the US, in principle at least it was soluble—the two sides were moving toward a compromise. But Covid-19 ended these hopes. Trump’s increasingly hysterical behaviour indicated that he saw the epidemic as a Chinese plot to oust him from power. His own and his administration’s attacks on China became increasingly strident and frequent.
By now, however, the anti-China attitude was shared by all influential segments of US politics. Many may not wish to admit that they are following in Trump’s footsteps, but they are—with an ominous escalation. What was a trade conflict has morphed into a conflict of values. Conflicts of values are by definition irresolvable, except by the victory of one side and defeat of the other.
The explanation for a new cold war proffered by Democratic leaders is that US engagement with China and acquiescence in its membership of the World Trade Organization were based on the idea that China would gradually liberalise its politics. It was a form of the modernisation theory the US establishment had believed in since the early 1960s, a belief reinforced by the fall of communism. In this reading of history, the conflict with China is inevitable because the Chinese leadership has not behaved according to the US establishment’s script and has failed to follow its economic prowess with multi-party democracy.
Losing supremacy
But a different reading of the roots of the conflict is possible too. It is based on Realpolitik, where US supremacy is seen as potentially endangered by the rise of China and creation of a bipolar world. Additionally, if a different type of capitalism is shown to be economically more efficient, would that not undermine liberals’ own view of the ‘end of history’? The conflict may be due to the fear of losing economic, and with it ideological, supremacy—not just the spurned hope of China emulating the west.
Thucydides, general in classical Athens and historian of its war with Sparta, wrote that people fight because of interests, honour or fear. The fear of loss of US mastery may push the resurgent coalition of liberals and conservatives to continue with Trump’s anti-China policy—and to elevate the tensions another notch by presenting the conflict as one between incompatible values. The idea of ‘regime change’ cannot be far behind.
Does the world need a second cold war? We were lucky to have escaped nuclear apocalypse with the first. No sane person could be in favour of having another brush with destruction, just because one part of the world wants to impose its system of values on another.
But the stars seem so aligned. Covid-19 may be seen by future historians (in the optimistic scenario that there are future historians) as the trigger that launched the world into an unnecessary and destructive political, and perhaps military, confrontation.
This article is a joint publication by Social Europe and IPS-Journal
Branko Milanovic is a Serbian-American economist. A development and inequality specialist, he is visiting presidential professor at the Graduate Center of City University of New York and an affiliated senior scholar at the Luxembourg Income Study. He was formerly lead economist in the World Bank's research department.