books economics globalisation sustainability wealth

The War for Wealth, by Gabor Steingart

//” cannot be displayed, because it contains errors. The West is distracted, says Gabor Steingart. We, and America in particular, are focused on the wrong things. “World history isn’t being written in Afghanistan, Baghdad, or Tehran,” he writes, “but in Shanghai. The fateful word confronting our generation is not terror, but globalisation… The war for wealth, the bitter struggle for a share of affluence, and the related struggle over political and cultural dominance in the world, are the real conflicts of our day.”

The War for Wealth goes on to explore this statement through a history of globalization, starting with the British empire and charting its decline through the World Wars. American power replaced European power, but is now being undermined itself by the rapidly growing economies of India and China. The US trade deficit and the haemorrhaging of jobs, knowledge and industry has left it a shell of an economy, reliant on consumer spending and increasing debt to sustain its levels of growth. “Politicians and economists are trying to convince the American people that they have disabled the laws of economic gravity” he concludes.

However, China’s economy is equally unsustainable, fuelled as it is by environmental overspend to maintain high levels of exports. As most of those exports go to America, “each of these two giant nations depends on the madness of the other. China needs America’s greedy consumption, while America needs China’s obsessive growth.”

If things continue as they are, China will overtake the US economy by 2050, and the world will have to adjust to a multi-polar balance of power again. China’s environmental problems may be catastrophic by then, or the gross inequalities of China’s new-found wealth may have pushed their enormous underclass into full-scale revolt. Either way, competition for resources and for political influence in a world of shifting alliances could provoke very serious instabilities. Steingart compares Asia now to Europe just before the First World War, even writing a highly speculative section called ‘Where is the new Sarajevo?’, pointing to North Korea or Taiwan.

In reply to this changing world, Steingart is clear that ‘China is not America’s biggest problem. America’s problem is America itself.’ If it is to maintain a healthy economy and in any way compete, it needs to re-think free trade. China, India, Malaysia, Singapore, all these places are proving economies can be planned and still hugely successful. America, and the West more generally, needs to learn to act more practically and less dogmatically. Steingart addresses the issue of labour, calling for closer international monitoring, and minimum standards administered through the WTO. He also looks at the welfare state, pointing out that the way welfare is funded in the US is detrimental to business, and indirectly encourages job losses. More controversially, he calls for closer links between the US and Europe, even as far as proposing a United States of the West. This would provide an economic base able to match China’s, and maintain a balance of power.

While all of this is a useful corrective to both Benjamin Barber’s divisive ‘Jihad vs McWorld’ narrative and Thomas Friedman’s optimistic ‘flat world’ theory, it doesn’t quite present a cohesive alternative framework. Steingart is correct in pointing out that China is a more important agent than the militant Islam, and that globalization is a bigger story than terror, but his analysis of globalization is too narrow. He talks about the winners and losers, but mainly in the national context – the Communist Party verses Chinese peasant farmers; venture capitalists versus US blue collar workers. He neglects the international perspective. There is little mention of South America, other than Brazil, nor Eastern Europe. Africa doesn’t feature on Steingart’s redrawn map at all. Even Russia has no significant role in any of his scenarios – a huge oversight, as recent events in Georgia have proved.

The ultimate aim of The War for Wealth is to issue a warning to the West that its dominance is under threat, and Steingart’s solutions are geared towards preserving and advancing that dominance, ensuring that the West stays competitive after decades unchallenged. He encourages the West to help the emerging economies of China and India to integrate into the existing world economy. At no point does he stop and consider whether the West’s dominance has been a good thing, or whether our global trade system works, whether it is fair, inclusive, or even truly ‘global’. That unquestioning attitude is, for me, what is most disappointing. Steingart’s ideas might save the United States, but they would do nothing to solve the inequity of our globalized world.

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