Western Dominance Is Coming to an End

A metamorphosis of virtually unprecedented proportions is taking place outside our direct field of vision. China and India, with populations of more than a billion people each, two countries we considered part of the Third World only yesterday, are suddenly surging ahead. We are all contemporary witnesses of, and participants in, an eruption of vitality that is unique in world history. The era of Western dominance, those two centuries in which first the Europeans and then the Americans overshadowed the rest of the world with their economic might, is coming to an end. After two world wars, the center of the world has shifted from Europe to America, and now it is shifting once again, this time toward Asia. A new topography of power is taking shape. What began with the rise of Japan, and continued with the success stories of the Asian Tigers—Singapore, Hong Kong, Taiwan, and South Korea—is now coming full circle. By 2025, China and India will likely dominate the world market with their purchasing power.

Meanwhile, the West is turning into a miniaturized version of itself. Its population is both shrinking and aging, its inventive spirit is diminishing, and its relative share of the economic pie is getting smaller. Europe’s share of the global market, three times the size of China’s and India’s combined before World War I, will shrink to only 15 percent of the economic power of these two countries within the next two decades. The United States, still the world’s dominant economic power today, will also have fallen behind China and India by then.

Globalization has shifted the economic emphasis away from the West. Asia’s emerging economies have managed to significantly expand their productive cores—the sphere in which capital and labor come together to generate the wealth of a nation—in the last two decades. Meanwhile, the productive core of the West is shrinking. The U.S. share of global exports, for example, has been cut in half since 1960.

But China is not America’s biggest problem. America’s problem is America itself or, to be more precise, its broad lack of understanding and awareness of the world’s rising powers. It’s business as usual in the United States, even as the foundation on which the country has based its economic strategy has changed fundamentally. Anyone who hopes to change the world for his own benefit must see and recognize the magnitude of the challenge.

What many in the West fail to realize is that what is happening in the Far East is not an extension of the present but the beginning of a new present. The rules of the world economy are being rewritten, but not by the West. The flat world once dominated by the West, the world in which the United States, Canada, and Europe held sway over world markets with their companies, their currencies, and their rules and regulations, is broken. The new world is not flat. It is a structure with many sharp edges and deep chasms. Unless Western politicians recognize the need for decisive and concerted action, these chasms will eventually swallow up many in the West, first ordinary workers and later portions of the middle class.

Anarchy prevails on the global labor market today. A brutal and primitive form of capitalism, with its starvation wages and its lack of workers’ rights and protections for the environment, is now in competition with a more sophisticated capitalism, which seeks to protect both the environment and its workers. We may consider ourselves modern and enlightened, and yet we are on the losing end of this struggle. The world is out of kilter, and it is fast becoming an unpleasant place in which to live. But most of all it challenges us to take political action.

For the Asians, taking control of the low-wage labor market was only the beginning. Their attack on the middle class and modern, high-tech jobs is still in its infancy, as Asian nations invest more and more of their revenues in research and education. Their
goal is dominance, not being part of a silent partnership. They want to lead instead of follow. 

The truth is that the winners and losers in the war for wealth have already switched roles. Asia’s new strength leads to the weakening of the West. Its rise is the West’s descent. As Asia booms, Europe faces mass unemployment and growing national debt. In the United States, the balance of trade deficit, consumer debt, and risks to the stability of the dollar are all growing. The American economy is now on shaky ground. The country will not be able to afford this form of the present for much longer. U.S. society, built from the ashes of the Civil War and committed to the values of freedom, equality, and equal opportunity, now faces a series of challenges of historic dimensions.

The new world is by no means more peaceful than the old. Today’s victories are being won on the economic battlefield—only to be transported to the political and military sphere. Intoxicated by their meteoric rise of the past decades, the leaders of China and India recently declared that their goal is to “establish a new world order.” Asia’s arms buildup has already taken on enormous proportions, as nuclear weapons become the status symbol of the continent’s nouveau riche.

Despite international commerce and intensive trade relations, the risk of armed conflict has not declined by any means. Asia’s rise to power is accompanied by feverish anxiety on the continent. The Asians’ newly acquired economic might has both boosted their self-confidence and created growing mutual distrust. Economic inequality—within and between nations—generates a potentially explosive situation.

My book examines the forces that are driving these global changes. Where does the immense energy behind globalization come from? How is the sheer magnitude of these processes changing and reshaping life in the United States? Who are globalization’s winners and losers? What will happen to the wealth we enjoy today? What can we do to stop these processes? Finally, how can America respond strategically if it hopes to preserve the power and prosperity of its citizens under changed conditions? Good policies begin with the ability to recognize reality. The goal of this book is to help make this recognition possible.

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The War for Wealth, by Gabor Steingart, addresses the issue of globalization and the problems it presents. Is it a force for good or an attempt to destroy the U.S.'s economic standing? Discuss this book and topic in the McGraw-Hill Books group this month and see where you stand on the issue. Click here to join the group.