Listener 15 March, 2003.
This was a response to an invitation to envisage a world in which the United States was not as dominant economically.
Keywords: Globalisation & Trade;
The most likely scenario for a major and early demise of American financial and economic hegemony would be that the financial fundamentals of the private sector are already ruined, and that Bush’s tax cuts creates a government deficit which is as damaging to the public sector. This would be reinforced by the depleting resource base – especially for oil and water – which, coupled with an extraordinary vigour and optimism, has been the foundation of US economic development.
The outcome, perhaps after a devastating inflationary depression, would be a tri-polar world, the other two components being the European Union (soon to be a bigger economy than the US anyway), and East Asia.. (The current thinking is that, rather than Japan, China – already the 11th largest economy in the world – would be the pre-eminent player. One summary is that China is going to turn international manufacturing into a commodity.)
The US dollar would cease to be the world currency (the euro is the obvious alternative) which would undermine the US dominated IMF and possibly other world economic institutions (the World Bank and the WTO). Under very pessimistic assumptions there could be an end to the international economy’s open trading regime and a return to the fortress economies of the 1930s.
Even if the open regime trade continues, there will be less emphasis on the notion that self-interest (especially the US one) reflects the world’s general interest. (In any case there has to be more attention to environmental issues.) Characterisations of economics as based on an idealised US economy will end. The dominant ideology in economic and political theory is likely to be moderated by pragmatism on one hand, and a commitment to social values on the other – ironically a shift towards Bush’s father’s promise of a ‘kinder gentler society’. Almost certainly there will be a greater component of ‘oriental’ values and experiences in world thinking, although English will continue to be the dominant language.