Until recently, the West has, by and large, determined the rules of the game on the global stage. During the last century, western countries presided over a shift in world power – from control via territory to control via the creation of governance structures created in the post-1945 era. From the United Nations Charter and the formation of the Bretton-Woods institutions to the Rio Declaration on the environment and the creation of the World Trade Organisation, international agreements have invariably served to entrench a well-established international power structure. The division of the globe into powerful nation states, with distinctive sets of geopolitical interests, and reflecting the international power structure as it was understood in 1945, is still embedded in the articles and statutes of leading intergovernmental organisations, such as the UN, the IMF and the World Bank. Voting rights are distributed largely in relation to individual financial contributions, and geo-economic strength is integrated into decision-making procedures.

The result has been susceptibility of the major international governmental organisations (IGOs) to the agendas of the most powerful states, partiality in enforcement operations (or lack of them altogether); their continued dependency on financial support from a few major states, and weaknesses in the policing of global collective action problems. This was dominance based on a ‘club’ model of global governance and legitimacy. Policy at the international level was decided by a core set of powerful countries, above all the G1, G5 and G7, with the rest excluded from the decision-making process.

Today, however, that picture is changing. The trajectory of western dominance has come to a clear halt with the failure of dominant elements of western global policy over the last few decades. The West can no longer rule through power or example alone. At the same time, Asia is on the ascent. Over the last half-century, East and Southeast Asia has more than doubled its share of world GDP and increased per capita income at an average growth rate almost 2½ times that in the rest of the world.1 In the last two decades alone, emerging Asian economies have experienced an average growth rate of almost eight per cent – three times the rate in the rich world.2

As a result, Asia has been both a stabilising influence on and steady contributor to world economic growth. According to the IMF, China alone accounted for around a third of global economic growth last year, more than any other nation, and its economy is the only one of the world’s ten biggest which is still expanding in the wake of the financial crisis.3 Other Asian economies have bounced back from the financial crisis far more quickly than anyone expected. As a recent New York Times article points out, the United States has always led the way out of major global economic crises, but this time, the catalyst is coming from China and the rest of Asia.4 They are no longer totally beholden to the US and other western countries as recipients of their exports, and this decoupling has to some extent allowed Asian economies to recover more quickly. Boosted by increased consumer spending and massive government-led investment, the region as a whole is expected to grow by more than five per cent this year – at a time when the old G-7 countries could contract by 3.5 per cent or more.5 Simply put, we are seeing a fundamental rebalancing of the world economy, with the centre of gravity shifting noticeably to the East.

The trajectory of change is towards a multipolar world, where the West no longer holds a premium on geopolitical or economic power. Moreover, different discourses and concepts of governance have emerged to challenge the old western orthodoxy of multilateralism and the post-war order. At the same time, complex global processes, from the ecological to the financial, connect the fate of communities to each other across the world in new ways, requiring effective, accountable and inclusive problem-solving capacity. How this capacity can be ensured is another matter.

Paradox of our times

What I call the paradox of our times refers to the fact that the collective issues we must grapple with are of growing cross-border extensity and intensity, yet the means for addressing these are weak and incomplete. While there are a variety of reasons for the persistence of these problems, at the most basic level the persistence of this paradox remains a problem of governance.

We face three core sets of problems – those concerned with sharing our planet (global warming, biodiversity and ecosystem losses, water deficits), sustaining our humanity (poverty, conflict prevention, global infectious diseases) and our rulebook (nuclear proliferation, toxic waste disposal, intellectual property rights, genetic research rules, trade rules, finance and tax rules).6 In our increasingly interconnected world, these global problems cannot be solved by any one nation state acting alone. They call for collective and collaborative action – something that the nations of the world have not been good at, and which they need to be better at if these pressing issues are to be adequately tackled. Yet, the evidence is wanting that we are getting better at building appropriate governance capacity.

One significant problem is that a growing number of issues span both the domestic and the international domains. The institutional fragmentation and competition between states can lead to these global issues being addressed in an ad hoc and dissonant manner. A second problem is that even when the global dimension of a problem is acknowledged, there is often no clear division of labour among the myriad of international institutions that seek to address it: their functions often overlap, their mandates conflict, and their objectives often become blurred. A third problem is that the existing system of global governance suffers from severe deficits of accountability and inclusion. This problem is especially relevant in regard to how less economically powerful states and, hence, their entire populations, are marginalised or excluded from decision-making.

Economic liberalism and international market integration

For the last two to three decades, the agenda of economic liberalisation and global market integration – or the Washington Consensus as it is sometimes called – has been the mantra of many leading economic powers and international financial institutions. The thrust of the Washington Consensus was to promote this view and to adapt the public domain – local, national and global – to market-leading institutions and processes. It thus bears a heavy burden of responsibility for the type of common political resistance or unwillingness to address significant areas of market failure, including:

• The problem of externalities, such as the environmental degradation exacerbated by current forms of economic growth;
• The inadequate development of non-market social factors, which alone can provide an effective balance between ‘competition’ and ‘cooperation’ and thus ensure an adequate supply of essential public goods, such as education, effective transportation and sound health;
• The under-employment or unemployment of productive resources in the context of the demonstrable existence of urgent and unmet need; and
• Global macro-economic imbalances and a poor regulatory framework – policies that led to the financial crisis.

Today, there are strong grounds for doubting that the standard liberal economic approach delivers on promised goods and that global market integration is the indispensable condition of development. The implementation of such policies by the World Bank, IMF and leading economic powers has often led to counter-productive results, at national and global levels. Countries that have benefited most from globalisation are those that have not played by the rules of the standard liberal market approach, including China, India and Vietnam.

Leaving markets alone to resolve problems of resource generation and allocation misses the deep roots of many economic and political difficulties, such as the vast asymmetries of life chances within and between nation states, the erosion of the economic fortune of some countries in sectors like agriculture and textiles while these sectors enjoy protection and assistance in others, the emergence of global financial flows which can rapidly destabilise national economies, and the development of serious transnational problems involving the global commons.

The financial crisis is a case in point. High levels of consumer spending in the West, fuelled by easy access to credit, underwritten by high rates of savings in exporting countries in the East (especially China), and aided by China’s fixed exchange rate and the accumulation of reserves in sovereign wealth funds, created a global liquidity overflow. The resulting asset bubbles and excess leverage, which eventually caused the crisis, were, however, not due to these factors alone. The key fault line can be traced to a ‘light touch’ regulatory system that encouraged risk-taking and allowed money to be diverted into very specific areas: mortgage securitisation and off-balance sheet activity.7 The fallout, when it came, was devastating – and while many financial institutions have emerged relatively unscathed, the damage to western economies has been huge. The financial crisis has to be understood as part of the structural weakness of the Anglo-American model of capitalism – a model, which recently sought to reshape the post-war welfare state through privatisation, deregulation, and regressive tax and social policies in the name of promoting economic efficiency and market success.8

Security

From the period following WW2 until 1989, the nature of national security was shaped decisively by the contest between the United States and the Soviet Union. The dominance of the US and the USSR as world powers, and the operation of alliances like NATO and the Warsaw Pact Treaty constrained decision-making for many states in the post-war years. In the post-cold War world of the 1990s and the 2000s the constraints upon state security policy have not been eradicated but reconfigured. Instead of bipolarity, the global system now exhibits more of the characteristics of a multipolar distribution of political-economic power. Within this more complex structure the strategic and foreign policy options confronting an individual state are still defined by its location in the global power hierarchy.

The war against Iraq in 2003 gave priority to a narrow security agenda, which was at the heart of the post 9-11 American security doctrine of unilateral and pre-emptive war. This agenda contradicted most of the core tenets of international politics and international agreements since 1945, and had many serious implications. Among them were a return to an old realist understanding of international relations, in which states rightly pursue their national interests unencumbered by attempts to establish internationally recognised limits (such as self-defence or collective security) on their ambitions. But if this ‘freedom’ is to be granted to the USA, why not also to Russia, China, India, Pakistan, North Korea, Iran and so on? It cannot be consistently argued that all states bar one should accept limits on their self-defined goals. The flaws of international law and multilateralism can either be addressed or taken as an excuse for the further weakening of international institutions and legal arrangements. In either event, America’s unilateralist moment proved to be short-lived – Iraq and Afghanistan have subsequently proved the dangers of such a strategy. The US and its allies generalised the wrong warfare model – the Cold War model – onto an era of fragmented, complicated conflicts, and stalled at best, lost at worse.

Most armed forces of the world – military/air/navy – are still developed on a model of nation states at war with one another, and based on the organisational principle of geopolitical state interests. And global military spending, fuelled by such preconceptions, has been on a sustained upward trend. Total global military expenditure in 2008 is estimated to have totalled $1.464 trillion, representing an increase of 4 per cent in real terms compared to 2007, and of 45 per cent over the ten-year period 1999–2008.9 To put this in perspective, it is:

- 2.4 per cent of global GDP, or $217 for every person on the planet.
- 13 times the total spent on all types of development aid.
- 700 times the total amount spent on global health programmes.
- Roughly the same as the combined total GDP of every country in Africa.
- Only the total cost of the financial crisis, 8 times as large, dwarfs it.

The United States accounts for the majority of the global increase – representing 58 per cent of the global increase over the last ten years, largely due to the wars in Iraq and Afghanistan, which have cost around a trillion dollars thus far.10 However, the US is far from the only country to pursue such a determined course of militarisation. China and Russia have both nearly tripled their military expenditure, while other regional powers – such as Algeria, Brazil, India, Iran, Israel, South Korea, and Saudi Arabia – have also made substantial contributions to the total increase. Of the five permanent members of the UN Security Council, only France has held its spending relatively steady, with a rise of just 3.5 per cent over the last decade. The effects of the global financial crisis – in particular, growing government budget deficits and the economic stimulus packages that are aimed at countering the crisis – seem to have had little effect on military spending, with most countries, including the US and China, remaining committed to further increases in the years ahead.

Yet, according to the 2009 SIPRI yearbook, the most comprehensive open-source account of developments in global conflicts and security, of the sixteen major armed conflicts that were active in fifteen locations around the world in 2008, not one was a major interstate conflict.11

Militaries remain organised on a national, rather than regional or multilateral basis, with vast duplication, overlap and waste of resources. In countries like the UK and the US, spending levels are now far in excess of any plausible defensive needs, and are no longer justified on such grounds. With the exception perhaps of the US and China, no country is capable of acting independently in major conflicts or to intervene against regimes that threaten global peace and security. There is something quite baroque about existing defence positions and tactics.12 Against this background, the way we conduct military spending looks increasingly anachronistic. It bears pointing out that total global spending on multilateral operations such as peacekeeping forces was $8.2 billion, or 0.56 per cent of total global military expenditures.13

Learning has been slow but now some of the world’s most senior military figures have taken up the challenge and are changing the way warfare is conceived. In a recent speech at Chatham House, the new head of the British Army, General Sir David Richards, warned that traditional methods and forms of warfare are becoming redundant.14 According to Richards, globalisation is increasing the likelihood of conflict with non-state and failed state actors, and reducing the likelihood of state-on-state warfare. Despite the use of impressive amounts of traditional combat power, the US and NATO, ‘the most powerful military alliance in the history of the world’, has failed to impress or deter opponents with recourse to asymmetric tactics and technology.15 Similarly, General Stanley McChrystal, NATO’s most senior commander in Afghanistan, has warned that the West’s military strategy is failing, and that a new approach is necessary. In a recently completed review, he is reported to have said that the initiative may have been handed to the Taliban by NATO forces charging like bulls at ‘matador’ insurgents and haemorrhaging with each thrust of the sword.16

What might such an approach look like? For a start, armed forces of the future will have to deal with new types of weapons systems and methods of warfare. According to General Richards, the lexicon of today is, ‘non-kinetic effects teams, counter-IED, information dominance, counter-piracy, and cyber attack and defence’.17 Armed forces of the future will need to be relevant to emerging security challenges and the increasingly sophisticated adversaries they face. Moreover, General David Petraeus, head of the US Central Command, and the man who oversaw the 2007 and 2008 ‘surge’ in Iraq has pointed out that new techniques of warfare are not enough. He stresses the importance of a more comprehensive approach to conflict. By this he means that:

‘While the traditional focus on the high ground, bridge crossings, and key infrastructure remains valid to varying degrees, especially, for example, in the mountainous regions of Afghanistan, the terrain that matters most is the human terrain, the people. Clearly we have to understand the people, their culture, their social structures, and how systems to support them are supposed to work – and how they do work. And our most important tasks have to be to secure and to serve the people, as well as to respect them and to facilitate the provision of basic services, the establishment of local governance, and the revival of local economies.’18

The impact of the global financial crisis

The financial crisis and its after-effects are a particular instance of both of the themes discussed so far – the end of the Washington Consensus and the decline of inter-state conflict. It will put further pressure on budgets, and put in sharp relief trade-offs on public expenditure. Of course, such trade-offs are nothing new. The issue is less about the contraction of available money (if anything the crisis increased the money available) as it is about a shift in public priorities. Security threats are in the process of being downgraded, and at the top of the agenda is now climate and finance, as well as ring-fenced domains such as the NHS. In short, a time is rapidly approaching when defence budgets will not only taper off as war supplementals disappear, but will also compete against ballooning mandatory spending programmes for fewer and fewer tax resources – all, of course, amidst an uncertain path to recovery in the US and Europe.

The financial crisis has also resulted in the emergence of the G20 as the new de-facto governance coalition of powerful states – with the US and China at the forefront of all negotiations. While both countries still pay lip service to the idea of multilateralism, the shift from the G1, G5, and G8 to the G2 and the G20 reflects the changing balance of power in the world.

Conclusion

Today, there is a newfound recognition that global problems cannot be solved by any one nation state acting alone, nor by states just fighting their corner in regional blocs. As demands on the state have increased, a whole series of policy problems have arisen which cannot be adequately resolved without cooperation with other states and non-state actors. There is a growing recognition that individual states are no longer the only appropriate political units for either resolving key policy problems or managing a broad range of public functions.

The policy packages that have largely set the global agenda – in economics and security – have been discredited. The Washington Consensus and Washington security doctrines have dug their own graves. The most successful developing countries in the world are successful because they have not followed the Washington Consensus agenda, and the conflicts that have most successfully been diffused are ones that have benefited from concentrated multilateral support and a human security agenda. Here are clear clues as to how to proceed in the future. We need to follow these clues and learn from the mistakes of the past if democracy, social justice and a renewed multilateral order are to be advanced.

Or, to sum up, realism is dead, long live cosmopolitanism.

The future of organised force in countries like our own is through regional and international organisations. Cooperation between states is still important, if not more so, but what has changed is the rationale, which is now deeper and more complex. The old threat was the ‘other’; the new threat is shared problems and collective threats.

Endnotes

1 Quah, Danny (2008), ‘Post 1990s East Asian Economic Growth’, unpublished, available at http://econ.lse.ac.uk/staff/dqua/Post-1990s-eaeg-KDI-DQ.pdf.

2 The Economist (2009), ‘An Astonishing Rebound’, 13 August.

3 International Monetary Fund (2009), World Economic Outlook: Crisis and Recovery, Washington DC, International Monetary Fund.

4 The New York Times (2009), ‘Asia’s Recovery Highlights China’s Ascendance’, 23 August.

5 Ibid.

6 Rischard, Jean-Francois (2002), High Noon: Twenty Global Problems, Twenty Years to Solve Them, New York, Basic Books.

7 Blundell-Wignall, Adrian, Paul Atkinson, Se Hoon Lee (2008), ‘The Current Financial Crisis: Causes and Policy Issues’, OECD Financial Market Trends, Vol. 95, Issue 2.

8 Lim, Wonhyuk (2008), ‘The Demise of the Anglo-American Model of Capitalism’, Global Asia, Vol.3, No. 4.

9 Stockholm International Peace Research Institute (2009), SIPRI Yearbook 2009, Oxford, Oxford University Press, p. 179.

10 Ibid, p. 185.

11 Ibid, p. 69.

12 Kaldor, Mary (1982), The Baroque Arsenal, New York, Hill & Wang, and Kaldor, Mary (2007), Old and New Wars, California, Stanford University Press.

13 SIPRI Multilateral Peace Operations Database available at http://www.sipri.org/databases/pko

14 The Guardian (2009), ‘Ships and Jets are no longer than answer – army chief’, 18 September

15 Ibid.

16 The Independent (2009), ‘The West ‘is failing Afghanistan’ says Nato Commander’, 1 September

17 The Guardian (2009), ‘Ships and Jets are no longer than answer – army chief’, 18 September

18 Petraeus, David (2010), ‘Counterinsurgency Concepts: What We Learned in Iraq’, Global Policy, Vol. 1 Issue 1.