Sinking Globalization

Niall Ferguson

From Foreign Affairs, March/April 2005

Summary:  Could globalization collapse? It may seem unlikely today. Yet despite many warnings, people were shocked the last time globalization crumbled, with the onslaught of World War I. Like today, that period was marked by imperial overstretch, great-power rivalry, unstable alliances, rogue regimes, and terrorist organizations. And the world is no better prepared for calamity now.

Niall Ferguson is Professor of History at Harvard University, a Senior Fellow at the Hoover Institution, Stanford University, and a Senior Research Fellow of Jesus College, University of Oxford. Copyright (c)2005 by Niall Ferguson.

He was right; the Iraq war is more like the colonial warfare the British waged 100 years ago. It is dangerous--the author of that letter was killed three weeks after he wrote it--but it is not Vietnam or Korea, much less the Pacific theater in World War II. Yet the Iraq war has become very unpopular very quickly, after relatively few casualties. According to several polls, fewer than half of American voters now support it. And virtually no one seems to want to face the fact that the U.S. presence in Iraq--and the low-intensity conflict that goes with imperial policing--may have to endure for ten years or more if that country is to stand any chance of economic and political stabilization.

Then there is the second problem: great-power rivalry. It is true that the Chinese have no obvious incentive to pick a fight with the United States. But China's ambitions with respect to Taiwan are not about to disappear just because Beijing owns a stack of U.S. Treasury bonds. On the contrary, in the event of an economic crisis, China might be sorely tempted to play the nationalist card by threatening to take over its errant province. Would the United States really be willing to fight China over Taiwan, as it has pledged in the past to do? And what would happen if the Chinese authorities flexed their new financial muscles by dumping U.S. bonds on the world market? To the historian, Taiwan looks somewhat like the Belgium of old: a seemingly inconsequential country over which empires end up fighting to the death. And one should not forget Asia's most dangerous rogue regime, North Korea, which is a little like pre-1914 Serbia with nuclear weapons.

As for Europe, one must not underestimate the extent to which the recent diplomatic "widening of the Atlantic" reflects profound changes in Europe, rather than an alteration in U.S. foreign policy. The combination of economic sclerosis and social senescence means that Europe is bound to stagnate, if not decline. Meanwhile, Muslim immigration and the prospect of Turkey's accession to the European Union are changing the very character of Europe. And the division between Americans and Europeans on Middle Eastern questions is only going to get wider--for example, if the United States dismisses the European attempt to contain Iran's nuclear ambitions by diplomatic means and presses instead for military countermeasures.

These rivalries are one reason the world today also has an unstable alliance system (problem number three). Nato's purpose is no longer clear. Is it just an irrelevant club for the winners of the Cold War, which former Soviet satellites are encouraged to join for primarily symbolic reasons? Have divisions over Iraq rendered it obsolete? To say the least, "coalitions of the willing" are a poor substitute.

None of these problems would necessarily be fatal were it not for the fourth and fifth parallels between 1914 and today: the existence of rogue regimes sponsoring terror--Iran and Syria top the list--and of revolutionary terrorist organizations. It is a big mistake to think of al Qaeda as "Islamo-fascist" (as the journalist Christopher Hitchens and many others called the group after the September 11, 2001, attacks). Al Qaeda's members are much more like "Islamo-Bolshevists," committed to revolution and a reordering of the world along anti-capitalist lines.

Like the Bolsheviks in 1914, these Islamist extremists are part of an underground sect, struggling to land more than the occasional big punch on the enemy. But what if they were to get control of a wealthy state, the way Lenin, Trotsky, and company did in 1917? How would the world look if there were an October Revolution in Saudi Arabia? True, some recent survey data suggest that ordinary Saudis are relatively moderate people by the standards of the Arab world. And high oil prices mean more shopping and fewer disgruntled youths. On the other hand, after what happened in Tehran in 1979, no one can rule out a second Islamist revolution. The Saudi royal family does not look like the kind of regime that will still be in business ten years from now. The only monarchies that survive in modern times are those that give power away.

But is Osama bin Laden really a modern-day Lenin? The comparison is less far-fetched than it seems ("Hereditary Nobleman Vladimir Ulyanov" also came from a wealthy family). In a proclamation to the world before the recent U.S. presidential election, bin Laden declared that his "policy [was] bleeding America to the point of bankruptcy." As he explained, "al Qaeda spent $500,000 on the [September 11 attacks], while America, in the incident and its aftermath, lost--according to the lowest estimate--more than $500 billion. Meaning that every dollar of al Qaeda defeated a million dollars, by the permission of Allah." Bin Laden went on to talk about the U.S. "economic deficit ... estimated to total more than a trillion dollars" and to make a somewhat uncharacteristic joke:

[T]hose who say that al Qaeda has won against the administration in the White House or that the administration has lost in this war have not been precise, because when one scrutinizes the results, one cannot say that al Qaeda is the sole factor in achieving those spectacular gains. Rather, the policy of the White House that demands the opening of war fronts to keep busy their various corporations--whether they be working in the field of arms or oil or reconstruction--has helped al Qaeda to achieve these enormous results.

Two things are noteworthy about bin Laden's quip: one, the classically Marxist assertion that the war in Iraq was motivated by capitalist economic interests; and two, the rather shrewd--and unfortunately accurate--argument that bin Laden has been getting help in "bleeding America to the point of bankruptcy" from the Bush administration's fiscal policy.