Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Category: The Twilight of Neoliberalism Page 3 of 11

Notes On The Structure Of American Imperial Collapse (State of the World 2023, #1)

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On October 31, 2023

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The American empire is now in essentially unstoppable decline. Certainly there are things that could be done to stop it, but they will not be done, much as the British had to avoid WWI and not take profits by sending industry to the US.

(This is the first article on the state of the world, as promised in last year’s fundraiser.)

Everyone knows about comparative advantage, but what doesn’t get talked about is absolute advantage. In absolute advantage you have something people need that they can only get from you.

This can be weapons. It can be jets. It can be advanced computers. It can be the capital equipment (like lithography machines used to create semiconductors) used to make other things. Sometimes it can be a resource, like oil.

The USSR was competitive with the America and its satrapies when it could still offer most of what other nations wanted. They could shop at the West store or the USSR store and get jets and weapons and dams and electrical networks and so on. By the 70s this had started to come apart, and in the 80s their failure at microcomputers was starting to really hurt, plus their domestic economy was in serious trouble.

So from somewhere in the late 70s to early 80s, and certainly after the collapse of the USSR, if you wanted jets, good weapons, computers, internet and so on, you had to go to the US and its allies: or rather, its satraps. There were American jets, or there were European (Airbus) jets, and so on.

Starting in the 80s, but really taking off in the 90s, China began to really industrialize in the standard way: start at the bottom of the chain and sell to the West. They moved up the chain very fast.

For example:

Huawei and ZTE are both Chinese.

The numbers above are worse than they look, because Huawei 5G is banned in much of the West. So really, Huawei is dominant in much of the developing world (the South.)

China now has a domestic jet industry. It isn’t quite up to snuff, but within ten years it will be. The latest Huawei phone, post sanctions, was made with domestic chips and outperforms Apple and Samsung on some important metrics.

So, let’s move to the important charts. The world in 1990, right after the collapse of the USSR.

The world in 2020:

China is more dominant than the US was in its prime. (Well maybe not in 1946.)

Now this sort of thing is a leading indicator. Countries who were dominant are able to control more of the world’s resources than they deserve for some time after they lose their dominance.

Be clear, the US has LOST its dominance already. It’s all over except for the shooting. It doesn’t look or feel like that because of generations of accumulation and because the dollar is used for most world trade.

But those are lagging indicators. Britain’s pound was the main instrument of trade for decades after the US had overtaken it industrially.

This time it’s going to happen faster, because the US has abused its central position in financial networks in ways other countries, like Russia and China won’t tolerate.

Now, understand clearly, Western prosperity is based on commanding more of the world’s resources because everyone had to get what they needed from the US and its satrap (well, and the whole imperialism and military thing, but that’s another article.)

Since China now offers almost everything the West does, at better terms, they will come to command those resources. It’s that simple, though that doesn’t mean the road will be smooth. This will be an Age of War and Revolution, and civilization collapse, especially as this isn’t a normal changeover because of climate change and ecological collapse.

Within the West we are already seeing the US cannibalizing its satrapies. Germany had to have cheap oil and natural gas to run its industry and European patents are lagging, badly. Europe’s garden will go, and go relatively quickly. The Chinese will dominate the EV market, eat Airbus and Boeing alive and bypass European control of the machines which make semiconductors.

The main industry the West seems to still have a dominant lead in is biotech, but the Chinese will get there.

Japan and South Korea will do better because both are keeping up in scientific innovation, but my bet is that South Korea will peel off into the Chinese sphere at some point, economically they already have. I’m less sure about Japan, but they’d be wise to do so.

As for Europe, well, for twenty years I’ve been warning them they had to regain their independence and forge their own path. Most of Eastern Europe should never have been allowed into the EU or NATO. The EU should have built its own army and left NATO. And yeah, they should have done everything necessary to keep good ties with Russia, which would have been easy, because until fairly recently Russia wanted to be a European nation.

They did none of this, their rate of scientific advancement is abysmal outside of a few areas and they’re toast.

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The End Of The Post-War & Post-Soviet Eras

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On August 25, 2023

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So…

The BRICS group of nations has decided to invite six countries – Argentina, Egypt, Iran, Ethiopia, Saudi Arabia and the United Arab Emirates

BRICS already included Brazil, Russia, India, China and South Africa.

The era isn’t over yet, but when you consider that US/European sanctions against Russia failed to gain much support from India, China, and almost all of Africa and South America, it’s clear that US/West is down to its core again: the EU, Canada, Australia, New Zealand, Japan, Taiwan and South Korea. These are all either core West states or their key “uplifts” — the nations they let into the club and industrialized.

This leads to the new cold war, which everyone has noticed now, and has the world’s greatest industrial power, China, on the other side. Ironically the most important nations on the West’s side, other than the US, are South Korea and Japan, which remain technological powerhouses, while Europe is coasting on legacy technology and failing to advance compared to China, the US, Japan and South Korea (more or less in that order.)

The majority of trade, about 90%, still uses the dollar, but dollar reserves are at their lowest since the fall of the USSR, and will continue to fall, as the freezing of Russia’s dollar reserves (which will probably be seized in the end) and the massive sanctions have made it clear that dollars are only useful if you don’t cross America, and many nations, including China, know that’s only a matter of time.

Bilateral trade using local currencies will continue to increase, as will trade using the Yuan.

All Empires end, as do all eras. Neoliberalism is dying, the US world order is dying and the unipolar era is dead. A new multipolar era is upon us.

These are all good things, more than bad, for most of the world’s population as the post-Soviet order was used to crush countries the US disapproved of under horrid neoliberal austerity policies. That doesn’t mean the new era will feel good, or even be good: that’s not possible with our environmental problems, and the onrushing civilization collapse, but at least countries will increasingly be able to do what they feel is good for them and their citizens without the IMF and US/EU sanctions crushing them.

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The Distributed Nature Of Collapse

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On July 26, 2023

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When the western world sanctioned Russia they expected Russia to collapse. It didn’t. The first reason is that most of the non-western world didn’t cooperate with the sanctions, but the second is simple: Russia has a food and fuel and mineral surplus.

The world as it stands now is every inter-dependent. The supply networks are dizzyingly complex and a final item like a car is made up of materials and parts extracted, made and assembled in dozens of locations.

The world isn’t always this way: it was like this in the late 19th, but after WWI that changed and the era of free trade ended, collapsing in particular during the Great Depression. The world did not become as “free trade” as it was before WWI again till the early 21st century.

But we are in a period of collapse. The peak, I would guess, will be seen to have been 2020, though different parts of the world economy will peak at different points (peak conventional oil was 2005, fracking and shale oil is not as good.) There will be water peaks, food peaks, peaks for various minerals like copper and so on. There will be a population peak, which will occur after a lot of other peaks. One model, which has been pretty accurate in general terms, is the Limits of Growth model, which regular readers will be familiar with:

Now the thing to understand is that as resources become genuinely scarce rather than simply distributionally scarce (we have more than enough food and have for a long time but people still go hungry) countries will stop trading away what they need and will move to more restricted trade. “We have excess food, you have excess minerals, we will trade with you for this, but we are not selling food generally on the world market to just anyone.”

In periods of genuine shortages, countries stop trading indiscriminately. Food riots are one of the main causes of government collapse and elites losing their lives. Running out of heating or cooling fuel or fuel to run the distribution network (diesel is probably near peak) can lead to fast internal collapse, and so on.

So when there isn’t enough, you stop playing around. You don’t trade unless you’re getting something concrete you need. If you need something, don’t have enough of it and either can’t or would rather not trade for it and still can run your military, you send your military to go get it. (This will become harder and harder though, as modern militaries are resource hogs.)

We’ve had a world economy for a long time now: most of the world since 45, virtually all of the world since the collapse of the USSR (and even before that the USSR, which had food shortages and petroleum to sell, was in the world market.)

Increasingly we will not. Some of this is driven, right now, by competition between the West (which includes S. Korea, Japan and Taiwan) and China, but even much of that is, I suspect, shortages in drag. Soon it will just be “there isn’t enough, who is going to get it?”

Take a good hard look at where you live and what it can make and grow and dig up itself, and how well it can be defended. Because that is going to matter even more in the not-so-far future.

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Pax Americana Is A Zombie

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On June 23, 2023

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On May 16th 2022 I wrote an article on who would win and lose from the Ukraine war. Summarizing, the big loser was obviously Ukraine. Even if they “win” they’ve lost millions of population who are never coming back and odds are they’re going to lose a chunk of their country on top of that.

Europe loses because of the economic effects: industry fleeing Europe to the US. They get some increased unity, but in a world where Europe is already in decline, this is a loss.

Russia I said would be about a draw: they’ll get some land, but Sweden and Finland joining NATO and the EU firmly set in place as US satrapies isn’t good for them.

The US—, well, I’ll quote myself.

The final major effect for the US is that freezing Russian reserves and encouraging the massive level of sanctions, is seen by most of the world as evidence it’s not safe to keep money in the US lead banking system, or even to trade with them. This has accelerated de-dollarization and I suspect will be seen as the precipitating event of losing reserve status for the American dollar. The world will split into two financial blocs, one centered around China-Russia, the other around the US-EU. The US receives huge benefits from reserve status and from being at the center of the world financial system, and as with Britain after WWI, it will suffer mightily when it loses this position.

My evaluation is that what the US will likely gain from the Ukraine war is less than it has or will lose: dollar hegemony and being the financial center of the world are a big deal, and confirming Russia as a junior Chinese ally makes their main geopolitical rival far stronger.

It’s clear this is happening. Multiple nations joining the BRICS; ASEAN creating its own trading currency; oil being sold in Yuan, and so on.

The US and the West in general had a BIG GUN. That big gun was going all out on sanctions, using their central position in the world monetary and trade system as a weapon. The US had been using this position coercively ever since WWII, but it really ramped up under Clinton and each President thereafter doubled down. Nations were genuinely scared of this power, seeing what it did Iran and Cuba and Venezuela and so on.

But the world changed. China became the most powerful manufacturing power. Russia recovered somewhat and became a huge net resource producer, including of food. The late USSR couldn’t feed itself, Russia can. China became the main trading partner for almost every nation in South America and Africa. The US declared China its main enemy, and China looked at the US and saw it was vulnerable to a blockade.

And so the sanctions failed, because China and most of the non-Western world, including India, didn’t cooperate.

The BIG GUN had been fired. The one everyone was scared of. And not only didn’t it work, the blowback damaged Europe.

It did damage Russia somewhat, but by not taking Russia out it showed that one could leave the system without being destroyed. And so that’s what’s happening.

Meanwhile, as inflation (largely from Covid, but much from the war) shuddered through the West, the US raised interest rates massively. This caused all the countries who owed money in US dollars extreme harm.

Being exposed to the US dollar was clearly a liability. A big one. Going off the dollar used to seem insurmountable but Russia had gone off it and while it lost a bit of GDP, basically done OK, because China and other countries supported it.

And if Russia could do it, well, so could other nations.

And so they are.

As for America, it reminds me of a 60 year old who still thinks he’s 40 and in training. “I can take him!” This isn’t the America of 1950, or 1990 or even 2000. This is a weak America, visibly become weaker.

Nobody likes America. Not even the Brits (outside their elites, who like America the way a poodle likes its owner.) Everybody was terrified of America.

Now a lot of them are only scared. And when you’re only scared, not terrified, you take action to protect yourself against whomever you’re scared by.

So, I have to say that I’m moving America from the “slight loss” column over to the big loss. It’ll take longer than Ukraine to be obvious, but the train is in motion and it isn’t stopping. Pax Americana is a zombie; it’s still shuffling along, but it’s functionally dead and only waiting for decay to reduce it to a shambling heap.

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Bruno Macaes On Putin And The World Order

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On May 31, 2023

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Macaes was a Portuguese minister and is now a member of the European Council of Foreign relations. He’s written a few books and at least two of them, on the Belt and Road and on Eurasia in general are insightful, though Bruno is definitely a Eurocrat who sometimes struggles to see the world without Eurocrat lenses. This is particularly true when it comes to Russia (remembering that these books were written before Ukraine, which he did not predict) but there are some points where Macaes “gets it.”

This is primarily when it comes to Putin’s views of the international order:

Putin doesn’t think along national lines. In thinks in terms of larger blocs, and ultimately, in terms of the world order… You cannot resist the pressures that come from the world order. So either the world order will come to mirror some elements of the contemporary Russian regime or Russia will mirror the liberal, Western political order.

Notice how Russia is called a regime. It’s a small tell, but a tell.

Later, on, the European view (where Macaes is an insider):

The Brussels bureaucracy has a very simple theory of the world. States are captured by special interests, but they may reform if there is pressure from the outside. If they do, they will certainly prosper.

Obviously the Europeans see the “outside” as them, with an assist, perhaps, from the US. They don’t seem to have noticed that Europe has been in economic stagnation for some time, or consider that perhaps they are captured by special interests also. Macaes does later on touch on European subjugation to the US, but never really deals with it squarely.

But bottom line this is “we are the reasonable people with the right laws and regulations and way of doing things and you all should do what we say, and we will pressure you to do so.”

Europe knows best.

Back to Russia (somewhat paraphrased)

1) There are no neutral, universal rules. Neutrality is only a pretnse aimed at deceiving others. The benefits of globalization are unevenly distributed because rules are made by those with power to make them.

2) International politics is an arena of permanent rivalry and conflict.

This is, of course, similar to the first quote. The “rule based” international order is just the set of rules and institutions set up by those who had the most power, and the rules were set up to benefit those who had the power.

I don’t see how any of this could be controversial, though there are limits to it. The US did deliberately offshore its industry, for example, and this started after WWII to build up Europe, Japan and South Korea as strategic allies. When neoliberalism came to power, they then started offshoring it to what more clear-eyed people saw was a potential rival: China, because elites wanted short term profits.

But generally speaking the rules of the world order benefit the US and its satrapies like Japan, the EU nations, Canada, Australia, South Korea and so on. This was intentional and intended and anyone who thinks otherwise is nearly a candidate for an insane asylum their denial of reality is so strong.

It is the Europeans who are living in a fool’s paradise, thinking, forgive the expression, that their shit doesn’t stink and that they are mostly driven by pure motives: that their system works and is a universal model and that they have the right and duty to force it on others.

One could say the same for the Americans, except that more of the smarter ones know they’re hypocrites.

This nonsense was epitomized by Fukuyama’s “The End of History” which anyone with a lick of sense and the most minimal knowledge of history knew was absolute bullshit. But it was the bullshit that Western elites wanted to hear: they had won, their victory was eternal and everyone else would inevitably, in a pseudo-Marxist historical inevitability way, become like them.

So you could give the Chinese your industry and get filthy rich doing so and it wouldn’t matter because they were going to become a liberal capitalist democracy. There would only be one elite, a transnational one, and its enemy was its own population, not other members of the elite, no matter where they lived.

Now to be fair to Macaes he’s clearly anti-Fukuyama and by the time he wrote these books he could clearly see that obviously Capitalism and Democracy were not the same thing.

But this isn’t really about Macaes, it’s about differing views of the world order.

The West thinks, or among the more self-aware elites pretends to think that they have created a neutral world order they just happened to win, or, in more sophisticated terms, in which they had a first mover advantage, but which is basically fair.

Putin, and though it’s not dealt with here, China, plus most of the developing world see this as absolute bullshit: the world order is just the rules made by the strongest and enforced by them with their financial, economic and military might.

This is why Russia has often said that any real negotiations must be with the US. Not the Ukraine, not even with the EU, but with the US, because they are the ones who make the rules and they are the ones who decide on NATO policy. It is why the real negotiations have included the Chinese, because the Chinese are the coming superpower. It’s why China was able to make peace between Iran and Saudi Arabia: again, because China is genuinely powerful.

Putin, at least in relation to international politics, lives in the real world, not in some Fukuyama fairy-land. Seen from that point of view his actions become more understandable: to let the West continue to push NATO towards Russia and to succeed in its color revolutions and coups, is to acquiesce to a world in which Russia must be second rate at best, because none of Russia’s preferences for how the world order is set up are not implemented. Russia doesn’t need almost everything, nor does Putin believe Russia can get everything: if you want that you have to be as powerful as the US after the fall of the USSR or like the British empire at its peak.

But if Russia can’t get even the things that are most important to it, like Ukraine neutral and not in NATO, then the negotiations have to be changed: they have to become kinetic, to use the modern speak. A test of power is necessary: is the West powerful enough to impose its will or not?

And that is what is being determined in the Ukraine: can the US still just force Russia to accept what the US wants or not? Does the US still run the world order? It’s one reason why the Chinese, ultimately, are supporting Russia, because they agree about the shape of the world order. And it’s why the US and the EU have spent so much supporting Ukraine. Because this is a test and neither side feels it can afford to lose, for if it does, its preferences for world order take a huge hit: it shows that it doesn’t actually have enough power to enforce its will to the extent it desires.

For the US that is that Russia be a “gas station with nukes” at most and preferably be broken up, “de-colonized.” For Russia it is that a military alliance aimed at it can’t push further against its borders, and that its allies or satrapies can’t just be taken away (as Libya and Ukraine were) without great cost.

In the real world you get what you have the power to get. It shouldn’t be that way, but that’s how it is, at least for the time being. Perhaps we’ll change that at some point in our history, but it is the way the US and Europe have lived, it is how they rose to power and it is how they have retained their power. To say “no more war now that we’ve won the major wars and made the world in our image” is laughable.

Putin is just playing their game, because it’s the only game.

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Rising Ideologies Need People Inside; Stagnant Hegemonies Want People Out

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On May 29, 2023

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When a new system is on the rise, it needs more people to join. Maybe it doesn’t need everyone, there may be an “out” group which is either the enemy or the scapegrace or both, but basically they want people inside their new system. Capitalists want wage workers; communists want everything collectivized and so on.

But when you’ve won, when your system, your ideology, is the only one available to most people, well then, you want people out because if you push them out the benefits for those who remain are greater and because being pushed out is such a huge punishment. If there is more than one system easily accessible to people, a person kicked out of one can usually go to another.

Even an alternative system which is not easily available, but does exist mitigates against abuse. It’s not an accident that the late era weakening of the Soviet Union and then the end of the Cold War saw much more abuse of populations in the capitalist world.

We, if it’s not obvious, are in a period with a dominant hegemonic ideology: capitalism of the neoliberal variety. (The previous dominant capitalist ideology was “New Deal” or “Post War” capitalism and was quite a bit different, while still being capitalist.)

This “pushing out” operates at all levels. At the bottom it means you get pushed out onto the street. In the middle it means descent to the working class or precariat. In the upper class, which is not the ruling class), it means dropping to the middle. And at the top, in the ruling class, it means being pushed into the upper class: people who are very comfortable and have more money than they need, but have no real power. You can have tens or even hundreds of millions of dollars and be in the upper rather than ruling class: it’s about power more than money. Some politicians and corporate executives are in the ruling class despite being worth only a couple tens of millions and even some billionaires, with just a few billion, aren’t really ruling class if they only have the money and don’t have control of any important company or some lever of power.

The pushing out is one of the symptoms of ideological decay. Peter Turchin has become famous for talking about “elite overproduction” but it has been understood for a long time that people who had expectations of being in the ruling or upper class and are kicked out are dangerous to the status quo. Indeed everyone who had expectations and didn’t get them is dangerous, but people who know how the system actually works and who were groomed for some form of leadership are particularly so.

At first the pushing out doesn’t matter. It didn’t matter much in the 80s or 90s or even 2000s, but eventually it reaches critical mass: an elite faction in opposition to the main system, massive popular discontent and, for a variety of reasons, an enforcer class unwilling to do their jobs.

This doesn’t have to be from the left; there are definitely right wing revolutions.

I leave it to readers to think this thru and apply it to our current situation.

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How Elites Liquidate National Advantage (Fall Of The American Empire)

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On April 26, 2023

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This is a story as old, and probably older, than civilization and isn’t unique to elites.

It is the question of group interest versus individual interest; or national interest versus internal group interest.

National advantages have to be sustained. If you have a technological lead, you don’t give that lead to another nation which is a competitor. If you have a production lead, you don’t help a competitor improve its production anywhere near close to yours. You may give them something from the prior tech generation, maybe, but never the current one.

This is unfortunate, a better world could be created with more sharing, but that would require a world in which nations and elites don’t compete with each other in devastating ways.

In our world, however, when nations get an advantage, they use it to hurt other nations: in the case of extreme advantages to conquer them, in the case of more relative advantages, to take hurt them economically. A recent example is how Germany used the Euro and the EU to damage the manufacturing industry of other EU nations: the Euro was priced too high for them to compete, but was lower than the German Mark would have been and the result was devastation to countries like Italy, especially when added to the inability to control currency issue and interest rates that the Euro essentially imposes.

This is a case where a regional elite in a federation put themselves before the rest of the federation, leaving the federation as a whole weakened.

Most people have forgotten just how much industry, technology and people Britain shipped to the US. This made the US overtake Britain as the prime industrial power decades, maybe even generations before it otherwise would have. That allowed the US to impose its peace terms in World War I, and after World War II to subjugate Western Europe, including Britain, and force Britain to divest of its Empire on unfavorable terms which crushed its economic viability.

It’s important to note that there are periods where this doesn’t happen. Britain’s rise, economically, started when it decided to stop allowing the export of raw wool to the Netherlands in order to force the creation of its own woolens industry. Once Britain gained a technological lead it had laws forbidding people with important skills and knowledge from going to other countries to share that knowledge and it carefully protected its industries thru various mercantale policies.

These sorts of policies work and exist when elites in a country have the feeling that the rise and fall together. But by the late 19th century British elites were in cut-throat competition with each other. If you didn’t keep up, you got bought out or couldn’t sustain your estates.

With large numbers of elites threatened with dropping out of the real elite (people with power and money, not just enough wealth to not worry about money) elites were willing to betray and policies were changed to allow the export of technology, skilled workers and knowledge. Since the US was a continental state with a larger population, such transfers, though they made many individual investors and capitalists in Britain richer, not only weakened Britain’s position, but inevitably lead to America becoming more powerful than the US. (Remember that the UK essentially won the war of 1812.)

Now note that some transfer to weaker allies can work out. The US was damaged by Japan’s rise after WWII (as anyone who was at least a teen in the 80s remembers) but because Japan had a smaller population and less of a resource base, Japan could not overtake the US, despite fears at the time. The same is true of South Korea and Taiwan, neither of which could have industrialized the way they did without US aid.

Making them rich industrial nations made them stronger allies and while it did weaken the US relatively, it improved America’s geo-strategic position in some ways.

Understand that America had very protectionist policies for a very long time, and they worked. Industry was built behind significant tariffs, intellectual property was stolen wholesale (the Brits of the 19th century were as upset about it as Americans are now at China) and trade was carefully managed.

Generally speaking, American elites, especially after the civil war, were united in feeling that America’s increased power was their increased power and wealth.

This remained true thru the first two and a half to three and a half decades after WWII, but it changed with the ascent of Reagan. In the old system, regional elites were protected and monopolies were heavily regulated. This started chanting in the 70s, with the rise of huge conglomerates, but was formalized in 80s under Reagan, which is when consolidation really took off. As various industries entered competition to buy out their rivals, those who were bought out left the true elite: they might have a lot of money, but they no longer had the power created by control.

This process lead to desperate need for profits: anyone who fell behind, even just by getting richer slower, was in a position to be bought out and thus thrust out of the elite.

And so American elites sought higher profits, even if it meant moving industry and technology overseas to the only country (India was not really a contender) which was larger, in effect, than the US: China.

This was precisely the mistake made by Britain and had the same consequences: the loss of the manufacturing lead, which will be followed by loss of the technological lead, the delay probably being two to three decades.

American elite competition became too fierce, internally. Threatened by loss of elite status, American leaders sold their country’s lead in order to maintain and indeed, increase their internal power within the US. America became relatively weaker, but those elites who retained elite status: who won the internal competition, became more powerful within a weaker America.

There were plenty of knock-on effects from this: soaring inequality, for example and popular dissent. The rise of Trump and so on is a direct result because part of elite competition was to find ways to take from the middle and lower class. It wasn’t just about going overseas. But high inequality societies, all else held constant, are weaker than more egalitarian ones, so this too was a weakness and the political instability and weakening of citizenship and consumers also hurt the US.

In a real way this is just the large scale of something which happens to groups: if the group doesn’t work for most of the group, if people don’t feel that making the group better off makes them better off, then people betray group interests since group and individual interests have become dis-aligned.

Great leaders have always understood this dynamic, and it is at the heart of “we must all hang together or we will all hang separately.” Like many such statements (another is “a rising tide lifts all boats”) it is not descriptive: it is prescriptive. One must make it so that betraying doesn’t make more sense than looking after group interests. If a group doesn’t, the group will become weaker and in worst case scenarios, group members may lose everything.

Indeed, as I’ve noted before, I expect Britain to break up and become England, Scotland and Ireland. There is a very good change England will become, essentially, a third world nation again.

But this process takes a long time. The initial betrayers lived 170 years or so ago. They died long before the cost came home, many even before the cost of post-WWI humiliation. This is another version of the death bet: “this will hurt terribly, but I’ll be dead before it does.”

I don’t think America’s decline will take as long Britain’s has, but it’s also cushioned by the fact that America is a continental power. Russia is far from what it was, but still a great power, and the same will remain true for the US for a long time, absent break-up, because of its sheer size and momentum.

Still, elites betrayed and the price will be America supremacy, long before it had to happen. Perhaps that loss is a good thing: the US was not a particularly kind Hegemon, especially after the fall of the USSR, and perhaps a two-polar or multipolar world will be better, though it’ll be hard to disentangle and be sure of that simply because of the crushing costs ecological collapse, climate change and human population overshoot.

Nonetheless, elites which did not engage in cut-throat internal competition would have hung onto power longer. They are losing their power precisely because they betrayed internally, and that led to external betrayal.

(See also: The Red Queens Race, Neoliberalism & Why Healthcare is Being Privatized.)

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China Is Winning The Electric Vehicle Race. Why And What Does It Show?

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On April 24, 2023

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Not precisely a surprise, or it shouldn’t be.

China, already the world’s biggest market for EV, is set to knock Japan from top spot for global car export volume this year after overtaking Germany in 2022

Price on the low end is pretty good, too, though it may only be available in China:

This is the new BYD Seagull and with a price tag starting at just 78,000 yuan ($11,300), it is one of the most compelling new electric vehicles from China launched in quite some time.

Of course, it helps that China is the largest market, though some European countries are hard-charging in terms of buying electric vehicles.

For a long time the US had a huge advantage: it had the consumers. It was rich, it was high population, there were no high population countries with larger markets than the USA. Now China is only a middle income country, but it is a 1.4 billion population middle income country.

Further, China uses industrial policy. It does not have a floating currency, but one that it manages. It provides huge subsidies to important industrial markets and it supplies a domestic market which is huge.

It should be understood, clearly, that with almost no exceptions, every country industrialized under protectionist policies. The only exceptions I am aware of are city states, Finland, and the USSR. Every country which moved to laissez-faire policies then saw a decline in their industrial power. In almost all cases they also had a sponsor: for Japan and the US, for example, the initial sponsor was Britain. That sponsor helped them with the initial technology transfer and provided an external market.

The country which did that for China was the United States.

However, as was the case with Britain aiding the US, this was a clear geopolitical mistake (though in the Chinese case a humanitarian plus). China’s population size and geographical extent meant that they eventually created a large internal market capable of providing a substantial market and, since they were and are the lower cost producer (a large part of why America moved production there in the first place), they have been able to easily take over export markets from the US and its allies: their products are about as good, or good enough, and a lot cheaper. So the West went from being the primary exporter of goods to South America, Africa and most of the rest of Asia to second place.

At this point China has a large internal market and more of the world market than the US does.

This is not to say that the American and European markets aren’t important, they are. But they are no longer determinative: they are no longer the only game in town.

Add to this that China is surging technologically, and the Western lead is evaporating. The speed of that evaporation is accelerating. China now has a domestic passenger jet industry, for example. The jets aren’t as good as Airbus or older Boeing planes (Boeing appears unable to make good new planes) but it’s good enough, and the next generation will be better. Chip manufacturing and design continues to improve and all the serious technological bottlenecks will be broken, I’d guess in ten to fifteen years. Most solar panels are made in China and it is also the world’s largest market for solar.

As I have pointed out before, the tech lead moves to where the manufacturing floor is. There is lag time, in the case of Britain and the US it was about 20 years, but it happens.

There are jokers in the pack, of course: climate change, demographic issues, ecological collapse, the possibility of war and blockade and so on, but the smart money is on China.

China was the world’s largest and most important economy for most of the last 2,000 years and the most technologically advanced (before that it was India.) It will return to that position if climate change or war does not stop it.

All absolute advantages are time-bounded. You can extend them with careful policy, but at some point other people learn how to do what you can do. If a smaller nation wants to dominate it needs an absolute advantage in production or the military. Sometimes that is in production, sometimes it is cultural/technological (think the Mongols or the Macedonian Greeks).

The West’s time is done. This is going to be particularly hard on the Europeans if they keep bungling their decline (they should be disentangling from the US and forming a third pole). The US, if it does not disintegrate into civil war, faces an ugly period as well. The dollar hegemony is collapsing, to the extent that even the Financial Times is writing about it, their tech leads is disintegrating and they are set to be the leader of the lesser bloc in a cold war. That didn’t work out well for the USSR and it isn’t going to work out well for the US.

Now, everyone has problems and I wouldn’t be surprised if in 50 years China breaks up under the hammer blows of climate change and ecological collapse. But then, I wouldn’t be surprises if the US does. For now, the normal dynamics of historical change and the rise and fall of hegemonic powers are in play and the smart money is on China.

 

 

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