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HEADLINE = Living in a world without the West

STRAP = The IMF’s world economic outlook confirms that the future belongs to Asia.

In 1983 Belgian economist Paul Bairoch presented a study of the world economy that caused a furor in
Western academic and political circles. In Economics and World History: Myths and Paradoxes he said
that in the year 1750 China’s share of global GDP was 33 per cent, India’s 24.5 per cent, and the
combined share of Britain and the US was 2 per cent.

Shaken and stirred by these figures, the Organisation for Economic Cooperation and Development
(OECD) constituted the Development Institute Studies under professor Angus Maddison of the
University of Groningen to investigate Bairoch’s claims.

The data Maddison compiled affirmed – what nearly every Indian school children knew but was
mysteriously unknown to the West – that India was among the richest countries in the world until the
British arrived and utterly ruined it. His figures showed India had the largest economy on the planet for
1700 of the past 2000 years.

From 1 CE to 1000 CE, India had a 32 per cent share of global GDP. During the second millennium,
foreign invasions disrupted economic activity considerably, and India yielded the top spot to China. Still,
India’s share remained at 28-24 per cent between 1000 and 1700 CE.

A new world order

Since Bairoch and Maddison presented those paradigm shifting studies, the world has moved at warp
speed. The International Monetary Fund (IMF) in its latest annual report on global economic activity
says China has unseated the US as the world’s largest economy and India has overtaken Japan to take
the No.3 spot. China’s economy is still smaller than America’s in US dollars, but its GDP balloons to $17.6
trillion – vs America’s $17.4 trillion – on the basis of purchasing power parity (PPP).

(PPP provides a more realistic picture because it tells us how much a country’s currency can purchase at
home. It is the best way to compare the size of economies rather than using volatile exchange rates.)

What has surprised everyone – including economists – is how rapidly China has grown, ignoring all
projections. For, as recently as 2005 China’s economy was less than half of the US. The National
Intelligence Council, which oversees the US intelligence community, had predicted China would
overtake the US only in 2020.

Now chew on this figure – $123,000,000,000,000. For the numerically challenged that’s $123 trillion. In
January 2010, US economic historian and scientist Robert Fogel wrote in Foreign Policy magazine: “In
2040, the Chinese economy will reach $123 trillion, or nearly three times the economic output of the
entire globe in 2000. China’s per-capita income will hit $85,000, more than double the forecast for the
European Union, and also much higher than that of India and Japan as China moves “from a poor
country in 2000 to a superrich country in 2040.”

America’s per-capita wealth may be higher, says Fogel, but “China’s share of global GDP – around 40 per
cent – will dwarf that of the US (14 per cent) and the European Union (5 per cent)”.

Despite dethroning Japan, not much attention has focussed on India because the country’s economic
growth that had risen to dizzying heights is coming to terms with gravity. But if India can play its cards
well, it could become the world’s leading economy in the 2060s when China’s population begins ageing.

Economic wasteland

Even as Asia grows richer, the West is declining at a pace faster than previously estimated. The worst
affected are the PIGS – Portugal, Ireland, Greece and Spain – where economic turmoil is hollowing out
the middle class. In Spain, for instance, the unemployment rate is an astounding 25 per cent. An entire
generation of European youth is growing up without the assurance of jobs – forget the cradle to grave
security their parents and grandparents took for granted.

Others aren’t any better. Canada’s Globe & Mail newspaper wonders if Britain’s current condition is an
indicator of the West’s future. It says “intergenerational poverty, rare in most countries today, has
become a factor in a notable British subculture”. That tallies with a British government report which
shows that if you are born poor, you stay poor.

Across the Atlantic, the US media is finally, although reluctantly, talking about the havoc the recession
has unleashed on ordinary people, such as the 50 million Americans suffering from chronic hunger. The
US reports a jobless rate of around 6 per cent, also called the “propaganda rate”. But if you include
people who have stopped looking for jobs and dropped out of the market after months or years of
fruitless search, the jobless rate is 17 per cent.

Crumbling fortress

This double whammy – the erosion in economic status and the resulting loss of global hegemony – is
causing considerable disquiet in the West. American arch-conservative politician and one-time
presidential candidate Patrick Buchanan is horrified at the prospect of a diminished global status even as
much of what was once the ‘Third World’ is roaring up the growth charts.

Buchanan’s book Suicide of a Superpower, about America’s decline, has been called racist and
homophobic by critics, but it nevertheless has some grounding in reality. “America is disintegrating,” he
screams. “The centrifugal forces pulling us apart are growing inexorably. What unites us is dissolving.
And this is true of western civilization.... Meanwhile, the state is failing in its most fundamental duties. It
is no longer able to defend our borders, balance our budgets, or win our wars.”

Another right wing demagogue, Zbigniew Brzezinski, who spent the better part of his life advocating the
destruction of Russia so the Eurasian landmass could be turned into a lebensraum for the West, is now
realising the West has been checkmated on the “Grand Chessboard”.
Brzezinski claims credit for the strategy that drew Russia into Afghanistan. Now he’s done an abrupt U-
turn in his new book Strategic Vision: America and the Crisis of Global Power, in which he asks Russia be
included in “a larger and more vital West”. The Pole’s chameleon-like transformation from hawk to dove
shows his desperation.

That’s not all. Western clubs like G7 (ex-G8) are on life support. US inaction in Ukraine – in the face of a
resurgent Russia – was described by a Chinese general as a symptom of America’s strategic “erectile
dysfunction”. And the World Bank and IMF, the twin organs of American power, now face competition
from the New Development Bank formed by the BRICS.

Allies and vassals of the West such as Saudi Arabia, Qatar, Kuwait, Turkey and Georgia will also face an
uncertain future.

That is tomorrow’s world without the West.

Routing around

The concept of a “World Without the West” was first articulated in 2007 by American academics Steven
Weber, Naazneen Barma and Ely Ratner who wrote: “For the first time in a century, a set of large,
populous and increasingly wealthy states – this time China, India and Russia – are on the cusp of
achieving great-power status.” These rising powers are keen to break the dominance of the current
order by increasingly “routing around” the West.

For years the East vs West debate has been framed largely in terms of whether emerging powers will
integrate into or challenge the existing international system built by the West. Weber and his associates
contend rising powers are opting for neither.

“By preferentially deepening their own ties among themselves, and in so doing loosening relatively the
ties that bind them to the international system centred in the West, rising powers are building an
alternative system of international politics whose endpoint is neither conflict nor assimilation with the
West,” they say.

This works in two ways. One, the rising powers deepen their trade, defence and cultural ties among
themselves, creating a new parallel international system. So in effect, by not playing by the rules set by
the West they are creating an alternative arrangement in which they neither enter into conflict
situations with the West nor enter into subservient alliances (like those offered to South Korea and
Japan).

Crucially, the developing world is routing around not just the West but also the idea of the West, making
it increasingly difficult for Western narratives to penetrate the developing world.

This makes the West simply irrelevant.

As the emerging economies grow in size, it gives them the critical mass to lay down the foundations of a
new system that is autonomous from the western international order.
For instance, Russia is using its vast oil and gas resources to shut out Western companies from the great
new pipelines snaking out of Central Asia. China’s trade with emerging markets has grown so fast in the
past decade that it can now offset any weakness in the American and European markets.

With the West enmeshed in wars it cannot win, India and China are racing each other to buy up the
world’s resources. Indian companies are buying farmland across Africa to secure future food supplies for
a billion people. China has turned Australia into a virtual mining colony.

The BRICS are building brand new cities, factories and malls in Africa. When the Chinese finish a mega
project, they are known to throw in a $100 million luxury hotel or hospital as a free gift. Which US
company can match that?

The West is literally being squeezed out.

No longer a role model

One reason for its growing irrelevance is that the West’s economic model is sputtering. Corruption in
the financial centres of New York and London is rife. Banks and financial institutions have violated nearly
all the 10 Commandments – they have lied to their customers and stolen billions of dollars. West
economies are no longer role models.

Another reason why the emerging countries want to establish an autonomous order is America’s blatant
misuse of the dollar. The US Federal Reserve ‘creates’ money by electronically ‘transferring’ dollars into
the US banking system. That is, printing of dollar bills has been given the go-by. In fact, defying the laws
of economics as well as physics, wealth is being created literally out of thin air. Financial expert Max
Kaiser says, “Countries like Russia, China and Brazil are trying to divorce themselves from the US dollar
because it’s a completely toxic currency that’s just right for the counting fraud. It supports an empire
that’s just too lazy to compete.”

The BRICS are now increasingly resorting to renminbi, ruble and rupee trade. If it catches on and the
dollar loses its status as the reserve currency, it will be a huge blow to the US because it is the
unrestrained printing of dollars that pays for America’s wars and expensive military toys.

The loss of absolute power doesn’t mean the West will be eating grass in the future. Its decline is only
relative and it will retain many core strengths. The overall quality of life, for instance, in the US and
Europe is far higher than in China or India. Western multinational corporations still control a good chunk
of global manufacturing. Their universities attract hundreds of thousands of students from emerging
countries.

But the days when the West was unchallenged and could steamroll countries are over. With each
passing decade China, India and Russia will only get richer and militarily more powerful. The world will
become polycentric with no single country able to dominate.

The transition to a post-Western world has started – and you have front row seats.