Book Review: Has the West Lost it?

To put it bluntly, there may have been a time (perhaps at the end of the Cold War) when 12 per cent of the world’s population could afford to impose demands on China (20 per cent of the world’s population), anger the Islamic world (20 per cent of the world’s population), ignore the demographic explosion in Africa (15 per cent of the world’s population) and humiliate Russia (the world’s second largest nuclear power). That time has gone.

Has the West lost it? by Kishore Mahbubai

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Allen Lane, 2018

In a world consumed by the West’s meltdown, signified by the election of Trump, Brexit, the successful rise of anti-EU parties, breakdown of the ‘Washington consensus’ and shattering legitimacy of multi-national bodies, the Western publications have spilled a lot of ink and dedicated screen-space to analysis of what has gone wrong. However, much of this inspection has only reinforced their sense of exceptionalism and supremacy, in that, this is just a passing phase and the West will find itself soon in a Wonderland.

Away from this hotchpotch, Kishore Mahbabuni looks at the recent Western actions from an Asian perspective in his book “Has the West Lost it? A Provocation” and spills much less ink in the process (just 60 pages!). He analyses the shifting geopolitics and economics that has caught the West blindsided in it’s hubris and interventionism, and casts the Western response to major non-Western events in a new light, one that questions the predominant narrative of Western exceptionalism and highlights the strategic errors in those reactions. 

The predominant narrative that posits the fall of Soviet Union and victorious end of the Cold War by the West misses, according to Mahbubani, or atleast underestimates the other more important developments of the rising Asian countries at the time. In the West’s imagination, it was a triumphalist moment that reinforced their power and hegemony in the world. Temporarily it may have been the case. But the belief in this hegemony was permanent. This was memorialized by Francis Fukuyama in his essay “The End of History”. The West further humiliated the already humiliated Russia by expanding NATO, providing a strong political ground for Putin’s aggression in Ukraine.

Furthermore, Mahbubani observes that most powerful West policymakers saw the protests and ensuing repression at the Tienanmen Square in China, feeling good about their democratic political system and capitalist economic system. It shielded the historically important process of the opening of Chinese Economy from Western narrative. On the political changes in China, he describes the new freedoms afforded to the Chinese people compared to forty years ago and asks “would 100 million Chinese tourists return home freely if they were indeed oppressed?”

Similarly, the balance of payments crisis of 1990s in India and later, the Asian Financial Crisis saw the West feeling a sense of financial supremacy over the rest. They felt that they solely had the magic formula of ‘economic growth and political stability’. However, these supposedly struggling economies managed to become the growth engines much to the envy of the West proving the belief wrong that democracy is a necessary condition for economic success. While these major events took place and were narrated complacently in the Western public spaces, Mahbubani narrates three revolutions that took place in the rest of the World that were left unnoticed.

First, he states a political revolution both in democratic and non-democratic societies such that leaders everywhere realized that they “have to demonstrate daily that they are improving their people’s lives”. Another was a psychological revolution with the hope and belief in a better future. “All the things that Western populations took for granted and the Rest thought were out of their grasp are becoming universal.” The third was the revolution in governance in form of better public policies. The west, says Mahbubani, had an influential role to play in these revolutions by providing the rational thinking, sharing its ideas and technologies with the rest. However, his narrative focus limits him from elaborating on the terms on which this has happened.

The book states that strategic errors of the West reached their peak with its reaction to 9/11 and ensuing war frenzy that shielded the important event of China’s entry into the WTO – an introduction of new workers from China into the globalized labor market led to “declining real wages and a smaller share of labor in national output”, especially for the West. While the war hysteria has waned considerably, the interventionism and bombing campaigns remain just as rampant. This, Mahbubani, finds problematic.

Bush’s call to planting ‘seeds of democracy’ in the Middle East is seen as hypocritical by most Muslims. It is a “cynical promotion of democracy in adversarial countries like Iraq and Syria and not in friendly countries like Saudi Arabia.” Often, the West walks away and takes on no moral responsibility for the adverse consequences when intervention turns sour.

On global trends of progress and Western military intervention, he comments:

the two regions that seem to be an exception to this broad trend are the two regions that the West has meddled in the most in recent times: North Africa and the Middle East. Is the relative failure of these two regions a result of bad luck? Poor leadership? Flawed societies and cultures? Or Western meddling?

Has the West lost it? by Kishore Mahbubai

In its supposedly benign interventionism, the West has often assumed that “the modernization and economic development of any society will lead to less religiosity and more secularism” This underestimates the influence of Islam, writes Mahbubani. In fact, “economic development and education are leading to greater religiosity” in Islamic countries. He suggests that the West withdraw completely from the middle east just like it did from Vietnam and let the region progress on its own terms, much like ASEAN countries progressed in time, despite American withdrawal and pessimism.

Mahbubani observes that the Western leaders did nothing to explain to their citizens the consequences of these fundamental changes. Their newspapers and commentators were convinced they were right, either pretending any of the major developments in the rest of the world was not happening or they were more than pleased to dismiss them. They totally missed the monumental shift of power away from the West. While the west shared its wisdom with the rest, it has been very unwilling to take any wisdom.

Mahbubani asks the West to reach a new consensus on its the new global economy in light of the fact that, “from the financial crisis (2008–9) to the Ebola outbreak (2014–16), from the Climate Change Summit in Paris (2015) to the terrorist attacks in leading capitals (2017), we learn that all cabins on the global boat must work together.” In this endeavor, he argues for serious introspection in the West away from the prevalant self-deception, hubris and condescension. The West needs to accept the new reality of its diluted power and changed mind-sets of non-Western populations. Its policy of “maximum insularity and self congratulation” in the latter part of 20th century and disastrous wars and incessant bombings in the beginning of the 21st century have been catastrophic for the world and for itself. The marginalization of United Nations in favor of unilateral actions and for suppression of voices by the West reflects as much of its arrogance as its waning respect in the eyes of the world.

Finally, since American and European interests have diverged, Mahbubani recommends that they focus their individual strategies on their primary enemies – for Europe, it is spillover of threats from Islamic world and for America, it is China. “Americans have taken advantage of Eurpoe’s strategic passivity” and destabilized Europe’s geographical neighborhood. According to him, no Russian tanks threaten Europe unless America meddles in Ukraine, the consequences of which Europe cannot walk away from.

He recommends that Europe work with China to build up North Africa and try to import the East Asian economic success stories into North Africa – a policy which may be in its strategic interest. He also bravely proclaims that America should make peace with the Islamic world as it is not America’s primary strategic challenge.

Iran will never be a threat to America.

Has the West lost it? by Kishore Mahbubai

If America does not course correct, Mahbubani foresees it making the same mistakes that the Soviet Union made while dealing with America, i.e. confusing an economic competitor with a military competitor. For him, “the biggest mistake that America could make is to step up its military deployments in East Asia to balance a resurgent China.” He advocates for a strategic alignment of interests between China and America on the Korean peninsula with a strong commitment that a reunified Korean peninsula be a neutral country.

Throughout the book, Mahbubani makes a compelling case for Western policymakers to rethink the foundation of their foreign policy. While his historical interpretation of events, cast in a new light, is nuanced and provocative, his recommendations seem overly optimistic and unrealistic in a world wanting in the slightest of cooperation among powerful countries on strategic issues. Moreover, some of the suggestions seem to miss the twists and turns of that define any historical process.

For example, while unified and fiercely independent Korea might ultimately a Western dream, coming even for Mahbubani, especially given China’s desire to control Hong Kong in a more centralized manner, Chinese expansion of naval infrastructure in Indian Ocean, East Asia and Africa suggests a divergence rather than an alignment. Whether the Chinese would appreciate a fiercely independent country on their doorstep is anybody’s guess. The more immediate question would be what that independence would entail for the rest of Asia. It misses the immediate neighboring ‘influence’ of China that a unified Korea will inevitably face.

As the Western share of the global population and of global power recedes, the West should calculate that it is in its best interests to have a stronger rules based order. One way to do this is to strengthen, not weaken, the UNSC. The best way to strengthen the credibility of the UNSC is for the UK to give up its seat to India and, as I argued in The Great Convergence, for France to share its seat with the EU.

Has the West lost it? by Kishore Mahbubai

Mahbubani sees the last few hundred years of Western dominance as an aberration which will come to its ‘natural end’. He claims that “modernization is poised to enter Arab, Turkish and Persian societies” just like it enters Asian societies, that the Nordic model of society will gradually become universalized, that the “Middle East region with less Western meddling will ultimately be a predominantly peaceful region” etc. This invocation of a natural order of things that might follow, sounds just as self-aggrandizing as Western exceptionalism.

The failings of democratic political system are dominating Western societies at a point where they need their leaders to make important changes in foreign and national security policies. These challenges will test the longevity of democratic setups all over the world, especially in the context of global challenges managed via national governments. Whether the response is strategically coordinated or not will decide the future of human civilization. The way West responds to this dilution of its power will ultimately cast the mold for the next superpower to fit in.

The best outcome would be a number one power (namely, China) that respects ‘rules and partnerships and habits of behavior’ that America could live with.

Has the West lost it? by Kishore Mahbubai

What will the ‘Beijing Consensus’, if there ever is one? Will China be a benign hegemon? What role will India play?

If history is any guide, the very idea of a sole superpower means rules become perfunctory. Yes, the West has lost it. But the Rest cannot afford schadenfreude. For the ‘new Rest’, China may prove to be just as costly.

Digital Technologies and Property Rights

Digital technologies are calling into question assumptions about the “nature” of many older economic processes in industries that are more likely to see the digitization of their content [publishing, entertainment, software, tele-communications among others]. In particular such technologies appear to be raising questions about the very conceptions of property rights [how is it organized, who controls it and how is it distributed, among others] that potentially could have serious implications for the division of power in the global political economy.

Question: How can the changes being brought about through the digital infrastructure [economics of the network + digital devices] contribute to significantly different outcomes about conceptions of property rights ? How could these rights affect the balance of power in the global economy?

With cheap availability of medium grained digital communication and storage devices (i.e. devices that cost low enough to justify personal purchase yet have excess capacity e.g. router, hard disk) along with internet, network effects increase manifold. The output generated is difficult to be appropriated (i.e. converted to private property) by any one player as the production depends on the collaboration among multiple nodes. For example, use of peer-to-peer networks. These networks can be used for data computation (Fightaids@home), storage (DC++) and communications (Skype). However, it does not mean that it cannot be appropriated.

Networked information economy complicates the notion of property rights that were conceptualized for rivalrous physical goods, and based on assumptions of scarcity, efficiency and anticipated benefits from trade of well-defined properties. Information goods are abundant and in fact, have to be artificially made scarce by exclusion (patent/copyright). Since marginal cost of these goods is zero, any price attached to it only reduces its economic efficiency. While property rights grant static efficiency to these goods, dynamic efficiency falls due to increased cost of future innovation dependent on easy availability of information goods in the present.  This dynamic efficiency figured less in old proprietary regimes because innovation was only possible in-house due to huge costs associated with physical infrastructure – which is no longer the case.

At the same time, the amorphous nature of activities on a network make it difficult to assign well-defined property rights for trade. This does not mean that exchange or value creation does not happen. For example, Linux operating system and open source software have become a success outside the paradigm of markets and firms. Projects were sufficiently modularized and varyingly granulated to suit the distributed contributions of developers and subsequent improvements. These outputs are licensed under General Public License (GPL), which prevents appropriation of the product by any one person. It becomes a ‘common’ good which can be used and modified by anyone under the same GPL.  In the old property rights system, this would have led to ‘tragedy of the commons’ with negative externalities for the collective. However, there is no such externality in this case as the good produced, software here, is non-rivalrous. In fact, the more it is used and tinkered with, the better and more robust it becomes (for example, Wikipedia). This is quite opposite to what one expects in property rights regime.

This creates a friction between the incumbent imperatives of property regime and the increasing salience of non-proprietary networked processes and outputs. For example, spectrum auction- based property rights system creates an artificial scarcity in wireless communication. Spectrum-based business models, which depend on preventing non-subscribers from accessing the communications, will gradually become obsolete as increasing adoption of wireless connectivity (e.g. WiFi) devices with excess capacity makes it possible for need-based peer to peer connectivity to take place. This reduced the power of telecommunication companies.

As the fuzzier boundaries become difficult to enforce, the balance of power will shift in the global economy to mark the increased salience of non-proprietary production processes. For example, the maintenance of Linux is done by a group of companies including IBM which pool in resources. This acts as a counteracting force to the polarizing influence of Microsoft while creating a potent non-proprietary resource which can be used for free. This has even more importance in the current context of global economy because of the increasing cost of technological development and shortened shelf-life of products that come out of these highly capital intensive investments.

However, this does not necessarily mean that economics of the network and the cheap availability of devices will lead to a more diffused form of property, moving towards a commons regime. The potency of distributed computing, storage and communications from dispersed capacities can be no match for the consolidated and highly organized computational and data storage capacities of giants like Google, Facebook, Amazon etc. They not only use their wide reaching networks to capture as much data as possible for monetization, they also appropriate the monetary benefits that emanate from the non-monetary, non-proprietary activities of users of their services.

This further problematizes the conception of property rights by delinking the ownership of the physical device from the ownership of intellectual property that it collects. For example, hardcopy of books could be resold in the market but a digital copy of a book on Kindle cannot be sold. In fact, Amazon learns from the reading patterns of Kindle users and monetizes those insights – something which was not possible. The user, while owning the physical device (Kindle), has no ownership of their own data being gleaned so seamlessly round the clock while. In fact, Amazon can remotely delete content from Kindle without permission of the ‘owner’, as it did in 2009.

The conception of property rights is also complicated in the area of agricultural technology with increasing digitization. For example, John Deere traditionally sold agricultural tools whose ownership would transfer to the farmers on sale. They could be easily repaired by self or by trained mechanics without paying the company repeatedly. With digitization and remote transmission of data to and from the company database, there is a separation of ownership of equipment (say, tractor) from ownership of data. Moreover, software debugging, device repair and remote update create new problems for the farmers as it increases their dependency on the company, reducing the supposedly exclusive control that a ‘property’ is supposed to offer to an ‘owner’.

Therefore, we see that the same network effects and availability of cheap devices, that tilt the regime of property rights towards a more diffused ownership or commons, can also be exploited by firms to render the property right claim of the user effectively useless as the value no longer lies with the device or the equipment owned but in the intangible data gleaned through them. In this new paradigm of networked devices, the former has the potential to reduce the agglomeration of power in the global economy, the latter can lead to further consolidation in the hands of a few companies and a few or even just one country. Nonetheless, old property rights become difficult to enforce and even be undesirable.