China’s rise has challenged America’s undisputed hegemony over the world economy – a status the United States has enjoyed since the Soviet Union’s collapse. While some American national-security elites seek continued US primacy, others seem resigned to an increasingly bipolar world. A more likely outcome, however, is a multipolar world where middle powers exert considerable countervailing force, thus preventing the US and China from imposing their interests on others.
Middle powers include India, Indonesia, Brazil, South Africa, Turkey, and Nigeria – all large economies that have a significant footprint in the global economy or in their regions. They are far from rich – indeed, they account for a significant share of the world’s poorest people – but they also have large, consumption-oriented middle classes and considerable technological capabilities. The combined GDP (in purchasing-power-adjusted terms) of the six countries mentioned above already exceeds that of the US and is projected to grow by 50% by 2029.
Typically, these countries have distinctive foreign policies that reject clear alignment with either the US or China. Contrary to what many in the US believe, middle powers have no great affinity for China, nor do they want to cozy up to it at the expense of their relationship with the US. In fact, insofar as they have been driven closer to China, it is because of US policy. America’s weaponization of its trade and financial might has impelled them to hedge their bets.
The leaders of middle powers do not want a world where they are forced to take sides. “We refuse to be a pawn in a new cold war,” says former Indonesian President Joko Widodo. Instead, they want to build trade and investment relationships that are multidimensional, selecting from a menu of options that is not artificially restricted by any great-power rivalry. Many believe, along with Rana Foroohar of the Financial Times, that “the US is not an anchor for stability, but rather a risk to be hedged against.”
With advanced economies increasingly focused inward, middle powers have become the natural champions of global public goods. They are well-positioned to lead in advocating action on climate change, public health, and debt distress. A good example is Brazil’s push for a global wealth tax on billionaires during its G20 presidency. The proposal under consideration would raise hundreds of billions of dollars and could play an important role in plugging the gap in climate finance for low-income countries.
The middle powers are unlikely to become a formidable bloc of their own, mainly because their interests are too diverse to fit into a common economic or security agenda. Even when they have joined formal groupings, their collective impact has been limited. The BRICS (originally Brazil, Russia, India, China, and later South Africa) was launched with great fanfare in 2009, but it has accomplished little beyond providing photo ops for its leaders.
The BRICS recently expanded to include four additional countries: Egypt, Ethiopia, Iran, and the United Arab Emirates, and more may join. But it is difficult to see how such a heterogeneous group of countries can consistently act together. The worst outcome is that the grouping will reinforce even the democratically elected member-state leaders’ own autocratic impulses.
A common view among economists and political scientists is that a healthy, stable global economy needs a hegemon – whether it be the US after 1945 or Britain during the gold standard. According to the theory of “hegemonic stability,” a supervening power is required to shoulder the costs of running an open world economy, such as maintaining open sea lanes or enforcing trade rules and the free flow of finance. Accordingly, multipolarity is a recipe for chaos and economic disintegration.
But this is an outmoded view of how today’s world works. Though the specific mix of openness and protection will naturally vary across countries, no country has an interest in turning its back on the global economy. Governments must balance the benefits of open trade against the support that their industries may need to develop new capabilities. Each country is its own best judge when it comes to the terms on which it participates in the world economy.
It would be nice to have a world in which the US, perhaps joined by China, truly supplied global public goods – such as the concessional finance and access to technology that developing countries need for climate mitigation and adaptation. But this is not the world we have. The US and other major economies are woefully ill-disposed to provide the public goods the world economy really needs; and given the mood in their capitals these days, their disposition is unlikely to improve anytime soon.
Moreover, as many middle powers have learned from experience, hegemonic power can be used for coercive as well as benevolent reasons. It can be deployed to enforce rules of the game that do not serve their interests – and which the hegemon readily flouts whenever they become inconvenient – or to punish countries that do not align with the hegemon’s foreign-policy goals, as with the internationalization of US sanctions against Iran and Russia.
Perhaps the most important contribution middle powers can make is to demonstrate, by their example, the feasibility of both multipolarity and diverse development paths in the global order. They offer a vision for the world economy that does not depend on either America’s or China’s power and goodwill. But if middle powers are to be worthy role models for others, they must become responsible actors – both in their dealings with smaller countries and in promoting greater political accountability at home. - Project Syndicate
Dani Rodrik, Professor of International Political Economy at Harvard Kennedy School, is President of the International Economic Association and the author of Straight Talk on Trade: Ideas for a Sane World Economy (Princeton University Press, 2017).
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