- Editorial note from HC: In the piece I had in the CSM last Friday about the current, Georgia-revealed shifts in global power balances, I argued that the many economic interdependencies among the world’s major power centers will act as a powerful brake on their going to war against each other. Afterwards, I received an intriguing critique of this position from none other than Branko Milanovic, an economist on global inequality whose work I admire a lot. (Indeed, I used this recent book of his quite a bit in my Re-engage! book.)
So although Milanovic’s conclusions are very different from mine– or rather, precisely because they are so different from mine– I am very happy to publish the short argument he has composed on this subject, so we can have a good exploration of these issues.
From Global Trade to Global War
by Branko Milanovic, August 26, 2008
Openness to trade and globalization lead to interdependence and cooperation and hence to global peace. There is a venerable school of thought, beginning with Montesquieu and Kant, that argues more or less exactly this. Less famously, the same point was made in Norman Angell bestseller that had the misfortune of being published just a few years before the vaunted cooperation and interdependence transmuted into the worst carnage the world had ever seen up to that date (1914). But there is another school of school to whom the carnage of the Great War did not come unexpected. It belongs to the Marxist and semi-Marxist tradition, starting from Hobson and continuing with Lenin and Rosa Luxembourg. It viewed the war as inevitable as capitalists from different countries clashed when dividing up the globe, and then manipulated the public and used their nations’ armies to further own interests.
And indeed the unease with the standard (“peaceful globalization”) version of events is evident even today. In one of globalization cheerleading bestsellers Martin Wolf (“Why globalization works?”) shows a singular difficulty explaining how apparently benign global capitalist competition resulted in the disaster of 1914. His explanation is to lay blame on “German militarism”. But German militarism was only special because it was a late-comer’s militarism: once most of Asia and Africa was divided (not always without conflict; witness Fashoda) between the French and British capitalists, the up and coming German capitalists wanted a slice of the pie too. So, it is the very nature of global capitalism, not some unique “German militarism,” that is to blame.
Why does it matter today, exactly 100 years from the run-up to World War I (the Tangier crisis which almost led to a direct clash between the French and the Germans) and just short of the World War I centennial? Because the same forces are at work again. Consider the following. The three most important countries, US, China and Russia have a nicely balanced division of assets among them: US has capital and technology, China labor, and Russia land and natural resources. But to make more money, US capital needs control of as many natural resources as possible. A glance at the map shows that the sparsely populated and natural resource-rich Siberia and Central Asia are the prime candidates for their lucrative control. After the break up of the Soviet Union, it seemed, all too briefly, that the US and Western capitalists had all this wealth within their reach. The Yeltsin regime was engaged in a fire sale where multi-billion plants and oil-fields were being sold for a song. But already by the time the second Yeltsin administration, the rules of the game started changing. In the swindle that has since become known as “loans for shares”, Russian big capitalists (known as the “oligarchs”) figured out that they did not need to share all these riches with foreigners. Instead, why not keep them for themselves?
This trend accelerated under the two Putin terms. The division of spoils was limited to a restricted circle of cronies and secret agents who suddenly developed an acumen for business deals. The agreements with foreign capitalists were rescinded or revised (most famously, the British Petroleum Tyumen oil field deal). Oligarchs who did not accept the new rules of the game, and who wanted to build pipelines with foreigners (Khodorovsky) were stripped of their assets and sent to jail.
Thus today the struggle between the West and Russia that threatens the world with not only another cold, but rather hot, war is between the two bands of greedy men, and it involves the riches of the Eurasian heartland (“the world island”) east of the Urals. It is an implacable fight because it is a zero-sum game. In contrast, the nature of the Sino-US rivalry is different because of complementarily which exists between capital and labor. Both are needed to produce toys and micro chips. But when it comes to natural resources, it is either you or I who control it.
No less an admirer of global capitalism than Keynes saw its Achilles’ heel in greed that at times becomes so irrational that it works against person’s own interests. Lenin agreed: he thought that a capitalist would sell the rope with which he would be hanged. They might still be right. Halliburtons and Gazproms of this world, rather than ushering an era of universal peace, may bring us World War III.