The Thucydides trap reimagined

Geo-economics emerged from geopolitics as key driver of international politics and international economics today

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The Thucydides trap reimagined
An aerial view shows containers and cargo vessels at the Qingdao port in Shandong province, China May 9, 2022. — Reuters 

Chatham House defines geo-economics as “the use of economic tools to advance geopolitical objectives.” The Singapore Economic Forum defined the present era as the “age of geo-economics” in which public and private sector decision-makers have to “assess constantly techno-economic returns and legal-political risks on a combined geo-economic plane.”

Geo-economics has emerged from geopolitics as the key driver of international politics and international economics today. There are, however, competing concepts such as "techno-feudalism" which Yanis Varoufakis, the former Greek finance minister, says has already superseded both capitalism and socialism with what he calls "cloud capitalism" in which all of us consumers are the unpaid labour force of the seven largest corporations owned by a handful of multi-billionaires who also own the entire production, sales and consumption process by virtue of the information we provide them by our every action.

There is also the "super-imperialism" of Michael Hudson which defines 21st century American geo-strategy as a fatally zero-sum game. A recent book by Chinese economist Keyu Jin, "China’s New Playbook", shows how American and European China experts have completely misunderstood and underestimated China’s development and transformation strategy. The strategy uniquely combines strong political centralisation with fiercely competitive economic decentralisation at the town level in what she calls a “mayoral economy”.

More broadly, Noam Chomsky, says the world today is faced with two choices: either follow the UN Charter to preserve some hope of world peace and organised human survival beyond the 21st century, or meekly comply with the strategic demands of US global hegemony, including its military and economic hegemony. This latter choice, according to Chomsky, will dangerously increase the chances of a major conflict with China which would ensure human civilization does not survive the present century in any coherent form. The choice for Pakistan should be clear. But whether or not the prevailing configuration of its governance allows a rational choice is much less clear.

With the rise of industrial capitalism, economics was detached from its holistic sociological context and converted into a mimic science with pretensions of hard science. However, Chomsky suggests this was an impossible conceit since human behaviour is too complex for the human mind to comprehend, except in general terms. This is one reason why the advanced economies of today never followed the precepts of classical or neoclassical economics. They were reserved for micro-analyses such as the household management of states, firms and individuals.

Later, during the age of imperialism, the metropolitan centres understandably did not allow economic theory to interfere with the exploitation of their colonies. Much later, when the colonies achieved independence, they sought to telescope the development process into decades rather than centuries. This was quintessentially a political project rather than an economic exercise.

Imperialism, however, transformed itself into neo-imperialism. Through the various international financial institutions the neo-imperialists, led by the US, imposed the theoretical orthodoxy they had refused to apply to themselves on developing countries to deny them the opportunity to climb up the economic ladder to developed economy status. Critics called this "kicking away the ladder" to keep developing countries under control. Only relatively well-governed developing countries managed to escape this neo-colonial debt trap. As long as Pakistan was united, it had the potential to be such a country and escape such a fate. But since the loss of its eastern majority, except for very brief deceptive periods, this has not been the case.

Moreover, any socio-economic restructuring effort that is directed by economic and development criteria — the people’s welfare criteria — will inevitably encounter huge elitist status quo resistance, including the power of the state apparatus which, in the case of Pakistan, is particularly subject to foreign and domestic elite capture. Accordingly, alleviating development challenges will, sooner or later, pose a threat to established structures and interests, and be stopped in its tracks.

So, will geo-economics define a new era of globalisation or de-globalisation? It emerged as the latest version of geopolitics and geo-strategy within a post-cold-war globalising world in which the current two superpowers were rivals but also each other’s primary trading partner. The US dollar was supreme largely because of China’s massive purchase of US Treasury bonds, and Chinese growth rates were supreme mainly because of the US market.

However, under the two worst US presidents in living memory, this situation is being reversed. The US and its allies are now trying to decouple China from global supply chains through economic sanctions and military measures. Nevertheless, much of the rest of the world, including the US and Western Europe, remain as dependent as ever on a whole range of Chinese inputs to maintain their own exports and growth rates. One of these two worst presidents will soon be re-elected for another five years.

Michio Kaku, the renowned physicist, says whoever wins the quantum computing race will dominate the world economy of tomorrow. Today, the US lead in the most advanced microchips — the basis for AI, super-fast quantum computers, and the high-tech economy — is being seriously challenged by China. For example, Huawei’s chip breakthrough has challenged the effectiveness of the US ban on microchip exports to China. China’s new quantum computer, "Jiuzhang 3", is reportedly much faster than the fastest US supercomputer. Similarly, Chinese scientists have reportedly created a chip that can perform AI tasks 3000 times faster than Nvidia’s A100 while consuming 4000 times less energy.

Two and a half thousand years ago, the Father of History, Thucydides, said the prospect of an established power being disestablished by an emerging power sooner or later leads to war. The established power will want to settle accounts as early as possible, and the emerging power will seek to avoid or delay conflict until the balance of power swings decisively in its favour.

Today, the context for the Thucydides Trap is set more by geo-economics and less by the traditional military balance. Accordingly, if the US were to somehow pursue its global geo-economic strategies as a positive sum game with China this could slow the approach of "midnight" on the Doomsday Clock. Otherwise, its approach will be accelerated if the military balance remains the decisive factor — as is the case with the US today, and almost certainly under whoever wins the presidential elections next November.

Nicolas Firzli of the Singapore Economic Forum says: “Adhering to the laws of geo-economic gravity is now essential to ensure the effective sovereignty of a state.” He adds: “Investment attractiveness and the capacity to project soft power as China has done through its Belt and Road Initiative are key determinants of geo-economic strength.”

This suggests several questions: How far has Pakistan enhanced its geo-economic strength? How well has it utilised the potential of CPEC and China’s strategic investments to strengthen its sovereign independence and economic transformation? How far has its politics and governance been obstacles to realising this potential? How far have its abysmally low social and economic indicators also been obstacles? How far have the powers-that-be been an opponent of the radical reforms required to bring about fundamental improvements in these socio-economic indices?

How well have its nouveau riche politicians and "seths", and its middle-class bureaucrats, intelligentsia, and professionals addressed such challenges? What degree of priority have the decision-making elites and governing institutions of Pakistan accorded to implementing transformation agendas such as are blithely articulated in party political manifestos? Does maintaining a strategic balance between a proven "frenemy" like the US, and a proven real friend like China, make sense?

How will we realise the strategic and geo-economic potential of BRI and CPEC through such transparently fake balancing? Why do the ruling elites in Pakistan choose, willingly or unwillingly, to be constrained by the US which regards China as its enemy? How can we begin to answer such questions without a plethora of local, regional and national movements to save democracy, respect the people’s choice, and ensure good governance on behalf of the people instead of corrupt elites?

We know the answers and laugh at them. We choose to be helpless and are complicit. We affect contempt for the truth and are contemptible. We are the enemy and can make no friends. We will not be absolved by history and shall be history. We shall be cursed by our own blood. We can change all this if we want to. We limit ourselves to prayer knowing prayers depend on intent, and intent is determined by actions, and we choose not to act.

The Quaid left us a potential heaven on Earth and we have made a hell of it — and smile, and recite poetry, and write articles. Our ablutions do not cleanse us.

The writer is a former ambassador to the US, India and China and head of UN missions in Iraq and Sudan. He can be reached at: [email protected]

Disclaimer: The viewpoints expressed in this piece are the writer's own and don't necessarily reflect's editorial policy.

Originally published in The News