April 13, 2014 2:39 pm

‘The Road to Global Prosperity’, by Michael Mandelbaum

A lucid if overly optimistic post-crisis reassessment of economic integration

The Road to Global Prosperity, by Michael Mandelbaum, Simon and Schuster, RRP$28

Ever since the financial crash of 2008 there has been speculation about whether the globalised economic system is under threat. Some analysts, me included, predicted international political tensions would rise in the new environment – and that this would eventually pose a threat to the trade and investment flows underpinning globalisation.

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Michael Mandelbaum has come to a different conclusion. In his new book The Road to Global Prosperity, he says globalisation will not merely survive but intensify – and that the result will be a much more prosperous world. “The global economy will continue to grow. Its growth will make people everywhere richer,” he predicts.

The Johns Hopkins University professor is a friend and sometime co-author of Thomas Friedman, the New York Times columnist whose 2005 book, The World Is Flat, popularised the notion of globalisation as an unstoppable and transformative force. A decade on, Mandelbaum’s new book could be subtitled The World is Still Flat.

His optimism is underpinned by four central propositions. First, “the conquest of territory and the defence of borders have ceased to be the chief concern of governments almost everywhere and have been replaced by the promotion of economic growth”. Second, political legitimacy “has come to depend on the delivery of prosperity”. Third, there is a global consensus that a market economy is a prerequisite for the creation of prosperity. And, finally, the “advance of technology” will continue to promote global economic integration.

The last two propositions seem strongest. One of the most striking things about the aftermath of the Great Recession was its failure to generate a coherent intellectual and political riposte to free-market thinking. The Occupy Wall Street movement proved unable to translate outrage into a compelling programme of change – and eventually gave up. The unorthodox economic policies pursued by the US Federal Reserve were designed to save global capitalism not transform it. Similarly, while technological utopianism can be overdone, it is also clearly true that advances in information technology, social media and transport continue to drive forward the process of globalisation.

It is Mandelbaum’s first two propositions that strike me as more questionable. Somebody has clearly failed to inform President Vladimir Putin that “the conquest of territory” is now unpardonably retro. Nor is it evident that Russia’s annexation of Crimea will simply be an isolated aberration. The government of China also has territorial disputes with many of its neighbours and has begun to use force to exert its claims – albeit modestly so far – in the South China Sea.

 

The fact that some important governments are still willing to pursue territorial disputes, through the use of force, points to the second questionable aspect of Mandelbaum’s case: his assertion that political legitimacy now flows from economic success. It does seem true that economic failure is a fairly sure way of losing legitimacy – particularly in an interconnected world, where ordinary citizens are much more aware of how people live in other parts of it. Yet, while economic success is an indispensable source of political legitimacy, it is not the only source. In many countries, the population still thrills to “strong man” politics and to assertions of national pride. Mr Putin’s opinion poll ratings have soared in the aftermath of the occupation of Crimea. And it seems clear that when President Xi Jinping talks of his goal of the “great rejuvenation of the Chinese nation”, he has something more than economic growth in mind. The strength of nationalist sentiment on the Chinese blogosphere also suggests many in the country see rising prosperity as a means to the end of national greatness – and not an end in itself.

Faced with powerful challenges from Russia – and perhaps one day from China – America is, sensibly, deeply reluctant to respond with military force. That leaves economic sanctions. But any attempt to sanction Russia, the eighth-largest economy in the world, begins to unpick the fabric of globalisation. An economic clash with China, at some future date, would pose an even more profound challenge to the “road to global prosperity” Mandelbaum sketches out.

To point to these potential weaknesses in Mandelbaum’s lucid and thought-provoking argument is not, however, to say he will necessarily be proved wrong. Globalisation has indeed proved remarkably durable despite the shock administered by a global economic crisis. It also remains the best hope for rising prosperity in a more peaceful world. So I finished Mandelbaum’s book hoping that he will be proved right – even though I suspect that the biggest challenges to his thesis are yet to come.

The writer is the FT’s chief foreign affairs commentator

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