"Where Is the World Headed?"
As the world heads into the next decade, there are two arenas where we can anticipate great turbulence the geopolitical arena and the world economy, with the relative decline of US geopolitical power, now acknowledged by almost everyone and which even President Obama will be unable to reverse.
We've moved into a truly multipolar world where the power of relatively weaker states is suddenly much greater. The Middle East in 2008 was but one example: Turkey brokered long dormant negotiations between Syria and Israel. Qatar brokered a negotiated truce between fiercely opposed factions in Lebanon. Egypt sought to broker negotiations between Hamas and Israel. The Palestinian Authority resumed negotiations with Hamas. And the Pakistani government entered into a de facto truce with the Taliban inside the zones bordering Afghanistan. What's significant about each of these actions is that the United States opposed all of these negotiations and was simply ignored without serious consequences for any of the actors.
Alongside the US, European Union, and Japan there is now Russia, China, India, Iran, Brazil as the putative leader of a South American bloc, and South Africa as the putative leader of a southern Africa bloc.
There's an immense amount of jockeying for alliances, with internal debate about optimal partners and plenty of uncertainty about what they will decide. In addition, other countries like Poland, Ukraine, Korea, Pakistan, Egypt, Nigeria, Mexico, and Canada are unsure about how to maneuver. Clearly the new geopolitical situation is quite unlike anything the world has known in a long time. It isn't quite total anarchy, but it is certainly massive geopolitical disorder.
This geopolitical disorder accompanies acute uncertainties about the world economy. There is first of all the issue of currencies. We have lived, since 1945 at least, in a dollar stabilized world. The decline of the US, in particular its decline as a dominant locus of world production, combined with the overstretch of its debt, has caused a serious decline of its exchange rate, one whose end point is unclear but probably still lower.
This decline of the dollar poses a serious economic dilemma for other countries, particularly those which have placed their increasing wealth into dollar denominated bonds and stocks. These countries are torn between wanting to sustain the US as a significant purchaser of their exports and the real losses they incur in the value of their dollar denominated assets as the dollar declines and pondering when to abandon it. But as with all financial exits, the issue for the holders of assets is timing neither too early nor too late.
Will some other currency replace the dollar as the reserve currency of the world? The obvious candidate is the euro. Whether it can play this role or whether European governments wish to play this role is uncertain, although it's possible that this role may be thrust upon it.
If not the euro, might we have a multi currency situation one in which the dollar, the euro, the yen, possibly the Chinese RMB and the pound are all used for world transactions? The answer here is akin to the question of geopolitical alliances. It would not be total anarchy, but it would certainly be disorder, and the world's governments and producers would feel most uncomfortable not to speak of the world's pensioners.
Many large countries have seen large increases in both their productive output and their level of consumption. Take the so called BRIC countries Brazil, Russia, India, and China which harbor something like 60 percent of the world's population. The increase in their output and consumption levels has led to an incredibly increased demand for energy, raw materials, food, and water. Something must give. We could have a major worldwide inflation, as the prices of all these commodities zoom upward, fueled by surging demand and speculation. We could then have massive protectionism, as governments seek to safeguard their own supplies by limiting any and all exports.
But, as the world has now acknowledged a so-called credit crunch, the more likely scenario is acute deflation. Excessive inflation and nominal deflation are simply two variants of serious constraints on world production and serious misery for the large majority of the world population.
As we know from past experiences, this could create an erratic vicious circle. We could have massive food and water shortages felt here and there, resulting in high mortality rates and serious additional environmental catastrophes.
Governments assaulted by reduced real revenues, under pressure not to increase taxes to compensate, might cut back in the three key domains of education, health, and old age pensions. But these are the domains that, as part of the democratization of the world over the past two centuries, have been the key demands in which publics make demands of governments. Governments unable to address the maintenance of these three forms of social redistribution would face a major loss of legitimacy, with uncertain consequences in terms of civil uprisings.
Now this entire short run negative picture is exactly what one means when one says that the system has moved far from equilibrium entering into a state of chaos. Chaos, to be sure, never goes on forever. Chaotic situations eventually breed their own resolution in what Prigogine and Stengers called "order out of chaos" in the English title of their classic work. As the authors emphasized, in the midst of a bifurcation, there is creativity, there is choice, but we cannot be sure what choices will be made.
In the world battle between the Left and the Right, the former had a vertiginous rise in the nineteenth and especially the twentieth century. The Left mobilized support on a vast scale and very effectively. There came a moment in the post 1945 period when it seemed to be succeeding everywhere in every way.
Then came the grand disillusionments. The states where the antisystemic movements came to power in one way or another were in practice far from what the popular forces had expected and hoped to institute. And the presumption of irreversibility of these regimes turned out to be another illusion. By the early 1990s, triumphalism had disappeared amongst the world Left, to be replaced by a widespread lethargy, often a sense of defeat.
And yet, as we know, the subsequent triumphalism of the world Right fell apart as well, most spectacularly in the utter fiasco of the neo con assertion of a permanent US imperial domination of the world. From the 1994 Zapatista uprising to the successful shutdown of the 1999 Seattle meeting of the World Trade Organization to the 2001 founding of the World Social Forum (WSF) in Porto Alegre, a reignited world Left reemerged on the world scene.
We live in a chaotic world environment and it's difficult to see clearly. It's a bit like trying to make one's way forward in a major snowstorm. Those who survive both use a compass to know which direction to walk and also examine the ground inches ahead to make sure they do not tumble into some hole. The compass guides our middle run objectives the kind of new world system we wish to build. The ground inches in front of us is the politics of the lesser evil. If we don't do both, we're lost. Let us debate about the direction of the compass, ignoring the states and ignoring nationalism. Let us nonetheless engage with the states and nationalism in the short run, so that we avoid the crevices. Then we have a chance of survival, a chance we will achieve that other world that is possible.