Financial crisis marks end of US as hyper power
By Masayuki Tadokoro, Keio University Professor of International Political Science and Economics
The current financial crisis that started in the United States will be recorded in history as an event that marks the end of the U.S. as a hyper power. The U.S. became the only superpower in the mid-1990s following the end of the Cold War. Since then, its unilateral behavior in defiance of a variety of postwar international institutions that the U.S. itself created has become increasingly salient while its booming economy kept attracting money from all over the world. As a result, the country came to be called a “hyper power,” surpassing a “superpower.”
However, the U.S. started the Iraq War in a high-handed manner and it has now turned into a quagmire. As a result, its global democratization project through military means has been at a deadlock. The financial crisis that started in the U.S. and resulted in the practical socialization of the U.S. financial market represents a serious setback of the economic model that it had advocated to the world.
Overconfidence and overdependence by the U.S. on its military and financial power, in which U.S. superiority is most outstanding, has led the U.S. to behave in an excessive manner. The result of the excess was a kind of “self poisoning” of its power. This is a classical example of “tragedy of power.”
Needless to say, no winner will emerge in the global financial crisis, just like in an all-out nuclear war, so all countries including Russia and China share an interest in stabilizing financial markets.
Japanese financial authorities are naturally preoccupied with responding to the on-going crisis. But as a medium and long term goal, we need to think of reforming the financial architecture of the world to impose more discipline upon the U.S., as the crisis was triggered by U.S. excess.
To better manage the global financial system, more involvement of emerging economies in addition to Group of Seven countries will be needed. Japan should take steps to stop being tossed about by U.S. financial excess by reducing its dependence upon the dollar and the U.S. dominated international system. Now is probably the time to step up regional monetary cooperation, which was bluntly blocked by the U.S. during the Asian financial crisis a decade ago
Having said that, it is very difficult for me to imagine any alternative to the leadership of the U.S., which will play special roles in managing the globalized economy after the current financial crisis and economic slump that will inevitably follow it, unless the world is divided into several spheres of influence.
It is impossible for not only Japan but also China to sever their relations with the U.S. economy without triggering major economic dislocation.
Viewing world order from a more comprehensive standpoint, not only Japan but also Europe has no ability or coordinated will to replace Pax Americana. World order led by either Russia or China, even if possible, will not be attractive.
Thus, Japan’s basic approach should be to make clear both internally and externally that it will support moderate and sensible leadership by the U.S. while trying to enhance its own ability to act independently. This is not tantamount to blindly obeying the U.S. At this time of crisis, discord between nations could threaten not only the global economy but world order as a whole Japan now has a good chance to persuade Washington, which may be prepared to listen to the friendly counsel of its ally, to revert to sensible leadership as Japan’s financial system is relatively stable and sound.
A United States that behaves in an excessive manner is a threat to Japan, to the world and above all to the U.S. itself. However, a shaky U.S. would also be a threat to Japan, which relies on it for national security and the international economic order it provides. While it is easy to criticize the United States, its sensible leadership is still the best hope for the world to create a liberal and open world order. (By Masayuki Tadokoro, Keio University Professor of International Political Science and Economics)
(Mainichi Japan) November 5, 2008
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