In These New Times

A global downturn in the power of the west
By Dominique Moïsi
Published: October 5 2008 18:21 | Last updated: October 5 2008 18:21 Financial Times

It is telling times when the FT prints an article that should appear in the Socialist Worker, with a few changes in jargon and an outlook that actually assesses Western power and not just capitalist crises. As to Europe, the author, here, is rather one sided:  have a look at our Editorial.

It is not too early to assess the first geopolitical lessons of the current financial maelstrom. As the crisis unfolds, trends are emerging. The near collapse of financial capitalism both confirms and accelerates a revolution that was already under way in international politics. Who are the losers and who are likely to be the winners – that is, those who lose the least – in the present mess? In the language of Wall Street, the west is down and the state is up. Moreover, democracy itself risks falling into disrepute if solutions are not found to the crisis.

First, the shock reinforces the relative decline of the US and the passage from a unipolar to a multipolar world. Whoever is its next president, America will not only have to face more diverse and complex challenges but will have fewer means with which to confront them. The interaction between the infectious greed of its financial class and its politicians’ dereliction of duty has impoverished the country. The torch of history seems to be passing from west to east. It is true that China and India are also affected by the financial turmoil; less so Japan, a country whose financial conservatism is the product of bitter experience 20 years ago. But to paraphrase French President François Mitterrand: growth is in the east and debts are in the west. Furthermore, fear is in the west and hope is in the east, so we are equipped in very different ways to face this crisis.

The meltdown has also revealed the depth of an identity crisis, not just in America but also in Europe. Nationalisation may have been the initial American response to the crisis. But it is nationalism that is the main obstacle facing Europe. The temptation of the “to each his own” mindset was present in Europe in the good times, but has become irresistible in bad times. Nicolas Sarkozy, French president of the European Union, may be mounting a brave and gallant fight to produce a “European answer”, but his activism is not sufficient to hide deep divisions among member states. The gold medal for selfishness may once more be given to the Irish, who have followed the ingratitude of their No vote on the Lisbon treaty with absolute contempt towards the search for a collective solution to the financial crisis. The European spirit is low and a “European political will” is lacking.

The financial crisis has also shaken Russia and demonstrated the gap between its ambition to recover cold war superpower status and its true means as a country whose wealth is solely based on energy. By contrast, thanks to the diversity of its resources, Brazil is likely to come out of the present morass stronger. Though they are affected too, the Emirates might engage in a shopping spree on the devalued jewels of western capitalism. On the African continent, only the energy-rich countries may emerge relatively unaffected, while the rest risk falling further. When the rich become less rich, the poor tend to become even poorer.

As the west withers, the state is on the rise. On the eve of the last World Economic Forum in Davos in January, its president and founder Klaus Schwab asked “what business can do to save the world”. The question has been reversed today: “What can the state do to save the business of finance?” The present crisis has much more to do with the 1907 bankers’ panic in America than with the Great Depression. At that time, the solution was found by John Pierpont Morgan, who convinced other bankers to provide a backstop for the crisis. Today it is the state that is called upon as the ultimate saviour of capitalism.

However, while citizens of the western world are expressing their need for state protection, they are also increasingly cynical towards politics and politicians. Their fear is growing as their trust is diminishing. If state intervention were unsuccessful, the comments made by many African leaders – comparing the stability of authoritarian regimes with the chaotic condition of democratic ones – would be raised too in many western countries. The 1929 stock market crisis led to the second world war. If we fail to resolve it, the 2008 financial crisis will accelerate the comparative decline of the west as a force today and as a model for the rest of the world tomorrow.

The writer is a senior adviser at France’s Institute for International Relations and author of the forthcoming ‘The Geopolitics of Emotion’, to be published in Britain by Bodley Head