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The Decline of the West

Washington's moment as the globe's sole superpower barely outlasted Andy Warhol's notorious 15 minutes of fame. What went wrong?

| Mon Sep. 26, 2011 1:57 PM EDT

Are You With Me or Against Me?

It's worth remembering that capitalism was "civilized" thanks to the unrelenting pressure of gritty working-class movements and the ever-present threat of strikes and even revolutions. The existence of the Soviet bloc, an alternate model of economic development (however warped), also helped. To counteract the USSR, Washington's and Europe's ruling groups had to buy the support of their masses in defending what no one blushed about calling "the Western way of life." A complex social contract was forged, and it involved capital making concessions.

No more. Not in Washington, that's obvious. And increasingly, not in Europe either. That system started breaking down as soon as—talk about total ideological triumph!—neoliberalism became the only show in town. There was a single superhighway from there and it swept the most fragile strands of the middle class directly into a new post-industrial proletariat, or simply into unemployable status.

If neoliberalism is the victor for now, it's because no realist, alternative developmental model exists, and yet what it has won is ever more in question. Meanwhile, except in the Middle East, progressives the world over are paralyzed, as if expecting the old order to dissolve by itself. Unfortunately, history teaches us that, at similar crossroads in the past, you are as likely to find the grapes of wrath, right-wing populist-style, as anything else—or worse yet, outright fascism.

"The West against the rest" is a simplistic formula that doesn't begin to describe such a world. Imagine instead, a planet in which "the rest" are trying to step beyond the West in a variety of ways, but also have absorbed that West in ways too deep to describe. Here's the irony, then: Yes, the West will "decline," Washington included, and still it will leave itself behind everywhere.

 

Sorry, Your Model Sucks

Suppose you're a developing country, shopping in the developmental supermarket. You look at China and think you see something new—a consensus model that's turning on the lights everywhere—or do you? After all, the Chinese version of an economic boom with no political freedom may not turn out to be much of a model for other countries to follow. In many ways, it may be more like an inapplicable lethal artifact, a cluster bomb made up of shards of the Western concept of modernity married to a Leninist-based formula where a single party controls personnel, propaganda, and—crucially—the People's Liberation Army.

At the same time, this is a system evidently trying to prove that, even though the West unified the world—from neocolonialism to globalization—that shouldn't imply it's bound to rule forever in material or intellectual terms.

For its part, Europe is hawking a model of supra-national integration as a means of solving problems and conflicts from the Middle East to Africa. But any shopper can now see evidence of a European Union on the verge of cracking amid non-stop inter-European bickering that includes national revolts against the euro, discontent over NATO's role as a global Robocop, and a style of ongoing European cultural arrogance that makes it incapable of recognizing, to take one example, why the Chinese model is so successful in Africa.

Or let's say our shopper looks to the United States, that country still being, after all, the world's number one economy, its dollar still the world's reserve currency, and its military still number one in destructive power and still garrisoning much of the globe. That would indeed seem impressive, if it weren't for the fact that Washington is visibly on the decline, oscillating wildly between a lame populism and a stale orthodoxy, and shilling for casino capitalism on a side street in its spare time. It's a giant power enveloped in political and economic paralysis for all the world to see, and no less visibly incapable of coming up with an exit strategy.

Really, would you buy a model from any of them? In fact, where in a world in escalating disarray is anyone supposed to look these days when it comes to models?

One of the key reasons for the Arab Spring was out-of-control food prices, driven significantly by speculation. Protests and riots in Greece, Italy, Spain, France, Germany, Austria, and Turkey were direct consequences of the global recession. In Spain, nearly half of 16- to 29-year-olds—an overeducated "lost generation"—are now out of jobs, a European record.

That may be the worst in Europe, but in Britain, 20 percent of 16- to 24-year-olds are unemployed, about average for the rest of the European Union. In London, almost 25 percent of working-age people are unemployed. In France, 13.5 percent of the population is now officially poor—that is, living on less than $1,300 a month.

As many across Western Europe see it, the state has already breached the social contract. The indignados of Madrid have caught the spirit of the moment perfectly: "We're not against the system, it's the system that is against us."

This spells out the essence of the abject failure of neoliberal capitalism, as David Harvey explained in his latest book, The Enigma of Capital. He makes clear how a political economy "of mass dispossession, of predatory practices to the point of daylight robbery, particularly of the poor and the vulnerable, the unsophisticated and the legally unprotected, has become the order of the day."

 

Will Asia Save Global Capitalism?

Meanwhile Beijing is too busy remixing its destiny as the global Middle Kingdom—deploying engineers, architects, and infrastructure workers of the non-bombing variety from Canada to Brazil, Cuba to Angola—to be much distracted by the Atlanticist travails in MENA (aka the region that includes the Middle East and Northern Africa).

If the West is in trouble, global capitalism is being given a reprieve—how brief we don't know—by the emergence of an Asian middle class, not only in China and India, but also in Indonesia (240 million people in boom mode) and Vietnam (85 million). I never cease to marvel when I compare the instant wonders and real-estate bubble of the present moment in Asia to my first experiences living there in 1994, when such countries were still in the "Asian tiger," pre-1997-financial-crisis years.

In China alone 300 million people—"only" 23 percent of the total population—now live in medium-sized to major urban areas and enjoy what's always called "disposable incomes." They, in fact, constitute something like a nation unto themselves, an economy already two-thirds that of Germany's.

The McKinsey Global Institute notes that the Chinese middle class now comprises 29 percent of the Middle Kingdom's 190 million households, and will reach a staggering 75 percent of 372 million households by 2025 (if, of course, China's capitalist experiment hasn't gone off some cliff by then and its potential real-estate/finance bubble hasn't popped and drowned the society).

In India, with its population of 1.2 billion, there are already, according to McKinsey, 15 million households with an annual income of up to $10,000; in five years, a projected 40 million households, or 200 million people, will be in that income range. And in India in 2011, as in China in 2001, the only way is up (again as long as that reprieve lasts).

Americans may find it surreal (or start packing their expat bags), but an annual income of less than $10,000 means a comfortable life in China or Indonesia, while in the United States, with a median household income of roughly $50,000, one is practically poor.

Nomura Securities predicts that in a mere three years, retail sales in China will overtake the US and that, in this way, the Asian middle class may indeed "save" global capitalism for a time—but at a price so steep that Mother Nature is plotting some seriously catastrophic revenge in the form of what used to be called climate change and is now more vividly known simply as "weird weather."

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