When Adam Smith’s much celebrated and equally venerated book, An Inquiry into the Nature and Causes of the Wealth of Nations, or The Wealth of Nations for short, was published in 1776 he had prosperity at the back of his mind. The Western branch of economic studies took a new turn after the groundbreaking publication by Smith. The value of the book’s content was unparalleled to the West. Adam Smith was breaking new ground in Western thought and like 20th and 21stCentury economists, was ‘preaching’ the cause of global prosperity. He called it Universal Opulence. He was well-known as an arch-critique of Mercantilism and advocated what now would be called the Free Market.
More than three hundred years later, it was a former emerging colony and fledgling Capitalist society that embraced the idea of free markets – the US – and not the United Kingdom and advocated it to the world after World War II. The US subtly used this idea to shape the 20th Century around its international interests. However, the Soviet Union repeatedly stymied US progress on this course. Eventually, the fall of the Berlin Wall and the resultant disintegration of the Soviet Union saw the United States of America emerge the sole Superpower.
The Market was virtually opened to almost everyone willing to join and fulfills some criterion judged by the US; Free Market? It was a rave to be celebrated but only by those that dominate or control the production market. The US uses the Free Market as a bargaining chip because it is the World’s largest economy. Closing its door to any nation brings chaos to that nation’s economy – Iran has always been the favorite example, and then followed by Russia. Trading with a US-sanctioned entity puts a country at crosshairs with the superpower. This sees other markets withdraw from deals with the sanctioned even if it benefits them. As recently seen when European companies left Iran because the US re-imposed sanctions on the clerical nation.
The World Trade Organization (WTO) is supposed to be a regulator with the capacity to prevent any ‘illiberal’ conduct in the global market. The market, as ostentatiously claimed by the US since World War II, is a means of uniting nations under the supposed interest of trade that can avert war. Any nation with trade policies that threatens this can be declared a rogue – but effectively only by the US.
However, as the end of the second decade of the 21st Century dwindles the US becomes the very first influential country to undermine the order it established on a very large scale. The Trade War with China might be interpreted by most as Donald Trump’s lack of mental intuition. But upon inspection, it appears to be bigger than his ego and narcism.
Since after the Second World War, the US has unilaterally dominated the global economy. The rest of the economies fly under its manifestly ‘destined’ wings. The rise of China as a regional power in Far-East Asia and an economic power globally poses a constant threat to this dominance. China has disbursed a large amount of money to establish a firm base for itself all over the globe. Although, its economically-driven approach to the globe is a huge downside to its rise as power it stands as the first major possible global challenger to the US since 1990.
China’s rapid economic surge came from cheap exports of highly needed materials to the world. This often generated surplus in its economy. This also gave China the capacity to carry out massive projects around the world and even give out loans. Slowly and with the passing of time, China is taking over assets from Asia to Africa – as a practical demonstration, it recently took over the possession of Mombasa seaport in Kenya and the Gwadar seaport of Pakistan was leased until 2059.
The major disadvantage the US faces is not restricted to China stealing the market from it by selling similar commodities – toys, devices like computers and phones, auto industry etc – at very low prices and splashing out cheap interest loans, it is also that China is making use of the international economic structure crafted and promoted by the US itself; Global Capitalism/Free Market/Global Free Trade/Globalization and you name it. The US is transcending the policies and strategies that helped entrench its position as a superpower. The reason being after the Cold War and at the end of the 20th Century, no country could challenge its economic dominance, talk-less of its military firepower. At the turn of the 21stCentury, China became an economic power by the use of technologies it got and replicated from the US – which serves as its major weakness against America.
Apparently, containing China has failed so the US moves to strategically alter course in order to secure its interests – only permanent interests. In other words, Globalization or Global Capitalism is no more beneficial to the US; therefore, it reneges against it and hurls accusations at China’s trade system and strategy. Fighting ‘terrorism’ and securing universal freedom are no more the top priorities in serving America’s interest. Pushing back China is.
To put Global Capitalism in perspective, the political factors must be connected to it as it is the most important factor to a power. As its actions indicate, the US never had the intention to foster prosperity by the means of Globalization. It is an ostensible mechanism for maintaining its position as a superpower. Now that it is not working, it chose to ignore it and this can be seen from the first decade of the 21st Century when the US started establishing military bases in different continents; hence, reversing into the old style of Colonialism.