The alternative is frightening, because a declining superpower losing both political and economic dominance but still preserving military supremacy is a dangerous mix. We used to be reassured by the generalization that democratic countries seek peace. After the Bush presidency, that rule no longer holds, if it ever did.
In fact, democracy is in deep trouble in the US. The financial crisis has inflicted hardship on a population that does not like to face harsh reality. US President Barack Obama has deployed the “confidence multiplier” and claims to have contained the recession. But if there is a “double dip” recession, Americans will become susceptible to all kinds of fear mongering and populist demagogy. If Obama fails, the next administration will be sorely tempted to create some diversion from troubles at home — at great peril to the world.
Obama has the right vision. He believes in international cooperation, rather than the might-is-right philosophy of the Bush era. The emergence of the G20 as the primary forum of international cooperation and the peer-review process agreed in Pittsburgh are steps in the right direction.
What is lacking, however, is a general recognition that the system is broken and needs to be reinvented. After all, the financial system did not collapse altogether, and the Obama administration made a conscious decision to revive banks with hidden subsidies rather than to recapitalize them on a compulsory basis.
Those institutions that survived will hold a stronger market position than ever and they will resist a systematic overhaul. Obama is preoccupied by many pressing problems and reinventing the international financial system is unlikely to receive his full attention.
China’s leadership needs to be even more far-sighted than Obama is. China is replacing the US consumer as the motor of the world economy. Since it is a smaller motor, the world economy will grow slower, but China’s influence will rise very fast.
For the time being, the Chinese public is willing to subordinate its individual freedom to political stability and economic advancement. But that may not continue indefinitely — and the rest of the world will never subordinate its freedom to the prosperity of the Chinese state.
As China becomes a world leader, it must transform itself into a more open society that the rest of the world is willing to accept as a world leader. Military power relations being what they are, China has no alternative to peaceful, harmonious development. Indeed, the future of the world depends on it.
George Soros is chairman of Soros Fund Management and of the Open Society Institute.
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