The Age of Disorganization

As states large and small struggle to cope with and find a way out of the current economic crisis, it is not too early to begin thinking about how the "Great Recession" will alter the world's politics. Countries that have the economic fundamentals and resilience to emerge relatively early from the crisis -- China, some Gulf states, Brazil, and India -- are also likely to emerge stronger politically.

But will the rise of new power centers result in genuine multipolarity, in which a more diverse set of countries works with the United States to make decisions about the global economic and political order? Or will the decline of U.S. hegemony result in a condition of "nonpolarity," in which no set of players assumes effective responsibility for the system as a whole?

This is a critical question, for the powers that we foresee coming out of the Great Recession in a stronger position are not likely, on their own, to embrace the full range of strategic responsibilities traditionally associated with "superpower" status. Thus, the United States and other established powers must incorporate rising states into the structures and processes of global economic governance. This way, the Great Recession will catalyze a strong and accountable international economic order, rather than a "beggar thy neighbor" world begetting, as in the 1930s, ever greater international disorder.

China: Of the major states likely to prove most resilient, China tops the list. Since the crisis hit, Beijing has launched massive stimulus initiatives -- and unlike many other countries, it clearly has the resources to do more. For this reason, China will recover before the United States, and certainly before Europe or Japan. Importantly, when the recession lifts, China will still have a massive supply of low-cost labor and unparalleled capacity in innovative, value-added manufacturing. Before the recession, the country started to include greater economic emphasis on domestic consumption. This will make China less vulnerable to any downturns in Western markets.

China's political machine reinforces its economic resilience. Three decades of double-digit growth have earned the Communist Party leadership considerable stores of domestic political capital. To be sure, severe chronic problems persist: the social turmoil provoked by growing gaps between rich and poor, severe environmental damage, and endemic local-level corruption, just to name a few. Yet millions more Chinese citizens are freer and wealthier today than ever. Thus, the party has fostered, and been a major beneficiary of, a tidal wave of national pride.

Gulf states: The next set of early reemerging markets is likely to be found in the Persian Gulf. Saudi Arabia, the United Arab Emirates (thanks to Abu Dhabi, not Dubai), and Qatar are managing today's economic challenges -- including the sharp drop in energy prices -- well. For the most part, Gulf banks avoided the structured financial products that so badly damaged their American and European counterparts, leaving the region's financial sector in relatively good shape. And, in contrast with previous oil booms, fiscal planners in Gulf Arab governments had made fairly conservative assumptions about oil and gas prices.

As rising energy prices transferred unprecedented wealth from the West to the Gulf, these countries built up ample foreign exchange reserves to cushion any short-term decline in government revenue. Therefore, these states, particularly Saudi Arabia, see the crisis as an opportunity to consolidate their standing as vital creditor nations. When global demand returns and energy prices start to rise again, the influence these governments wield in financial and monetary matters will grow still further, boosting in turn their geopolitical standing.

Brazil: Brazil entered the financial crisis with emerging-market dynamism, and will emerge with that dynamism intact. The country's increasingly world-class agricultural, manufacturing, and service sectors make a difference. Its recent offshore oil discovery has made its abundant natural resource base even more impressive. Most importantly, President Luiz Inácio Lula da Silva has helped implement responsible macroeconomic policies. His enviable approval ratings suggest that his government will ride out the crisis with its market-friendly reputation intact.

India: India has also proven a resilient engine of growth, notwithstanding the effects of the slowdown on its domestic economy and the horse-trading nature of its election-year political dynamics. The decentralization of power in the world's largest democracy ensures that, though reform often proves a (very) slow process, New Delhi's enormous state bureaucracy can no longer easily obstruct the entrepreneurial talents and energies that have transformed India over the past two decades.

What will these countries' economic ascension mean for global politics?

In recent years, senior Chinese officials have regularly described China as a "peacefully rising power." In the past year, references to China's "shared responsibility" for international leadership have become more frequent. The practical effect of this shift became evident in the run-up to the recent G-20 summit, when China made clear that its willingness to help expand the International Monetary Fund's capitalization was contingent on its ultimately receiving greater voting power within the fund.

Beijing's growing prominence in global economic management will lead to competition, and perhaps conflict, with Washington; the already established trend toward greater Chinese assertiveness will accelerate. Beijing is unlikely to challenge U.S. primacy directly, but it will be more willing to resist when Washington proposes economic and foreign policies it doesn't like. To the extent it seeks to exercise broader political influence, China will seek to reduce focus on democratization as a corollary to economic liberalization and increase focus on national sovereignty, narrowly defined, and on multilateral decision-making as a necessary constraint on U.S. unilateralism.

At the same time, China's gravitational pull on other countries -- both in its regional orbit and beyond -- will grow. Gulf states, already building ties to Beijing as a hedge against a perceived decline in Washington's competence, will embrace China as an economic and financial ballast against the United States. Together, China and the Gulf energy-producers will gain influence as dollar hegemony slowly but inexorably erodes. Brazil and India -- both robust democracies, but also strong defenders of developing countries' sovereign prerogatives -- are likely to join China in seeking a bigger share of global political power for emerging economies.

At this point, the old G-7 countries, the political power centers, will face a choice. They could embrace rising powers, making international economic and political institutions more reflective of the true global balance of power. The expansion of the G-7 into the G-20 is an important first step in this direction. Rising states must embrace higher standards regarding the rule of law, corporate governance, domestic regulation, and -- in China's case, especially -- currency openness. Then, the global economy would survive a historic shift in the global balance of power, a truly epochal achievement.

But the old G-7 countries might decide their relative standing is more valuable than effective global economic governance, shutting out smaller countries and cementing their power. Such an approach would prove shortsighted come the next systemic economic emergency -- whether it is an emerging-markets financial crisis or a currency crisis due to the strained dollar-based monetary regime. Likewise, rising powers might fail to create open, legal markets; without broadened international oversight organizations, individual states may start manipulating international markets.

Such a chaotic world would be one seriously deleterious effect of the Great Recession. It is up to international bodies like the G-20 and wealthy countries such as the United States to ensure a multipolar and accountable future for all.