Who runs the world? The rise of the G5

June 9, 2010

     By Duncan Green     

The G5 countries
will police each other and
everyone else

A thought-provoking and perversely optimistic take on 21st Century geopolitics from Paul Collier in this month’s issue of Prospect. It’s too well-written to edit, but in Paul Coliershort, what he is saying is that the world will be run by the US, China, Japan, India and the EU (the G5). Their big challenge will be global public goods (climate change, disease, managing scarcity etc), so they will have no choice but to cooperate. What about the remaining countries? ‘The key clashes in 21st-century politics, then, will be between those who free ride, and those who do not’. The 60 or so poorest are so weak and small, that they can be free riders – they will not have much impact on the world, whatever they do. The 100 or so in the middle are the problem – they will need to be policed by the G5, who will have no choice but ‘to become bullies for good global co-operation’.

Here’s the piece in full:

“International relations have taken a pessimistic turn. A year ago there was widespread optimism about a new multi-polar world. A newly humble America would make space for others. China seemed to be evolving into a “good global citizen.” Even Europe was hopeful of an enhanced role, as the trusted friend of both powers. Yet today, optimism about China has evaporated in the wake of internal repression, attacks on Google and huge mining and oil deals with murderous African regimes. President Obama’s Cairo speech in June 2009 raised hopes of breaking the impasse in the middle east, but then he allowed the moment to pass. Europe’s hope to be the broker of a Chinese-American agreement at Copenhagen flopped, while Chancellor Merkel now seems keen on moving her country towards self-righteous introversion in the aftermath of the Greek bailout. The new positions of president and foreign minister of Europe yielded incumbents who seem more likely to add to the cacophony of European voices than to tower over them.

At first blush the world seems to be heading for a newly precarious, 19th-century style balance of power. Yet the picture is not nearly as disturbing as it seems. The importance of new leadership—from Barack Obama, for instance—is wildly exaggerated. Most decisions are shaped not by personalities but by interests—and it is how states think of their interests that should shape the way we conceive the international politics of the future.

In the 20th century the chief national interests overwhelmingly concerned employment and welfare. This required national, rather than international, action as governments organised the supply of roads and schools for their citizens. International co-operation was restricted to trade and security. Even here, necessary co-operation was really only between Europe and the US. Under the auspices of the general agreement on tariffs and trade (Gatt), the two power blocs liberalised trade restrictions. Under the auspices of Nato they provided a collective defence against communism. In short, there was little need for more global co-operation.

But the national interests of 21st-century states are different. Today, national governments alone manifestly can’t deliver everything that their citizens demand. Put simply, our world needs more of what economists call global “public goods”—things like a stable climate, a well-functioning post-crisis economy, clean oceans and fewer cyberattacks, from which all countries benefit.

This does not imply that governments will then spend the money necessary to provide them. All states in the new world order have an entirely rational self-interest in free riding—meaning they get the benefits from a stable climate or bountiful seas, but hope someone else picks up the bill. One solution would see governments cede sovereignty to some new global authority charged with preventing such behaviour. But governments are profoundly unwilling to do this, while emerging powers like China tend to be suspicious that any form of global authority might simply be used against them. Hopes for a new system of global governance are, frankly, romantic.

So what now? The most important challenge is to curtail free riding. With some public goods the incentives to free ride are powerful: not only can countries avoid costs, but they can even profit at the expense of those who do contribute. Climate change is such an example: countries that refuse to co-operate not only pay nothing, but can also win valuable carbon-emitting industries (like car making) from those that do. In the very worst case, there is a “weakest link” problem, where a single free-riding country can ruin the system for everyone else. Take financial reform. If one nation in the Caribbean grants secrecy to the money of international criminals, attempts to end the culture of impunity everywhere else will have much less effect.

The key clashes in 21st-century politics, then, will be between those who free ride, and those who do not. Luckily, a few countries are too big to free ride: America, China, India, Japan and the 27-in-1 EU. Each of these is a deal-breaker: if it tries to free ride, the other four will refuse to step up to their responsibilities, and as a result the global public goods they need will not be supplied. Think of these as the G5.

All of the G5 countries face a common structural problem if any, or all, of the world’s other 165 countries decide not to co-operate. These 165 are globalisation’s new “sack of potatoes”—the phrase used by Karl Marx to describe the inability of peasantry to behave collectively. However, these 165 are really better thought of as two sacks of potatoes. One contains the 60 or so small, poor countries of the “bottom billion”—places such as Haiti, Guinea and Laos, which on most global issues will not have sufficient clout to warrant much attention. The second contains the 100 or so countries that can free ride, but which taken together matter a great deal for most global issues. These are the G100.

Seen this way, we can understand that the geopolitical clash of this century will not be a return to a 19th-century world of great powers fighting it out. Instead, our world will be defined by the struggle between a G5 which has no alternative but to behave responsibly, and a G100 which does. The challenge for the former will thus be assembling sufficient carrots and sticks to bring the G100 into line. This will bring uncomfortable choices: most conventional carrots, like preferential trade deals, will prove too expensive, given that many of the G100 countries are much richer than two of the G5: China and India, when measured by GDP per capita. But there are still plenty of options for sticks—such as trade restrictions.

The G5 itself is an odd club, whose members could scarcely be more different, united only on issues of unmistakable global interest. Its members will take time to learn their new roles. Their attempt to become bullies for good global co-operation could backfire, inadvertently promoting crude nationalism. Think of the current flare-up of abusive nationalism between Germany and Greece, but on a much grander scale.

However distasteful it may be to have the G5 running the 21st century, it is likely to be a considerable improvement on the horrors of the 20th, and a realistic backstop to the utopian aspiration of global governance. And eventually, this model will produce a world in which the US and China are on the same side, as will be China and India, and Europe and America too. Indeed, the hardest transformation may be in our hearts, for we must learn to cheer when the big bully the small.”

June 9, 2010
Duncan Green