A world in crisis: The revenge of the 1920s, the rise of China, and the tragedy of the Titanic

In the new year of 1912, few would have thought that, within a few months, an Olympic-class ocean liner would be sunk by an iceberg, killing over half of its passengers. Even fewer would have thought that, within three years, the European great powers would descend into the largest military conflict the world had ever seen, leading to the deaths of sixteen million people within seven years of the Titanic sinking. Thirty years later, the world would be in the midst of a second world war, after decades of economic turbulence and desperate attempts to rescue the political world that was built in the nineteenth century after the conquests of Napoleon Bonaparte. There is, of course, a word that summarises Napeolonic and Titanic triumphs and tragedies: ‘Pyrrhic’.

RMS Titanic, five days before it struck an iceberg in the North Atlantic.

Humanity, like ancient Greek king Pyrrhus, has achieved great things. But at what cost? We have reached some definite limits to our existing expansion: Earth has finite minerals with which to construct our elaborate digital technologies, and even fewer reserves of fossilised energy with which to power our titanic modern industry. On the near horizon looms climate change resulting from burning the dead residue of the amoeba and plankton of the deep past. Indeed, the deep oceans of the present are facing colossal levels of extinction events across such sea creatures on whom we all depend for a balanced atmosphere. What have we done?

A deep social cause of this natural catastrophe is capitalism, a system of market competition which selects for those practices that maximise profits of companies, not the wellbeing of people. As a result, without regulation and investment of Marshall Plan proportions, there is little hope of a speedy transition away from fossil fuels towards a balance of renewable energy (green and safe, but low-powered and comparably inefficient) and nuclear energy (terrifying to the ear, yet effective in substituting for fossil fuels on a large scale, given the adequate investment — and safe distance from earthquake boundaries …).

But there is a more immediate, pressing problem for humanity to confront. In the last two centuries, the vast majority of world conflicts have resulted from the rise of a new power to confront the presiding hegemonic, or leading, state that anchors world trade. In the nineteenth century, that state was Britain, whose hegemony was undermined by the rise of America and Germany, and the conflict that ensued. After coming to Britain’s aid, America established a post-war peace that it promised to help maintain, but, in the event, failed to take a leading role in, forfeiting membership of the League of Nations, a progenitor of the United Nations and its Security Council. Europe was politically on its own. Inflation in the immediate aftermath of the economically devastating global conflict had a series of ricocheting political effects, including in Germany, which faced a right-wing coup on more than one occasion, and a political assassination in 1922 which bears some similarities to the recent assassination of the former Japanese prime minister, 100 years later.

Nonetheless, the ‘roaring 20s’ were underpinned by American loans. When the bloated stock market bubble popped in 1929, these loans evaporated, leaving Europe on its own economically, too. As a result of the waves of economic destruction that followed, with depression significantly more deadly than the inflation of the early 1920s, country after country lost its democratic institutions to autocrats promising prideful patriotism. Under thirty years after the Titanic sunk, the Axis-aligned Japanese air force attacked the American naval base at Pearl Harbour, forcing the United States to take up its global responsibilities as political and economic hegemon, once more. After the subsequent Cold War and the collapse of communism, America decided to hold nothing back, trying to spread democracy by force to oil-rich countries. The results were as unpromising as America’s recalcitrance in the face of Germany in the run-up to the world wars. Neither all-out offence nor cowering defence are the marks of a true hegemon. Balance is. But in the face of true threats, it is better to be safe than sorry.

Which brings me to the rise of China. After undergoing market liberalisation reforms in the 1980s under Mao’s liberal successor Deng Xiaoping, China effectively became a state-capitalist economy. Today, the liberalisation of the capital account is bringing China up to date with financial globalisation, too. China is a capitalist country, fair and square — where the modern state and the ‘free’ market are two sides of the same equation of money and power.

In 2001, China joined the World Trade Organisation, with the consent of America. Since then, China’s growth has accelerated beyond all expectations. Its rise is as threatening to the existing hegemony as Germany’s rise was to British hegemony in the early twentieth century, and as Japan’s rise was to American hegemony, both at Pearl Harbour and in the run-up to Japan’s crash to economic standstill in the 1990s, a standstill which lasts to the present day, pace innovations in robotics and service industries.

China is advancing on every conceivable front. Its military spending is second only to America’s — because its economy is second only to America’s. In the 2000s, political scientists like John Mearsheimer warned that China, after laying the economic foundations of military might, would challenge America in trade, technology, and war after not too long. But free trade with China continued, as China took advantage of technologies elsewhere to develop its own offensive capabilities — such as in cyberspace, infrastructure, nuclear weapons, and naval bases in the South China Sea.

If global capitalism is the Titanic, China is the iceberg that will sink world trade in the event of even a short-term, low-level war with America over Taiwan or another strategic objective in the South China Sea. And unlike Russia, whose panicked seizure of Crimea in 2014 and swathes of eastern Ukraine earlier this year have been met with debilitating sanctions, China’s objectives are considerably more offensive than they are defensive in nature. China is not reacting to a Pacific equivalent of NATO, and is effectively deflecting the effects of latent sanctions on its exports, a legacy of the Trump administration. China is anticipating future threats to its survival, such as climate change, market turbulence, and America’s late realisation of China’s growing power, through a combination of internal transformation and external expansion.

China is the closest any country has come in history to supplanting America as the sole hegemonic power of the world system of nation-states and international trade. Its rise is analogous to the Soviet Union’s dominance of eastern Europe in the Cold War, and the real and imagined threat of communist countries to capitalist ones in that global conflict. But China is not a war-torn country with a tottering economy and weakened military. It is a rising, globalising, militarising superpower with a keen eye for economic ambition and geopolitical caution. It knows time is against it, but it is ready to wait for its moment. This sensible strategy should terrify anyone with recollection of recent world history — economic, political, and military. Sadly, many politicians suffer from a case of historical amnesia.

It is time we woke up to the world crisis of climate change, capitalism, and the rise of China — and its historical analogies, including the sinking of the Titanic, the roaring 1920s, and geopolitical conflicts among great powers in the last century. If we wish to stay above water, we had better face reality. Before it really is too late.

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