Vainqueurs et vaincu, Lendemains de la crise (Victors and Vanquished, Aftermaths of Crisis)

Citation

Richardson, J.G. (2011), "Vainqueurs et vaincu, Lendemains de la crise (Victors and Vanquished, Aftermaths of Crisis)", Foresight, Vol. 13 No. 2. https://doi.org/10.1108/fs.2011.27313bae.002

Vainqueurs et vaincu, Lendemains de la crise (Victors and Vanquished, Aftermaths of Crisis)

Article Type: Book reviews From: foresight, Volume 13, Issue 2

François Heisbourg,Stock,Paris,2010,137 pp.,€12

This longish and well-constructed essay develops from the author’s axiom that major disturbances of human organization – natural disasters, war, disease, technological innovation or large-scale terrorism – leave severe marks on order and system. “Crisis”, as defined by the author, “is an event resulting in paroxysm” (p. 103).

Nowhere is the paroxysm more marked than on geo-economics. François Heisbourg’s latest book derives from the world’s financial crisis of 2008-2009, one of short duration but enormously costly over the longer term. The author calls the event impressively significant: it created new relationships among the forces at play worldwide. The “victors” of his title include a reinforced China, while Europe and the USA head the list of those being left trailing.

Confirmation of these altering roles is the changing value of currency exchange, for example, an element contributing to gross domestic product (GDP) values for the period 1 July 2008 through 30 June 2009 as shown in Table I.

China’s and India’s economies grew accordingly; those of the European Union and North America faltered. Among the sequels to the serious recession were explosive rises in national debts between 2007 and 2010, expressed in terms of percentage of GDP:

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  Germany – from 44 to 86;

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  Japan – from 170 to 200; and

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  USA – from 63 to 98.

Table I

Citing the International Monetary Fund, Heisbourg states that at the world level an additional $9,000 billion were needed to assure proper financing. At the same time the call on global savings (investments, private debt, public debt) amounted to some $13,000 billion. There is little sign so far of rapid attenuation of such colossal sums.

Given China’s financial situation, that East Asian nation now has a “hegemonic outlook in what it believes is its national space, especially on Taiwan and the islands of the South China Sea” (p. 40). Yet while looking to expand their sphere of influence, the Chinese do not seem to be seeking to apply coercive diplomacy or resort to force. Their yuan currency, too, remains pegged to the US dollar. This means that China and America profit from similar gains in competitiveness, to the disadvantage of Japan and, somewhat similarly to that of India, Brazil, South Korea and the Southeast Asian newcomers.

America remains no. 1

China’s gain is not, however, without pain. Inside the country, the rural exodus to industrial centers has built enormous pressure on social services without at the same time avoiding the risk of unemployment for the migrants (the bane since the 1760s of the industrial revolution in the West). China in 2010, “winner” in what remains of the crisis, now has to manage a web of “extraordinarily complex relations in which any miscalculation could have substantially destabilizing effects” (p. 49).

More than the other industrial democracies, the USA accepts the ups and downs of economic cycles. Since 1958 it has known eight recessions – drops in the GDP rate for two successive quarters – before the 2008 calamity. Since 1985 America’s annual growth has bested Europe’s by 1 percent, Japan’s by 2 percent; these gaps “make a real difference to the advantage of the United States”, Heisbourg notes. Yet if China’s growth continues at a minimal rate of 7 percent annually, the American and Chinese growth curves will cross before another 25 years.

Despite this outlook, Heisbourg reminds that America’s population dynamics, entrepreneurial freedom and technological creativity must not be discounted. Given these assets, however, military spending remains costly and presents a variable outlook. Washington today accounts for more than 45 percent of global spending on military forces and their equipment. China remains far from meeting such a level; Russia seems to have let go. And nations such as France and Britain remain well behind. But paying for both armed force and easing the financial crisis are strenuous efforts for all countries; excessive military investment is clearly inhibitive for the world’s public treasuries.

Given the concurrence of China with the USA, the French futures essayist foresees Europe and Japan continuing to limp along. Heisbourg considers critical the growing national debts of Britain, France, Italy, Greece and Belgium. But the potential effects of this eating into gross domestic product are more or less under the staying hand of the European Central Bank. The euro zone itself, furthermore, does not approach the level of actor in economic and financial policy as does that of the USA. The European Union continues to be plagued by a lack of common budgetary and tax policy. Attitude thus makes a difference: “for the United States, decline is a possible risk, for Europe and Japan it is a strong probability… The state of the internal debt of European States precludes any optimism”, warns Heisbourg.

Caution thrown to the winds

Towards the end of this compact volume, author Heisbourg concentrates on the lack of financial caution that brought about the momentous crisis of the new century’s first decade. Too much deregulation, he implies, laxity concerning the remuneration of those who play with others’ money, the lack of bite in the decisions made at the G8, G20 or G2 levels. As a result, “one crisis can conceal another or even several”, a paraphrase of the warning to railway-station passengers in France tempted to cross the tracks to other platforms,

This is the tenth book by Europe’s grand, old “young” geostrategist (he turns 61 this year). Heisbourg, with earlier experience in diplomacy and disarmament, has also directed prominent think-tanks in London and Geneva, and is currently special counselor at the Fondation pour la Recherche Stratégique in Paris. Much like Sun Tzu two and a half millennia ago, he makes the strategist and decision maker understand that existing attitudes and mental models must be adapted to the reality of the emerging moment: nuclear risks, climatic anomalies, looming epidemics. The economic crisis of 2008 has proved, indeed, to be one of those grave hazards.

Jacques G. RichardsonMember of foresight’s editorial board and Decision + Communication, Authon la Plaine, France