Transcription
Uh, to the hegemony of the dollar. And if the hegemony of the dollar goes, that's it. The United States is finished. It will be, you know, uh, a sad, pathetic case like Britain is today.
Uh, I had a contrarian view, uh, which I began to lay out starting around 2001, uh, making the case that China could not rise peacefully. That if it became, uh, an especially prosperous country, uh, and I think the United States has a deep-seated interest in containing China, making sure it does not dominate, uh, East Asia. Uh, I think it's in America's interest to be the only regional hegemon on the planet.
Uh, there's no doubt that it considers Taiwan to be its own territory. Uh, I think with good cause. Uh, and there's no doubt that it looks at the Philippines and various, uh, islands around Japan and Indonesia, uh, in the same way that Iran is looking at the American bases around the Gulf threatening it. But I think the parallel with Iran is not an unhelpful one in the sense that, you know, neither country has a tradition of invading others. And, but, but they do have, uh, an interest in making sure that the choke points that the United States is building around them, uh, are pushed back. And I think this is what the Chinese do. I don't think that the Chinese have any interest in projecting their fleet to the coast of the United States, to the Western Hemisphere, as you call it in America, uh, beyond, uh, the states of Malaga or in the Gulf.
Anyway, Fore. Starting in the early 1990s, the United States pursued a policy of engagement toward China. And the idea was, uh, to integrate China into the globalized economic system that the United States was basically in charge of. And what we did, uh, throughout the 1990s and probably about the first 15 plus years of the 21st century, was try to make China rich. We, uh, fostered Chinese economic prosperity. And really, the key move here was when we brought China into the WTO in 2001. And it's important to understand that both the Clinton administration and the Bush administration were really enthusiastic about the idea of bringing China into the WTO and helping to make China very rich. And the belief was that if China became very rich as a result of this policy of engagement, and it was integrated into international institutions like the WTO and others, uh, it would become a responsible stakeholder in the international system, excuse [clears throat] me, and it would eventually become a liberal democracy. And the belief was that liberal democracies don't fight each other, and therefore the United States and China would get along very well, and we, in a sense, would live happily ever after.
Uh, I had a contrarian view, uh, which I began to lay out starting around 2001, uh, making the case that China could not rise peacefully. That if it became, uh, an especially prosperous country, in other words, a wealthy country, uh, it would translate that economic wealth into military might, and that it would try to dominate East Asia the way that the United States dominated the Western Hemisphere. Uh, I believe that the United States is the only regional hegemon in world history. We dominate the Western Hemisphere, uh, like no other country has dominated its region of the world. Uh, and I think from China's point of view, as I've said on many occasions, including inside China, uh, that from China's point of view, it should want to be a regional hegemon. It should want to dominate all of East Asia the way the United States dominates the Western Hemisphere, because that is the most secure situation that a great power can ever achieve. If you dominate your backyard, your neighborhood, uh, you are highly secure. Uh, and if you don't do that, and if you're a weak great power [clears throat], uh, you suffer what the Chinese suffered between the late 1840s and the late 1940s, which is the century of national humiliation. You never want to be weak in the international system because ruthless great powers like the United States and the European great powers, back in the day, will take advantage of you. So, I think it is definitely in China's interest to dominate all of Asia. If I'm China, I want to push the Americans out beyond the first island chain. I want to push them out beyond the second island chain. I want to dominate Asia, not because, uh, I like dominating other nations, not because it makes me feel good, but that's the best way to survive in the international system.
This was an argument, my argument, that was at odds with the way most people thought about international politics in the '90s and again in the first 15 plus years of the 21st century. They believed that I was a dinosaur. That that's just not the way the world works. That great power politics, the sort of realist logic that I employed, uh, was outdated. It had gone away with the end of the Cold War. Uh, and they believed that we live in a new world. These were people who believed that the United States was a benign hegemon. We were not a threat to China. Uh, and China would recognize that, and therefore it was not a problem that China was going to grow economically, because again, it would turn into a democracy, and we would all live happily ever after. I disagreed with that argument, and I thought that China could not rise peacefully.
And what's happened now is that China is very powerful. Well, I argue that it became a great power in about 2017, and I think that China has a voracious appetite in East Asia with regard to Taiwan, the South China Sea, and the East China Sea. I believe for good strategic reasons, it wants to dominate Asia. Uh, and I think the United States has a deep-seated interest in containing China, making sure it does not dominate, uh, East Asia, just the way the United States had a deep-seated interest in making sure that the Soviet Union, Nazi Germany, and before that, Imperial Germany did not dominate Europe. Uh, I think it's in America's interest to be the only regional hegemon on the planet. And therefore, to sum this up, because I believe that China, for good strategic reasons, would try to dominate East Asia. Why a prosperous China would try to dominate East Asia, uh, and why the United States would go to great lengths to prevent that outcome. I thought you would end up in the situation that we are now in, where you have a serious security competition between China and the United States, which I believe will get only worse with the passage of time and will become very dangerous. This is my basic realist view of international politics in a nutshell.
The reason why I don't think China is an emergent, uh, hegemon, an emergent version of the United States or the British Empire, is because, uh, of the political economy of China. China, we don't know how it's going to turn out. It's still a work in progress. So, you know, it may turn out that John is absolutely right and I'm absolutely wrong. But the way I understand it is they have a remarkable planning mechanism. They plan their markets. The markets are boisterous and competitive, and they work really very well because they are so heavily planned. This is, this is something that, you know, the Western mind cannot understand because they cannot fathom, because in the West, we've been convinced that it's either the market or the state, or either you have planning or you have free enterprise. No, the only way of having a serious market is if you plan for it. If you plan for it, investment flows and so on. So, they're doing it. They had a real estate bubble. They oversaw a very gradual, very clinical deflating of that bubble without, you know, the subprime mortgage disaster of the United States. So, they, in 2008, 2009, one of the reasons why financial capitalism survived was because of the very, very careful, um, operations, macroeconomic operations of the Chinese, something that in the West we're not good at. So they have a capacity to manage their, uh, economy, their demand, their aggregate demand, their investment flows, uh, without having to, um, export deflation, to ex- to to grab markets, uh, using military means like the Dutch were doing, or the British were doing, or the United States were doing at some point.
So, I, I think that, you know, the reason why I see things differently, and I do believe that it is possible. I can see it. You know, look at them now. They are the adults in the room. They respect all the contracts they have ever made. They really don't care about who is in government in any country. I saw this personally, uh, when I was dealing with the Chinese government. They didn't give a damn whether we were on the left, on the right, who we were, where. They were, uh, not particularly hegemonic. Um, you know, I put to them three or four major changes in the contract that we had. They said, "Okay, fine." Um, they were cool about it. Um, in ways that, uh, Western decision-makers really are not. So I am optimistic about that. I'm not at all optimistic about the clash between the the two lumps, as I call them, mountains of cloud capital, because there you have very serious power games that are being played, both in China and in the United States.
I would just point out, Giannis, that you also want to focus not on not just on the economic dimension, but the strategic dimension as well. You want to think about how China behaves in its neighborhood with regard to Taiwan, with regard to the East China Sea, with regard to the South China Sea, how China's neighbors think about it as a possible strategic threat. And I think when you look at the strategic side of the equation, uh, you see a lot of evidence that I'm correct. But of course, I have a vested interest in saying that. But I would just say to you, you don't only want to focus on the economic dimension, which is immensely important, of course, as we both agree, but I just want to go, uh, to what you call cloud, the cloud capital dimension. Uh, I like that term. [snorts]
Uh, I argued that around 2017, China had become wealthy enough that it was able to generate enough military might to qualify as a great power. So again, you see my emphasis on the economic foundation of military power. And if you look at GDP, uh, and other indicators of wealth, uh, China was not as powerful as the United States, uh, in terms of economic might in 2017, but it was not that far away. It had become a truly impressive country economically. Now, at the heart of that wealth generation was its ability to develop sophisticated technologies. This is what you call cloud capital. And if you look at the competition, the economic competition between the United States and China today, it revolves around sophisticated technologies, or what you call cloud capital. There is absolutely no question about that. I do not disagree with you.
And when I talk to audiences these days and I talk about the security competition between the United States and China, I always go to great lengths to say, don't simply equate the security competition with the military competition, which you might do because you're talking to John, who's a realist. You want to understand that that security competition has an economic dimension as well, and it involves what you call those cloud, what you call cloud capital, or those sophisticated technologies. And I think many people in the American national security establishment worry more about the competition in terms of cloud capital or sophisticated technologies than they do the military competition, because I think they understand what you argued, which is that the Chinese may be able to beat us. The Chinese, as you know as well as I do, are truly [snorts] impressive when it comes to cloud capital, and they may be able to beat us. And if that's the case, you have to think about what the effects are on the global balance of power from a realist point of view. So what I'm saying here is that economic considerations matter enormously for realist considerations, and given what's going on with regard to cloud capital, the balance of power in the world could shift against the United States.
All good points. Uh, let me start with the question of the military buildup. There's no doubt that, uh, China is building up its military prowess. No doubt about that. Uh, there's no doubt that it considers Taiwan to be its own territory. Uh, I think with good cause. Uh, and there's no doubt that it looks at the Philippines and various, uh, islands around Japan and Indonesia, uh, in the same way that Iran is looking at the American bases around the Gulf threatening it. But I think the parallel with Iran is not an unhelpful one in the sense that, you know, neither country has a tradition of invading others. And, but, but they do have, uh, an interest in making sure that the choke points that the United States is building around them, uh, are pushed back. And I think this is what the Chinese do. I don't think that the Chinese have any interest in projecting their fleet to the coast of the United States, to the Western Hemisphere, as you call it in America, uh, beyond, uh, the states of Malaga or in the Gulf. Uh, and this may change. I don't see it changing because their business model is really very different to that of the Dutch Empire, of the British Empire, and the Chinese Empire.
Now, when it comes to cloud capital, uh, again, we have a very different, uh, deployment of cloud capital in the United States on the one hand, and in China on the other. [snorts] A lot of that capital is being used productively in China. That cannot be said in the United States. Uh, if you look at the AI business model, it's all about, uh, you know, selling subscriptions to Anthropic, to ChatGPT, and primarily, primarily really empowering the bots that existing big tech mega companies have, like Amazon's Alexa, like Apple's Siri, to give it a human-like demeanor. So, in order to suck you into their realm and, you know, turn you into a vessel that buys what they want you to buy, and, you know, essentially train them to train you to train them to control, uh, your behavior, modify your behavior. This is the business model in the United States. Extremely lucrative, but it's so productive. Whereas in the United, in China, you, you find AI being applied to drones that, uh, are very efficient in, uh, watering grapes and, you know, vineyards, or, uh, wheat, or, uh, rice fields. Um, so there is this difference, but that doesn't worry people in Washington D.C. You're absolutely right. What worries them is the two things. One, I've mentioned already, the fact that they have a super-fast highway for payments using blockchain, if you look at BRICS Pay and so on. And if you compare it to the Western versions like SWIFT, it's like comparing, you know, a rocket ship with a mule. SWIFT is clunky, takes three days, it charges you 5% to send money across the West. The Chinese have systems that that work in nanoseconds, they charge you nothing, and they are based on blockchain technology. You know, it's really way, very far ahead. So this is a, a clear and present danger, as I was saying before, to the hegemony of the dollar. And if the hegemony of the dollar goes, that's it. The United States is finished. It will be, you know, uh, a sad, pathetic case like Britain is today. Uh, so it is a clear, job, strategic, uh, concern for people in Washington D.C.
But then there is the other one as well. There's a second dimension. Uh, Palantir is a good example. You know, these cloud companies that, um, uh, do not, uh, care about extracting rents from consumers or from producers. These are a very particular form [clears throat] of techno-feudalism. Um, so you have Palantir training its AI models in the Gaza Strip. Why? As a Palantir engineer put it to me in person, I was having dinner with this guy. I didn't finish that dinner, for obvious reasons. Um, he was telling me how it was amazing in Gaza, how, you know, because if you bombard, uh, uh, densely populated areas and lots of people die and they panic and so on, they move a lot. And he pointed at my phone and he said, "Your phone is useless to me because it's stationary." Was sitting on, on my, on the dinner table. But if you get bombarded, you take it and you run around and you create a lot of data. And I said, "Okay, now why is this of use to you?" And he said, "Well, because we use that data, uh, that movement data, movement caused by panic, huh, to train AI models which we then sold to the British National Health Service for 1 billion quid." Uh, so, you know, this is a techno-fugal firm, corporation using data, uh, that doesn't have anything to do with consumption, has to do with war and carnage, and maiming and killing children, in order to sell to a public health service, uh, a piece of AI, a piece of cloud capital. So, you know, this is a very different world to the one, um, we grew up in. And, um, you know, the Chinese are, I don't know, you know, with Palantir, because they need to advertise these things so that the stock, stock valuation goes up. We learn these things. With what are the Chinese doing in that real? They, thankfully, they are not involved in Gaza. They are not involved in these massacres. They don't train their data in any conflict that they have precipitated. Fore! Fore! Fore! Fore! Foreign! Foreign! Forch.