Economics Understood as Soft Power Makes More and More Sense

By OOI KEE BENG, for THE EDGE MALAYSIA, 2 May 2021

“Soft Power”, the highly influential article written by Joseph Nye, published in Foreign Policy No. 80 in Autumn 1990, ends with the sentence: “The problem for U.S. power after the Cold War will be less the new challengers for hegemony than the new challenges of transnational interdependence.” The historical comparison was being made to what Britain experienced in the lead-up to the First World War in the first decades of 20^th centiury, when it faced “new challengers to hegemony”.

Written just a year before the Soviet Union was dissolved, ending the Cold War for good, the author was not able to perceive any “challenger” rising to contest in the global space that was the spoils going to the winner of that “war”. Indeed, this blindess was a common affliction for most experts in foreign relations at that time. The intellectual ambience was such that Francis Fukuyama could gather the gumption to title his book published just two years later as “The End of History and the Last Man”, declaring the final triumph of liberal democracy as understood in the US.

The Muslim reawakening was not obvious yet, a decade after the Iranian Revolution. A discernible observer could perhaps have seen, as in the significant case of Malaysia, that the Muslim world had been “thrown out of bed”, as it were, and the wider Muslim world would not remain unstirred by the events in Tehran. An “Islamisation” of Malaysia’s institutions and policy-making had begun on all fronts, reflecting similar processes in the wider Muslim world. The political struggle for the Muslim soul was in full swing between the nationalistic UMNO and the Islamist PAS, and would lead by 2001 to Prime Minister Mahathir Mohamed’s rhetorical and tactical declaration that the country was already “an Islamic State”, to counteract PAS demands and to proffer that no more Islamisation was therefore needed. It was of course also the year that the 911 attack in New York happened, and Mahathir’s comment was made in the context of an impending US-led invasion of Afghanistan.

It was pointedly also the year China was granted membership in the World Trade Organisation, and we now know, this acted as a much-needed super-steroid shot for the Chinese economy.

But in the early 1990s, it was not obvious at all to anyone that Communist China, through its economic reforms, would be able to avoid the implosion that the Soviet Union experienced following Mikael Gorbachev’s political reforms. On the contrary, things were looking very bad for the Beijing government, which had had to send in tanks in June 1989 against its own population, damaging its legitimacy and crushing the optimism that had accompanied Deng Xiaoping’s reform agenda thus far.

But as the “war on terror” became normalised in the American mind, and as the world began functioning in an increasingly multipolar fashion, what role ‘soft power’ – a highly suggestive and popular term in itself – plays, necessarily shifts.

China as challenger has tended in recent times to define soft power through economic influence, while American hegemony had preferred to consider cultural superiority and ideological appeal the basis for its global supremacy beyond its insuperable military strength.

A hegemon under threat is also not likely to comprehend the coming change as anything other than a powerful process seeking its replacement at the top. In that important sense then, especially post-Covid-19 and post-Trump, Nye’s main point needs reiterating, for that is the crux of the matter: The US is in truth still having trouble handling “the new challenges of transnational interdependence” in the 21^st century, but as these challenges grow, it slips into seeing itself as handling “new challenges for hegemony”, just as the British did in the early 20^th century.

Now that the conflict between the US and China is being fought out in the economic realm, one has to question whether “soft power” should include economic influence or not, and how dependent cultural superiority and ideological appeal are on economic influence.

Accepting the inevitability of “transnational interdependence” would indeed ease much of the tension in US-China ties in the coming decade, especially if that change of mindset can go so far as to embrace multipolarity in international relations as the model for the future.

The alternative does not bode well for anyone. The Thucydides Trap relies on a simplistic and pessimistic understanding of power and suffers from mistaken comparativeness, and can only imagine zero-sum outcomes and predict disaster.

This weakness in humans to think in zero-sum even when the board on which the game is played is eternally changing, the moves are multiplying, and new players are joining in all the time, is common enough. To reference Malaysia again, we have seen how the country’s comprehensive affirmative action logic begun in 1970, which was meant to grow the economy and encourage equity at the same time – bigger pie meaning more for everyone – soon became a zero sum game.

Especially today, economic growth is multidimensional and multilateral, and conceived as soft power, it is multidirectional. In short, it is highly unpredictable in the medium and long term, especially when technological innovations are moving at top gear, as they do today, with Industry 4.0, and when so many players are globally involved.

If power is indeed both hard and soft, then there are many options available, especially if we consider economic influence as soft power. Surely, growing the international economic pie is not the same contest as maximising the number of missiles hegemons can point at each other. In the Malaysian case, growth held hostage by the logic of equity punches huge holes in society’s cohesion, efficacy and adaptability.

Dato’ Dr Ooi Kee Beng is Executive Director of Penang Institute. His recent books include The Eurasian Core. Dialogues with Wang Gungwu on the History of the World (ISEAS Publishing, 2016). Homepage: wikibeng.com.