A favourite Exhibit A here of wishy-washy thinking about the subject matter has (unfortunately) been IPE stalwart Joseph S. Nye, Jr. who does not seem to share the common sense most of his countrymen have. Sometime ago, he was the recipient of the not-so-coveted Carl Spackler Award for economic analysis--a prize given by yours truly for exceptionally bad political-economic commentary that strains credulity. It has since come to my attention, though, that he has problems far greater than those dealing with global economic imbalances to encompass definitions of hegemony. American elites are famously fond of setting standards for themselves they don't apply to others, and today's hypocrisy concerns the question of economic preponderance.
With China's economy growing at nearly ten percent per annum year in and year out while that of the US struggles to even reach the "new normal" range of 1-2% in the post-global financial crisis era, it doesn't take a maths whiz to figure out that China will overtake the US in most of our lifetimes if present trends continue. So what's a USA#1 cheerleader like Nye to do with the seemingly inevitable diminution of American prestige? Well, he now says China will not have surpassed the US unless the latter is overtaken in per capita income terms:
Since per capita income provides a measure of the sophistication of an economy, aggregate economic size will not necessarily mean that China will economically surpass the United States in 2027.Shifting the goalposts is nothing new as far as USA#1 cheerleaders are concerned. After denying its possibility for the longest time--sure, they said that about Japan in the 80s too (a lazy, lousy excuse I should smash soon)--Nye now plies this per capita income definition.
The faults here are obvious: First, if per capita income were a key basis for economic performance, then we should tremble in fear before the likes of Luxembourg, Lichtenstein, and the other countries that rank ahead of the United States on this measure by a fairly significant margin. Why is it that these erstwhile economic powerhouses don't sit at the G-8, G-20 or are otherwise members of the UN Security Council? Because aside from Joe Nye and a handful of similarly misguided others, per capita income is not commonly used as a correlate of economic might--and for very good reasons.
Second, being a high per capita income nation is by no means an obvious measure of
economic sophistication. Luxembourg is a European mini-state known for...not much of anything in particular while Lichtenstein is a tax haven under pressure from the EU to stop its traditional line of business of sheltering wealth from taxation. Qatar and the UAE are states with small populations, sizeable energy reserves, and lots of migrant workers to do the grunt work. Though the reasons for their high per capita income are many, countries ranked highly on this measure are not necessarily regarded as being on the leading edge of economic sophistication.
Third, and this point should fatally undermine the realism of Nye's wildly unrealistic assertion, is the level of nominal GDP that China should achieve to overcome the United States as the world's most powerful economy. The current US GDP per capita is around the $47,000 mark. For the sake of argument, let's assume that US per capita income remains steady to whenever China overtakes the US as the world's largest economy in nominal terms. What size would China's economy have to be? Also assuming that China's population remains steady, the smallest possible figure I come up with for China to overcome the US by Nye's criteria is $47,000 x 1.3 trillion which gives us $61.1 trillion. To put matters in perspective, the size of the entire world economy at present doesn't even to amount to that much.
Bottom line: I'd like to have some of what Joe Nye is smoking! For serious IPE analysis, though, I think the rest of us are better of ignoring this redefinition of hegemony along per capita income terms. File this one under Nye's works of fiction.