Dead Empires: How China May Overtake the U.S.

By Polly Cleveland

“The earth is the tomb of dead empires, no less than of dead men.” Thus wrote the American economist and journalist Henry George in his 1879 worldwide bestseller, Progress and Poverty. Adam Smith had identified cooperation and specialization—“the division of labor”—as the forces that generated economic growth and prosperity. George claimed that those same forces led eventually to collapse, as monopolization of land and other natural resources directed more and more wealth into ever fewer hands. (George was nonetheless an optimist; he argued for heavy taxes on wealth and checks on monopoly—causes vigorously taken up by Progressive reformers in the early twentieth century.)

When George first wrote, the sun never set on Queen Victoria’s Empire, and looked like it never would. Yet twenty years later the British Empire was visibly faltering, plagued by bankruptcies of investments in U.S. railroads, the failure of obsolete industries, and the quagmire Boer War in South Africa. New rivals—the United States, Germany, and Russia—peered over the horizon.

Two astute observers have recently offered complementary predictions of the imminent demise of the American empire, and its replacement by China. One is historian Alfred McCoy of the University of Wisconsin, and the other is investigative journalist Barry Lynn of New America.

In The Geopolitics of American Global Decline: Washington Versus China in the Twenty-First Century, McCoy describes the Chinese strategy to break through the encircling ring of American bases to reach—and control—its markets and resources directly. As U.S. officialdom has already noted with some alarm, China is aggressively seeking to assert dominion over the South China Sea between it and Japan and the Philippines. It has been dredging landfill to create airbases on the unoccupied Spratley Islands, and has demanded that U.S. and other aircraft overflying the area obtain Chinese permission. But that’s just the eastern end. McCoy presents maps showing China’s massive investments in infrastructure to link it westward overland to the rest of the great Eurasian heartland. While U.S. railroads and bridges crumble, the Chinese are building a dense internal network of sophisticated high-speed high-volume railroads, plus oil and gas pipelines. These will connect up with transcontinental railways and pipelines, crossing Kazakhstan, reaching Moscow, and from there to Hamburg, Germany on the Baltic Sea. Another corridor will connect through Pakistan to the Arabian Sea, and yet another across Myanmar to the Indian Ocean. Meanwhile, the Chinese are making huge collaborative investments with these neighbors and with willing partners in Africa and Latin America. McCoy sees the TPP as Obama’s last-ditch effort to contain China.

For years, Barry Lynn has reported on the growing power—and weakness—of multinational monopolies. The power is more obvious: higher prices, less choice, less innovation—and greater political influence. The weakness is less obvious: less investment, fewer jobs, lower wages, and restriction of manufacturing to dependence on a small number of cheap, mostly foreign suppliers.

Here’s where China comes in, as Lynn reports in The New China Syndrome: American business meets its new master. Multinational businesses, like the auto companies and computer companies, increasingly depend on China both for cheap manufacturing and for access to the growing Chinese consumer market. Lynn reports a number of instances where Chinese have intimidated multinationals into concessions on price, or ownership shares, or jobs for children of Chinese leaders. He describes an episode in which bureaucrats summoned in-house lawyers from some thirty companies, including GE, IBM, Intel, Microsoft, Siemens, and Samsung, told them that half the companies were under investigation for monopoly crimes—without saying which—and  instructed them write public “self-criticisms” under threat of double or triple fines should they refuse. The great monopolies must submit to this arbitrary tyranny precisely because they have destroyed so many other sources of supply, and have so eroded consumer markets in the rest of the world.

Bill Clinton saw U.S. investment in China as a way to “a more open and free China.” What if, Lynn asks, “the extreme economic interdependence between the United States and China is not actually carrying our values into a backward and benighted realm, but accomplishing precisely the opposite — granting the Chinese Politburo ever-increasing leverage over America’s economic and political life?” And, one might add, leverage over all the other multinational host countries? That could hardly have been more obvious than in the obsequious reception given to President Xi Jinping on his recent state visit to Great Britain. The meeting sealed a series of business investments, including a deal in which Chinese investors take a one-third stake in Hinkley Point C, Great Britain’s first new nuclear plant in a generation.

So, on the one hand, as Alfred McCoy suggests, Chinese infrastructure investment and joint ventures in foreign countries increasingly constrain U.S. power from the outside. On the other, as Barry Lynn suggests, Chinese control of multinational corporations threatens U.S. power from the inside. After the British Empire collapsed in the bloodbath of World War I, it staggered on a few more years as a zombie agent of the growing American empire. (See Middle East.) That empire may in turn stagger on as the zombie agent, not of a western democracy, but of a giant nation contemptuous of our values—and with thousands of years’ experience managing empires.