Has Economic Power Replaced Military Might?

CAMBRIDGE – At the Cold War’s end, some pundits proclaimed that “geo-economics” had replaced geopolitics. Economic power would become the key to success in world politics, a change that many people thought would usher in a world dominated by Japan and Germany.

Today, some interpret the rise in China’s share of world output as signifying a fundamental shift in the balance of global power, but without considering military power. They argue that a dominant economic power soon becomes a dominant military power, forgetting that the United States was the world’s largest economy for 70 years before it became a military superpower.

Political observers have long debated whether economic or military power is more fundamental.  The Marxist tradition casts economics as the underlying structure of power, and political institutions as a mere superstructure, an assumption shared by nineteenth-century liberals who believed that growing interdependence in trade and finance would make war obsolete. But, while Britain and Germany were each other’s most significant trading partners in 1914, that did not prevent a conflagration that set back global economic integration for a half-century.

Military power, which some call the ultimate form of power in world politics, requires a thriving economy. But whether economic or military resources produce more power in today’s world depends on the context. A carrot is more effective than a stick if you wish to lead a mule to water, but a gun may be more useful if your aim is to deprive an opponent of his mule. Many crucial issues, such as financial stability or climate change, simply are not amenable to military force.