There is the predominance now in International Relations of the ‘realist’ school of thought. Yet this is not, as some commentators believe, a new phenomenon. The economist Paul Samuelson noted that the Second World War was the ‘economists war.’ It was realized by the United States that economic planning, the role of the Federal Reserve, and mobilization of the civilian sector were crucial in times of war. What the role of geoeconomics signals now is the complete triumph of ‘total mobilization.’ This post WWII realpolitik, carved up at Yalta in 1945 saw two ‘hegemons,’ the U.S. and the Soviet Union, carry out their percentage areas of influence. What the Soviets ultimately realized to their cost, was that ‘ideology’ per se, is not enough. That is, that scarcity and economic wealth become the de facto drivers of foreign and domestic policy. This is what is now referred to as ‘geoeconomics.‘ Unfortunately, capital and strategic geoeconomics become the powerful shapers of international politics. This is not a value judgement about Marxism or Islam, it is merely a Hobbesian reflection of reality.
The 19th century liberal view of ‘non zero sum’ ‘quid pro quo’ was the Adam Smith idea that the benefits of trade led to economic and political advantages for all concerned. However, the increasing mobilization of resources (both natural and human) led to the realization, put forward by Albert Hirschmann in 1945, of the ‘zero sum ‘ concept of winners and losers. The trajectory of events of WW2 made liberal free trade rhetoric obsolete. The prevailing tendency was what economists call ‘mercantilism.’ This was the idea that increases in wealth means greater power – to the detriment of the other. Therefore, geopolitics and geoeconomics became intertwined. The illusion that ‘globalization’ was a ‘win win’ for developing nations has now been exposed. The ‘End of History’ triumph of liberal democracy (Fukuyama) was a delusion. There was always hegemony and it has always been, in the modern era, economic. The error of liberalism, which came out of a type of Christian thinking, was that an ideological value could be exported. That liberalism would carry with it an ideological baggage ( human rights, ‘democracy’, etc). Neoliberalism came to be seen as insufficient (i.e., small state, free trade, supply side economics). We have now moved to an era of ‘state capitalism.’ This is visible in China and Russia, and the growing awareness of this in the U.S. The ‘baggage’ is deemed unnecessary. Authoritarianism, capital, and power are the ‘de facto’ guidelines of the new world.
The emphasis in mercantilism is the feature of one or two ‘hegemonic’ powers. Therefore, in the twentieth century this was assured for the U.S., through the suspension of the Bretton Woods agreement in 1972. The abolition of the convertibility of gold to dollars, set in motion a ‘hegemony’ for the United States. The fiat currency of the dollar had replaced gold. Hegemony is policed through, for example, global payment systems, sanctions etc. Mercantilism is back in vogue and we can see it in Trump’s protectionism and China’s soft loans creating Chinese dependency in Asia. States such as Iran are caught up in the realist shift. Iran faces the dilemma of opposing the hegemony or establishing bilateral relations with another hegemon, i.e. China or Russia. This can be achieved perhaps through the BRICS (Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates) organization. Another possibility would be the introduction of the ‘state capitalism’ market structure. This would involve, inevitably, opening up markets to the U.S. and perhaps other regional actors.
The implementation of geoeconomics, and the need to establish ‘hegemony’ leads to inevitable conflict. Hence the need for peripheral nations, such as Iran, Turkey, etc., to align with regional actors across the world. In the realist school, ideology is old hat. The dominant theses is ‘state capitalism,’ a replacement to globalization or colonial thinking.
The grand strategy of the United States is one of ‘offshore balancing.’ Under this strategy, the hegemon utilizes offshore partners to facilitate its dominion, i.e. Saudi Arabia. It is not an ideological choice for the U.S. and doesn’t involve the kind of liberal baggage which was attached to globalization and the remits of the IMF, etc. The US focus is on a three-prong strategy in Asia (China), Europe, and the Persian arena. Ideology is in abeyance worldwide. Realpolitik and geoeconomics rule the roost. The US strategy in this context is to maintain the US dollar ascendancy.
Consequently to do this is needed a strong executive (Trumpian) and a dominance in global financial structures. Peter Gowan in The Global Gamble (1999) called this the DWSR (Dollar Wall Street Regime). Trump’s geopolitical outlook is based on this, including tariffs. It is a reaction to the increasing strength of the Chinese economy, the Belt and Road Initiative, and soft loan acquisitions in Europe, Africa, etc. China becomes a leading competitor and, threateningly, in the area of electric cars, semiconductors, and AI. The Chinese are more and more involved in the capitalization of world markets. For the U.S., predominance in petro resources and now rare earth elements becomes salient. China’s dominance in rare earth materials (having vast resources) is only rivalled in Ukraine and Russia, hence the West’s attempt to inflict defeat on Russia.
The failure in Ukraine has set the DWSR back. The Sino-Russian alliance is stronger. The ‘Global South’ has seen the utilitarian nature of geopolitics. It is not the ‘End of History,’ but the ‘End of Ideology.’ The focus in the U.S. is to repair the deficit through DOGE cuts to the federal budget and achieve dominance over the tech sector. There is a gradual fall in foreign dollar reserves as countries switch to Chinese renminbi to an increasing degree. Hence all policies point to strengthening the dollar hegemony and weakening rivals.
Regional actors, in the new realist world, need to position themselves with ‘hegemons.’ Such are the attempts by the U.S., Russia, and China to seduce Saudi Arabia with its gargantuan oil reserves. The U.S. will be keen to topple China and Russia’s alliance with the Saudis. Washington needs to keep the balances of foreign dollar investment into Treasury Bills. Tariffs produce inflation and in times of inflation people switch to Treasury Bills, raising the value of the currency. In times of instability people invest in the dominant currency, therefore strengthening the dollar. It is important for the U.S. to get Saudi Arabia on board and to keep them away from other actors, such as China, Russia, and also Iran.
One of the central tenets of the theory of realism in international relations is that of anarchy. In this there isn’t a directional Hegelian movement in history, an ‘end of history.’ Also there isn’t any overarching governing body, be it the League of Nations, the UN, the EU, etc., with any real power. This means it is essential to grind out one’s own area of influence; it is commerce or chaos. Mearsheimer’s ‘offensive realism’ is the predominant tactic of the Trump administration. Rather than ‘balancing’ acts in international relations, offensive realism seeks to ‘pass the buck.’ This means to use proxy actors (i.e. Ukraine, Israel) to do the leg work, to build hegemony in strategic arenas. The major threat , in the geographical arena, is Israel. The ‘tragedy of great power politics,’ as Mearsheimer calls it, is that states are rational actors which will prioritize security and dominion. Today this is coupled with mercantilism, tariffs and other economic weapons. Hence the importance of access to raw materials.
Yet this new realization by the United States is not to be the hegemon of the whole world, but of the Western hemisphere. Hence the U.S. will intervene to maintain its Western hegemony and also to prevent the rise of a dominant Eastern or Eurasian hegemon (China) which would threaten dollar supremacy. Therefore the importance of dollar hegemony, resource accumulation, rare earth materials, etc., as well as military power.
The US policy is to force states into agreement. Iran will be key to US thinking in the region. Iran is a good example of the dilemmas faced by proxy and peripheral states. It is one of alliances. Iran may be brought into some sort of transactional economic cooperation as the U.S. does not want Iran in the court of the Red Tsar or China. Therefore Iran has a certain amount of leverage especially with the nuclear card. Iran really is at an historic crossroads on the realist highway. The metamorphosis towards a new world order is one of geopolitics and resource domination. Hence the turn to realism by Trump and the abandonment of liberalism – recognized as a corrosive, weakening, and self-destructive ideology.
Of course, realism is not the only theory in town. Within Chinese thinking there is another strand. In China, amongst intellectuals, there is talk of ‘xin shidai,’ or a ‘new era.’ The new draughtsmen of the world are at work, and they aren’t emanating from the liberal soapboxes of Western universities. The Chinese philosopher Jim Huimin talks of a ‘Chinese cultural self confidence,’ taking ‘tianxia‘ to the world. The tianxia school ( ‘all under heaven’ ) seeks to employ Chinese historical sources, rather than Western imitation, such as Marxism, as its new intellectual weapons. Tianxia sees itself as a new ‘world empire 2.0’ according to Jiang Qing.
The new Chinese version aims at new universal values of East Asia, through intercultural dialogue. The Chinese see the world engaged in a Manichean struggle between a dual world history; one of the imperialism of Rome and the tianxia system of universal harmony. Yet the Chinese don’t equate tianxia with empire. The Chinese argument is that Roman unilateralism, realism in international relations, pits itself against itself, state against state . Western thought is always dualistic, remnants of the Christian, good and evil. Not nuanced or shaded. At heart, the liberal Occident which inherited Hegel’s ‘world spirit’ of civilizational Europe has been a negligent host. The new carrier of the spirit of the world belongs, say the Chinese, to the spirit of tianxia, a form of universalism descending from the Emperor ‘Duke Wen of Zhou’ of 1043 BC. These were universal values which respected harmony and the individual culture of any dynasty. The tianxia revolution would claim to be ecumenical and pluralist. For Jiang Shigong :
”The difference between Chinese and Western culture is that whilst Western culture consistently attempts to arrive at the resolution of any antagonism in favor of one of the original positions, Chinese culture consistently seeks to find the unity, which results in a pluralism based on ideas of harmony.”
We have the ‘end-game’ of the Ukraine war and the Gaza tragedy. Outlying nations have to align themselves in a difficult world of realpolitik. Henry Kissinger, no stranger to realpolitik, recognized a huge difference in Chinese and American thinking. The colonization of the Orient was accompanied by a missionary zeal of Christianity then liberalism, a ‘correct’ doctrine. China’s worldview espouses a new cultural, rather than missionary export. It is not to convert, it is said. It is based on Confucian ‘filial piety.’ Henry Kissinger noted that ‘American exceptionalism is missionary, China’s exceptionalism is cultural.’ Yet now the U.S. has abandoned the liberal pulpit. The cultural, particularist method has merit as the globalized experiment is in tatters. US hegemony is under threat and the turn to Hobbesian realism in international affairs means more instability and more conflict, with nation states scrambling to find economic dominance.
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