Does the Global Financial Crisis Signify A Shift in World Power and a New “End of History”?

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Many of us in Western Europe and in the United States have felt the effects of, or suffered from, the Global Financial Crisis (GFC). While we understand the causes of the crisis, what is its broader meaning? The GFC was and is a complex phenomenon but one of its features that often goes unremarked is the fact that it can be seen as marking a transition from the United States to China as the world’s leading economic power. As much manufacturing has been offshored from “the West” to China and other “Asian driver” economies, the US and Britain became increasingly dependent on the financial, insurance and real estate (FIRE) sector to drive growth. However, manufacturing remains a key sector for economic development because of its technological dynamism, linkages to other economic sectors and ability to generate exports. China is now the “workshop of the world” in the way that the United States and Britain were in earlier eras. The GFC then can be seen as one process, amongst many, arising from the shift in the global economic centre of gravity from the West to the East.

It has been noted that superpowers have historically been getting bigger progressively in terms of their internal population sizes; from Holland to Britain and then the United States to China. India is the only other country which can match China in terms of its population, but it does not seem to present a major challenge, at least for the foreseeable future. With the end of the Cold War, Francis Fukayama argued that we had witnessed the “End of History” as liberal democracy and capitalism would become the largely uncontested forms of social organization and governance. The rise of China belies such a claim, but does the shift in power signified by the GFC portend another “end of history” as China becomes the world’s dominant superpower, potentially without a major challenger into the future?

Authored by Pádraig Carmody, Associate Professor, TCD Geography

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