Earlier this month I was arguing that a post-hegemonic world would not be nearly as terrible as Michael Auslin claimed, and that many of the things that he warned would happen in such a world are already happening and are largely out of American control anyway. Reihan wrote an interesting response that I didn’t answer at the time, and I was reminded of it by The Economist’s article on the BRIC countries. First, Reihan:

But for those of us who believe that global trade flows, the free flow of capital, relatively free migration, and market-friendly governments are a good thing, Auslin raises an important question, namely whether the fact that much of metropolitan Europe and East Asia “free-rides” on American military power creates benefits that outweigh the costs. Perhaps the security competition that would result from a U.S. grand strategy that focused on offshore balancing rather than the more active and interventionist posture of the present would prove manageable. Military budgets would swell slightly, but new collective security arrangements would emerge to keep the peace at reasonable costs. Or perhaps the security competition would spark dangerous spirals of aggression and counter-aggression. It’s difficult to tell, though I tend to think that the former scenario is somewhat more likely.

Let’s assume a middle series projection in which military budgets do indeed increase, and, as Auslin suggests, states pursue more activist economic policies — including aggressive capital controls and migration controls — to finance this military expansion. Is this a friendlier world for classical liberals than one in which the benevolent global hegemony of the U.S. persists, or rather efforts to extend BGH persist?

Again, I’m not sure. I do think that such a world would prove somewhat less prosperous and more dangerous at the margin, though I can also imagine a comparatively freer United States flourishing in this environment.

Auslin had warned that Chinese military build-up, Russian influence in post-Soviet space and an Iranian bomb would lead to a situation in which “global trade flows will be stressed, the free flow of capital will be constrained, and foreign governments will expand their regulatory and confiscatory powers against their domestic economies in order to fund their own military expansions.”

One of the reasons I didn’t originally address these concerns is that I don’t find these to be the likely consequences of China’s continued rise, Russian resurgence in its own neighborhood and Iranian membership in the nuclear club. Why will global trade flows be stressed? China is heavily dependent on its export trade to sustain economic growth at home. It has no incentive to disrupt or “stress” trade flows or to embark on policies abroad that would lead to this. At present we see increasing economic integration of Taiwan with the mainland, and the Hatoyama government has held out the possibility, however remote it is at the moment, of forming an East Asian economic community modeled on the European Union. China is investing in (and exploiting) markets all over the world in states where Western companies typically do not go or where they are not allowed to go. So why will the free flow of capital be constrained if China continues to increase its military power? Are we not instead seeing increased trade carried out by and among the BRIC nations? Aren’t emerging-market countries, including China, engaging in noticeable economic innovation?

The article on BRIC countries brought this discussion to mind when I was reading this section:

But there are other reasons why the BRICs might damage the global economic system, rather than buttress it. They might, for example, undermine the role of the IMF and World Bank, abandon attempts to expand free trade or even just ride roughshod over aid conditions in poor countries. But Mr Hormats thinks they will not. “They understand,” he argues, “that the openness and smooth functioning of the system is vital to them and so far there has been very little evidence that they want to change it dramatically.” When world output was plummeting last year, the BRICs’ economic stimulus programmes did a lot to stabilise it [bold mine-DL]. And on the question of reforming the international financial institutions, America and the BRICs find themselves on the same side.

Hormats’ analysis seems right to me. We should also bear in mind something that Russian President Dmitry Medvedev wrote last week in The Times of India on the BRIC nations ahead of the Brasilia summit that concluded yesterday:

By strengthening the economic framework of the multipolar world, BRIC countries are objectively contributing to creating conditions for strengthening international security. We share an imperative that the international community should resolve conflicts through politico-diplomatic and legal means, rather than the use of military force. In our view, it is necessary to strengthen collective principles in international relations and to establish a just and democratic world order.

Some of this is just rhetoric and propaganda, of course, but it expresses the real interest that the BRIC nations have in stability and economic integration. We need not take that last sentence at face value to appreciate that all major emerging-market countries, including Russia and China, generally want international stability, economic expansion and non-interference in their internal affairs. We also don’t need to exaggerate the significance or cohesiveness of the BRIC group to recognize that the relative increase in the individual states’ influence and economic clout is not going to usher in the “dimming of our age” Auslin predicts.