Asia Redraws the Map of Progress: Balance of Economic, If Not Political, Power Is Shifting from West to East. A Diplomat and Scholar Argues That, If Asia Is to Rise to the Challenges That This Power Shift Will Bring, It Must Not Emulate the More Destructive, Materialistic Values of Industrialized Society

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Over the last 30 years, unique opportunities for high and persistent economic growth have blessed Asia, and policy makers grabbed them with both hands. Global growth was high, commodity prices were low, and a growing labor force turned China into the world's top manufacturer. Meanwhile, there was not much pressure to heed environmental warnings. The policy challenge for Asia's political leaders was primarily to manage economic growth.

All that is changing. Global growth is slowing, commodity prices are expected to continue rising, and oil supplies are declining. Alternative energy sources are available--but for a price. Starting in 2015, the labor force will shrink in China while it continues to rise in South Asia. Environmental problems demand far more resources, and the United States can no longer be counted on as a stabilizing power. Indeed, there is a risk of Chinese-American tensions catapulting the Pacific trade and growth engine into trouble. So creating the conditions for economic growth becomes a policy challenge--and it's a whole new situation.

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Asia cannot do without economic growth. Over the preceding decades, a large part of the population has become accustomed to an almost permanently rising living standard, considered to be a kind of prescriptive right. Many political regimes find that their legitimacy in the eyes of their people depends on constantly rising prosperity. But the demographic composition is changing, with more elderly people calling for more welfare, more pensions, and better health care. Large infrastructure investments are necessary, not the least in South Asia, which is destined to take over from China as the next home of low-cost, labor-intensive manufacturing. Meanwhile, investment in research and technology is becoming more costly as Asia moves from catching up with the West to searching for new breakthroughs--a more laborious and costly exercise than simply improving existing technology.

The weaker fundamentals will force Asia to find a growth pattern other than the mass consumption of America and Europe, which, if pursued successfully, would result in an implosion of Asian societies as natural resources become unavailable. Mass consumption for a couple of hundred million people in the West cannot with a stroke be extended to between 1 and 2 billion people. Something has to give, and that something is the perception of economic growth, which makes people feel that their living standard is improving.

For the last 200 years, the world has lived and lived well with what may be termed American-style capitalism, which hit full throttle in the twentieth century. It was a combination of economic and political elements that fit admirably well together. Adam Smith's dictum that the pursuit of wealth by individuals coalesced into higher wealth for society as a whole, because society's wealth is the accumulation of individuals' wealth, proved largely correct.

Easy access to natural resources gave the impression that they were unlimited. Transport opened up for new markets, giving access to raw materials hitherto out of reach. Technology improved productivity, keeping inflation in check. Population growth boosted the economy. The nation-state served as the political framework and mechanism for distribution and as the administrative infrastructure for industrial growth.

Asia accepted this worldview at the peak of its ascendancy during the second half of the twentieth century. The rise of Asian economies has depended primarily upon using this Western model as a guide to growth.

Nothing is more striking than Asia's jump into the global political-economic system forged after 1945. This system was not truly global, but an institutional setup designed to further American preponderance and to secure American interests all over the globe. It worked because the American model was regarded as attractive and, in the eyes of a large majority, had proved itself. …