I'm going to talk to you about the power in this 21st century. And basically, what I'd like to tell you is that power is changing, and there are two types of changes I want to discuss. One is power transition, which is change of power amongst states. And there the simple version of the message is it's moving from West to East. The other is power diffusion, the way power is moving from all states, West or East, to non-state actors. Those two things are the huge shifts of power in our century. And I want to tell you about them each separately and then how they interact and why, in the end, there may be some good news.
When we talk about power transition, we often talk about the rise of Asia. It really should be called the recovery or return of Asia. If we looked at the world in 1800, you'd find that more than half of the world's people lived in Asia, and they made more than half the world's product. Now fast forward to 1900: half the world's people—more than half—still live in Asia, but they're now making only a fifth of the world's product. What happened? The Industrial Revolution, which meant that all of a sudden, Europe and America became the dominant center of the world. What we're going to see in the 21st century—is Asia gradually returning to being more than half of the world's population and more than half of the world's product. That's important and it's an important shift. But let me tell you a little bit about the other shift that I'm talking about, which is power diffusion.
To understand power diffusion, put this in your mind: computing and communications costs have fallen a thousand fold between 1970 and the beginning of this century. Now that's a big abstract number. But to make it more real, if the price of an automobile had fallen as rapidly as the price of computing power, you could buy a car today for five dollars. Now, when the price of any technology declines that dramatically, the barriers to entry go down. Anybody can play in the game. So in 1970, if you wanted to communicate from Oxford to Johannesburg to New Delhi to Brasilia and anywhere simultaneously, you could do it. The technology was there. But to be able to do it, you had to be very rich—a government, a multinational corporation, maybe the Catholic Church—but you had to be pretty wealthy. Now, anybody has that capacity, which previously was restricted by price just to a few actors. If they have the price of entry into an Internet cafe—the last time I looked, it was something like a pound an hour— and if you have Skype, it's free. So, capabilities that were once restricted are now available to everyone.
And what that means is not that the age of the State is over. The State still matters, but the stage is crowded. The State's not alone. There are many, many actors. Some of that's good—Oxfam, a great non-governmental actor. Some of it's bad—Al Qaeda, another non-governmental actor. But think of what it does to how we think in traditional terms and concepts. We think in terms of war and interstate war, and you can think back to 1941 when the government of Japan attacked the United States at Pearl Harbor. It's worth noticing that a non-state actor attacking the United States in 2001 killed more Americans than the government of Japan did in 1941. You might think of that as the privatization of war. So we're seeing a great change in terms of diffusion of power.
Now the problem is that we're not thinking about it in very innovative ways. So let me step back and ask, "What's power?" Power is simply the ability to affect others to get the outcomes you want, and you can do it in three ways. You can do it with threats of coercion, "sticks," you can do it with payments, "carrots," or you can do it by getting others to want what you want. And that ability to get others to want what you want, to get the outcomes you want without coercion or payment, is what I call "soft power." And that soft power has been much neglected and much misunderstood, and yet it's tremendously important. Indeed, if you can learn to use more soft power, you can save a lot on carrots and sticks. Traditionally, the way people thought about power was primarily in terms of military power. For example, the great Oxford historian who taught here at this university, A.J.P. Taylor, defined a great power as a country able to prevail in war. But we need a new narrative if we're to understand power in the 21st century. It's not just prevailing at war, though war still persists. It's not whose army wins; it's also whose story wins. And we have to think much more in terms of narratives, and whose narrative is going to be effective.
Now, let me go back to the question of power transition between states and what's happening there. The narratives that we use now tend to be the rise and fall of the great powers. And the current narrative is all about the rise of China and the decline of the United States. Indeed, with the 2008 financial crisis, many people said this was the beginning of the end of American power, or the tectonic plates of world politics were shifting. And president Medvedev of Russia, for example, pronounced in 2008 this was the beginning of the end of United States power. But in fact, this metaphor of decline is often very misleading. If you look at history, in recent history, you'll see that the cycles of belief in American decline come and go every 10 or 15 years or so. In 1958, after the Soviets put up Sputnik, it was "That's the end of America." In 1973, with the oil embargo and the closing of the gold window, that was the end of America. In the 1980s, as America went through a transition in the Reagan period between the rust belt economy of the Midwest to the Silicon Valley economy of California, that was the end of America. But in fact, what we've seen is none of those were true. Indeed, people were over-enthusiastic in the early 2000s, thinking America could do anything, which led us into some disastrous foreign policy adventures, and now we're back to decline again.
The moral of this story is all these narratives about rise and fall and decline tell us a lot more about psychology than they do about reality. If we try to focus on the reality, then what we need to focus on is what's really happening in terms of China and the United States. Goldman Sachs has projected that China, the Chinese economy, will surpass that of the U.S. by 2027. So we've got, what, 17 more years to go or so before China's bigger. Now someday, with a billion point three people getting richer, they are going to be bigger than the United States. But be very careful about these projections—such as the Goldman Sachs projection as though that gives you an accurate picture of power transition in this century. Let me mention three reasons why it's too simple. First of all, it's a linear projection. You know, everything says, here's the growth rate of China, here's the growth rate of the U.S., here it goes—straight line. History is not linear. There are often bumps on the road, accidents along the way. The second thing is that the Chinese economy passes the U.S. economy in, let's say, 2030, which it may. That will be a measure of total economic size, but not of per capita income—won't tell you about the composition of the economy. China still has large areas of underdevelopment, and per capita income is a better measure of the sophistication of the economy. And that the Chinese won't catch up or pass the Americans until somewhere in the latter part, after 2050, of this century.
The other point that's worth noticing is how one-dimensional this projection is. You know, it looks at economic power measured by GDP—doesn't tell you much about military power, doesn't tell you very much about soft power. It's all very one-dimensional. And also, when we think about the rise of Asia, or return of Asia as I called it a little bit earlier, it's worth remembering Asia's not one thing. If you're sitting in Japan, or in New Delhi, or in Hanoi, your view of the rise of China is a little different than if you're sitting in Beijing. Indeed, one of the advantages that the Americans will have in terms of power in Asia—is all those countries want an American insurance policy against the rise of China. It's as though Mexico and Canada were hostile neighbors to the United States, which they're not. So these simple projections of the Goldman Sachs type are not telling us what we need to know about power transition.
But you might ask, well, so what in any case? Why does it matter? Who cares? Is this just a game that diplomats and academics play? The answer is it matters quite a lot. Because, if you believe in decline and you get the answers wrong on this, the facts, not the myths, you may have policies which are very dangerous. Let me give you an example from history. The Peloponnesian War was the great conflict in which the Greek city state system tore itself apart two and a half millennia ago. What caused it? Thucydides, the great historian of the the Peloponnesian War, said it was the rise in the power of Athens and the fear it created in Sparta. Notice both halves of that explanation.
Many people argue that the 21st century is going to repeat the 20th century, in which World War One, the great conflagration in which the European state system tore itself apart and destroyed its centrality in the world, that that was caused by the rise in the power of Germany and the fear it created in Britain. So there are people who are telling us this is going to be reproduced today, that what we're going to see is the same thing now in this century. No, I think that's wrong. It's bad history. For one thing, Germany had surpassed Britain in industrial strength by 1900. And as I said earlier, China has not passed the United States. But also, if you have this belief and it creates a sense of fear, it leads to overreaction. And the greatest danger we have of managing this power transition of the shift toward the East is fear. To paraphrase Franklin Roosevelt from a different context, "the greatest thing we have to fear is fear itself." We don't have to fear the rise of China or the return of Asia. And if we have policies in which we take it in that larger historical perspective, we're going to be able to manage this process.
Let me say a word now about the distribution of power and how it relates to power diffusion and then pull these two types together. If you ask how is power distributed in the world today, it's distributed much like a three-dimensional chess game. Top board—military power among states. The United States is the only superpower, and it's likely to remain that way for two or three decades. China's not going to replace the U.S. on this military board. Middle board of this three-dimensional chess game—economic power among states. Power is multi-polar. There are balancers—the U.S., Europe, China, Japan can balance each other. The bottom board of this three-dimensional chess game—the board of transnational relations—things that cross borders outside the control of governments, things like climate change, drug trade, financial flows, pandemics, all these things that cross borders outside the control of governments, there nobody's in charge. It makes no sense to call this unipolar or multi-polar. Power is chaotically distributed. And the only way you can solve these problems—and this is where many greatest challenges are coming in this century—is through cooperation, through working together, which means that soft power becomes more important, that ability to organize networks to deal with these kinds of problems and to be able to get cooperation.
Another way of putting it is that as we think of power in the 21st century, we want to get away from the idea that power's always zero-sum—my gain is your loss and vice versa. Power can also be positive-sum, where your gain can be my gain. If China develops greater energy security and greater capacity to deal with its problems of carbon emissions, that's good for us as well as good for China as well as good for everybody else. So empowering China to deal with its own problems of carbon is good for everybody, and it's not a zero-sum—I win, you lose. It's one in which we can all gain. So as we think about power in this century, we want to get away from this view that it's all "I win, you lose." Now I don't mean to be Pollyannaish about this. Wars persist. Power persists. Military power is important. Keeping balances is important. All this still persists. Hard power is there, and it will remain. But unless you'd learn how to mix hard power with soft power into strategies that I call "smart power," you're not going to deal with the new kinds of problems that we're facing.
So the key question that we need to think about as we look at this is how do we work together to produce global public goods, things from which all of us can benefit? How do we define our national interests so that it's not just zero-sum, but positive-sum? In that sense, if we define our interests, for example, for the United States the way Britain defined its interests in the 19th century, keeping an open trading system, keeping a monetary stability, keeping freedom of the seas—those were good for Britain, they were good for others as well. And in the 21st century, you have to do an analog to that. How do we produce global public goods, which are good for us, but good for everyone at the same time? And that's going to be the good news dimension of what we need to think about as we think of power in the 21st century.
There are ways to define our interests in which, while protecting ourselves with hard power, we can organize with others in networks to produce, not only public goods, but ways that will enhance our soft power. So, if one looks at the statements that have been made about this, I am impressed that when Hillary Clinton described the foreign policy of the Obama administration, she said that the foreign policy of the Obama administration was going to be "smart power," as she put it, "using all the tools in our foreign policy tool box." And if we're going to deal with these two great power shifts that I've described, the power shift represented by transition among states, the power shift represented by diffusion of power away from all states, we're going to have to develop a new narrative of power in which we combine hard and soft power into strategies of smart power. And that's the good news I have. We can do that.
Thank you very much.