Europe Is the Next Rival Superpower. But Then, So Was Japan.

Unlike communism, the E.U. seems to be not an enemy of liberal capitalism, but a new and possibly improved version of it.

President Bush travels to Europe in February—stopping first in the old continent's pint-sized capital city. Why Brussels, instead of London or Paris or Warsaw? Not for the chocolate. A small but increasingly prominent cluster of foreign-policy thinkers—call them bipolarists—believe they know the answer: Whether Bush likes it or not, there are two superpowers in the world, and the other is Europe.

In 2002, Charles A. Kupchan, a professor of international relations at Georgetown University, saw bipolarity coming. "Not only is American primacy far less durable than it appears, but it is already beginning to diminish," he wrote in the November 2002 issue of The Atlantic Monthly (a sister publication of this magazine). "And the rising challenger is not China or the Islamic world but the European Union." Europe, he said, "will inevitably rise up as America's principal competitor."

That was two long years ago. Today's bipolarists change "will rise" to "has risen":

  • In his new book, The European Dream: How Europe's Vision of the Future Is Quietly Eclipsing the American Dream, Jeremy Rifkin, the left-liberal president of the Foundation on Economic Trends, writes that "the fall of the American Dream may be inevitable." (There's "inevitable" again.) Europe's systems and values, he argues, are better suited to today's world. In a related article in European Affairs magazine, he writes that the E.U. "is, indeed, a new superpower that rivals the economic power of the United States on the world stage," a new reality that "America is unaware of and unprepared for."
  • In another new book, called The United States of Europe: The New Superpower and the End of American Supremacy, T.R. Reid, a Washington Post correspondent, writes, "We need to recognize and accept the plain fact that the planet has a second superpower now, and that its global influence will continue to increase as the world moves toward a bipolar balance of economic, political, and diplomatic authority." Americans slumbered while Europe emerged, but now "will have to wake up to the revolution."
  • February brings publication of Why Europe Will Run the 21st Century, by Mark Leonard, a British foreign-policy thinker with the London-based Center for European Reform. "American hegemony contains the seeds of its own destruction, and is already driving its own retreat," he writes. America's reliance on military strength and unilateral pressure is a "shallow and narrow" power: "The lonely superpower can bribe, bully, or impose its will almost anywhere in the world, but when its back is turned, its potency wanes. The strength of the E.U., conversely, is broad and deep: Once sucked into its sphere of influence, countries are changed forever." Cheekily tweaking the neoconservative Project for the New American Century, Leonard predicts "the emergence of a 'New European Century.' Not because Europe will run the world as an empire, but because the European way of doing things will have become the world's."
  • In Europe as well as America, many intellectuals and some politicians view Europe as the world's second major pole in two respects. First, Europe has power: not military power, but all the other kinds. It has the euro, a rival currency. Its economy is as large as America's (about $11 trillion), and its population is larger. It has the regulatory power and market clout to humble the likes of General Electric and Microsoft. It has many of the world's biggest and best companies, including (writes Rifkin) 14 of the world's 20 largest commercial banks and six of the top 11 telecommunications companies. It has a growing membership, a new constitution, and 25 United Nations votes. Reid quotes Romano Prodi, a former president of the European Commission: "Europe's time is almost here. In fact, there are many areas of world affairs where the objective conclusion would have to be that Europe is already the superpower, and the United States must follow our lead."

    To bipolarists, Europe is also, just as importantly, a social pole: a rival model of how best to organize society and the world, and even human life. "The European Dream," writes Rifkin, "emphasizes community relationships over individual autonomy, cultural diversity over assimilation, quality of life over the accumulation of wealth, sustainable development over unlimited material growth, deep play over unrelenting toil, universal human rights and the rights of nature over property rights, and global cooperation over the unilateral exercise of power." Europe, writes Leonard, "can offer the best of both worlds: a synthesis of the dynamism of liberalism with the stability and welfare of social democracy." Thus "the European way of life will become irresistible."

    Irresistible. Inevitable. Back here in Washington, it's tempting to say we've heard this before from Marxism, but that would be a cheap shot. Unlike communism, the E.U. seems to represent not an enemy of liberal capitalism, but a new and possibly improved version of it.

    Well, maybe; but we've heard that before, too. In 1988, Clyde V. Prestowitz published an influential book called Trading Places: How We Allowed Japan to Take the Lead. America, he said, was a "sleeping giant," oblivious to the fact that Japan challenged not only America's economic pre-eminence but the very premises of U.S.-style capitalism. America, he wrote, "was the leader only in military power.... In other areas, the United States ... had traded places with its former protég´—Japan."

    Meanwhile, Chalmers Johnson, then a professor of international relations and now president of the Japan Policy Research Institute, identified Japan as a "capitalist developmental state," a new economic hybrid that combined private ownership with state control—a threat to the U.S. economy, he said in a 1989 interview with Multinational Monitor, but "not a threat in the sense of being malevolent." The Atlantic's own James Fallows, also in 1989, argued that in head-to-head competition, free-trading states such as America would eventually lose to capitalist developmental states such as Japan and its imitators.

    Bipolarist claims about today's Europe and yesterday's Japan differ in important and obvious ways. For example, Japan was an economic dynamo, which today's Europe is not; many Europeans lay claim to an exportable, universal system of values, which yesterday's Japanese did not. Europe lacks the economic self-confidence (some would say arrogance) of Japan in 1989, and Japan lacked the diplomatic and intellectual self-confidence (some would say arrogance) of Europe today.

    That said, there are some striking parallels. Both Japan and Europe have supposedly tapped a vein of "soft power" (technology in Japan's case, market power and peaceful internationalism in Europe's) that will rival America's brute force. Both supposedly embody a communitarian ethos that better suits the times than does America's cowboy individualism. Both could boast of giant banks, cutting-edge companies, and surging currencies. Then as now, people foresaw growing tensions as the two divergent systems inevitably clashed.

    Back in the late 1980s, however, another school predicted trouble for Japan, seeing not a new paradigm headed for dominance but an unbalanced system headed for crisis. And some observers look at Europe today and see an unbalanced system headed for crisis. They say that Europe's rapid aging will bring fiscal rupture and economic stagnation; that the euro is far from ready to challenge the dollar; that Europe's social compact will be strained and perhaps broken by an influx of non-European immigrants; that America's security guarantee, not the European Union, is what has brought peace to the continent; that the E.U. will grow fractious and unwieldy as it expands; and that the E.U.'s "democratic deficit" will ultimately sap its legitimacy.

    In Japan, of course, the economic bubble burst. No one talks any more about Japan as America's emerging rival. But the crisis never quite came, either. Given the magnitude of the adjustment it has had to make, Japan has come through well. Its financial and social structures—even its political system—have converged toward America's (and Europe's), even as America's (and Europe's) industrial systems have converged toward Japan's. America's and Japan's foreign policies have converged, too, with Japan sending forces to Iraq and supporting missile defenses while America promotes Japan for a permanent seat on the U.N. Security Council.

    If past is prologue, then 15 years from now people at globalist talk-shops will reminisce about that fleeting "Europe scare" of 2005. Over drinks in Geneva, Europeans and Americans will notice how much they learned from each other in the course of not always getting along. They may quietly conclude that when the hype about a new global rivalry peaks, so does the rivalry.