Geoeconomics, or the "use of economic instruments" like aid, trade and sanctions "to accomplish geopolitical objectives," is a critical venue for interstate competition. According to Jennifer Harris and Robert Blackwill, both former administration officials and current fellows at the Council on Foreign Relations, America unfortunately has lost its touch in this arena. In order to stimulate thinking on this chronically understudied topic, the two policymaker-scholars have crafted a readable and lucid primer.
Unlike other books born out of think tanks, War by Other Means doesn't put its policy recommendations front and center. Instead, the first book-length take on the topic since David Baldwin's 1985 work Economic Statecraft aspires to "explain how, not what, to think about geoeconomics."
In line with this aim, each chapter provides a different view of the contemporary geoeconomic landscape. At first, the book defines the extensive topic and opens readers' eyes to its prevalence throughout history. Even Adam Smith understood that since "defence is more important than opulence," nations often are right to nudge the invisible hand.
Then the authors explain the seeming resurgence of geoeconomics after a post-Cold War geoeconomic Pax Americana. The authors correctly note that the rise of emerging powers who subscribe to state capitalism provide them more economic ammunition than a similarly sized government with less control over its industries. Harris and Blackwill also catalog the main economic tools states use to achieve their ends. Particularly strong are the book's introductions to the economic implications of cyber and investment policy.
War by Other Means then turns to today's two most important geoeconomic players: China and the United States. The case studies on China's activity to alter Japan, Southeast Asia, and Taiwan's politics to their ends demonstrate the PRC's determination to influence markets to achieve strategic ends. Surprisingly often, Chinese efforts seem to backfire by inflaming national pride. But the PRC is trying to learn, for instance by reaching out to Taiwanese farmers to understand why a recent heavy-handed lobbying push soured them on pro-Beijing politicians.
Harris and Blackwill's take on U.S. geoeconomic history makes the important point that American politicians from Alexander Hamilton to George Marshall have long appreciated the importance of geopolitics in international economic policy. During the early stages of the Cold War, America was not shy in restricting trade to the Soviet Union. A tiff over steel piping once prompted Khrushchev to complain, "Who the hell do these capitalists think they are, to believe that they can go around and not act like capitalists?" The chapter gives relatively short shrift to the two most important geoeconomic developments of the 20thcentury: the creation and the decay of the Bretton Woods system. At first, U.S. centrality to global monetary policy provided stability for postwar reconstruction, and the regime's fall under Nixon ushered in today's monetary framework, which traded fixed exchange rates for capital mobility.
The book's most powerful argument calls for American policymakers to reframe their thinking about geoeconomic action. All too often, "when U.S. policy makers oppose a potential geoeconomic move, their grounds for opposition often do not reference maximizing U.S. foreign policy interests…Whenever a given geoeconomic action is deemed to risk undermining these economic principles [of a liberal rules-based order]…these principles are invoked as sacrosanct." The United States doesn't seem to appreciate what Russia and China do: that economics may well have a much greater strategic impact than weapons systems unlikely to change the military balance of power.
This election season's turn against trade does not bode particularly well for an active geoeconomic policy. Unfortunately, the presidential candidate making the most hay out of geoeconomic movies is Donald Trump. His proposals to charge allies for military protection, make Mexico pay for a wall, throw up counterproductive tariffs and even dissolve NATO are not only economically counterproductive, but strategically suicidal. Other candidates who care more about protecting American interests would be wise to heed the advice of War by Other Means and take our geoeconomic toolkit more seriously.
Jordan Schneider is a financial researcher in Norwalk, CT.