#134: The Spectre Of Havoc — Graham Allison

21 min read
#134: The Spectre Of Havoc — Graham Allison

Graham Allison is an American political scientist and the Douglas Dillon Professor of Government at Harvard University. He is the author of Destined for War: Can America and China escape Thucydides' Trap?


JOE ​​WALKER: It is an honour to speak with you. I am a fan of your work. I think it is vitally important work in this current moment. I have many things that I would like to discuss, but my first question is perhaps the trickiest and that is, in what circumstances would a war against China be worth fighting?

GRAHAM ALLISON: Well, my God. That's a most difficult question. One of the difficulties with asking a question like that of professors is, as one of my colleagues used to say, we speak in 50-minute sound bites. So let me try to be succinct. Three or four points here.

First, depends a lot on what you mean by a war, and I think most of us have forgotten what really means war. But if what we're really talking about was a total war between the US and China, that is World War III, and if in that war the US and China each used their full nuclear arsenals, at the end of that war there could be both countries erased from the map and every Chinese in China killed and every American in the US killed, and actually there's enough other bombs to go around to hit a few other targets.

Ronald Reagan, a fierce anti-communist for whom I worked, worked his way through this logic and came to the conclusion that he often expressed in a bumper sticker: a nuclear war cannot be won and must therefore never be fought. He concluded, there was nothing for which it would have been worth, after the fact, having destroyed the US entirely. So that's point one, painful and very hard to intellectually come to grips with.

Second point quickly. So that doesn't mean that one's not prepared to risk a nuclear war for some things or risk a small war that could escalate to a nuclear war, and in the Cold War, we did take actions that included some risk of a war. So I think the question is better asked: Under what circumstances should one take a risk of a war that could escalate to a nuclear war? And there, again, it depends on the values and the interests.

So where the US has firm treaty commitments to Australia and New Zealand, to Japan, to South Korea, if the US should not fulfil its commitments, the Alliance System would unravel and then we can play out the consequences of that, and one could well conclude that it would have been better to fight a war and risk the escalation of a nuclear war…

Take specifically – third point – the Korean War. Should we have fought the Korean War? Should the US and Australians have fought to keep South Korea from being absorbed by North Korea? Well, at the time we were able to do so against a China that we wouldn't even imagine would have entered the war, did enter the war. As a result lots more Americans than Australians were killed and would have been otherwise. But nonetheless, there wasn't a risk that it would escalate to a nuclear war.

Despite the fact that there were 50,000 dead Americans and some thousands of dead Australians, South Korea has been one of the great success stories of the last 50 years. It's emerged as a free, vibrant democratic economy.

So if you said, "Well, let's do it again," would we do that again? I think the answer is yes. Now, would I do Vietnam again? No. So, there're lots of unnecessary wars. Unfortunately, the US has had an inclination for them lately, including in Iraq and Afghanistan. But I think there's some things that are worth fighting for. Certainly for our own freedoms, they're worth fighting for.

John Kennedy had a saying... People would say, "Better red than dead." And he said, "Wait a minute, no. I refuse that dichotomy. I want both peace and freedom." I think that's what we want.

WALKER: You've said that the three great teachers that you had on China were Henry Kissinger, Kevin Rudd, and Lee Kuan Yew. I'm curious, could you summarise the most important thing that each man has taught you about China?

ALLISON: Oh, great points. My teacher, when I was a graduate student, was Henry Kissinger. Then I became his teaching assistant, and course assistant, and research assistant. He and I are going to do a call on Saturday on something. One of the things if you ever worked for Henry, you always worked for Henry. He just turned 98 a couple of weeks ago, so amazing character.

Henry, I think understood the Reagan proposition that because we couldn't fight a nuclear war with the Soviet Union, we had to find some way to live with them even while we had a long-term competition or rivalry.

He struggled with that in the Nixon administration. Detente was a kind of early stage of that. The evolution in the strategy of containment. And Henry has even said, there's an online interview that I did with him in which he always wondered that if the Soviet Union had actually attacked the US with nuclear weapons, would he have recommended that we respond by basically destroying the entire Soviet Union if it meant that would mean the entire destruction of the US? He was never able to answer that question in his own mind. So even now reflecting on it. But in any case, I would say that's a big takeaway from Henry.

From Lee Kuan Yew, whom I think was unquestionably the most astute China watcher in part because he was so smart, in part because he had a really urgent need to know, since Singapore only survives at China's whim or China's largess.

Also, because he was a model for many Chinese leaders and they would come and want to talk to him. So he spent more face-time with Chinese leaders than anybody. So his proposition was that China was going to be the biggest player in the history of the world, that its rise was normal since it was trying to follow more or less in the path of Singapore, and South Korea, and Japan, and others who had made their way to the market, and that this was something that was going to become the defining feature of the 21st century, that the contest for supremacy would be the defining feature of the 21st century.

He kept telling me, this is now back even at the beginning of the century, "Graham, you should pay more attention to China. Pay more attention to China." And I said, "Thank you, Sir, but China is so big and so complicated, got such a long history, I don't speak Mandarin." He said, "Pay more attention to China." So that was wise advice, and his basic insight about how this was likely to develop was correct.

For Kevin... Kevin, I think, has been a great tutor for me on helping understand more of the complexities of the internal politics of China, on the one hand, and also the reality of states like Australia in which it is impossible for them to choose between their security relationship with the US, which is essential for their survival and wellbeing, and their economic relationship with China, which is essential for their prosperity.

Kevin was one of the first people to drive it home to me that, "Don't try to make us choose between the US and China" and imagining that you're going to reconstruct some Cold War with an iron curtain of economics between the people that are on your side in the rivalry and China, because you're going to not find the choices ones that you can live with, whether it's for Australia, or Japan, or Singapore, or Germany.

I think that helps you see why this is ultimately so much more complex than the Cold War, because for the Soviet Union fortunately they isolated themselves from the global economy. They only traded basically with the members of their bloc.

The growing economies were part of the market world and ultimately that built a strength of our side and hollowed out their side. They also were mostly technically challenged except in a few areas. They had a good missile program. They had bombs that worked, but they were not able to make computers. They still used vacuum tubes…

Basically, they were a competitor in certain arenas, but unlike China... China is a full-spectrum peer competitor, and coming to grips with that for the US and for Australia and for everyone else, again means this, there's no simple model like the Cold War that if we just follow that playbook it's going to work out okay.

This is a special new complicated case. It's like what we've seen historically, that Thucydides taught us about, it is a rising power threatening to displace a ruling power. So there's a fundamental similarity. But the differences, between this case and the Soviet Union or many of the other cases, have to be more significant and have to be taken into account.

WALKER: Why is purchasing power parity the best yardstick for measuring a country's GDP?

ALLISON: A great question and this may be too complicated for some of your folks because once they get into PPP and market exchange rates, it can become complicated. I wrote a fairly simplistic article on this called, 'The Big Mac Seesaw for Measuring Economies'.

The best reason for believing this is the best yard stick is that, that is the conclusion that both CIA and the IMF have come to painfully after having used the traditional yardsticks for many years, but worked their way through the logic of it.

In brief, the logic of using PPP with the market exchange rates is that it focuses on what Chinese can buy in China at China prices, as compared to what they would be able to buy if they took that equivalent amount of RMB, exchanged it at the current exchange rates for dollars, and then use those dollars to buy something.

So to take the Big Mac Index, which was developed by The Economist, and which is, I think, brilliant as a way to explain this, if I go to a McDonald's in Beijing and take the RMB equivalent of the $4.50 it costs me for a Big Mac at McDonald's in Boston, so I take those RMB, I can buy one and a half Big Macs. So I get more burger for my equivalent of a dollar or of $4.50.

If I do it at exchange rates and make me translate it into dollars and take those there, I get less. So I think the best way to think of it is in terms of what the Chinese buy for their currency at the current exchange rates. And if they're buying a car or a plane or a missile or a base.

Another way to think of it is, how much does it cost to buy a soldier? So again, in China about one-fifth of the price of an American soldier. Now, they're not as good, I think, not as tested, so it's a complicated effort to try to compare.

Nonetheless, if you go to the CIA fact book online and ask about size of economies, you'll see that by their judgement of what's the best yardstick China's GDP is now about 20% larger than that of the US.

WALKER: Why didn't China liberalise like everyone thought it would?

ALLISON: Interesting question. This is one what I've talked to Liu He about often. He's their chief economics person who was a former student at the Kennedy School. I've known him for 25 years and he's a brilliant, thoughtful, serious person.

He says, as I think their government says, "We believe that Western financial markets are life at casino" and that they invite excesses of the sort that we saw that produced the financial crisis, the great financial crisis of 2008.

They've repeatedly produced these crises in which there would have been a great depression if there hadn't been this extraordinary response both by the US Fed and by the Chinese government in doing their stimuluses and coordinating them. They are creeping out in that space but they worry about financial markets in which the temptation always in a financial market is for big players to take on unnecessary levels or unsustainable levels of risk.

If we look at what Citigroup or Goldman or AGI or others did before 2008, they had created a bunch of instruments that left them so exposed that if ever real estate prices should decline, they would find themselves bankrupt and they would have been had it not been for the bailout.

I think the Chinese are very nervous about the full liberalisation of their currency, because they think they can be jerked around by international markets and they believe those are 'wild'.

It's a complicated subject because it certainly is the case that in western open financial markets we've seen recurring excesses of risk that led to financial crises that required major responses, including what we saw after the Depression.

So whether they can find their way to a controlled market, a more controlled or more managed market, is a good question in the same way that you can see how in the US we're asking how with 'Too Big to Fail' and the other Volcker Rule laws that were put in after 2008, whether there can be a little bit more management of the risks in the financial markets by the players whose excesses could actually jeopardise the whole financial system.

WALKER: What are the theoretical underpinnings of the Thucydides's Trap?

ALLISON: I think that fundamental idea Thucydides wrote about brilliantly and the reason why I always remind people this was Thucydides's idea, not my idea. I had the good fortune to coining the term Thucydides' Trap, but it was a way of making vivid Thucydides' insight.

I think his insight is actually fundamental, just as you say. What's the underpinning? There's something extremely, almost protean about the proposition that when a rising power credibly threatens to displace a ruling power, you get a dynamic that is fairly predictable in which the ruling power believes this is unreasonable, unjust, irregular, that the rising power should actually know its place.

And so you get what I described in my book as a syndrome. Similarly, the rising power quite naturally thinks, "Now, wait a minute, the rules were made before I was bigger and stronger. So they need to be adjusted to take account of my weight and my interests." And you see this actually everywhere.

If you take the established firms in any industry and a technologically disruptive upstart, you can see this in the news business, where things that were newspapers and monopoly television networks for many years had been disrupted by technologies and upstarts, and they wonder, "What the hell is going on? Why are you behaving this way? You shouldn't be doing things like this."

You can see this in the animal kingdom, as you watch an alpha wolf and the emergence of a would-be. You can see this actually in families. If you have two children roughly the same age and the older one is much taller than the younger one, but then for whatever reason, the younger one begins to sprout and becomes taller than the older one, the table conversation changes, the manner of talk the younger one begins to do. Even sometimes he suggests that maybe the bedrooms should be readjusted because my bedroom is not sufficient for me now.

I think the phenomenon that occurs when a rising power threatens to displace a ruling power you can see in the course of history, but you can see its elements intuitively in basically the animal kingdom and even the human expressions of that in families.

WALKER: When you wrote the book, you implied that Germany and Britain pre-World War I was the most similar case study to China and the US today. I'm curious, Graham, has that view changed since the book was written? For example, Japan and the United States before World War II might be more applicable now.

ALLISON: No. I still find World War I resulting from the rise of Germany and efforts of Great Britain to cope with it the most analogous case. The Chinese, when I talked to them about this, the case they liked the best is the rise of the US and its rivalry with Great Britain and Britain's acceptance of that. The case that I remind them of is the case of the Cold War and the rivalry between the US and the Soviet Union.

But I think the reason why the German case is so haunting, I guess there's three or four reasons. The first is that once Germany was reunified, given pressure, and now that it had become a full German state, its growth rate began to exceed that of Great Britain so that by 1900 its GDP was equal, and by 1914, 25% larger.

It was on a trajectory in which it was getting stronger, and as it got stronger, Germany said, "Well, why do everybody else have colonies and we don't? So we should have colonies, even though they're all taken, but they were taken before we were able to compete. So how about some for us? Why should the British have a Navy that dominates all the blue border? We're bigger and richer, so we should have a Navy." So they began building a Navy.

If you look at the Crowe Memorandum that I refer to in the book written to explain to the King of England why the rivalry with Germany was becoming the central feature for the British, I think it's haunting.

Secondly, this is, I think, a valuable warning case for us that in this case, neither Great Britain nor Germany wanted war. Both of them actually understood that war could be devastating for themselves, but they got themselves into a set of entanglements that then allowed something as otherwise inconsequential as the assassination of an Archduke in Sarajevo to become a spark that produced a fire that produced a conflagration at the end of which nobody would have chosen what they got and actually Europe, which had been the cockpit of civilization for half a millennium was basically exhausted and never recovered.

I think the reminder that you don't have to want war for war to happen and that things that would otherwise seem inconsequential when played into the misperceptions and miscalculations that are characteristic of a Thucydidean rivalry, can often trigger a spiral of negative reactions that drag people to a place they don't want to be.

I worry about Taiwan as a potential trigger, or North Korea as a potential trigger. So I think it's not difficult if you were thinking about it through a Thucydidean lens to find candidates that could become such a spark if the two parties are not smart enough to think about them before and figure out ways to prevent them.

WALKER: That point, Graham about the role of third parties in igniting a war between Thucydidean rivals, I think is really important and overlooked. Most people who I talk to about your book, their first reaction is, "I just can't see it happening because war between China and the US is so manifestly against the interests of both." But your point is that there's almost this tragic quality to some of these conflicts because they spiral out of control.

ALLISON: As I mention in the book, I've been fascinated by World War I for a long time. So Bethmann Hollweg, he's very interesting, the [German] Chancellor. And here he lives through this and after it, one of his relatives asked him, "What did you guys do? What did you think you were doing? How did you let this happen?" And he has this crazy line, "If we only knew." He should have known better than that and we can at least be smart enough to learn from lessons and mistakes like that if we're prepared to.

WALKER: On an optimistic note, the Chinese don't really believe in inadvertent escalation, their thinking is quite different to Western thinking in that sense. I was catching up with Oriana Skylar Mastro in Sydney last night and she was saying that the Chinese just think, "Why would we let a war spiral out of control? It's completely within our control."

ALLISON: I've had this discussion with Chinese, and I think there's no question that in their conceptualisation of war and especially in their kind of Marxist-Leninist [inaudible 00:34:07] of that, that has these ideas of inevitability and determinism, there's no doubt an element of that.

But I think that it's also the case that for their serious thinkers they notice lots of things that seem to happen that were not chosen. I've had this conversation with two people who worked directly for Xi Jinping. I said, did they think that the Great Financial Crisis of 2008 was chosen by somebody understanding what they were doing? They said, "Well, of course not. If anybody had understood what was likely to happen, then they would have positioned themselves quite differently."

I think to some extent I'm sure that much of Chinese thinking is shaped by their historical concepts and their Chinese characteristics, and even by their Confucianism, and to some extent Kevin is about to persuade me that maybe even some of the Marxist-Leninism, although I keep telling him I can find more real communists in Cambridge, Massachusetts, than in Beijing.

But I'm more impressed with their ultimate pragmatism, in which when I watch the way they actually behave, even though they sometimes give unusual explanations of it, they seem to be very ruthlessly realistic and pragmatic.

I think in that regard, if financial markets can be as undetermined and vulnerable to being triggered by unusual behaviour or irresponsible behaviour, I think that they suspect that, that could also be true if the US were to do something reckless, or alternatively Taiwan to do something reckless or to respond in a way that they would regard as reckless to something that they did.

WALKER: Is the Thucydides's Trap really a trap? We've already spoken about how there are some wars that have to be fought. For example, the United States was right to join World War II. But more than that, there are more things than war that are really, really undesirable, for example, losing your status as top dog and all of the loss of influence that that entails, and sometimes a war might be necessary to prevent that loss of status. So is the Thucydides's Trap not so much a trap?

ALLISON: Good question. There's the Thucydides's Trap as one big idea, and the Thucydidean rivalry is really the structural underpinning of that. In a Thucydidean rivalry, so this is a special form of great power competition. Great power competition is known through history, but some great power competitions include rapid change in the relative power of the two parties, in which one power's rise is basically shifting the seesaw of power and to the disadvantage of the party that was the ruling party.

In those circumstances, that's the fundamental situation. Sometimes there can be an argument for the ruling power fighting the rising power deliberately before the rising power becomes strong enough to overtake it, or similarly, the rising power may think, "I'm big enough and strong enough that it's time for me to make my move and you should either stand down or if I have to fight you, I'll fight you." I would say Thucydidean rivalries produce war in some instances without having been "caught" in a Thucydides's Trap component.

The Thucydides's Trap component emphasises the ways in which the misperceptions and miscalculations in this rivalry and accidents or incidents or third-party provocations trigger the parties into a war that neither would have chosen.

So it tries to highlight that component of it, but you're certainly right to notice that the Thucydidean rivalries are about something and they're about not simply who's at the top of the ladder, but whether if as you get bigger and stronger than I am, you insist that well, China rules Hong Kong.

So China rules Hong Kong. Well then China rules Taiwan. "Well, wait a minute, but I was proposing we leave Taiwan the way it was before." To which the answer is, "Well, you now have made it such that if I want to prevent you ruling Taiwan, I have to take a risk that I would regard as unacceptable because a balance of military power has shifted."

I think the proposition that the relative strength of the parties given that they have quite understandable contrary interests and values being that it's about more than worrying about the risk of accidental war, it's also the fundamental question of, well, whose rules are going to ultimately obtain, and if we care deeply about our freedoms, which we do, and if we believe that democratic forms of government are the best way in which to ensure those, then we have to figure out a way in which in this rivalry, ultimately, our team wins at least enough of the Olympic contest to hold our own.

That doesn't mean we have to hold on to every position we had when we were relatively stronger. I think we have to be careful not to get stuck with lost causes or sunk costs.

But I think there's more reason to believe that the US now needs Australia, Japan, India, if ever India could become real, and South Korea than in the earlier period in which we were more doing a favour for countries by bringing them under our nuclear umbrella.

WALKER: Joe Henrich, another distinguished Harvard professor, points out that China has become WEIRDer in the sense that it's developed a psychology most similar to Western psychology. The CCP began altering kinship structure in ways, similar to what the Catholic Church did in Europe, beginning in around 1950.

They started by destroying the clans requiring bilateral inheritance, ending polygyny, then the One Child policy massively shrunk families, made cousins rare. And then add to that urbanisation, competing voluntary associations like universities and business organisations.

China has become a lot WEIRDer and there's evidence that culturally similar groups are less likely to go to war. I guess, Britain and America around 1900 is an example of that. Should the West be trying harder to make China WEIRDer?

ALLISON: First, it's a slightly perverse argument that he makes by calling it WEIRDer because it seems like he really means more like us, more normal. Now, I think Americans are weird anyhow, so I like, once you're in on the joke.

But normally when this argument is up, people say they think it's about whether China's confucianism, autocracy, hierarchy, communism or party led system is what part is weird and in the US now, particularly for people trying to rally the efforts to counterbalance China, the more they can seem 'weird' in simple English, the more they seem like they're behaving differently than other states in Xinjiang or in Hong Kong or in their autocratic system, or in their party-led system, the more you can heat the ideology piece of this or the human rights in order to build a coalition to counter China. That's actually a different idea.

I think in this instance, it's a big and complicated argument, and I think I don't have a totally settled argument or agreement about it. I think that there's no doubt that Chinese history, culture, confucianism, characteristics are significantly different, and there's no question that their current Party-led autocracy, and their views about the fact that the Party should rule everything is quite contrary to my convictions or Western convictions about individual liberty being the highest political value and the political system protecting that. There's no doubt that that's true.

On the other hand, I would say fundamentally, this is a structural, a geopolitical structural rivalry, and if China were 'just like us', I believe the difference in the rivalry would be modest. So contrary to those that argue that what's going on now is China's abnormality, I would say China looks to me, unfortunately, very normal as a great power.

In fact, in my book, the chapter that most Americans don't like the most, and that I actually find the most delicious, is called, 'What if China Were Just Like Us?' I imagine a conversation between Teddy Roosevelt and Xi Jinping, and I think Teddy Roosevelt, who led the Americans into what he was confident would be an American century, would say to Xi Jinping, "You seem to be pretty mild and reserved given your relative power."

In the US case, as you will know but many of your listeners may not, Teddy Roosevelt shot up in Washington in 1898 as the number two person in the department of the Navy. He found it an abomination that there were foreigners, especially Spanish who were occupying Cuba, but even British and Germans, in our hemisphere. It was time for them to leave.

And in the dozen years after that, we first, was a mysterious explosion in the Havana Harbor, blew up a ship called the Maine. We didn't know who had done it, but any case we declared war on Spain, defeated them, kicked them out of liberated Cuba, took Puerto Rico as a spoil of war and also Guam, which is how the US got Guam, and picked up the Philippines as a first colony.

We then threatened war with first Britain and then Germany unless they backed out of a territorial dispute in Venezuela. We sponsored and supported a coup in a country called Columbia, created a whole new country called Panama, which the next day gave us a contract for a canal so that any ships could go from the Atlantic to the Pacific.

He even then enunciated the Roosevelt Corollary of the Monroe Doctrine, in which it said any nation in our hemisphere that misbehaves, we will send the Marines and change their government. Every year thereafter we sent the Marines somewhere and changed some governments. So I think he would look at Xi Jinping so far and say, "Pretty mild."

WALKER: Absolute last question, because I know you have to go, if the US is Sparta and China is Athens, Australians feel a bit like the Melians at the moment. You'll be familiar with that other passage in Thucydides' History of the Peloponnesian War, the Melian Dialogue, where the Athenians come to the island of Melos and say, "You know as well as we do that right, as the world goes, is only in question between equals in power while the strong do what they can and the weak suffer what they must."

Australia is in the freezer at the moment with regards to China and China's behaviour has been lacking all proportion. What principles should Australia obey in its response to China?

ALLISON: First, is Australia in the Melian position in which the weaker suffer what they must? Yes. Two, if I understand it, 40% of Australia's exports go to China and that's about 10% of Australia's GDP. So China is your most important economic relationship.

Basically, even though there's this current punishment for about 7% of that, with the seven, whatever they call them, the seven wrong moves that Australia did or whatever, these are about 7% for a small portion of the overall trade, and they're attempting to punish Australia in order to encourage the proper level of deference.

I think unfortunately that as a Melian it's necessary to try to humour and deal with and adapt to and adjust and defer and grovel to some extent in order to deal with a big powerful strong neighbour.

Finally, and last point, fortunately the Australians are not exactly like the Melians. The Melians actually didn't really matter that much to anybody. They certainly didn't matter to Sparta. They didn't have a defence treaty with Sparta. And so nobody was coming to the defence of the Melians.

Whereas in the Australian case, the exports that you provide, the raw materials, especially iron ore, and coal, and soybeans and others, are absolutely important to China. So there's a degree of interdependence there that again, managed carefully, I think you can be successful.

But I think the bottom line is you're living with a big, powerful, strong neighbour that you'll have to find a way to humour and defer to and cope with, but be unable to choose to ignore because you would do so at the risk to your economy and any prime minister who tried to do that would be at risk to his power.

So I think it's back to the Kevin Rudd point, don't try to make us choose between our economic relationship and our security relationship. We're going to have to live in this very uncomfortable middle ground.

I think maybe for some lessons in it, you could talk to some people that live in the Western hemisphere with the US. I think that the Mexicans have a good line which says, "So close to the US and so far away from God. Maybe that'll be you.