Global Discord: Values And Power In Fractured World Order

>> Niall Ferguson: Hello, I'm Niall Ferguson, the Milbank family senior fellow here at the Hoover Institution, and I chair the Hoover History working group. And we have just had the pleasure to listen to my old friend, Sir Paul Tucker, talking about his new book, Global Discord, Values and Power in a Fractured World Order.

Sir Paul's trajectory is an unusual one, for 33 years he was at the bank of England. He rose through the ranks to be deputy governor, and only late in life turned from central banking to wider questions of government and indeed, global governance. And I wanted to start, if I may, by asking you what led to that change of direction after such a long time working as a central banker concerned with financial stability?

You've written a book which is as much about geopolitics and history as it is about the technical world of monetary management and financial stability. How did that come about?

>> Paul Tucker: Well, first of all, thank you very much for having me here. It's been really marvelous over the last hour, and I'm looking forward to this.

Two things, I think, which came together. The first is leaving that former life nine years ago, gave me an opportunity to live an alternative life, a life that I may have chosen to live. Age 22, 23, I contemplated carrying on at Cambridge in philosophy, but instead became a central banker.

So it's partly that, but it's also partly, and this was true of my previous book, unelected power, which was about legitimacy in the domestic state. If you are a senior, very senior policymaker, exercising power in the background all the time are a whole set of assumptions about the decency of the state, legitimacy of the state, international organizations.

I chaired two and a half international committees. If you do that with effects in the real world, if you do that, you can't but think what's going on here? What does this cooperation rely on? And among other things, it relies on peaceful coexistence and some norms of coordination and cooperation.

And the book is an exploration of that in a period where it's all in jeopardy because of a great rising power.

>> Niall Ferguson: I should have perhaps said that at that time while you were Deputy Governor at the Bank of England, you were Director of the Bank for International Settlements.

Chaired the Basel committee on Payment and Settlement Systems, and were on the steering committee of the G20 Financial Stability Board. And in those roles, you clearly did see a world of institutions, some of which I think you came to see as being rather siloed. And I wonder if we could talk a little bit about that.

You're now based at Harvard, you've been in the academic world for nearly a decade now. Is your argument in this book that the specialists in monetary policy need to spend more time talking to the specialists in national security or foreign policy or trade policy? Is the critique of our existing system partly just, there are silos, and that leads to poor strategy?

>> Paul Tucker: I think, yes, I think silos are a product of being able to take all sorts of things for granted, most of all, peaceful coexistence. We have lived for decades and decades under an American European order, which Japan and others joined, and all of those things could be held in the background.

And you could get on with your part of public policy, in my case, financial and monetary policy for somebody else, trade policy for somebody else, environmental policy. And it's just not like that anymore. Everything is in degree, a move in the game of geopolitics, partly because so many economic policies can be weaponized, as the expression goes, but not just because of that.

I'll give you an example. So, in Washington at the moment, the periodic game of the debt ceiling is being debated, played out. This is hard knuckle game within the Beltway, played by very sophisticated people, but I think they've missed the broader context. And the best way of summing this up is vote default, vote Beijing, that whatever gains are reaped domestically, they will be surrendered geopolitically.

>> Niall Ferguson: And that brings me to your four scenarios. This is a book that gives us four possible or plausible futures, lingering status quo, superpower struggle, new Cold War, and number four, reshaped world order. And I read this, and I thought, isn't this obviously new Cold War? Why are you not quite convinced by that analogy?

Because to me, it just seems we had an interwar period. That was when you were a central banker, and it was between Cold War one and Cold War two. Now we're in Cold War II, and immediately, it becomes obvious that geopolitics dominates. Why is it not Cold War II quite?

>> Paul Tucker: Because so far, the decoupling doesn't create almost completely separate blocs that can find their way through commercial life completely separately, compete in the security space. I do think there is an element of that. Proxy wars were a feature of the old Cold War. I think Ukraine is best thought of as a proxy war.

I've thought that since it happened and I think I may say that in the book, Putin could not have prosecuted the war for so long without at least acquiescence from Beijing. But there isn't anything like a complete decoupling in commerce that maybe I have been an advocate of.

This is symmetric, but I've been an advocate of the West inducing its over dependence on unfriendly states that could plainly spiral out of control and end up with bifurcated economic blocs. But so far, that's not where we are at all. We are still in a world where western economies and the Cinese economy touch each other in millions of ways, in thousands of places every day, if not every second.

>> Niall Ferguson: And that led you to a somewhat less familiar historical analogy, which is the Anglo French rivalry that extended really from the late 17th century right into the early 19th century. Talk a bit about the implications of that analogy. Clearly, it's not completely decoupled. There clearly were many points of contact, including intellectual points of contact.

But what's the implication of that analogy for our world in 2020.

>> Paul Tucker: The thing about the British French struggle, from roughly, as you say, 1689 to 1815 or so. Is it was everywhere, everything there were, in terms of everywhere, it was here one can think of the war of independence, the revolutionary war, in that context, it was on the coast of India, in Africa, in parts of Southeast Asia.

It was very much commercial, competing, constraining. It went on for so long that there were moments of rapprochement. A trade agreement was reached sometime in the middle of the 18th century. Two countries fell into war again, and that moment wasn't recaptured until the 1860s. Perhaps most of all, it was ideological.

And this distinguishes it, I would say, from the standard comparator of the second German Reich in Britain at the turn of the 20th century. That was for sure the standard problem of rising power and a jealous, established power. But it wasn't terribly ideological. Whereas France and Britain, Britain was ideological at the beginning of the 18th century, Britain saw France as seeking universalist, absolutist monarchy, and at the end of the 18th century, universalist revolutionary radicalism.

As Burke, the Irish British thinker, writer parliamentarian, said at one point, the problem with France isn't its power, it's the wrong kind of power. And that kind of captures how we, a broad we, which includes part of East Asia, think about the People's Republic. The problem is not the Chinese people, it's not Chinese civilization.

The party itself and the party's conception of itself, amounts to a great ideological challenge, which they themselves have articulated in very ideological terms.

>> Niall Ferguson: War lasted about 40 years, part of the point you're making is that this could last a very much longer time, because it resembles that Anglo French rivalry that's lasted for more than a century.

And I found that one of the most interesting points the book makes. But it also struck me, as I was reading it, that it is itself a rather 18th century book. You're inspired by the writings of the great Scottish Enlightenment thinkers, Adam Smith and David Hume. You're writing on an enlightenment scale, it's all here, political economy, geopolitics, economics.

And not many scholars these days would attempt to be so interdisciplinary. Do you think of yourself as a kind of latter day philosophy, an heir to the Scottish Enlightenment?

>> Paul Tucker: An heir to the Scottish Enlightenment, in some respects, yes. The book is very much and overtly trying to bring David Hume to geopolitics and international political theory.

Hume is writing in the middle of the 18th century, before political economy on the one hand, and political philosophy, on the other hand, have gone their separate ways, which, by mill, in the middle of the 19th century, they basically have. So yes, it is, I find more help in 18th century thinkers, help us confront our predicament, than I have found in 19th century or many 20th century thinkers.

Of course, that's music to my ears, not only because I'm a Scotsman, but because Hume regarded history as being equal to political philosophy.

>> Niall Ferguson: I have one last question, and that is, does that worldview leave you somewhat pessimistic about the west using that term in its broadest sense, in this protracted struggle with an authoritarian, if not totalitarian, China?

I sensed in our discussion, when we talked about specific issues, like a showdown over Taiwan or the internal legitimacy of institutions in the west, that you are somewhat gloomy in your outlook. Am I wrong about that?

>> Paul Tucker: I wanna temper that, I mean, you're not completely wrong. But there is one source of great hope, if not optimism, which is our system of government is magnificent in one really important way.

It separates how we feel about the government of the day from how we feel about the system of government. When we felt let down or frustrated by the government of the day, we can vote them out without losing faith in the system. I think China's system of government in that respect is more brittle.

To lose faith in the party is to lose faith in the system, and therefore they don't have the cushion of separating the two. And therefore their performance needs to be, perhaps needs to be relentlessly good, which no one can manage over a sustained period. But what this underlines is we must have faith in who we manage to become.

And we must remember that all systems of government rely on norms and conventions, and ours are forged through our history and are worth holding onto. And people on every side of politics here in the United States, in Britain, in continental Europe, must remember that can't take for granted the system that we manage to achieve.

>> Niall Ferguson: Well, Sir Paul Tucker, of course, the Bank of England was an important institution in the evolution of those successful norms and institutions in Great Britain. I want to thank you very much for coming and sharing your wisdom with us at the Hoover Institution. The book is global values and power in a fractured world order.

It's been a huge pleasure to have Sir Paul Tucker here with us at the Hoover Institution showing that central bankers can do many things, including history.