The last economic era, roughly from 1980 to 2008, was the most successful combination of globalisation, growth and prosperity in history. The West benefited but, more importantly, this was when 'the rest' came on board: 'underdeveloped countries' cast off post-colonial isolation and embraced the world economy. The recent global economic crisis, though, has induced a sharp divergence of economic performance between the West and emerging markets. The US and most of Europe are stuck with anaemic growth. The main emerging markets, with the exception of Russia, sailed through the crisis and are booming. This short-term divergence has accelerated the long-term convergence between emerging markets - particularly in Asia - and the West.
There is a similar divergence in global policy outlook. The West's financial crisis and 'crisis interventions' have wrecked public finances. Financial bailouts, fiscal stimulus packages and extra-loose monetary policy also provided cover for 'big government' microinterventions that distort competition and restrict economic freedom. Most emerging markets retain healthier balance sheets and have a much more promising outlook.
Asia is an awakening continent whose peoples are grasping new-found economic freedom with both hands. Market liberalisation has unleashed the 'animal spirit' of ordinary people. But I don't want to paint too rosy a picture of emerging markets. Market reforms have stalled in China, India and elsewhere. Domestic red tape continues to stifle emerging markets' business climates and repress economic freedom much more than in the West. This is reflected in all major global rankings, such as the World Bank's 'ease of doing business' index and the Fraser Institute's rankings on economic freedom. Economic institutions and political systems remain relatively weak; they keep business costs high, repressing entrepreneurship and innovation. Emerging-market powers suffer their own rivalries, are still reactive in global economic institutions, and have regional markets beset by high barriers to trade, investment and the movement of people. In other words, there is huge unfinished business, particularly to expand economic freedom outside the West.
Liberty, particularly economic freedom - what Adam Smith called 'natural liberty' - is a theme that preoccupies me, particularly its condition and prospects outside the West. The liberal tradition is a product of the West. Those who are Western-centric like to think that liberty is the West's intellectual property. It is for the West to export liberty to benighted lands - to lead them out of their 'areas of darkness' (to borrow a favourite V.S.Naipaul term). True, the liberal tradition comes mainly from the West. But any export will not work unless a serious connection is made with local intellectual traditions and local history. Hence, there must be a serious effort to explore non-Western liberal traditions, and then make the connections with Western classical liberalism.
A Western-centric view holds that only Western colonialism enabled economic development outside the West. But there is only a grain of truth in this script. The history of long-distance trade, for example, was mainly a non-Western story until the 15th century.
The zenith of economic freedom outside the West in pre-modern history was medieval Indian Ocean trade before European colonisation, a golden age of South and Southeast Asian commerce. Before the Portuguese muscled in, the Indian Ocean was mare liberum, or 'free seas', not controlled by any power and fully open to trade. Coastlines were dotted with 'port polities', independent towns and cities whose lifeblood was overseas trade. Aden, Hormuz, Cambay, Goa, Calicut, Aceh, Malacca and Macassar - these were religiously tolerant, polyglot, cosmopolitan places, energised by trading diasporas. Freewheeling economic competition went in tandem with decentralised, flexible political institutions and advanced legal structures. Fractured geography and competing polities combined to promote economic freedom, growth and prosperity. The past 60 years has seen a remarkable economic renaissance in East and South Asia - a recreation of the golden age of Indian Ocean commerce. Commercial clusters in and around coastal cities, connected with each other across seas and oceans, are its economic lifeblood. Its networks are complex manufacturing and service supply chains linking them to global markets. It is in these mostly coastal strips - from the south to the west of India, the eastern provinces of China, coastal cities in Southeast Asia - that liberalisation of markets, property rights, a burgeoning middle class and other features of commercial society are blossoming most. Hong Kong and Singapore are today's Malacca and Macassar. They form the core of liberty outside the West; they point the way to its future expansion. This is not quite the utopian vision of Richard Cobden, who foresaw free trade leading to a world of cosmopolitan, peacefully coexisting municipalities that would replace warring nation-states. But Cobden would still approve enthusiastically.
The global economic crisis has ushered in a phase of illiberal ideas and policies; it has set back the cause of economic freedom. I have some confidence that the intellectual tide will turn in parts of the West - indeed it already has in the US. But, looking beyond the short term, I have greater confidence that the expansion of liberty - especially economic freedom - outside the West, especially in Asia, will provide even more tailwind. The future of liberty is shifting East; more than ever, it lies outside the West.
Razeen Sally is director of the European Centre of International Political Economy, a global-economy think tank in Brussels