BOOK REVIEW: PADDY SMYTHreviews The Post-American Worldby Fareed Zakaria; Allen Lane; €26 (£20)

IT'S A bit like the old story of the two guys who owe the bank money. One owes a couple of thousand. The other, a couple of million. Who, we are asked, has the whip hand?

Now take Wal-Mart as a metaphor for the United States, and ask the same question. Wal-Mart is one of the world's largest corporations. Its revenues are eight times those of Microsoft and it represents 2 per cent of US GDP. It employs 1.4 million people, more than Ford, IBM , GM, and GE put together. Every year it imports to the US $18 billion in goods from China.

How then will a government which represents this company's best interests treat China? The answer is simple - with kid gloves, Bush's Olympics human rights appeal notwithstanding.

Globalisation and the boom in the world's emerging economies has changed the nature of power relationships on a world scale. The interpenetration of economic interests is putting an end to old-fashioned imperialism.

The successful export of American capitalism as an economic and ideological system has seen the system evolve into a global system - pax Americana is losing its meaning.

Except, of course, in the battlegrounds of the Middle East and Afghanistan where, it seems, history is stuck in a groove , endlessly, futilely repeating itself.

Fareed Zakaria, the Indian-born editor of Newsweek International, has joined the ranks of the many authors who have in recent times warned of imperial decline, in his case with some elegance and not a little sympathy for the American project.

His purpose is to drag America's attention away from its obsession with terrorism and Islam, correctly pointing out that the threats they represent in reality, beyond the eclat of the latest spectacular terrorist act, are trifling compared to previous historical movements like Nazism or Maoism, backed as they were by massive might and popular support.

Look instead, he urges America at the emerging economies of China and India to understand the forces that are really reshaping the world and creating new means of mutual engagement. The US, as many of its European critics have complained, has never understood the largely unquantifiable exercise of "soft power", he argues, quoting Mark Twain's dictum that "to the man who has a hammer, every problem looks like a nail."

Zakaria has straddled the worlds of academe and journalism, once a neo-con who edited the journal Foreign Affairs - the left-wing Nation once described him as a "junior Kissinger" - he is now a favourite of liberals for his criticism of Bush in Iraq, and has become a mainstay of the talk show circuit. A Muslim educated at Yale and Harvard he became as a cultural interpreter of the outside world, his post-9/11 Newsweek cover story "Why They Hate Us" putting him on the mainstream map.

The "rise of the rest", the theme of his latest book, Zakaria, argues, will not replace the US as the world's dominant power, but erode its relative position. "The emerging international system is likely to be quite different from those that have preceded it. A hundred years ago, there was a multipolar order run by a collection of European governments . . . Then came the duopoly of the Cold War, more stable in some ways, but with the superpowers reacting and overreacting to each other's every move. Since 1991, we have lived under a U.S. imperium, a unique, unipolar world in which the open global economy has expanded and accelerated.

"This expansion is driving the next change in the nature of the international order. At the politico-military level, we remain in a single-superpower world. But . . . the world will not stay unipolar for decades and then suddenly, one afternoon, become multipolar. On every dimension other than military power - industrial, financial, social, cultural - the distribution of power is shifting, moving away from U.S. dominance. That does not mean we are entering an anti-American world. But we are moving into a post-American world, one defined and directed from many places and by many people."

His thesis is scarcely new and his prescriptions for America's response - a Bismarckian balancing role, multilateralism, choosing selectively when to be engaged - are the staple of current Democratic and "realist" think-tank thinking.

But he writes with an easy journalistic fluency and his chapters on the extraordinary development stories of China and India are an important reality check for a nation whose sense of its place in the world is largely outdated.

Paddy Smyth is the Foreign Editor of The Irish Times