Did Star Wars break the Soviet bank and thus collapse the system later in the decade? The Soviet economy was broken long before the Strategic Defense Initiative (SDI) appeared on the scene, although Reagan’s promise to render Soviet nuclear missiles irrelevant did freak out the Soviet leadership to a certain extent. In the past, they had seen American technology pull off difficult stunts far faster than they could (e.g., the race to the moon), so as much as they might doubt SDI’s feasibility, they couldn’t quite be sure the Americans wouldn’t develop something just good enough to make them dangerous. In that sense, as Ulam noted, SDI was a wonderful psychological weapon. But here’s my superseding point: Without Nixon’s détente, that price tag would have remained incalculable and therefore economically meaningless. Moreover, without the Helsinki movement engineered by Kissinger, there would have been no regional diplomatic top-cover for the dissidence movement to simultaneously emerge. Reagan’s sense of timing and theater were brilliant, but Star Wars and demands to “tear down that wall” were not enough. The Soviet leadership needed to know they could no longer pretend to pay while workers pretended to labor, and Soviet bloc populations needed to realize they could stop pretending to respect the authority of leaders who had long since given up any pretense of totalitarian rule.
Nixon’s détente created that context by making clear, to Soviet bloc leaders and citizens alike, just how hollow their system was. In the end, the only rationale holding the bloc together was the lie that said, despite its economic backwardness and political crudeness, at least “the little guy” had it better in the East than in the far crueler and more rapacious West. Reagan, with his unaffected, “morning in America” optimism, denied them even that. Worse, after his near-death experience at the hands of a would-be assassin, Reagan, with wife Nancy’s strong encouragement, began reconsidering his embryonic legacy, which in the 1982-83 time frame consisted primarily of resurrecting Cold War dynamics with the Soviets to no apparent end. Once Gorbachev had received an ideological seal of approval from Reagan’s trusted mentor, Margaret Thatcher, Reagan moved with the strange urgency of a man who seemed to know his physical capital would evaporate far faster than his political capital. Making spur-of-the-moment offers that frightened his advisers, like having both superpowers get rid of all their nuclear weapons, Reagan preemptively did to Gorbachev what the Soviets’ top Americanologist, Georgi Arbatov, later claimed Gorby would do to us: Reagan denied Gorbachev’s reformists a reason not to move ahead with their system-tinkering plans—he denied them an enemy.
It’s important to realize just how different Soviet leadership had become under Gorbachev. Brezhnev’s crew was made up of mostly party hacks and ideologues whose main personal attribute was a survivor’s instinct. They had grown up amid Stalin’s many insane purges, survived the Great Patriotic War, in which more than one out of every eight of their countrymen died, and once in top power slots, had displayed a strange mix of calculating aggression abroad and comfortable corruption at home. By the early 1980s they were a collection of old men who could barely understand the world around them, even as they suspected it was passing them by. They wanted recognition of their sacrifices and achievements, and Nixon gave them that. And once they had finished with their midlife fantasy of guiding socialist revolutions in the world’s most backward states, they realized they were spent as a leadership force and handed the reins of power over to Gorbachev and his crew of industrially trained technocrats.
Gorbachev wasted little time in trying to revive public spirit with his campaigns of perestroika (restructuring) and glasnost (openness), but both had arrived about a generation too late. The middle class Gorbachev had hoped to ignite had already made its peace with the system’s failings, preferring its black markets to his red reforms. Too well conditioned by Brezhnev’s reign to be happy with what they already had, they welcomed the glasnost but passed on the perestroika. I spent a summer living in the Soviet Union in 1985, just as Gorbachev’s reign began, and I can remember thinking to myself then just how screwed this new leadership already was. Everybody I met had his or her entire existence already worked out according to every workaround you could imagine. There was the official Soviet reality, where nothing of value was created, and there was the na levo, or life “on the left,” where anything was available on the black market and thus all basic needs were already being met—despite the decrepit system. When Gorbachev appealed to his generation to help him pick up the pieces, they looked at him dumbfounded, like he was from another planet. (Fast-forward to Mahmoud Ahmadinejad’s Iran and we basically witness the same dialogue of the deaf, presaging his likely defeat in 2009.)
There was simply no choir left to hear Gorbachev’s plaintive preaching. Instead, as subsequent events proved, there were a host of nations, both inside the Soviet Union and across Eastern Europe, that were eager to explore just how fake this empire really was. In his idealism, Gorbachev mistook their warm welcomes as expressions of support for his vision of restructuring the Soviet bloc and making it competitive against the West, when in reality they simply saw him as Margaret Thatcher did—somebody they “could do business with.” The problem was, the only business they were interested in pursuing was an immediate divorce. They wanted out. They wanted a better deal with the world. They simply didn’t want to live here anymore. When the Berlin Wall fell in 1989 and the Soviet Union dissolved in 1991, in neither case was it really a revolution. There were no opposition parties to speak of, but merely a zoo full of animals that simply wanted out.
As soon as the inmates started running the asylum, the first order of business was simple: In Eastern Europe it was called “seek integration with the West as fast as possible and along as many lines as possible.” In the Caucasus and Central Asia, there’s been more slippage toward the “olive tree” past than the “Lexus” future, but neither set of packages has proved to be America’s problem in a post-Cold War world. Instead, Russia has its definition of a near abroad, with its main problem being that so do China, Iran, and Turkey. But taken as a whole and judged from today’s perspective, this process of dissolving the Soviet empire has gone incredibly well and with few serious hitches. If you had told this Sovietologist back in his late 1980s grad school days that we could fast-forward to a future where the EU was successfully integrating former Warsaw Pact states and where Chinese economic interests were penetrating Central Asia, and that the biggest problems we’d face along the way were a minor conflagration in the Balkans, the usual Russian nastiness in the Caucasus, and resurgent nationalism and authoritarian rule in Moscow, I would have considered you fantastically optimistic—perhaps even under the influence. This is not a case of being careful what you wish for. This is a case of being grateful for what history has dropped into America’s lap. This is the next best iteration. This is as good as it gets when our grand strategy works: Not everybody suddenly morphing into carbon copies of America, but huge chunks of humanity being returned to play and slowly integrated by various knockoffs of the American System.
I know a lot of Americans are uncomfortable with this outcome. When George H. W. Bush declared his “new world order” in 1990, resurrecting that phrase directly from Woodrow Wilson, it carried that air of “Finally, America’s going to get the world it deserves after all our long struggles!” But of course that was a wildly premature and, quite frankly, immature way of viewing things, as Robert Kagan succinctly argues in his 2008 book The Return of History and the End of Dreams. What America had been given was a vast new swath of humanity to integrate into our American System-cum-globalization model. It was like we’d just made the “Eurasian Purchase” of 1991 on behalf of the global economy and, instead of recognizing the tasks of integration and state-building that lay ahead, we simply wanted to be able to fast-forward to the good part—you know, where rule of law worked everywhere and everybody’s economy and political system looked just like our own. Certainly there’d be no “Injuns” or insurrections or roving criminal gangs or bomb-tossing radicals or c
ivil wars or ethnic cleansing to deal with, right? I mean, if everybody really wants the same things we want for our families, can’t we just skip all that bad stuff that we know from American history is a complete waste of time and effort and—you know—make the right package happen right from the start? Isn’t there some sort of shortcut everybody can take? Can’t we just use some sort of “shock therapy” or “big bang” that’ll rejigger the whole thing all at once? And when do we get to bring the boys home, by the way?
Now I hope you’re beginning to see why I bothered telling you all this.
We’re at a stage in history that’s the best iteration yet of the American System projected upon the global stage. These are the best sort of problems to be dealing with: not global nuclear Armageddon, not great-power war, not fascism or Communism or any other perversion of markets—just a lot of economic frontiers to integrate, new allies to mentor, bad actors to track down and kill without remorse, networks to make more resilient, social movements and religious awakenings to harness for their natural progressive tendencies, and an environment that needs equal parts taming and conserving. Hamilton and Clay confronted much the same set of challenges. So did Lincoln and Seward in their time. Theodore Roosevelt tackled most of this work with his bare hands—often before breakfast! His successors, Wilson and FDR, made their ambitious pitches following two global conflicts they helped guide to the best possible conclusions, considering what America could muster in will and capabilities at the time. Truman had to withstand the capitalist system’s once-and-future blowback—Communism, setting up the original string of forts that would protect our new Western settlements against the worst trust we’d ever have to bust. But we persevered, with Nixon eventually setting up, and Reagan knocking down, the last serious in-house challenger we’ll ever meet. Most important, Nixon’s gambit toward China opened a door that Deng Xiaoping, Mao’s successor, widened dramatically and permanently, thus ensuring globalization’s dominance.
None of this was accidental. And yes, all of it was by design—our design. That design is not—by definition of its global spread—unique to America, even though it took Americans, those most synthetic of God’s political creatures, to create it, nurture its spread, and, when required, defend it with arms. That design unfolded as a quintessential American grand strategy, however unconsciously followed at times by leaders who knew instinctively what it meant to be Americans, even if they didn’t always know what America meant to the world. This grand strategy resides in America’s DNA. We can no more be separated from its impulse for economic expansionism than we can shut off our instincts to resist tyranny in all forms. Americans have always posed this challenge to the world: We simply must be. We simply must be allowed to grow and self-improve. We simply must be given the freedom necessary for those tasks. We simply must be granted enough competitive space to pursue our happiness. We simply must be expected to remake as much of the world as is necessary to ensure all these possibilities.
Yes, there are new barbarians at new gates, but the frontier is more distant than ever, and most of humanity is now inside the fence, working security and not defense, raising incomes, not revolutions.
And no, they don’t all look like us today, but working together we’ll all end up looking like what America needs to become someday. To accomplish that, we simply need to recognize that this American experiment has become bigger than just these fifty states united; it’s become a globalization that integrates economies and states just as we once integrated economies and states. And since it’s become more powerful than we ever imagined it could, we’ll need to adapt ourselves to globalization more than even we, its originators, can adapt it to our perceived needs for stability. Theodore Roosevelt’s cautions against the dangers of the stationary state still ring true: There is no path but forward, there is no choice but to make globalization truly global, there is no state of being more stable than America’s continued state of becoming.
Four
THE ECONOMIC REALIGNMENT
Racing to the Bottom of the Pyramid
The United States has been the demand center—meaning the biggest single source of demand—in the global economy for so long that we can’t remember what it was like when that wasn’t true. And yet it is rapidly becoming true that global corporations view the United States as just another market among many, as the global middle class expands dramatically and rising great powers such as India and China become competing demand poles and—in certain sectors such as infrastructure development—collectively eclipse America as the new global demand center. What’s it like to be the global demand center? The world revolves around your needs, your desires, and your ambitions. You get to set a lot of the new rules that naturally emerge from all this heightened economic connectivity and transaction rates, because the most important power in the global system resides with you—not the suppliers but the consumers. That’s what it’s been like to be the Boomer generation in the U.S. economy for the past several decades—you’re the center of all economic attention. But just as the Boomers inevitably cede their demand dominance to their demographic successors, the Millennials, so too does America cede its demand dominance to the rising great powers of our age—the price of our success in projecting the American System globally.
Naturally, such a shift is somewhat scary for our nation, having grown so used to our rules holding sway in international forums by dint of our incredible demand power. We sense both a zero-sum loss of our agenda-setting power and a new discipline being forced upon us by the highly competitive landscape of this “flat world”—for example, sovereign wealth funds that snatch up our ailing firms (a bruise to our national ego) and the rise of the euro as an alternative global reserve currency (meaning our easy-credit, spendthrift days have ended). But here’s where we need to remember our strengths: We’ve been mastering this “new” globalization phenomenon of economies integrating and states uniting for quite some time. Think of all the economic and political and security rule sets that the United States had to build up over the decades to handle the massive amount of daily transactions between these fifty members: all the travelers, cargo movement, service traffic, communications, cross-border investment flows, interstate contracts, and so on. That’s one-quarter of the world’s economy packaged into a single nation-state that the twenty-seven economies of the European Union struggle mightily to replicate today.
If our fifty members and the District of Columbia were ranked as individual nation-states in the global economy, this is the equivalent lineup we’d field: France (CA), Canada (TX), South Korea (FL), Mexico (IL), Russia (NJ), Australia (OH), Brazil (NY), Netherlands (PA), Switzerland (GA), Sweden (NC), Belgium (MA), Turkey (WA), Austria (VA), Saudi Arabia (TN), Poland (MO), Indonesia (LA), Norway (MN), Denmark (IN), Greece (CT), Argentina (MI), Ireland (NV), South Africa (WI), Thailand (AZ), Finland (CO), Iran (AL), Hong Kong (MD), Portugal (KY), Venezuela (IA), Malaysia (KS), Pakistan (AR), Israel (OR), Singapore (SC), Czech Republic (NE), Hungary (NM), Chile (MS), New Zealand (DC), Philippines (OK), Algeria (WV), Nigeria (HI), Ukraine (ID), Romania (DE), Peru (UT), Bangladesh (NH), Morocco (ME), Vietnam (RI), Croatia (SD), Tunisia (MT), Ecuador (ND), Belarus (AK), Dominican Republic (VT), and Uzbekistan (WY). Any superstate that can stitch together all that economic power into a single overarching rule set must know a thing or two about unleashing the cumulative creative power of its people. Those fifty-one nation-states listed above encompass a global population pool of over 2 billion people, and yet somehow our national population of just over 300 million manages to match their combined economic power!
What does that fact tell us about our strengths today? America arose as a global power thanks to its ability to knit together its states: interstate trade integration through the disintegration and geographic distribution of production chains, with transportation infrastructure—sometimes literally—paving the way for national firms with national platforms (i.e., networks) that peddle nationally branded products. The American System is now
being replicated on the global stage in basically the same manner: integrating trade by disintegrating production, thus making possible global firms with global platforms for globally branded products. So if this is a “flat world,” it’s certainly a familiar one—at least to us Americans. As we grew, America’s greatest challenge came in improving the rule sets that bound together our constituent states. The same is true for globalization today. My point is this: When it comes to wringing out competitive efficiencies through improved rules (e.g., laws, regulations, procedures, industry best practices, rules of thumb), nobody’s done it—or does it—better than America. If we can remember that one thing from our history, we’ll be fine.
When 9/11 struck, America, feeling proprietary about the international liberal trade order we created and nurtured into global dominance, naturally felt the need to propose all manner of new rules. But in our haste to demonstrate their effectiveness to the world, we not only botched their initial employment in many instances (Afghanistan and Iraq being preeminent), we scared off many old allies and alienated much of the rest of the world in the process. Meanwhile, globalization’s nosebleed trajectory continued unabated, even as America routinely blew its whistle to interrupt game play after every post-9/11 international crisis to announce our latest new rule set for global order. Sometimes our new rules were ignored and other times they met opting-out responses—such as “We’ll take our business/tourism/IPOs elsewhere!” Other times, rising great powers simply proposed their own, competing rule sets. For example, while America got fixated on “transforming” the Middle East, the EU focused on eastward expansion, Russia concentrated on extending pipelines in all directions (save north), and China cast its nets pretty much over the rest of the developing world, with India in hot pursuit. Inevitably, America’s new definition of post-9/11 “normal” put us increasingly at odds with significant global trends, many of which seemed to accelerate just as we Americans, whose trade-liberalization schemes sent this whole world spinning, began plaintively asking globalization to slow down so that we might regain our strategic balance, feeling—as we were—both subpar and “subprime.”
Great Powers Page 20
