Thursday,20 September, 2018
Current issue | Issue 1337, (23 - 29 March 2017)
Thursday,20 September, 2018
Issue 1337, (23 - 29 March 2017)

Ahram Weekly

America’s decline V

America’s political culture and social structure should enable it to make the most of the new connected world

The January/February 2009 issue of the US magazine Foreign Affairs was especially interesting for the theme of America’s decline, as many contributions tried to assess the impact of the 2008 financial crisis on the balance of power between the US and China.

Former US deputy treasury secretary Roger Altman was pessimistic. His article’s subtitle was “A geopolitical setback for the West”. No country would escape the crisis, he wrote, but the West, that is the US and Europe, would be terribly weakened by it and China would emerge in a stronger relative position, as it was more insulated from the rest of the world.

Moreover, the appeal of the US would erode, Altman said. The West would economically recover, but this would take years, and the time lost would mean that China and others would have opportunities to improve their global position. For some years, he wrote, “China would be in a position to financially assist other countries and to make key investments in natural resources at a time when the West cannot do so.” Its financial system did not have toxic assets. It had little government debt, its households had impressive saving rates, and it did not have a large budget deficit.

Moreover, the US would be unable to undertake any large-scale military endeavours abroad for some years. This last sentence proved prophetic. Major economic assistance from the West to key strategic countries facing various forms of crisis would also be unlikely, Altman said.

He first described the origins of the crisis, together with its effects and impact. His figures and charts were terrifying. The global financial system was close to the brink of collapse, he said, and this had been due to a major failure in regulation. Second, the classical tools for dealing with the collapse were not appropriate this time round. How could one ease monetary policy when interest rates were already very low? Financial reform would go too far, and debt would reach new heights.

The leading western countries would have to resort to large-scale economic interventions that would undermine the free market doctrines advocated by the US. Of course, China was also suffering. Its exports to the West and its economic growth were dramatically slowing. But this meant its economy was expected to grow by “only 8.5 per cent” in 2009, Altman wrote (in fact it did slightly better at 8.7 per cent). Altman had some recommendations to make regarding IMF reform, a greater say for China in world affairs, and a revision of the guidelines regulating the capitalisation of the banks.

With the benefit of hindsight, and assessing former US president Barack Obama’s economic legacy, it can be said that the latter did a fine job in responding to the crisis. The recovery was much quicker than expected, and the US returned to full employment and growth. This came at a price, however. Debt reached new heights, on average American households remained poorer and did not recover their 1999 levels, and regulations are indeed too tight.

China now has a much greater say in world affairs, and it is safe enough to say the crisis accelerated an already existing trend. But the US still firmly remains on top. Anne-Marie Slaughter, then dean of the Woodrow Wilson School of Public and International Affairs at Princeton University in the US, was optimistic in her article in the same issue of the magazine. The title was “America’s Edge: Power in the Networked Century”. In the world today, she wrote, everything is networked — war, terrorism, the media, religion, society, diplomacy, business. The new measure of power is thus “connectedness”.

Slaughter then elaborated on this idea, drawing a distinction between two different systems co-existing. The new system was the networked world, she said, and the older one was the “billiard-ball world” in which self-contained states collided with each another. The results of these collisions were determined by military and economic power. She seemed to think that US commentator Fareed Zakaria’s assessment of a relative decline in US influence was sound. I have already begged to differ in a previous article in Al-Ahram Weekly.

However, Slaughter added that in the new system that was emerging it was likely that the US would remain on top. This new networked system existed above, below and through the state, she said. In this system, the state with the most connections would be the central player, and on this count the US “retains a clear and sustainable edge.” I would go even further on this and say that in this new system US power will remain unmatched for a very long time.

Slaughter’s arguments are interesting. First, she says, US demography and size make it much easier for it to develop and profit from the new technologies. Second, the heterogeneity of the US population is a huge asset, as it allows America to extend its reach since all those immigrants retain their links with their home countries. It is clear that some, including president Donald Trump, would disagree on the last point, and much will depend on US ability to integrate people from different origins. But heterogeneity can turn out to be a formidable resource.

Third, geography helps the US in many ways. The country is more or less insulated from the rest of the world and feels, or should feel, secure. It also a pivotal state that is able to profit from both the Atlantic and Pacific hemispheres, and geography also protects it from pollution. Fourth, the country’s political culture and social structure should enable it to make the most of this new connected world.

Slaughter does not mention the deep and very relevant insights made by Tocqueville in the 19th century, since he also thought that a country grounded on decentralisation and local democracy would feel at home in the new world. Centralised states have a much more daunting task if they want to adapt. The US has a relatively horizontal social structure, Slaughter says (many would beg to disagree) and a culture of innovation and entrepreneurship.

On many counts, she sounds too optimistic. Basically, she says that with such assets, and “the right policies”, the US can bring about a better world for itself and others. It would be safer to say that the connected world brings both new resources and new threats and that finding and implementing the right policies will not be an easy task.

But despite some naiveté, Slaughter’s diagnosis sounds correct. There will be more on this in the next article.

The writer is a professor of international relations at the Collège de France and a visiting professor at Cairo University.

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