It is worth bearing in mind the Soviet Union’s difficulties when one turns to analyze the present and the future circumstances of the United States, because of two important distinctions. The first is that while it can be argued that the American share of world power has been decliningrelatively faster than Russia’s over the past few decades, its problems are probably nowhere near as great as those of its Soviet rival. Moreover, its absolute strength (especially in industrial and technological fields) is still much larger than that of the USSR. The second is that the very unstructured, laissez-faire nature of American society (while not without its weaknesses) probably gives it a better chance of readjusting to changing circumstances than a rigid and dirigiste power would have. But that in turn depends upon the existence of a national leadership which can understand the larger processes at work in the world today, and is aware of both the strong and the weak points of the U.S. position as it seeks to adjust to the changing global environment.
Although the United States is at present still in a class of its own economically and perhaps even militarily, it cannot avoid confronting the two great tests which challenge the longevity of every major power that occupies the “number one” position in world affairs: whether, in the military/strategical realm, it can preserve a reasonable balance between the nation’s perceived defense requirements and the means it possesses to maintain those commitments; and whether, as an intimately related point, it can preserve the technological and economic bases of its power from relative erosion in the face of the ever-shifting patterns of global production. This test of American abilities will be the greater because it, like Imperial Spain around 1600 or the British Empire around 1900, is the inheritor of a vast array of strategical commitments which had been made decades earlier, when the nation’s political, economic, and military capacity to influence world affairs seemed so much more assured. In consequence, the United States now runs the risk, so familiar to historians of the rise and fall of previous Great Powers, of what might roughly be called “imperial overstretch”: that is to say, decision-makers in Washington must face the awkward and enduring fact that the sum total of the United States’ global interests and obligations is nowadays far larger than the country’s power to defend them all simultaneously.
Unlike those earlier Powers that grappled with the problem of strategical overextension, the United States also confronts the possibility of nuclear annihilation—a fact which, many people feel, has changed the entire nature of international power politics. If indeed a large-scale nuclear exchange were to occur, then any consideration of the United States’ “prospects” becomes so problematical as to make it pointless—even if it also is the case that the American position (because of its defensive systems, and geographical extent) is probably more favorable than, say, France’s or Japan’s in such a conflict. On the other hand, the history of the post-1945 arms race so far suggests that nuclear weapons, while mutually threatening to East and West, also seem to be mutually unusable—which is the chief reason why the Powers continue to increase expenditures upon their conventional forces. If, however, the possibility exists of the major states someday becoming involved in a nonnuclear war (whether merely regional or on a larger scale), then the similarity of strategical circumstances between the United States today and imperial Spain or Edwardian Britain in their day is clearly much more appropriate. In each case, the declining number-one power faced threats, not so much to the security of its own homeland (in the United States’ case, the prospect of being conquered by an invading army is remote), but to the nation’s interests abroad—interests so widespread that it would be difficult to defend them all at once, and yet almost equally difficult to abandon any of them without running further risks.
Each of those interests abroad, it is fair to remark, was undertaken by the United States for what seemed very plausible (often very pressing) reasons at the time, and in most instances the reason for the American presence has not diminished; in certain parts of the globe, U.S. interests may now appear larger to decision-makers in Washington than they were a few decades ago.
That, it can be argued, is certainly true of American obligations in the Middle East. Here is a region, from Morocco in the west to Afghanistan in the east, where the United States faces a number of conflicts and problems whose mere listing (as one observer put it) “leaves one breathless.”208 It is an area which contains so much of the world’s surplus oil supply; which seems so susceptible (at least on the map) to Soviet penetration; toward which a powerfully organized domestic lobby presses for unflinching support for an isolated but militarily efficient Israel; in which Arab states of a generally pro-western inclination (Egypt, Saudi Arabia, Jordan, the Gulf emirates) are under pressure from their own Islamic fundamentalists as well as from external threats such as Libya; and in which all the Arab states, whatever their own rivalries, oppose Israel’s policy toward the Palestinians. This makes the region very important to the United States, but at the same time bewilderingly resistant to any simple policy option. It is, in addition, the region in the world which, at least in some parts of it, seems most frequently to resort to war. Finally, it contains the only territory—Afghanistan—which the Soviet Union is attempting to conquer by means of armed force. It is hardly surprising, therefore, that the Middle East has been viewed as requiring constant American attention, whether of a military or a diplomatic kind. Yet the memory of the 1979 debacle in Iran and of the ill-fated Lebanon venture of 1983, the diplomatic complexities of the antagonisms (how to assist Saudi Arabia without alarming Israel), and the unpopularity of the United States among the Arab masses all make it extremely difficult for an American government to conduct a coherent, long-term policy in the Middle East.
In Latin America, too, there are seen to be growing challenges to the United States’ national interests. If a major international debt crisis is to occur anywhere in the world, dealing a heavy blow to the global credit system and especially to U.S. banks, it is likely to begin in this region. As it is, Latin America’s economic problems have not only lowered the credit rating of many eminent American banking houses, but they have also contributed to a substantial decline in U.S. manufacturing exports to that region. Here, as in East Asia, the threat that the advanced, prosperous countries of the world will steadily increase tariffs against imported, low-labor-cost manufactures, and be ever less generous in their overseas-aid programs, is a cause for deep concern. All this is compounded by the fact that, economically and socially, Latin America has been changing remarkably swiftly over the past few decades;209 at the same time, its demographic explosion is pressing ever harder upon the available resources, and upon the older conservative governing structures, in a considerable number of states. This has led to broad-based movements for social and constitutional reforms, or even for outright “revolution”—the latter being influenced by the present radical regimes in Cuba and Nicaragua. In turn, these movements have produced a conservative backlash, with reactionary governments proclaiming the need to eradicate all signs of domestic Communism, and appealing to the United States for help to achieve that goal. These social and political fissures often compel the United States to choose between its desire to enhance democratic rights in Latin America and its wish to defeat Marxism. It also forces Washington to consider whether it can achieve its own purposes by political and economic means alone, or whether it may have to resort to military action (as in the case of Grenada).
By far the most worrying situation of all, however, lies just to the south of the United States, and makes the Polish “crisis” for the USSR seem small by comparison. There is simply no equivalent in the world for the present state of Mexican-United States relations. Mexico is on the verge of economic bankruptcy and default, its internal economic crisis forces hundreds of thousands to drift illegally to the north each year, its most profitable trade with the United States is swiftly becoming a brutally managed flow of hard drugs, and the border for all this sort of traffic is still extraordinarily permeable.210
If the challenges to American interests in East Asia are farther away, that does not diminish the significance of this vast area today. The largest share of the world’s population lives there; a large and increasing proportion of American trade is with countries on the “Pacific rim”; two of the world’s future Great Powers, China and Japan, are located there; the Soviet Union, directly and (through Vietnam) indirectly, is also there. So are those Asian newly industrializing countries, delicate quasi-democracies which on the one hand have embraced the capitalist laissez-faire ethos with a vengeance, and on the other are undercutting American manufacturing in everything from textiles to electronics. It is in East Asia, too, that a substantial number of American military obligations exist, usually as creations of the early Cold War.
Even a mere listing of those obligations cannot fail to suggest the extraordinarily wide-ranging nature of American interests in this region. A few years ago, the U.S. Defense Department attempted a brief summary of American interests in East Asia, but its very succinctness pointed, paradoxically, to the almost limitless extent of those strategical commitments:
The importance to the United States of the security of East Asia and the Pacific is demonstrated by the bilateral treaties with Japan, Korea, and the Philippines; the Manila Pact, which adds Thailand to our treaty partners; and our treaty with Australia and New Zealand—the ANZUS Treaty. It is further enhanced by the deployment of land and air forces in Korea and Japan, and the forward deployment of the Seventh Fleet in the Western Pacific. Our foremost regional objectives, in conjunction with our regional friends and allies, are:
—To maintain the security of our essential sea lanes and of the United States’ interests in the region; to maintain the capability to fulfill our treaty commitments in the Pacific and East Asia; to prevent the Soviet Union, North Korea, and Vietnam from interfering in the affairs of others; to build a durable strategic relationship with the People’s Republic of China; and to support the stability and independence of friendly countries.211
Moreover, this carefully selected prose inevitably conceals a considerable number of extremely delicate political and strategical issues: how to build a good relationship with the PRC without abandoning Taiwan; how to “support the stability and independence of friendly countries” while trying to control the flood of their exports to the American market; how to make the Japanese assume a larger share of the defense of the western Pacific without alarming its various neighbors; how to maintain U.S. bases in, for example, the Philippines without provoking local resentments; how to reduce the American military presence in South Korea without sending the wrong “signal” to the North …
Larger still, at least as measured by military deployments, is the American stake in western Europe—the defense of which is, more than anything else, the strategic rationale of the American army and of much of the air force and the navy. According to some arcane calculations, in fact, 50 or 60 percent of American general-purpose forces are allocated to NATO, an organization in which (critics repeatedly point out) the other members contribute a significantly lower share of their GNP to defense spending even though Europe’s total population and income are now larger than the USA’s own.212 This is not the place to rehearse the various European counterarguments in the “burden-sharing” debate (such as the social cost which countries like France and West Germany pay in maintaining conscription), or to develop the point that if western Europe was “Finlandized” the USA would probably spend even more on defense than at the moment.213 From an American strategical perspective, the unavoidable fact is that this region has always seemed more vulnerable to Russian pressure than, say, Japan—partly because it is not an island, and partly because on the other side of the European land frontier the USSR has concentrated the largest proportion of its land and air forces, significantly greater than what may be reasonably needed for internal-security purposes. This still may not give Russia the military capacity to overrun western Europe (see pp. 507–9), but it is not a situation in which it would be prudent to withdraw substantial U.S. ground and air forces unilaterally. Even the outside possibility that the world’s largest concentration of manufacturing production might fall into the Soviet orbit is enough to convince the Pentagon that “the security of western Europe is particularly vital to the security of the United States.”214
Yet however logical the American commitment to Europe may be strategically, that fact itself is no guarantee against certain military and political complications which have led to transatlantic discord. Although the NATO alliance brings the United States and western Europe close together at one level, the EEC itself is, like Japan, a rival in economic terms, especially in the shrinking markets for agricultural products. More significantly, while official European policy has always been to stress the importance of being under the American “nuclear umbrella,” a broad-based unease exists among the general publics at the implications of siting U.S. weapons (cruise missiles, Pershing lis, Trident-bearing submarines—let alone neutron bombs) on European soil. But if, to return to an earlier point, both superpowers would try to avoid “going nuclear” in the event of a major clash, that still leaves considerable problems in guaranteeing the defense of western Europe by conventional means. In the first place, that is a very expensive proposition. Secondly, even if one accepts the evidence which is beginning to suggest that the Warsaw Pact’s land and air forces could in fact be held in check, such an argument is predicated upon a certain enhancement of NATO’s current strength. From that perspective, nothing could be more upsetting than proposals to reduce or withdraw U.S. forces in Europe—however pressing that might be for economic reasons or for the purpose of buttressing American deployments elsewhere in the world. Yet carrying out a grand strategy which is both global and flexible is extremely difficult when so large a portion of the American armed forces are committed to one particular region.
In view of the above, it is not surprising that the circles most concerned about the discrepancy between American commitments and American power are the armed services themselves, simply because they would be the first to suffer if strategical weaknesses were exposed in the harsh test of war. Hence the frequent warnings by the Pentagon against being forced to carry out a global logistical juggling act, switching forces from one “hot spot” to another as new troubles emerge. If this was particularly acute in late 1983, when additional U.S. deployments in Central America, Grenada, Chad, and the Lebanon caused the former chairman of the Joint Chiefs of Staff to proclaim that the “mismatch” between American forces and strategy “is greater now than ever before,”215the problem had been implicit for years beforehand. Interestingly, such warnings about the American armed forces being “at full stretch” are attended by maps of “Major U.S. Military Deployment Around the World”216 which, to historians, look extraordinarily similar to the chain of fleet bases and garrisons possessed by that former world power, Great Britain, at the height of its strategic overstretch.217
On the other hand, it is hardly likely that the United States would be called upon to defend all of its overseas interests simultaneously and without the aid of a significant number of allies—the NATO members in western Europe, Israel in the Middle East, and, in the Pacific, Japan, Australia, possibly China. Nor are all the regional trends becoming unfavorable to the United States in defense terms; for example, while aggression by the unpredictable North Korean regime is always possible, that would hardly be welcomed by Peking nowadays—and, in addition, South Korea itself has grown to possess over twice the population and four times the GNP of North Korea. In the same way, while the expansion of Russian forces in the Far East is alarming to Washington, that is considerably balanced off by the growing threat posed by the PRC to Russia’s land and sea lines of communication with the Orient. The recent, sober admission by the U.S. defense secretary that “we can never afford to buy the capabilities sufficient to meet all of our commitments with one hundred percent confidence”218 is surely true; but it may be less worrying than at first appears if it is also recalled that the total of potential anti-Soviet resources in the world (United States, western Europe, Japan, PRC, Australasia) is far greater than the total of resources lined up on Russia’s side.
Despite such consolations, the fundamental grand-strategical dilemma remains: the United States today has roughly the same massive array of military obligations across the globe as it had a quarter-century ago, when its shares of world GNP, manufacturing production, military spending, and armed forces personnel were so much larger than they are now.219 Even in 1985, forty years after its triumphs of the Second World War and over a decade after its pull-out from Vietnam, the United States had 520,000 members of its armed forces abroad (including 65,000 afloat).220 That total is, incidentally, substantially more than the overseas deployments in peacetime of the military and naval forces of the British Empire at the height of its power. Nevertheless, in the strongly expressed opinion of the Joint Chiefs of Staff, and of many civilian experts,221 it is simply not enough. Despite a near-trebling of the American defense budget since the late 1970s, there has occurred a “mere 5 percent increase in the numerical size of the armed forces on active duty.”222 As the British and French military found in their time, a nation with extensive overseas obligations will always have a more difficult “manpower problem” than a state which keeps its armed forces solely for home defense; and a politically liberal and economically laissez-faire society—aware of the unpopularity of conscription—will have a greater problem than most.223
Possibly this concern about the gap between American interests and capabilities in the world would be less acute had there not been so much doubt expressed—since at least the time of the Vietnam War—about the efficiency of the system itself. Since those doubts have been repeatedly aired in other studies, they will only be summarized here; this is not a further essay on the hot topic of “defense reform.”224 One major area of contention, for example, has been the degree of interservice rivalry, which is of course common to most armed forces but seems more deeply entrenched in the American system—possibly because of the relatively modest powers of the chairman of the Joint Chiefs of Staff, possibly because so much more energy appears to be devoted to procurement as opposed to strategical and operational issues. In peacetime, this might merely be dismissed as an extreme example of “bureaucratic politics”; but in actual wartime operations—say, in the emergency dispatch of the Rapid Deployment Joint Task Force, which contains elements from all four services—a lack of proper coordination could be fatal.
In the area of military procurement itself, allegations of “waste, fraud and abuse”225 have been commonplace. The various scandals over horrendously expensive, underperforming weapons which have caught the public’s attention in recent years have plausible explanations: the lack of proper competitive bidding and of market forces in the “military-industrial complex,” and the tendency toward “gold-plated” weapon systems, not to mention the striving for large profits. It is difficult, however, to separate those deficiencies in the procurement process from what is clearly a more fundamental happening: the intensification of the impacts which new technological advances make upon the art of war. Given that it is in the high-technology field that the USSR usually appears most vulnerable—which suggests that American quality in weaponry can be employed to counter the superior Russian quantity of, say, tanks and aircraft—there is an obvious attraction in what Caspar Weinberger termed “competitive strategies” when ordering new armaments.226 Nevertheless, the fact that the Reagan administration in its first term spent over 75 percent more on new aircraft than the Carter regime but acquired only 9 percent more planes points to the appalling military-procurement problem of the late twentieth century: given the technologically driven tendency toward spending more and more money upon fewer and fewer weapon systems, would the United States and its allies really have enough sophisticated and highly expensive aircraft and tanks in reserve after the early stages of a ferociously fought conventional war? Does the U.S. Navy possess enough attack submarines, or frigates, if heavy losses were incurred in the early stages of a third Battle of the Atlantic? If not, the results would be grim; for it is clear that today’s complex weaponry simply cannot be replaced in the short times which were achieved during the Second World War.
This dilemma is accentuated by two other elements in the complicated calculus of evolving an effective American defense policy. The first is the issue of budgetary constraints. Unless external circumstances became much more threatening, it would be a remarkable act of political persuasion to get national defense expenditures raised much above, say, 7.5 percent of GNP—the more especially since the size of the federal deficit (see below, pp. 527–28) points to the need to balance governmental spending as the first priority of state. But if there is a slowing-down or even a halt in the increase in defense spending, coinciding with the continuous upward spiral in weapons costs, then the problem facing the Pentagon will become much more acute.
The second factor is the sheer variety of military contingencies that a global superpower like the United States has to plan for—all of which, in their way, place differing demands upon the armed forces and the weaponry they are likely to employ. This again is not without precedent in the history of the Great Powers; the British army was frequently placed under strain by having to plan to fight on the Northwest Frontier of India or in Belgium. But even that challenge pales beside the task facing today’s “number one.” If the critical issue for the United States is preserving a nuclear deterrent against the Soviet Union, at all levels of escalation, then money will inevitably be poured into such weapons as the MX missile, the B-l and “Stealth” bombers, Pershing lis, cruise missiles, and Trident-bearing submarines. If a large-scale conventional war against the Warsaw Pact is the most probable scenario, then the funds presumably need to go in quite different directions: tactical aircraft, main battle tanks, large carriers, frigates, attack submarines, and logistical services. If it is likely that the United States and the USSR will avoid a direct clash, but that both will become more active in the Third World, then the weapons mix changes again: small arms, helicopters, light carriers, an enhanced role for the U.S. Marine Corps become the chief items on the list. Already it is clear that a large part of the controversy over “defense reform” stems from differing assumptions about the type of war the United States might be called upon to fight. But what if those in authority make the wrong assumption?
A further major concern about the efficiency of the system, and one voiced even by strong supporters of the campaign to “restore” American power,227 is whether the present decision-making structure permits a proper grand strategy to be carried out. This would not merely imply achieving a greater coherence in military policies, so that there is less argument about “maritime strategy” versus “coalition warfare,”228 but would also involve effecting a synthesis of the United States’ long-term political, economic, and strategical interests, in place of the bureaucratic infighting which seems to have characterized so much of Washington’s policymaking. A much-quoted example of this is the all-too-frequent public dispute about how and where the United States should employ its armed forces abroad to enhance or defend its national interests—with the State Department wanting clear and firm responses made to those who threaten such interests, but the Defense Department being unwilling (especially after the Lebanon debacle) to get involved overseas except under special conditions.229 But there also have been, and by contrast, examples of the Pentagon’s preference for taking unilateral decisions in the arms race with Russia (e.g., SDI program, abandoning SALT II) without consulting major allies, which leaves problems for the State Department. There have been uncertainties attending the role played by the National Security Council, and more especially individual national security advisers. There have been incoherencies of policy in the Middle East, partly because of the in-tractibility of, say, the Palestine issue, but also because the United States’ strategical interest in supporting the conservative, pro-Western Arab states against Russian penetration in that area has often foundered upon the well-organized opposition of its own pro-Israel lobby. There have been interdepartmental disputes about the use of economic tools—from boycotts on trade and embargoes on technology transfer to foreign-aid grants and weapons sales and grain sales—in support of American diplomatic interests, which affect policies toward the Third World, South Africa, Russia, Poland, the EEC, and so on, and which have sometimes been uncoordinated and contradictory. No sensible person would maintain that the many foreign-policy problems afflicting the globe each possess an obvious and ready “solution”; on the other hand, the preservation of long-term American interests is certainly not helped when the decision-making system is attended by frequent disagreements within.
All this has led to questions by gloomier critics about the overall political culture in which Washington decision-makers have to operate. This is far too large and complex a matter to be explored in depth here. But it has been increasingly suggested that a country needing to reformulate its grand strategy in the light of the larger, uncontrollable changes taking place in world affairs may not be well served by an electoral system which seems to paralyze foreign-policy decision-making every two years. It may not be helped by the extraordinary pressures applied by lobbyists, political action committees, and other interest groups, all of which, by definition, are prejudiced in respect to this or that policy change; nor by an inherent “simplification” of vital but complex international and strategical issues through a mass media whose time and space for such things are limited, and whose raison d’être is chiefly to make money and secure audiences, and only secondarily to inform. It may also not be helped by the still-powerful “escapist” urges in the American social culture, which may be understandable in terms of the nation’s “frontier” past but is a hindrance to coming to terms with today’s more complex, integrated world and with other cultures and ideologies. Finally, the country may not always be assisted by its division of constitutional and decision-making powers, deliberately created when it was geographically and strategically isolated from the rest of the world two centuries ago, and possessed a decent degree of time to come to an agreement on the few issues which actually concerned “foreign” policy, but which may be harder to operate when it has become a global superpower, often called upon to make swift decisions vis-à-vis countries which enjoy far fewer constraints. No single one of these presents an insuperable obstacle to the execution of a coherent, long-term American grand strategy; their cumulative and interacting effect is, however, to make it much more difficult than otherwise to carry out needed changes of policy if that seems to hurt special interests and occurs in an election year. It may therefore be here, in the cultural and domestic-political realms, that the evolution of an effective overall American policy to meet the twenty-first century will be subjected to the greatest test.
The final question about the proper relationship of “means and ends” in the defense of American global interests relates to the economic challenges bearing down upon the country, which, because they are so various, threaten to place immense strains upon decision-making in national policy. The extraordinary breadth and complexity of the American economy makes it difficult to summarize what is happening to all parts of it—especially in a period when it is sending out such contradictory signals.230 Nonetheless, the features which were described in the preceding chapter (pp. 432–35) still prevail.
The first of these is the country’s relative industrial decline, as measured against world production, not only in older manufactures such as textiles, iron and steel, shipbuilding, and basic chemicals, but also—although it is far less easy to judge the final outcome of this level of industrial-technological combat—in global shares of robotics, aerospace, automobiles, machine tools, and computers. Both of these pose immense problems: in traditional and basic manufacturing, the gap in wage scales between the United States and newly industrializing countries is probably such that no “efficiency measures” will close it; but to lose out in the competition in future technologies, if that indeed should occur, would be even more disastrous. In late 1986, for example, a congressional study reported that the U.S. trade surplus in high-technology goods had plunged from $27 billion in 1980 to a mere $4 billion in 1985, and was swiftly heading into a deficit.231
The second, and in many ways less expected, sector of decline is agriculture. Only a decade ago, experts in that subject were predicting a frightening global imbalance between feeding requirements and farming output.232 But such a scenario of famine and disaster stimulated two powerful responses. The first was a massive investment into American farming from the 1970s onward, fueled by the prospect of ever-larger overseas food sales; the second was the enormous (western-world-funded) investigation into scientific means of increasing Third World crop outputs, which has been so successful as to turn growing numbers of such countries into food exporters, and thus competitors of the United States. These two trends are separate from, but have coincided with, the transformation of the EEC into a major producer of agricultural surpluses, because of its price-support system. In consequence, experts now refer to a “world awash in food,” 233 which in turn leads to sharp declines in agricultural prices and in American food exports—and drives many farmers out of business.
It is not surprising, therefore, that these economic problems have led to a surge in protectionist sentiment throughout many sectors of the American economy, and among businessmen, unions, farmers, and their congressmen. As with the “tariff reform” agitation in Edwardian Britain,234 the advocates of increased protection complain of unfair foreign practices, of “dumping” below-cost manufactures on the American market, and of enormous subsidies to foreign farmers—which, they maintain, can only be answered by U.S. administrations abandoning their laissez-faire policy on trade and instituting tough counter measures. Many of those individual complaints (e.g., of Japan shipping below-cost silicon chips to the American market) have been valid. More broadly, however, the surge in protectionist sentiment is also a reflection of the erosion of the previously unchallenged U.S. manufacturing supremacy. Like mid-Victorian Britons, Americans after 1945 favored free trade and open competition, not just because they held that global commerce and prosperity would be boosted in the process, but also because they knew that they were most likely to benefit from the abandonment of protectionism. Forty years later, with that confidence ebbing, there is a predictable shift of opinion in favor of protecting the domestic market and the domestic producer. And, just as in that earlier British case, defenders of the existing system point out that enhanced tariffs might not only make domestic products less competitive internationally, but that there also could be various external repercussions—a global tariff war, blows against American exports, the undermining of the currencies of certain newly industrializing countries, and a return to the economic crisis of the 1930s.
Along with these difficulties affecting American manufacturing and agriculture there are unprecedented turbulences in the nation’s finances. The uncompetitiveness of U.S. industrial products abroad and the declining sales of agricultural exports have together produced staggering deficits in visible trade—$160 billion in the twelve months to May 1986—but what is more alarming is that such a gap can no longer be covered by American earnings on “invisibles,” which is the traditional recourse of a mature economy (e.g., Great Britain before 1914). On the contrary, the only way the United States can pay its way in the world is by importing ever-larger sums of capital, which has transformed it from being the world’s largest creditor to the world’s largest debtor nation in the space of a few years.
Compounding this problem—in the view of many critics, causing this problem235—have been the budgetary policies of the U.S. government itself. Even in the 1960s, there was a tendency for Washington to rely upon deficit finance, rather than additional taxes, to pay for the increasing cost of defense and social programs. But the decisions taken by the Reagan administration in the early 1980s—i.e., large-scale increases in defense expenditures, plus considerable decreases in taxation, but without significant reductions in federal spending elsewhere—have produced extraordinary rises in the deficit, and consequently in the national debt, as shown in Table 49.
Table 49. U.S. Federal Deficit, Debt, and Interest, 1980–1985236
(billions of dollars)
The continuation of such trends, alarmed voices have pointed out, would push the U.S. national debt to around $13 trillion by the year 2000 (fourteen times that of 1980), and the interest payments on such debt to $1.5 trillion (twenty-nine times that of 1980).237In fact, a lowering of interest rates could bring down those estimates,238 but the overall trend is still very unhealthy. Even if federal deficits could be reduced to a “mere” $100 billion annually, the compounding of national debt and interest payments by the early twenty-first century will still cause quite unprecedented totals of money to be diverted in that direction. Historically, the only other example which comes to mind of a Great Power so increasing its indebtedness in peacetime is France in the 1780s, where the fiscal crisis contributed to the domestic political crisis.
These American trade and federal deficits are now interacting with a new phenomenon in the world economy—what is perhaps best described as the “dislocation” of international capital movements from the trade in goods and services. Because of the growing integration of the world economy, the volume of trade both in manufactures and in financial services is much larger than ever before, and together may amount to some $3 trillion a year; but that is now eclipsed by the stupendous level of capital flows pouring through the world’s money markets, with the London-based Eurodollar market alone having a volume “at least 25 times that of world trade.”239 While this trend was fueled by events in the 1970s (the move from fixed to floating exchange rates, the surplus funds flowing from OPEC countries), it has also been stimulated by the U.S. deficits, since the only way the federal government has been able to cover the yawning gap between its expenditures and its receipts has been to suck into the country tremendous amounts of liquid funds from Europe and (especially) Japan—turning the United States, as mentioned above, into the world’s largest debtor country by far.240 It is, in fact, difficult to imagine how the American economy could have got by without the inflow of foreign funds in the early 1980s, even if that had the awkward consequence of sending up the exchange value of the dollar, and further hurting U.S. agricultural and manufacturing exports. But that in turn raises the troubling question about what might happen if those massive and volatile funds were pulled out of the dollar, causing its value to drop precipitously.
The trends have, in turn, produced explanations which suggest that alarmist voices are exaggerating the gravity of what is happening to the U.S. economy and failing to note the “naturalness” of most of these developments. For example, the midwestern farm belt would be much less badly off had not so many individuals bought land at inflated prices and excessive interest rates in the late 1970s. Again, the move from manufacturing into services is an understandable one, which is occurring in all advanced countries; and it is also worth recalling that U.S. manufacturing outputhas been rising in absolute terms, even if employment (especially blue-collar employment) in manufacturing industry has been falling—but that again is a “natural” trend, as the world increasingly moves from material-based to knowledge-based production. Similarly, there is nothing wrong in the metamorphosis of American financial institutions into world financial institutions, with a triple base in Tokyo, London, and New York, to handle (and profit from) the great volume of capital flows; that can only boost the nation’s earnings from services. Even the large annual federal deficits and the mounting national debt are sometimes described as being not too serious, after allowance is made for inflation; and there exists in some quarters a belief that the economy will “grow its way out” of these deficits, or that measures will be taken by the politicians to close the gap, whether by increasing taxes or cutting spending or a combination of both. A too-hasty attempt to slash the deficit, it is pointed out, could well trigger off a major recession.
Even more reassuring are said to be the positive signs of growth in the American economy. Because of the boom in the services sector, the United States has been creating jobs over the past decade faster than at any time in its peacetime history—and certainly a lot faster than in western Europe. As a related point, its far greater degree of labor mobility eases such transformations in the job market. Furthermore, the enormous American commitment in high technology—not just in California, but in New England, Virginia, Arizona, and many other parts of the land—promises ever greater outputs of production, and thus of national wealth (as well as ensuring a strategical edge over the USSR). Indeed, it is precisely because of the opportunities that exist in the American economy that it continues to attract millions of immigrants, and to stimulate thousands of new entrepreneurs; while the floods of capital which pour into the country can be tapped for further investment, especially into R&D. Finally, if the shifts in the global terms of trade are indeed leading to lower prices for foodstuffs and raw materials, that ought to benefit an economy which still imports enormous amounts of oil, metal ores, and so on (even if it hurts particular American producers, like farmers and oilmen).
Many of these individual points may be valid. Since the American economy is so large and variegated, some sectors and regions are likely to be growing at the same time as others are in decline—and to characterize the whole with sweeping generalizations about “crisis” or “boom” is therefore inappropriate. Given the decline in raw-materials prices, the ebbing of the dollar’s unsustainably high exchange value of early 1985, the general fall in interest rates—and the impact of all three trends upon inflation and upon business confidence—it is not surprising to find some professional economists being optimistic about the future.241
Nevertheless, from the viewpoint of American grand strategy, and of the economic foundation upon which an effective, long-term strategy needs to rest, the picture is much less rosy. In the first place, given the worldwide array of military liabilities which the United States has assumed since 1945, its capacity to carry those burdens is obviously less than it was several decades ago, when its share of global manufacturing and GNP was much larger, its agriculture was not in crisis, its balance of payments was far healthier, the government budget was also in balance, and it was not so heavily in debt to the rest of the world. In that larger sense, there is something in the analogy which is made by certain political scientists between the United States’ position today and that of previous “declining hegemons.”242
Here again, it is instructive to note the uncanny similarities between the growing mood of anxiety among thoughtful circles in the United States today and that which pervaded all political parties in Edwardian Britain and led to what has been termed the “national efficiency” movement: that is, a broad-based debate within the nation’s decision-making, business, and educational elites over the various measures which could reverse what was seen to be a growing uncom-petitiveness as compared with other advanced societies. In terms of commercial expertise, levels of training and education, efficiency of production, standards of income and (among the less well-off) of living, health, and housing, the “number-one” power of 1900 seemed to be losing its position, with dire implications for the country’s long-term strategic position; hence the fact that the calls for “renewal” and “reorganization” came at least as much from the Right as from the Left.243 Such campaigns usually do lead to reforms, here and there; but their very existence is, ironically, a confirmation of decline, in that such an agitation simply would not have been necessary a few decades earlier, when the nation’s lead was unquestioned. A strong man, the writer G. K. Chesterton sardonically observed, does not worry about his bodily efficiency; only when he weakens does he begin to talk about health.244 In the same way, when a Great Power is strong and unchallenged, it will be much less likely to debate its capacity to meet its obligations than when it is relatively weaker.
More narrowly, there could be serious implications for American grand strategy if its industrial base continued to shrink. Were there ever to be a large-scale future war which remained conventional (because of the belligerents’ mutual fear of triggering a nuclear holocaust), then one is bound to wonder what the impact upon U.S. productive capacities would be after years of decline in certain key industries, the erosion of blue-collar employment, and so on. In this connection, one is reminded of Hewins’s alarmed cry in 1904 about the impact of British industrial decay uponthat country’s power:245
Suppose an industry which is threatened [by foreign competition] is one which lies at the very root of your system of National defence, where are you then? You could not get on without an iron industry, a great Engineering trade, because in modern warfare you would not have the means of producing, and maintaining in a state of efficiency, your fleets and armies.
It is hard to imagine that the decline in American industrial capacity could be so severe: its manufacturing base is simply that much broader than Edwardian Britain’s was; and—an important point—the “defense-related industries” have not only been sustained by repeated Pentagon orders, but have paralleled the shift from materials-intensive into knowledge-intensive (high-technology) manufacturing, which over the longer term will also reduce the West’s reliance upon critical raw materials. Even so, the very high proportion of, say, semiconductors which are assembled in foreign countries and then shipped to the United States,246 or—to think of a product as far removed from semiconductors as possible—the erosion of the American shipping and shipbuilding industry, or the closing down of so many American mines and oilfields—such trends cannot but be damaging in the event of another long-lasting, Great Power, coalition war. If, moreover, historical precedents are of any validity at all, the most critical constraint upon any “surge” in wartime production has usually been in the area of skilled craftsmen247—which, once again, causes one to wonder about the massive long-term decline in American blue-collar (i.e., usually skilled-craftsmen) employment.
A quite different problem, but one equally important for the sustaining of a proper grand strategy, concerns the impact of slow economic growth upon the American social/political consensus. To a degree which amazes most Europeans, the United States in the twentieth century has managed to avoid ostensible “class” politics. This is due, one imagines, to the facts that so many of its immigrants were fleeing from socially rigid circumstances elsewhere; that the sheer size of the country allowed those who were disillusioned with their economic position to “escape” to the West, and simultaneously made the organization of labor much more difficult than in, say, France or Britain; and that those same geographical dimensions, and the entrepreneurial opportunities within them, encouraged the development of a largely unreconstructed form of laissez-faire capitalism which has dominated the political culture of the nation (despite occasional counterattacks from the left). In consequence, the “earnings gap” between rich and poor in the United States is significantly larger than in any other advanced industrial society; and, by the same token, state expenditures upon social services form a lower share of GNP than in comparable countries (except Japan, which appears to have a much stronger family-based form of support for the poor and the aged).
This lack of “class” politics despite the obvious socioeconomic disparities has obviously been helped by the fact that the United States’ overall growth since the 1930s offered the prospect of individual betterment to a majority of the population; and by the more disturbing fact that the poorest one-third of American society has not been “mobilized” to become regular voters. But given the differentiated birthrate between the white ethnic groups on the one hand and the black and Hispanic groups on the other—not to mention the changing flow of immigrants into the United States, and given also the economic metamorphosis which is leading to the loss of millions of relatively high-earning jobs in manufacturing, and the creation of millions of poorly paid jobs in services, it may be unwise to assume that the prevailing norms of the American political economy (low government expenditures, low taxes on the rich) would be maintained if the nation entered a period of sustained economic difficulty caused by a plunging dollar and slow growth. What this also suggests is that an American polity which responds to external challenges by increasing defense expenditures, and reacts to the budgetary crisis by slashing the existing social expenditures, may run the risk of provoking an eventual political backlash. As with all of the other Powers surveyed in this chapter, there are no easy answers in dealing with the constant three-way tension between defense, consumption, and investment in settling national priorities.
This brings us, inevitably, to the delicate relationship between slow economic growth and high defense spending. The debate upon “the economics of defense spending” is a highly controversial one, and—bearing in mind the size and variety of the American economy, the stimulus which can come from large government contracts, and the technical spin-offs from weapons research—the evidence does not point simply in one direction.248 But what is significant for our purposes is the comparative dimension. Even if (as is often pointed out) defense expenditures formed 10 percent of GNP under Eisenhower and 9 percent under Kennedy, the United States’ relative share of global production and wealth was at that time around twice what it is today; and, more particularly, the American economy was not then facing the challenges to either its traditional or its high-technology manufactures. Moreover, if the United States at present continues to devote 7 percent or more of its GNP to defense spending while its major economic rivals, especially Japan, allocate a far smaller proportion, then ipso facto the latter have potentially more funds “free” for civilian investment; if the United States continues to invest a massive amount of its R&D activities into military-related production while the Japanese and West Germans concentrate upon commercial R&D; and if the Pentagon’s spending drains off the majority of the country’s scientists and engineers from the design and production of goods for the world market while similar personnel in other countries are primarily engaged in bringing out better products for the civilian consumer, then it seems inevitable that the American share of world manufacturing will steadily decline, and also likely that its economic growth rates will be slower than in those countries dedicated to the marketplace and less eager to channel resources into defense.249
It is almost superfluous to say that these tendencies place the United States on the horns of a most acute dilemma over the longer term. Simply because it is the global superpower, with far more extensive military commitments than a regional Power like Japan or West Germany, it requires much larger defense forces—in just the same way as imperial Spain felt it needed a far larger army than its contemporaries and Victorian Britain insisted upon a much bigger navy than any other country. Furthermore, since the USSR is seen to be the major military threat to American interests across the globe and is clearly devoting a far greater proportion of its GNP to defense, American decision-makers are inevitably worried about “losing” the arms race with Russia. Yet the more sensible among these decision-makers can also perceive that the burden of armaments is debilitating the Soviet economy; and that if the two superpowers continue to allocate ever-larger shares of their national wealth into the unproductive field of armaments, the critical question might soon be: “Whose economy will decline fastest, relative to such expanding states as Japan, China, etc.?” A low investment in armaments may, for a globally overstretched Power like the United States, leave it feeling vulnerable everywhere; but a very heavy investment in armaments, while bringing greater security in the short term, may so erode the commercial competitiveness of the American economy that the nation will be less secure in the long term.250
Here, too, the historical precedents are not encouraging. For it has been a common dilemma facing previous “number-one” countries that even as their relative economic strength is ebbing, the growing foreign challenges to their position have compelled them to allocate more and more of their resources into the military sector, which in turn squeezes out productive investment and, over time, leads to the downward spiral of slower growth, heavier taxes, deepening domestic splits over spending priorities, and a weakening capacity to bear the burdens of defense.251 If this, indeed, is the pattern of history, one is tempted to paraphrase Shaw’s deadly serious quip and say: “Rome fell; Babylon fell; Scarsdale’s turn will come.”252
In the largest sense of all, therefore, the only answer to the question increasingly debated by the public of whether the United States can preserve its existing position is “no”—for it simply has not been given to any one society to remain permanently ahead of all the others, because that would imply a freezing of the differentiated pattern of growth rates, technological advance, and military developments which has existed since time immemorial. On the other hand, this reference to historical precedents does not imply that the United States is destined to shrink to the relative obscurity of former leading Powers such as Spain or the Netherlands, or to disintegrate like the Roman and Austro-Hungarian empires; it is simply too large to do the former, and presumably too homogeneous to do the latter. Even the British analogy, much favored in the current political-science literature, is not a good one if it ignores the differences in scale. This can be put another way: the geographical size, population, and natural resources of the British Isles would suggest that it ought to possess roughly 3 or 4 percent of the world’s wealth and power, all other things being equal; but it is precisely because all other things are never equal that a peculiar set of historical and technological circumstances permitted the British Isles to expand to possess, say, 25 percent of the world’s wealth and power in its prime; and since those favorable circumstances have disappeared, all that it has been doing is returning down to its more “natural” size. In the same way, it may be argued that the geographical extent, population, and natural resources of the United States suggest that it ought to possess perhaps 16 or 18 percent of the world’s wealth and power, but because of historical and technical circumstances favorable to it, that share rose to 40 percent or more by 1945; and what we are witnessing at the moment is the early decades of the ebbing away from that extraordinarily high figure to a more “natural” share. That decline is being masked by the country’s enormous military capabilities at present, and also by its success in “internationalizing” American capitalism and culture.253 Yet even when it declines to ocits “natural” share of the world’s wealth and power, a long time into the future, the United States will still be a very significant Power in a multipolar world, simply because of its size.
The task facing American statesmen over the next decades, therefore, is to recognize that broad trends are under way, and that there is a need to “manage” affairs so that the relative erosion of the United States’ position takes place slowly and smoothly, and is not accelerated by policies which bring merely short-term advantage but longer-term disadvantage. This involves, from the president’s office downward, an appreciation that technological and therefore socioeconomic change is occurring in the world faster than ever before; that the international community is much more politically and culturally diverse than has been assumed, and is defiant of simplistic remedies offered either by Washington or Moscow to its problems; that the economic and productive power balances are no longer as favorably tilted in the United States’ direction as in 1945; and that, even in the military realm, there are signs of a certain redistribution of the balances, away from a bipolar to more of a multipolar system, in which the conglomeration of American economic-cum-military strength is likely to remain larger than that possessed by any one of the others individually, but will not be as disproportionate as in the decades which immediately followed the Second World War. This, in itself, is not a bad thing if one recalls Kissinger’s observations about the disadvantages of carrying out policies in what is always seen to be a bipolar world (see pp. 407–8); and it may seem still less of a bad thing when it is recognized how much more Russia may be affected by the changing dynamics of world power. In all of the discussions about the erosion of American leadership, it needs to be repeated again and again that the decline referred to is relative not absolute, and is therefore perfectly natural; and that the only serious threat to the real interests of the United States can come from a failure to adjust sensibly to the newer world order.
Given the considerable array of strengths still possessed by the United States, it ought not in theory to be beyond the talents of successive administrations to arrange the diplomacy and strategy of this readjustment so that it can, in Walter Lippmann’s classic phrase, bring “into balance … the nation’s commitments and the nation’s power.”254 Although there is no obvious, single “successor state” which can take over America’s global burdens in the way that the United States assumed Britain’s role in the 1940s, it is nonetheless also true that the country has fewer problems than an imperial Spain besieged by enemies on all fronts, or a Netherlands being squeezed between France and England, or a British Empire facing a bevy of challengers. The tests before the United States as it heads toward the twenty-first century are certainly daunting, perhaps especially in the economic sphere; but the nation’s resources remain considerable, // they can be properly organized, and if there is a judicious recognition of both the limitations and the opportunities of American power.
Viewed from one perspective, it can hardly be said that the dilemmas facing the United States are unique. Which country in the world, one it tempted to ask, is not encountering problems in evolving a viable military policy, or in choosing between guns and butter and investment? From another perspective, however, the American position is a very special one. For all its economic and perhaps military decline, it remains, in Pierre Hassner’s words, “the decisive actor in every type of balance and issue.”255 Because it has so much power for good or evil, because it is the linchpin of the western alliance system and the center of the existing global economy, what it does, or does not do, is so much more important than what any of the other Powers decides to do.
*Which is why even Japanese firms are building factories there.
*Assuming that to be the case, it is still difficult for technical reasons to suggest what that means in exact figures. Many of the statistics commonly used (e.g., by the CIA) in international comparisons are based upon U.S. dollars and market exchange rates; thus the tumbling of the value of the dollar vis-à-vis the yen by nearly 40 percent in 1985–1986 could, by that reckoning, massively boost Japan’s GNP total as compared with the United States’ (and also as compared with the USSR’s, since its GNP is often calculated in “geometric mean dollars”).76 Simply a rise in the yen from its present exchange value to 120 or even 100 to the dollar—which some economic experts think is its “true” rate77—would give Japan a total GNP close to the United States’ and well in excess of Russia’s. It is because of the problems caused by rapidly fluctuating exchange rates that some economists prefer to use “purchasing parity ratios,” although that measurement also has its problems.
*It is, for example, all too easy to show the Warsaw Pact as massively superior by including, say, all of Russia’s armed forces (even those deployed against China), and by excluding, say, France’s.