The Challenges of American Hegemony

Abstract

'This terrible century, has - or appears to be having - a happy ending,' wrote the historian, Arthur Schlesinger, Jr, recently.(f.1) This is certainly true for the United States. Consider the events of the last decade: the Soviet Union surrendered and then crumbled; victory in the 1990-1 Gulf War sent television images of American military might across the globe; American ideas about free markets and democracy appear largely unchallenged; American companies and culture are spreading into every nook and cranny of the world; and the American economy is the envy of all. Henry Luce's prediction about the American century might be up for a hundred-year extension. Not surprisingly, in this season of triumph, polls of United States foreign affairs and security experts, journalists, scholars, religious leaders, scientists, governors, mayors, business executives, congressional staff, and labour leaders reveal that more than two thirds of these 'American influentials' are satisfied with 'the way things are going in the world' - a world that half of them see as decisively under United States leadership.(f.2)What a difference a decade makes. Ten years ago, the American elite's estimation of the world and their country's place in it could not have been more different. Though the Soviet Union and its nuclear arsenal still loomed large, the real fear was what the elite saw as America's decline. Foreign policy failures in Vietnam and Iran had eroded America's self-confidence and its image in the world at large. The economy was widely considered dysfunctional, plagued by a fiscal deficit of nearly US$300 billion, the declining competitiveness of its exports against cheaper, high quality goods from Japan, and a seemingly better organized corporate sector in Europe.Japan and Germany, it was thought, had hit upon a better brand of capitalism than America's wild west version, more oriented to longterm growth and endowed with checks and balances that would prevent such catastrophes as the stock market crash that hit the United States in 1987 or the savings and loan crisis that cost American taxpayers between $200 billion and $500 billion. And with the United States engaged in an arms race against Moscow (with a price tag in the hundreds of billions), Japan and Germany were free to focus on economic competitiveness.(f.3) The national debt was approaching $4 trillion - interest payments alone were approaching 15 per cent of total government spending. Throughout the 1980s, the growth in gross domestic product (GDP) averaged only 2.69 per cent, continuing a slowdown that had begun in the mid-1970s.Even by the late 1980s, when it was clear that the Soviet Union was on its last legs, American elites believed that bipolarity would give way to a multipolar order in which the United States would be, at best, first among equals. In fact, as late as 1991, 71 per cent of leading Americans believed that the country's problems had become so insurmountable that the United States had 'decline[d] as a world power.'(f.4) In this atmosphere of pessimism, the question was not 'if' America declined; it was not even 'when,' which everybody thought would be soon. It was 'who' - as in, who would take over when America was gone? Lester Thurow, the eminent economist from the Massachusetts Institute of Technology, foresaw a 'tripolar world built upon Japan, the European Community, and the United States.'(f.5) In a 1986 essay ominously titled 'Pax Nipponica,' the distinguished scholar, Ezra Vogel, wrote that 'future historians may well mark the mid-1980s as the time when Japan surpassed the United States to become the world's dominant economic power.'(f.6) Again, American elites seemed to agree; 63 per cent said Japan posed a 'critical threat' to the United States, 41 per cent said Europe did - with a particular emphasis on Germany.(f.7)What went wrong - or rather right? The pessimism of the late 1980s made four important and instructive errors in the perception and measurement of national power. …