The end of 2021 and the beginning of a new year is a convenient time to take stock of the causes of America’s decline.
This past year saw both Washington’s inglorious exit from Afghanistan after 20 years in the country that had served as the launching pad for its direct military intervention in the Middle East and an historic insurrection at the very heart of the empire. Add to this the absolute lack of traction for President Biden’s recent “Democracy Summit” in contrast to Beijing’s surefooted diplomacy, the erosion of an already weak U.S. economy by COVID-19 followed by uncontrolled inflation, and the deepening of the country’s informal but very real civil war—and it is hard to avoid the sense that we are indeed at the end of an era.
The U.S. wasted trillions on fruitless military adventures, but the main economic consequence of the Middle East wars was to boost China’s economic ascent at its expense.
Serving as the bookends of this era were two individuals that stamped their personalities on it: Osama bin Laden at the beginning and Donald Trump at the end.
Varieties of Imperial Decline
Ever since Paul Kennedy wrote The Rise and Fall of the Great Powers, historians and others have tried to discover the universal elements of the phenomenon he called “imperial overstretch.”
This might, however, be a futile enterprise. Tolstoy said that all families are unhappy but each of them is unhappy in its own way. The same thing might be said of the end of empires. All empires end, but each exits in its own distinct unhappy fashion.
Bankrupt at the end of the Second World War and facing spiraling financial and political costs as independence movements challenged their hegemony from East Asia to Africa, the British chose to cut their losses and liquidate most of their holdings, passed the task of ruling to indigenous elites, and largely left the defense of global capitalism to the Americans.
The French chose to hang on despite defeat in Indochina and a bloody stalemate in Algeria and could only be persuaded to give the latter independence when renegade military men threatened to take over the government itself to continue the empire. The Soviet Union was largely dissolved by a domestic reform effort that ran out of control, though defeat in Afghanistan made a not insignificant contribution.
Like the ascent to the zenith of empire, the descent from it does not follow a predetermined path but one that is shaped by contingencies, many of them surprising and unexpected.
At the beginning of the 1990s, the U.S. had staved off the economic challenge of Japan and seen the political and military challenge posed by the Soviets dissipate. Moreover, it seemed to have thrown off the “Vietnam Syndrome” with its victory over Saddam Hussein in the first Gulf War. The American Empire appeared to be experiencing a second wind.
At this juncture, the choices for maintaining the empire boiled down to two. One, identified with the Democrats, favored the U.S. ruling via a multilateral economic order undergirded by the supremacy of its corporations and a liberal global political order propped up by unchallenged American military power and promoted by the “soft power” of liberal democracy. The other was championed by neoconservatives largely ensconced in the Republican Party who claimed the “unipolar” status of the United States provided a unique opportunity for reordering the world to the lasting advantage of the United States both strategically and economically—and demanded unilateral action to bring that about.
The debate between these two visions of the imperial future dominated American politics during the eight-year reign of the Democrats presided over by Bill Clinton.
Under the succeeding Republican administration of George W. Bush, US power was primed to do just what the neoconservatives wanted. It was, however, not predetermined that the Middle East would be the prime target of their global push to reorder the world. Tension with China was high in the first months of the new administration, with the Pentagon, in fact, identifying Beijing no longer as a strategic partner, as the Clinton administration did, but as a strategic rival. A new Cold War could have been launched at that juncture, with a China that was much, much weaker militarily and economically relative to the U.S. than it is now.
What made the difference in the fateful calculations of the neocons was one man: Osama bin Laden.
Bin Laden’s Historic Role
Bin Laden puts paid to those historians who belittle the role of personality in history. For what he did, probably without intending it, was direct U.S. military power to Afghanistan and the broader Middle East with his attack on the Twin Towers on September 11, 2001.
Bin Laden hoped to create a hundred Islamic insurgencies by boldly baiting the Great Satan, much like Che Guevara hoped to create more Cubas in Latin America with his guerrilla experiment in Bolivia. Bin Laden failed in bringing about the purifying Islamic revolutions he sought, but he was wildly successful in a way he had not intended. For his move gave the American neocons the opportunity for the military action they had devoutly wished for to enable them to consolidate their new unipolar order.
Desire did not, however, end up with the object of desire, for the terrain in which the U.S. chose to wage an “exemplary war” to teach the rest of the world to get out of the way of America’s hegemonic mission turned out to be populated by people, Afghans and Iraqis, who were no pushovers.
Bush II got the war he wanted but not the outcome he sought. Instead of his legions coming back home in triumph, they were plunged into what quickly became a quicksand from which they could not be extricated for two decades, and then only in shame and defeat under a Democratic administration in 2021.
The Economic Consequences of the Forever Wars
Being pinned down in what critics called the “forever wars” in the Middle East had momentous political and economic consequences for the United States. Washington set aside its definition of China as a strategic rival and sought instead to enlist Beijing as an ally in its “war on terror.” China obliged, but devoted most of its efforts to economic diplomacy to gain markets and cultivate good relations with countries in the Global South, a contrast with Washington’s bellicose behavior that did not go unnoticed.
The U.S. wasted trillions on fruitless military adventures, but the main economic consequence of the Middle East wars was to boost China’s economic ascent at its expense.
With China reaffirmed as a political ally, the U.S. transnational corporations that had promoted the entente with China in their search for cheap labor during the Clinton presidency accelerated the transfer of their manufacturing processes to China, making the 16 years of the Bush II and Obama administrations a period of irreversible deindustrialization. Thousands of factories closed down in the industrial heartland in the Midwest and Northeast and at least 2.5 million high paying manufacturing jobs were lost to what some economists called the “China Shock.”
China’s rise to industrial prominence was not, in other words, predetermined. Bin Laden’s baiting the U.S.—and Washington taking the bait—was a major reason why the China-TNC alliance continued and gathered force during the Bush II presidency instead of being sidelined by strategic concerns about China that were prominent both at the Pentagon and the neocons during Bush’s first months in office.
Alternative Routes from Capitalism’s Crisis of Profitability
If the U.S. being bogged down in the Middle East and China’s benefiting from this were not predetermined, some would claim that the broad contours of economic change, at least in the U.S., were but the unfolding in time of contradictions already present at the heart of the premier capitalist country.
True, already in the 1970s and 1980s, the rate of profit had plunged from its postwar high of 16 percent in the early 1950s to around 6 percent. True, accessing cheap labor in the global South, where wages were a fraction of those in the United States, was certainly seen as a key solution. Still, breaking the social democratic compromise between labor and capital undergirded by Keynesian technocratic economics, where social peace was the quid pro quo for relatively high wages and limited profits, was no easy, largely predetermined process.
Even before China came into the picture in the 1990s, two “superstructural” factors were decisive in conditioning the way capital would respond to the crisis of profitability, one that would clear the way for the massive migration of U.S. jobs there.
The first was political in nature. The showdown between Ronald Reagan and PATCO, the air traffic controllers’ union, in 1981 became the key battle for U.S. labor’s future, and Reagan’s victory, like Margaret Thatcher’s triumph over the miners in Britain, made the rest of management’s campaign to break unions a mopping up operation. As in Britain, had the AFL-CIO come out in full support of the PATCO strike and had the air controllers won, it is conceivable that the right’s offensive to destroy labor’s power could have been slowed down, if not stopped, and neoliberalism’s triumph could have been averted or, at the least, been much less thorough. The political consequences of concrete class struggles can never be underestimated.
The other critical condition for capital’s triumph in the 1980s and 1990s was ideological in character. With the 1970s U.S. economy stuck in the “stagflation” whose underlying cause was the crisis of profitability, a revived classical market economics centered at the University of Chicago came to the rescue. Neoliberalism faulted state intervention as the central cause of U.S. economic stagnation, and capital, politicians, and academics united in a common cause for sweeping deregulation.
This political and ideological coalition was not, however, inevitable. Had the Democratic Party remained faithful to its New Deal roots and social democratic academics put up more of an intellectual fight, neoliberalism’s rise could have encountered more resistance that, at the least, could have made its hegemony more fragile, a point to which we will return later.
In any event, it was the virtually unopposed neoliberal counterrevolution that made possible the corporate capture of public policy in the 1980s and 1990s, a development that set the stage for the large-scale transfer of American factories and jobs to China over the next two decades. Moreover, with their assertion, more by fiat than by proof, that market forces had “determined” that the U.S. competitive advantage no longer lay in manufacturing, the neoliberals not only promoted deindustrialization but, equally significant, the wholesale “financialization” of the U.S. economy.
Financialization was a process that involved focusing on the financial sector as the cutting edge of the economy owing to the greater returns on investment it offered compared to industry; promoting debt-driven consumption as the engine of growth; and converting workers from wage-earners to “shareholders” in U.S. corporations, thus reconciling labor and capital.
This “new” American economy created by neoliberalism was alleged to have entered a “mature” phase of permanent prosperity known as the “Great Moderation” in the 2000s. It fell apart with a vengeance with the financial crisis of 2008, which ushered in years of stagnation and high unemployment that gutted the economy of what dynamism it had left.
By the beginning of the third decade of the 21st century, China, while still just the world’s second biggest economy, had clearly displaced the U.S. as the center of global accumulation, accounting for 28 percent in global growth in 2019, more than twice the share of the U.S., according to the International Monetary Fund.
Trump and the Crisis of the Imperial Order
But endless wars and the unraveling of the financialized U.S. economy are insufficient to explain the drastic decline of the empire from “unipolarism” to severe dislocation in less than two decades. One must bring into the equation the unfolding of what I have called the informal civil war in the United States. Central to explaining this cancer eating at the heart of the American political system was the evolution of white supremacy as a political and ideological force.
While the Republican Party had exploited the racial insecurities of the white population successfully since the late 1960s through the so-called “Southern Strategy” and racist dog whistle politics, it was not predetermined that white supremacy would become the dominant stream in conservative, right-wing politics that would subordinate and fuse with other streams such as cultural and religious conservatism, anti-liberalism, and populist disdain for scientific expertise.
Again, this was not inevitable. A key contribution to the expansion and consolidation of white supremacy was the defection from the Democratic Party of large sections of its white working class base—the pillar of the once solid “New Deal Coalition” put together by Franklin Delano Roosevelt—as “Third Way” Democrats from Clinton to Barack Obama legitimized and led in promoting neoliberal policies that had such a damaging consequences on the jobs and income of workers.
The Democratic Party leadership’s surrender to neoliberalism has been well analyzed by Thomas Piketty, who noted that the base of the party from the 1960s on increasingly became composed of people with relatively high levels of education—professionals, academics, intellectuals, and even managers. The relatively well educated leadership of the party increasingly responded to the interests of these like-minded followers, resulting in many in the old union, working class base being steadily alienated from them.
Increasingly, what Piketty terms the “Brahmin Left” in the Democratic Party represented by the Clintons and Obama found a coincidence of intellectual and material interests with conservatives traditionally ensconced in the Republican Party. Their common agenda came to be espousal of neoliberalism, with the difference that the Democrats favored neoliberalism with “safety nets.” This ideological convergence assured that while the independent left would be loud in its denunciation of neoliberalism, the dominant political response to neoliberalism would not come from the left but from another quarter when the right conjuncture emerged.
That conjuncture came with the outbreak of the Great Recession in 2008. Its volatile mix of high unemployment and high inequality provided an indispensable context for white supremacy’s breaking out to become the driving force of the politics of the white population, a development that took liberals and others by surprise.
Still, it could not have turned into the virulent, destabilizing movement it became were it not for one man. This brings us again to the role of personality, a factor that at certain historical junctures can become decisive. It was a volatile opportunist with weak ties to either the Republican establishment or Democratic establishment who elevated white supremacy from one of several streams of American right-wing politics to its hegemonic status.
In the 2016 elections, Donald Trump smelled an opportunity that a Democratic leadership tied to Wall Street ignored. By tying the crisis created by deindustrialization, financialization, and neoliberalism to anti-migrant rhetoric and dog whistle anti-black appeals in a boisterous, redneck-captivating style, he was able to break through to the white working class that had already given signals earlier that it was ripe to be mobilized along racial lines.
The culmination of that process was the January 6 insurrection, a battle that Trump lost which may actually serve as a prelude to his winning the war, just as the failed Munich Beer Hall Putsch in 1923 prefigured Hitler’s gaining power in 1933.
A Third Wind?
As the era 2001 to 2021 comes to an end, the American empire continues to be dominant, but its pillars have been severely eroded.
Its ability to discipline the rest of the world has been shattered by its defeat in Afghanistan. Its credibility even among its western allies as a reliable partner is at an all-time low. Its economy may still be the largest in the word, but it is no longer the center of global capital accumulation and confronts the prospect of its unraveling accelerating—especially now that the $1.75 trillion “Build Back Better” social and climate public spending bill that was supposed to be its program for revitalization faces uncertain approval in a deeply divided Congress. Meanwhile white supremacist politics has become the hegemonic force in the politics of the white population, creating not only deep polarization but an existential threat to the world’s oldest democracy itself.
In the 1990s and 2000s, the U.S. empire seemed to have a second wind, appearing to have put the “Vietnam Syndrome” behind it and its economy apparently gliding into a prosperous maturity. As events proved, that illusory second wind was short lived.
A third wind is, of course, a theoretical possibility. But while we should be wary of deterministic projections, how such a rejuvenation can take place is much, much less evident today. Each empire descends from the zenith in its own unique way, but if there is one path that is broadly similar to that being trodden by the United States, it is that of the Ottoman Empire in the early 20th century. Like the Ottomans then, the United States now is a very sick empire, faced abroad by powerful challenges to its hegemony, eroded by economic stagnation, shorn of ideological legitimacy, and torn apart internally by a civil war in all but name.