TELOSscope: The Telos Press Blog

World Order and the Decline of U.S. Power: Hard or Soft Landing?

This talk was presented at the 2009 Telos Conference.

As we consider U.S. foreign policy for the next several years, there seems to be a growing consensus that the United States will have to adjust to a less unilateral role in maintaining world order and that we will be living in a more multipolar world. This is the conclusion of Global Trends 2025: A Transformed World, recently published by the National Intelligence Council. But this report’s view that such a multipolar world will lead to both an end of ideology and a return to the kind of balance of power politics of the nineteenth century overlooks major ideological differences between different cultures that will likely become more prominent in global politics. To understand why, we should consider both the motivations of recent U.S. engagements with the rest of the world and the ideological implications of shifting power constellations in the future.

The Continuing Consequences of the End of the Cold War

To start with, there are clearly both political and economic pressures that indicate a shift in the role for the United States in world politics. Since the end of the Cold War and particularly during the Bush administration, the United States has taken advantage of its sole superpower status in order to pursue an interventionist agenda to defend liberal democracy as a political form, in a sense continuing the ideological battles of the Cold War period. To the extent that this agenda has coincided with a more general international interest in preventing state-sponsored and partisan terrorism, the United States has also been successful in recruiting other countries to aid in this project. Intervention in Kosovo, for instance, was supported as an attempt to prevent the Milosevic government from terrorizing the Albanian Kosovo population, and intervention in Afghanistan was supported by many countries as an attempt to prevent future acts of terrorism after September 11. But the rest of the world has been less willing to support U.S. intervention in cases where the goals were not so clearly aimed against terror. The second Iraq War demonstrates the importance of the terror element in world opinion, to the extent that the onus was on the Bush administration to demonstrate that Iraq was developing weapons of mass destruction that would eventually be used in terrorist acts. The lack of such weapons delegitimized the intervention as a way to prevent terrorism, and the United States was left to pursue this war with only a few allies.

The example of the Iraq War leads to two conclusions about the major currents of international politics. First, the U.S. ability to mobilize world opinion in favor of military intervention in clear cases of either state-sponsored or partisan terrorism indicates a degree of world consensus about what is to be actively prohibited. This consensus may not be enduring, however, to the extent that opposing ideologies confront each other. In the conflict between Israel and the Palestinians, terror is being used as a weapon on both sides because the conflict really does pit two peoples with opposing ideologies against each other for control of the same territory. Second, the Bush administration’s decision to pursue the war in Iraq in spite of the paucity of clear evidence about weapons of mass destruction reflects the extent to which this war was part of a neo-conservative interventionist strategy to promote liberal democracy. As subsequent reports have shown, neo-conservatives such as Dick Cheney and Paul Wolfowitz were committed to invading Iraq in order to establish liberal democracy in the Middle East. The idea was that liberal democracy would naturally spread once it was established and its merits became appreciated by the people in the region. This prejudice toward liberal democracy in the U.S. approach to maintaining peace and order has been a recurring theme in twentieth century U.S. foreign policy: within Wilsonian liberalism, during the Cold War as a defense of liberal political as well as economic policy, and as part of George W. Bush’s neo-conservative goal of expanding liberal democracy.

Changes in the Global Economy

While this liberal agenda has run into the problem that its seemingly neutral procedural prescriptions actually include a set of ideological assumptions that have to be established as part of the political-theological framework of a territory that is to be “emancipated” (on this point, see my “Liberalism as a Political Ideology in U.S. Foreign Policy”), the Global Trends 2025 report also points out correctly that changes in the global economy indicate that U.S. foreign policy will be forced to adhere to more multilateral strategies in the future. The key economic change noted by Global Trends 2025 is that the United States will no longer be able to benefit from the economic flexibility that resulted from the privileged status of the dollar as a world reserve currency. For the past decade, the United States has been able to finance much of the cost of foreign wars by issuing new debt at low interest rates, in spite of its increasing foreign debt. This period is coming to an end, as the long-term capital imbalances are due for correction. The main uncertainties have to do with the timing and the specific form of this correction.

Much of the increasing U.S. foreign debt has been held by exporters such as China, which has invested in dollar securities partly because of the perceived stability of the dollar and partly as a way for China to support its export policy. In holding this debt, China has been able to avoid a rise in its own currency while providing the Americans with the means to continue purchasing their goods. Rather than holding or spending U.S. dollars, sovereign wealth funds used them during the boom times to purchase U.S.-denominated securities, continuing a circulation of dollars in which they went abroad to pay for U.S. domestic consumption and then returned to the United States, not as a way to pay for U.S. goods and services but in the form of new loans whose proceeds were sent abroad again to pay for more imported goods. Now that the market cycle of dollars has collapsed with the housing and financial crises, these dollars are continuing to cycle back to the United States in the form of loans to the U.S. government. But in spite of the Bush administration’s best efforts to put this money back in the hands of consumers and create more spending, these dollars are no longer being sent back abroad to pay for new purchases. Rather, they are being used to pay down previous debts. Consequently, export economies are no longer earning as many dollars, and the U.S. dollar debt that they hold does not have much room to increase. While holders of dollars have up to now been content to invest them in Treasury bonds, at some point they will need to start cashing in their dollars rather than rolling them over into new loans. China in particular faces a big decision on when to begin using those dollars to finance their stimulus plans. Whenever this point comes, and there are indications that this point is approaching (see for instance Peter Schiff’s recent article in the Wall Street Journal), it will lead to a fall in the value of the dollar, a rise in interest rates, and dollar inflation. The initial decline in the dollar could well lead to such a decline in confidence that the dollar will lose at least a part of its status as a reserve currency. At this point, the United States is going to run into severe limitations in the amount of new debt it can issue, and it will not be able to fund foreign wars without immediate economic implications such as increased taxes, higher interest rates, and inflation, all leading inevitably to lower domestic consumption.

It is already the case that China’s creditor status makes the United States dependent on China for economic stability, with the consequence that it would be more difficult for the United States to confront China on issues of foreign policy. While there are a number of ways that the current capital imbalances will correct themselves, none of them bode well for the long-term capacity of the United States to undertake foreign intervention. A sudden crash in the value of the dollar would lead to an immediate crisis that would preoccupy the United States, perhaps paralyzing it temporarily on the foreign policy front, but would also be accompanied by a global financial crisis with unpredictable consequences. A more gradual decline might mean a long-term malaise for the U.S. economy in the midst of a recovery in the rest of the world. Both scenarios indicate that the United States will be unable to play the kind of global policing role that it has taken over in the past two decades.

The Political-Theological Assumptions of Liberal Democracy

In addition to these economic determinants of U.S. foreign policy, recent events have led to a decline of liberalism as an ideology and therefore a decline in the legitimacy of the United States as the guarantor of world order. Though liberalism has usually been linked to capitalism and free markets, the example of China has led to the idea that it might be possible to develop capitalism without an accompanying commitment to liberal democracy. It remains to be seen whether China can maintain political stability with an authoritarian system in the face of an economic slowdown, but for the moment China’s example has made it easier for governments to support free markets while also maintaining authoritarian rule. The U.S. experiences in Afghanistan and Iraq have also dispelled the idea that there might be a natural tendency for all peoples to gravitate toward liberal democracy once they have been liberated from a repressive government. The toppling of repressive governments in these countries did allow for more expressions of popular sentiment. But this expression did not result in a natural growth of liberal democratic structures, but in a reappearance of cultural differences that were previously suppressed. The development of liberal democratic structures in Iraq, for instance, has occurred over the foundations of a prior set of religious sectarian and tribal commitments. As a result Iraqis, do not seem to have developed a true commitment to liberal democratic principles as much as loyalty to previously existing groupings that are continuing their conflicts with each other within liberal democratic institutions. If this is the case, then Iraqi democracy is in danger of heading toward the same fate as German democracy in the Weimar Republic. That is, the key factions (Shias, Sunnis, and Kurds) could continue to be the primary focus for the development of political loyalties, and these loyalties could eventually undermine liberal democracy, replacing it with the rule of one of the main factions. To avoid this fate, the Iraqis would have to develop a national consciousness with enough ideological legitimacy to suppress the significance of regional and sectarian differences (see “The End of the State of Exception in Iraq”). This dynamic indicates that the victory of liberal democracy is not a victory of freedom as such or of democracy but rather of a particular set of representational forms connected with secular nationalist ideology. Liberal democracy, as a set of procedures, is not just a neutral mechanism but a set of rituals with a specific orientation requiring representational authority in order to establish itself.

Its proliferation indicates the spreading of a specific ideology of secular nationalism, and liberal democracy only remains stable within a population with a homogeneous political identity. Its spread then requires world-wide agreement on a single specific conception of the form and structure of a political entity, namely the nation-state. But the nation-state structure is itself a particular historical form and not some kind of natural way for a political entity to be set up. So the United States’ championing of liberal democracy has meant that it has been trying to institutionalize this particular understanding of politics for the whole world, even for political entities that currently are not structured as nation-states. For such political entities (Yugoslavia and Iraq are primary examples, but one might argue the same for India or perhaps China), the establishment of liberal democracy without the requisite homogeneity runs the risk of a dynamic of disintegration into competing ethnic or sectarian groups, possibly leading to civil war and break-up along ethnic or sectarian lines. So while the United States in general supports a stable world order and frowns on wars of aggression or the changing of territorial boundaries, it does support such territorial changes in cases like Kosovo, in which such changes support the proliferation of the nation-state model. The U.S. attempt to spread liberal democracy in Iraq has been so difficult, first, because ethnic and religious differences create awkward splits in which for example the creation of a Kurdish nation-state would change the borders of Turkey as well, and second, because it has become clear in the conflict between Shias and Sunnis that the political fault lines in Iraq do not follow a purely ethnic logic but also religious and tribal ones. The U.S. policy of support for liberal democracy has consequently also been an attempt to suppress the importance of non-ethnic ways of defining political entities. This suppression has been the major reason for the local perception that the United States is not freeing the Iraqis but imposing its system onto it.

As it becomes clear that the U.S. mode of providing order to the world involves the promotion of liberal democracy and the establishment of a particular understanding of politics based on the nation-state, other peoples who have alternative ways of organizing political entities will continue to resist the U.S. conception of world order. This resistance, coupled with the changing economic circumstances that have supported U.S. power, will lead to a new ordering of world politics. While the Global Trends 2025 report recognizes that the United States will have to cede its status as a single superpower whose hegemony dominates world politics, it also contends that this new world order will bring with it both the end of ideology and a return to the kind of balance of power politics that characterized the nineteenth-century balance of power in Europe.

A Truly New World Order

But the particularity of liberal democracy that I have outlined indicates that a new world order in which China becomes a major force will in fact be very different from the nineteenth century. In the “Great Game” of nineteenth century world politics, the major world political players consisted purely of European states, with the later addition of Japan by the beginning of the twentieth century, in which there was a shared outlook about the character of politics. As Carl Schmitt has laid out in The Nomos of the Earth, wars between European powers during the eighteenth and nineteenth centuries were very civilized in that they were limited wars that did not involve regime change. When one power occupied the land of another, it did not change the political or administrative structure of the occupied territory but simply changed the ruler. This meant that the balance of power in Europe did not really result from a limiting of war but rather from the European attempt to create a mutual self-defense against political changes that would result in the destruction of the European political order. If wars between European powers were limited, it was because they did not involve deep ideological differences about the suitable structure of political life but only disputes about succession and resources. The key exception to this was of course the case of the Napoleonic Wars. But this exception demonstrates precisely the extent to which the European political order was constructed as a common defense against the threat of a radical transformation in the terms of political life. Because Napoleon did not just change the ruler of the territories that he conquered but attempted to transform the entire system of political life from a dynastic to a republican one, war became increasingly total during that period. Thus, the true major ideological conflict of the nineteenth century between a dynastic and a republican political structure was resolved through a series of revolutions that were not limited in the way that interstate wars were limited. In this context, the late nineteenth-century conflicts between Europeans were minor disputes that were based on an overarching common consensus about the form of political life. Similarly, the relationship between Europe and the rest of the world was one in which Europe established the hegemony of its understanding of politics and the rest of the world became either a set of colonies for Europe or “free” land that was available for European appropriation. These colonial wars were also not limited but total in their consequences for the colonized peoples. The balance of power amongst European sovereigns and the functioning of a kind of non-ideological power politics consequently was premised on the unity of the great powers regarding both the proper structure of political entities and the common project of colonizing the rest of the world.

The new world order toward which we are moving in the twenty-first century may not consist of any true superpowers, but rather encompass a set of more or less powerful regional powers including the United States and China certainly but perhaps also India, Russia, and the European Union. But these different powers will not share the conformity of ideology and political structure that stabilized the relations between the nineteenth-century European great powers. Instead, these political entities will include differing political systems and ideological assumptions. Significantly, the Global Trends 2025 report fails to list the Islamic world as anything but a zone of instability in the twenty-first century. The linking of religion and politics in the Islamic world suggests an alternative way of imagining political entities and consequently poses a challenge to a nation-state conception of politics. If this specifically liberal democratic understanding of politics will no longer be hegemonic, a new set of risks and possibilities opens up arising from different understandings of what constitutes a valid political structure. Though a rising China seems to bode for increasing stability, continuing ideological differences leading to differing political structures could be a destabilizing influence. If the rise of China indicates the development of regional political blocks, it also presages the decline of the hegemony of liberal democracy as a universally recognized model for political structure. To the extent that the United States continues to pursue a foreign policy that is oriented around liberalism, there is the risk that conflicts between regional blocks could begin a new kind of dynamic familiar from the Cold War in which the different regional blocks establish separate political-economic spheres that would compete for legitimacy and resources. The challenge for U.S. foreign policy is to descend from the high horse of liberal democracy while at the same time helping to establish the global framework that could mediate between both the economic interests and the political-theological differences amongst the disparate regions of the world.

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