The End of Empire?

In a recent article in Institutional Investor entitled “Paradise Lost”, Nouriel Roubini and Ian Bremmer argue that the Great Financial Instability will accelerate the decline of American power, especially relative to that of the rest of the world (with China in the van).  I find this point of view plausible in the short term, but more doubtful over the course of the long-term.

It is difficult to imagine that the worst of this crisis is behind us.  We are likely to encounter rapid and dramatic cycles of boom and bust as attempts to boost credit compete with the debt and dislocation caused by loose money and state intervention over the last century.  This kind of instability is likely to make everyone look like fools.  No sooner will bears look vindicated than we will witness an unforeseeable bull market.  The Austrians will look like they have got things figured out, right before they misinterpret the economy, and the Keynesians will appear to have been right all along.  And vice versa.

For this reason, I suspect that the Tea Party, which appears to be at its height now, will fizzle out within a year or two.  Ron Paul was on AC360 last night saying that the credit crisis was equivalent to the economic failure of communism during the cold war.  Ron Paul and the Tea Party and libertarianism are still regarded as fringe elements in American society, unfortunately, and if unemployment should drop, as I believe it will over the course of the next year, how many people will be showing up for Tea Party rallies?

The kind of volatility that we are going to be facing over the coming years will likely discredit all schools of thought and leave the demagogues of right and left the last ones standing.  In a period where theories have failed or appeared to fail, people with simplistic, passionate, and apparently consistent solutions will battle amongst themselves for power over a growing state apparatus.  As John Calhoun wrote, as I recall, in his brilliant Disquisition on Government, this is the terminus for all majoritarian democratic systems, and our monetary system is just rushing us down the path.

From this perspective, America is already undone.  We are just waiting for Fate to fill out all the paperwork.  And, in a sense, that is true.  America as we have known it is long gone.  But, then again, it has been long gone for a long time now.  One could turn to the Great Society and the Vietnam War, the New Deal and the Second World War, Progressivism and the First World War, Lincoln and the Civil War, and so forth.  The federal government and statism have been on the move, absorbing and assimilating everything in its path.

On the other hand, I do not think that the American empire is undone yet.  It is likely to face very serious internal and external challenges, but so will every other country and civilization on earth.  And, those states, especially China, face almost inconceivable obstacles on their way to regional domination, never mind global domination.

China’s massive regional, economic, and social disparities are held in check by the promise of economic growth and national vindication, but its state and society are structured, despite all pretense, as a reactionary force.  It reacts to foreign initiative, either negatively or positively.  It is an export-driven economy, not just because it is good for unemployment and keeping the citizens content, but because a consumer-driven economy is one where individuals assert themselves, not just materially but spiritually, as well.  In a consumer-driven economy, people have aspirations, not just to accumulate cars and houses and so forth, but this kind of car with this kind of house.  A massive, authoritarian state can only permit this kind of assertiveness within the elite, and even there, it threatens to spill out into the populace, provoking jealousy, corruption, and hypocrisy.

If this global economic stability—lest we forget, the whole world has been sucking at the teat of easy money, not just America—should break the American-Chinese symbiosis, both nations will have hell to pay.  China is the one, however, that is likely to have not just a civil war, but a civilizational war.  China’s reactionary society is desperate to define itself.  The arrival of the West on China’s doorstep has been bemoaned by the Chinese from the beginning.  They trace their suffering and inferiority to the West’s greed and imperialism, but they are also conscious of the weaknesses of their own society, weaknesses that were first violently made manifest in 1919 during the May 4th protests and culminated in Maoism, but have also found expression both before and after that key date.

China also has a great deal of trouble getting along with her neighbors.  America’s pretensions to a liberal democratic empire have been fairly derided, but they stand in stark contrast to the pretensions of China.  It does not take a lot of effort to imagine China at war with one or more of her neighbors within the next three years.  I am not making a prediction, but I only mean to say that China has been on the verge of violent confrontation with virtually every neighbor within very recent memory.  Within China’s borders, it of course oppresses both Tibetans and Uighurs, both of whom require liberation from feudalism, according to their Han masters.  China has fought a hot war with Vietnam and India.  Its oppression of its Muslim minority has rankled Muslims around the world, especially Turks.  It has been on the verge of war with Russia.  It regularly threatens war with Taiwan.  It is presently in a potentially dangerous dispute with Japan, ostensibly over control over a set of islets between Japan and Taiwan, but in reality over domination of East Asia.  It is the sole support for the most frightening regime on the planet, North Korea, which it uses as a proxy in its disputes with Japan, Taiwan, South Korea, and the United States.

Ironically, the Pax Americana maintained in East Asia is a great boon to the Chinese.  Were American power to recede in the area, the Japanese, Koreans, Taiwanese, and Russians would all reassert themselves.  Were American military and economic power to recede simultaneously, China would be forced to deal with a disintegrating external order while disintegrating internally.  All of East Asia would be in turmoil.  It has no mechanism historically or in the present to address the problems of regional order.  Hegemony has always been the ideal in these countries, and each, especially China and Japan, but also Korea, believes it should be the benevolent hegemon.

The last time Western power receded in East Asia and China was disintegrating under the early republican period, Japan asserted herself most violently to fill the void.  There is no reason to assume that something similar wouldn’t happen.

Roubini and Bremmer argue that what we will face is, not a multipolar world, but a nonpolar world.  If that is the case, that nonpolarity cannot long endure.  New states or renewed states and new religions and movements will compete to fill the void, and a new order will emerge.  America stands the best chance of leading that new order, although she will likely have sacrificed a number of what she once regarded as core values along the way.  So long as America has provided a framework of trade and peace for the rest of the world, other states have been able to find a role whereby they could find a modicum of prosperity.  That prosperity, like America’s, has largely been an illusion, and these states lack a tradition of running independent, stable economic and political systems.

The coming instability is bound to challenge and change everyone, but what America has accomplished cannot be achieved overnight and will not be lost overnight.  No great empire has vanished in a flash.  It took decades and centuries of failed adaptation and decline.  This time is no different.

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