Is America Falling Behind?

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Irresistibly readable though it is, I doubt that Paul Kennedy’s The Rise and Fall of the Great Powers (Random House) has leaped onto the best-seller list simply because people want to follow the roller-coaster histories of the Hapsburgs or the British Empire or other by-gone centers of world power. The book packs its wallop because Kennedy asks aloud a question that has been silently nagging at America’s consciousness: Is America falling behind?

Of course, there has never been a shortage of American hand wringers and Jeremiahs. But Kennedy wags no moral fingers and displays not the smallest hint of any anti-American bias. Neither does his book predict any kind of inevitable doom for the United States.

Kennedy is a trim, spare Englishman in his early forties who was the first of his working-class family ever to go to college. At the University of Newcastle he read history for his education, but for his pocket money he worked during vacations as an assistant to a bookmaker at the local track and thought about earning his living as a correspondent for a leading racing journal. As graduation neared, he wrote a tryout column that correctly called a 33-to-1 shot; then he sat for 11 three-hour exams. He pulled off a dazzling first and within the week had been offered a scholarship at Oxford. The editor of the racing journal said that if he changed his mind, he could always come back.

At Oxford Kennedy read British diplomatic and imperial history and became research assistant to Sir Basil Liddell Hart, the great military historian. In 1976 Kennedy’s The Rise and Fall of British Naval Mastery appeared to much acclaim. Further books, articles, and fellowships in Europe and America followed, and in 1983 he was up for a prestigious chair at Oxford. Mrs. Thatcher’s budgetary freeze came just in time, from our point of view, for Kennedy then accepted Yale’s offer of the post he now occupies there—Dilworth Professor of History.

I’m very eager to talk to you about the United States, but I think we ought to begin by tracing the larger argument of your work. Let me start by asking you how you ever came to write so audacious a book in the first place.

Actually the impetus came out of my work on British navel history. I was never much interested in writing about naval battles. It was the interplay between England’s mastery at sea and its subservience to its domestic economy that interested me—how its economic capabilities eventually proved to be the all-important constraint for its military capacities. That put me to wondering whether it might not have been the same for Holland and Spain or Germany. For a long time I kept in the back of my mind this relationship between military and economic power. Then, in 1981, I got going. I intended at first to write a quite short book that would briefly recount the familiar tales of the great powers from the 1500s up to about 1960, with the two superpowers—the United States and the USSR—in place. Then friends and colleagues who read early chapters wanted to know more about events and economic trends that were not so familiar to them as they were to me, and perhaps more important, I became increasingly aware that the world of the two superpowers was by no means an end to my story. In fact, I saw—or thought I could see—that some of the dynamics of the past were about to be played out again, under different conditions, of course, and with different outcomes, and yet in some fashion following a familiar pattern.

You mean that you perceive some kind of grand design in the rise and fall of the great powers—a theme that repeats itself in the stories of imperial Spain and Austria and Napoleonic France and nineteenth-century Britain and twentieth-century Germany?

As a historian I’ve learned to be very, very wary of grand designs. History is a complex affair, and the more closely you look at any particular event or time, the more complex it tends to become. Just the same, there is a kind of pattern to the interplay of military power and economic power—a pattern that really isn’t very surprising. A nation requires some sort of economic advantage if it is to rise to power in the first place. This economic advantage is not just a matter of resources, however. At least as important are its institutions. In the fifteenth century, for example, Ming China was a far more populous, rich, and powerful nation than any European country, but under its mandarin bureaucracy its energies simply stagnated. Much the same with Mogul India. World mastery passed to Europe in the sixteenth century because Europe was so institutionally diverse, flexible, open. To the extent that there is a grand design, one element of it is surely a nation’s institutional adaptability to changing circumstances—or perhaps, more precisely, its institutional capacity to encourage innovation and creativity.

Trouble comes when other nations discover paths to success and steal your thunder.

Once a nation rises to dominance, however, the dynamics change. The dominant country’s interests expand. It develops far-flung commitments. Fleets and armies are needed to protect its newly won territory. Its national power is not only much larger but much more expensive. The problem becomes one of expanding its economic base to keep pace with the expansion of its political and military role.

So it’s easier to rise to power than to remain there?

You might say that. Success comes relatively quickly because you usually know what combination of factors is driving you ahead. The trouble comes when the momentum begins to crest or when other nations discover their own paths to success and then start to steal your thunder. Then there is a great debate about falling behind and about what should be done about it.

Isn’t it the case that both rise and fall take place more rapidly today than in the past?

I think that’s undoubtedly true. The economic problem facing the old monarchies was not the same as ours. Charles V, for example, as Holy Roman Emperor, lacked the administrative capacities to levy effective taxes. He was always strapped for cash. He had no effective means of raising citizen armies or efficiently taxing the citizenry (usually the aristocracy were exempt from taxation). In those days, mercenaries were a common means by which nations recruited military strength, and loans were a common means by which war finance was gathered. Both were very costly.

By contrast, a modern government has the ability to mobilize an entire society in times of war. And in times of peace the techniques for increasing national wealth are vastly more powerful than in more distant times. As we have seen in the Pacific countries, a nation can move up from the second or even third tier to the first in the course of a generation. As a consequence, a dominant power can be shouldered aside much more quickly than in the past. Think of the fact that America has slipped in less than a decade from the world’s largest creditor nation to its largest debtor. Only a catastrophic war could have brought about so rapid a change in the past.

Hence both rise and fall seem to have accelerated in our time. That has a sobering implication. In the past the process of decline could take a very long while. It’s often been said that the Roman Empire took longer in falling than the lifetime of most empires or that the Ottoman Empire was in decline from the start. I’m afraid that such a leisurely, slow, nearly imperceptible decline is not so easily managed today.

To what do you ascribe that acceleration?

It seems to be a combination of a number of things, some technical, some organizational. We simply have more know-how than in the past—more command over nature—so that when a nation like Japan or Korea is ready to take the plunge into manufacturing, it can build the necessary plant and equipment more rapidly than in the past. No less important, a nation can import scientific technology that allows it to make high-tech products with relatively low-skilled workers. That’s how Taiwan learned to make computer parts. Meanwhile, the international transmission of information—and of credit—is as quick and easy as a telephone call next door.

All these new capabilities allow manufacturing activities to be transferred from one part of the world to another in a fraction of the time and cost it would have taken fifty or even thirty years ago. A country that imports the right technology, combines it with a disciplined—and, of course, low-wage—labor force, and finds the right way of putting together private entrepreneurship and government backing can rise in the world with great rapidity. Contrariwise, the competitive advantage of older, more established centers can disappear with equal rapidity. But that is certainly something Americans know about at first hand.

 

 

 

 

 

Do you think the loss of our markets is a sign that America is losing its status as a great power?

There is no blinking the fact that the United States has lost its relative place in the sun. After World War II this country was the steelmaker to the world, the breadbasket of the world, the auto manufacturer for the world. America’s predominance in manufacturing and in agriculture—a mighty combination, you must admit—was without peer. Not surprisingly, the American dollar was also the strongest currency in the world. All these elements of economic superiority have been eroded. The United States is still the single largest economic entity on the planet, but it is not any longer the entity whose performance puts it in a class by itself, hopelessly beyond the reach of any would-be competitor.

On the contrary, we have seen the most astonishing “invasion” of this economy by foreign products. What is perhaps even more significant is the rapidity with which the American sense of its economic superiority has given way to a feeling of its having lost its bearings—of not knowing how to compete or where to compete.

Why do you say “even more significant”?

Perhaps because the present mood of soul-searching in the United States reminds me so strongly of a very similar kind of self-questioning in Edwardian times, when many thoughtful people in England felt that greatness was slipping through their fingers and didn’t know what to do about it.

How do your investigations and historical perspective help us see our situation more clearly?

The thing that strikes me the most strongly is that the general world situation has become much more complicated over the last few years. That is probably what sets the stage for the American frame of mind. And I’m not just thinking of the advent of nuclear weapons. I am thinking about the end of a world in which any single power can exercise global hegemony of the kind we had at the height of the British Empire and again in the heyday of American power in the decades following World War II.

 

The main reason, I think, lies in the growing fluidity of economic power. There are no more impregnable geographic bastions of manufacturing strength, as once there were. There are no dominant centers of financial power comparable to the London-based finance of the late nineteenth century or the New York-based finance of the 1950s. West Germany and Japan are major players in the manufacturing and financial worlds, and will continue to be. Other economies, like the Korean, are on the rise. Still other countries, such as perhaps Brazil, are waiting in the wings. India may soon be heard from. What of China? Of course, America is today and will be tomorrow a great military and economic power. But not the only power.

What are the consequences of this more complex map of world power?

One consequence, I feel, should be the rise in the importance of diplomacy. A bipolar world leads inevitably to military trials of strength—an arms race. A multipolar world leads much more naturally to diplomacy. We are entering a world that is much more open and indeterminate than the one we’ve left. Such a world could be more promising—or more unstable.

Why unstable?

Because one-power hegemony has an obvious stability—think of the Roman Empire!—and even a two-power world has a certain stability, so long as it does not lead to runaway rivalries. Multipolar worlds, such as Europe in the early nineteenth century, do not possess these natural equilibriums. They require a sensitive adjustment and adaptation to a map of power that is constantly being redrawn, not a dogged pursuit of policies designed for a map that never changes. However, we must not think that today’s new instability poses problems only for the United States. Aren’t the Soviets also challenged by this new state of affairs, with the rise of new military and economic centers in the East? One cannot any longer meaningfully describe the overall historical situation simply in terms of a free world against an unfree world, or of the capitalist system against planned systems, or even of East against West. At the end of David Calleo’s Beyond American Hegemony, he tantalizingly suggests that, as two “older” powers, Washington and Moscow may find they have many common interests in the emerging unstable world. One can only speculate about that. What I think is quite clear is that diplomacy must play a far more important role in the coming decades.

How well equipped do you think this country is to carry on such a world diplomacy? Don’t I pick up from your book a deep ambivalence about the way you assess the United States—at once admiring its vitality but deploring its tendency to see everything in oversimplified terms?

Of course I have my uncertainties about America’s diplomatic capabilities. I suppose I would about anyone’s. I often think that a country’s particular weaknesses are the obverse side of its strengths. The American strength has been its wonderful optimism, its “can do” attitude. That has given the United States great energy. But it also brought the belief that sheer optimism and resolve would by themselves always carry the day. This is a view that can prevent its holders from taking a critical stance with respect to their own situation. Historical self-confidence carries a price at those times when reexamination and fresh stock taking may be the order of the day.

To me this lesson seems to apply especially in the economic sphere. The United States rose to power in a period when all-out entrepreneurship, combined with a generally negative view of government, carried everything before it. I’m thinking of the time when you built your vast railways and your unparalleled steel industry, then your electric utility industry, your consumer appliance industry, your automotive industry, and later your computer industry. Under that general outlook the United States had a triumphant economic career for a century.

Therefore, it is very difficult psychologically to accept the possibility that today other ways of mobilizing and organizing the economy may be more effective—for instance, the ways in which the Japanese openly use the state as a kind of partner, often the senior partner, of private enterprise. Americans find it hard to imagine that ministries and bureaucrats can work successfully with entrepreneurs and captains of industry. Mind you, I am not saying that Japanese methods are intrinsically better than the American or that they could be imported, as we import their cars. But the very possibility of doing things in another way does not come easily to you.

The same is true, of course, of other countries. What has been called the British Disease used to refer to the inability of my own countrymen to change English ways of running a business to American ones. Perhaps today it refers to their difficulty in running them in an Italian or a Swedish fashion. Maybe one day in the future that challenge will come full circle, and the Japanese will be worrying about why they can’t match the new-American—maybe by then even the new English—way of organizing their national economic effort.

America’s commitments—and its conception of its role—are unrealistic.

For the moment, though, the gauntlet is at the feet of the United States. This is the country whose established ways of thinking and doing are being challenged. That brings us back to what we talked about earlier, the problem of adaptation and flexibility. That has been the great secret of success and failure, of rise and fall. I suspect it will be the same today and tomorrow.

I take it you have some doubts about America’s capacity to adapt.

I don’t regard the American future as anything like foreclosed. But I’m concerned lest there be barriers in the American outlook that will make it hard to respond to challenge, especially on the economic front. To my way of thinking, in the face of so much uncertainty the best chance of remaining flexible and adaptive—competitive—is to raise the share of resources going into infrastructure. I don’t just mean roads and water mains. I mean first-class educational systems, basic scientific research, the production of scientists, engineers, skilled workers of all kinds. That is not, right now, a generally shared urgent priority for most Americans.

What course should we pursue?

I see the answer in a group of coordinated responses, not in any single effort. Let me begin with the military/diplomatic sphere. The United States is carrying an immense military burden, which it imposes upon itself because it still perceives itself as the world leader it was forty and thirty or perhaps even twenty years ago. It is that no longer.

Soviet military strength quite aside, both the American experience in Vietnam and the inability of the United States to control the Persian Gulf situation are clear warning signals that the days of unchallengeable American military might are in the past. Do not forget that there was a time when the United States could (and did) unseat an Iranian premier whose policies were regarded as unfriendly and oust or install whatever regimes it wanted in Central America with a few Marines. That period is past. So I sense that America’s military commitment—perhaps I should say its conception of its role—is unrealistic. That is, I am sorry to say, an old story that we can trace back to the Hapsburg monarchy in the sixteenth century, and no doubt much earlier: too many fronts to defend; too many “enemies,” too large a military burden to be borne by the economy. In America’s case it means devoting too large a proportion of its best scientific and skilled manpower to ends that do not add to the growth of the economy. If history teaches us anything, it is that an emphasis on military power over economic vitality leads to a deterioration of both.

And what about the nuclear question?

In a sense we have to put the nuclear issue to the side. There is simply no precedent for the possibility that using a weapons system might destroy not only the enemy but also oneself. But non-nuclear military force is still extremely important. So I think the next President should seize the opportunity presented to us by Russian perestroika to say to Gorbachev: “Look, we both have to modernize and improve aspects of our societies. We have our own perestroika to attend to—different from yours but also needing our full attention. So let us seek to de-escalate together, realizing that we are very different kinds of societies that nonetheless have some common problems ahead of us.”

Then I would like to see this country mount a new diplomatic effort to persuade its allies to share the burden of European and Pacific defenses more equitably. That does not mean that America should pull out its troops from West Germany or South Korea with a shrug of its shoulders. It does mean that the United States is today well placed because of its economic problems to persuade the rising nations of the West and of the Pacific that it is in their long-term interest to share more proportionately the expenses of an adequate military defense.

I am also worried about the massive American domestic deficit and the unprecedented foreign deficit. The loss of this country’s accustomed competitive edge in manufacturing and the loss of its traditional place at the apex of world finance is a dangerous combination. The answer here is not to resort to defensive measures, such as old-fashioned protectionism, but once again to encourage the innovation, flexibility, and adaptation that seem to me the keys to success. This will certainly involve such changes as new management structures and attitudes in business; one already sees these appearing. Sooner or later I believe it will have to lead to new ways of coordinating public and private activities. These are matters about which economists and political scientists will argue. Speaking as a historian, however, I am certain that adaptability will necessitate a shift away from national consumption—the credit-card way of life as well as unproductive government spending—into formation of human and physical capital. That last may be a painful process.

Perhaps not so very painful if we consider that a great deal of that shift should result in an improvement of the quality of our lives—that is, in our inventories of skills and knowledge.

Painful even then. I recently heard of a state legislature that was considering lengthening the school year to match that of the Japanese—about 240 days instead of 185. What a furor that started! The tourist industry protested. The kids protested. Some of their parents protested. The teachers wanted more compensation. So the trade-offs for redistributing resources into the capacity for future growth and flexibility are not painless. Politicians running for office may use slogans like “Hard choices,” but they don’t spell out those choices. None of them are willing to talk about raising taxes in order to increase the growth potential of the nation. None of them are even willing to mention raising taxes to the levels that were around before Mr. Reagan gave people a lot of pocket money. What I call the “thinking classes” are already wrestling with these notions. But the American electorate in general is not, and neither party wants to be the first to mention it. What is fascinating to me is that Gorbachev faces something of the same kind of problem—indeed, a much more difficult one.

 

 

 

 

People don’t want to hear bad news. They don’t want their institutions criticized.

Does he? Gorbachev knows what has to be done: An impossibly inefficient economic apparatus must be dismantled and a new one installed. Our problem is that we do not know exactly what has to be done.

Perhaps. On the other hand, The New York Times a little while ago carried a story about Gorbachev in some village telling the townspeople about how bad Soviet medicine was, how bad their production system was, how backward their science was. An old woman spoke up, saying, “Why are you bad-mouthing the Soviet Union all the time?” I remember I thought, It’s the same problem there as here. People don’t want to hear bad news. They don’t want their cherished institutions criticized or even held up for examination. One can understand that and even sympathize with it. But however understandable, these attitudes of defensive pride get in the way of making the changes that may have to be made.

You present a very sobering picture. But isn’t it likely that the very growing awareness of our problems will lead us to overcome them? Isn’t it the challenge that generates the response?

Of course, there is such a possibility. But I wouldn’t want to count on it. To turn around the vast inertial system of a country like the United States quickly is no easy matter. I remember a newspaperman asking a British minister in the midst of some crisis in the 1970s, “Are we at the edge of a precipice?” and the minister answering, “No, but I wish we were.”

I get the point.

The danger, you see, is that of sliding gradually downhill, simply because no single dramatic event will come along to awaken Americans to the need for change and keep them awake for a decade. I am very far from composing a dirge for the United States. But it strikes me as the height of foolishness not to recognize its vulnerability—I do not mean to military attack but to a further worsening of its relative economic position in the world. That is not in itself a bad thing. It is good for Europe and the Pacific to catch up. The hope, as I see it, is for the United States to take its place among the concert of nations fortified with the knowledge that it is, and with intelligence can remain, a great power, yet no longer perceiving itself as, or even desirous of being, the great power.

Can the United States manage such a remarkable transition? Can it undertake the difficult process of pulling back its military commitments and of undertaking those changes needed to help us find a productive and contributive place in the world economy? History doesn’t give us answers to questions like that. I see my task as pointing to the lessons of the past, so that this nation—I should say all nations, not just this one—will not have to learn those lessons over again.