By Nelson Denis.
During the 1970s, various academics began to notice certain weaknesses in American foreign policy. This was the time of the American defeat in the Vietnam War, the breakdown of the Bretton Woods System, the first oil crisis, and the end of accelerated post-war economic growth, which ended with what historian Eric Hobsbawm called “The golden years of capitalism.” It was also the time of the Sandinista revolution in Nicaragua, the Islamic revolution in Iran and the Soviet invasion of Afghanistan; considered, at that time, as great geopolitical defeats for the US.
The academics Robert Gilpin and Charles Kindleberger, simultaneously, formulated a similar thesis that became a reference in studies on International Political Economy: the idea that the world system requires a “hegemonic” power ─ and only one─, which guarantees political order and stability to the international economy (later popularized as “hegemonic stability theory” by Robert Keohane). According to this theory, the functioning of the world economy requires a “primacy”, or a “leadership”, of a country that provides “global public goods” indispensable to the system itself, such as a currency, the defense of free trade, the coordination of economic policies and a working financial system.
With this thesis in the limelight, Gilpin and Kindleberger interpreted the great political and economic imbalances of the time as indications of an inexorable “decline” of the United States as a hegemonic power, which no longer fulfilled its role of “stabilizer”. With some differences, this same idea continues to permeate diagnostics today. It can be seen in the countless announcements of North American decline, whether from liberal or even Marxist traditions, heralding “hegemonic crises” and historical ruptures in the face of any systemic dysfunction of global political and economic life.
The crisis of American leadership is relative, and can only be understood in a broader context that contemplates the strategies of the major world powers in their struggle for global power, mainly China and Russia. It is still very difficult to know the medium and long-term changes that the pandemic will bring to the geopolitical configuration of the world.
However, from then until today, the United States has demonstrated impressive resilience in its ability to accumulate power and wealth. In fact, many of the outlined forecasts indicators of its “decline”, turned to show the opposite. For example, it is true that the United States became the great “debtor” of the world economy, after the (unilateral) abandonment of the convertibility of the dollar with gold in 1971. But that debt did not cause a fatal imbalance in the North American economy and it rather functioned as a true motor of the global economy up until now. The dollar continues to be the dominant international reserve currency, accounting for approximately 60% of the currency demand composition of central banks. Neither the euro, nor the Chinese renminbi nor any other national currency, seem to give it any comparable competition.
Graph 1. Currency composition of world foreign reserves, percentage.
Translation from left to right: US dollar, Euro, Yen, Pound sterling, others. Source: International Monetary Fund. Note: The “other” category includes the Australian dollar, the Canadian dollar, the Chinese renminbi, and other currencies not listed on the chart.
The US percentage in GDP and global exports have been declining but it is still the main world market, with a relative share in global consumption of approximately 25%. At the military level, the US continues to be the country with the highest military spending in the world, with a budget of USD 778 billion and a 39% share of military spending in the world. With 37% of world arms exports, it remains first at the top of this list, in addition to having 1,750 nuclear warheads deployed with operational forces, even larger than Russia, which has a larger inventory. In addition, it continues to be the country with the largest deployment of military bases abroad: 800 bases around the planet with more than 200,000 soldiers.
Graph 2. Share of world military spending of the 15 countries with the highest spending in 2020.
Translation: from left to right, Brazil, Israel, Canada, Australia, Italy, South Korea, Japan, France, Germany, Saudi Arabia, United Kingdom, Russia, India, China, USA. Source: own elaboration based on data from the Stockholm International Institute for Peace Studies
There is great confrontation in the scientific-technological field, but even so, the US remains on the innovation frontier, with an investment in Research and Development (R&D) of USD 581.6 billion and a share of 28% of the world total. Of the twenty most valuable technology firms in the world, thirteen are American and, of these, three top the world ranking. The aforementioned aspects (monetary, military and technological) are not the only ones to measure the power of the States, but they are the most relevant.
Graph 3. Countries with the highest spending on R&D, 2018 (in billions of current PPP dollars)
Translation from top to bottom: USA, China, Japan, Germany, South Korea, France, United Kingdom, Taiwan, Russia, Italy, Canada, Spain, Australia, Turkey, Netherlands, Switzerland, Sweden, Israel, Belgium, Austria, Rest of the world. Source: own elaboration based on data from Congressional Research Service
For almost half a century now, academics and analysts have been predicting a “terminal crisis” in the US at the top of the inter-state hierarchy. A notable case is that of the sociologists Giovanni Arrighi and Immanuel Wallerstein, who died defending not only that the crisis of American hegemony, which began during the 1970s, was still in full swing (until their deaths, 2009 and 2019 respectively), but that it would have mutated, towards the beginning of this century, in a kind of terminal crisis of the modern world system: that is, capitalism itself. However, throughout this time the US has only continued to expand and reaffirm its dominant position and, beyond its recurring crises, capitalism continues to be the only existing mode of production on a planetary scale.
Announcements about the end of US hegemony tend to regain strength during “systemic” crises such as 9/11 in 2001, sub-prime mortgages in 2008 or the current “corona-crisis.” The latter would not be the exception to this rule, especially given the disastrous initial role that the US had in it, giving the world the image of a leader incapable of taking charge of global affairs during an extremely critical moment.
Having said that, there is still a possibility of an eventual “hegemonic transition” in the long term. However, to say that we are witnessing this decline in the present, at least from the empirical point of view, does not make any sense. The crisis of American leadership is relative, and can only be understood in a broader context that contemplates the strategies of the major world powers in their struggle for global power, mainly China and Russia. It is still very difficult to know the medium and long-term changes that the pandemic will bring to the geopolitical configuration of the world. In this sense, the general consensus says that the pandemic, rather than “transforming” the world, acted as an accelerator of pre-existing trends that could be outlined in recent years: one of them is the intensification of the Sino-American dispute. Perhaps, for now, it is one of the few things we can say with any certainty.
Illustration: Milenio