Currents of destabilization race around the world. Conflict erupts. Things seem to be falling apart, wherever you look. The international order, breaking down. Threats intensifying. Tensions rising. Crises proliferating, blending, multiplying. Why? What’s going on here? Today, we’re going to talk about the fraying of the Pax Americana, aka, the American Century, America as world power, American hegemony.
Paul Krugman just wrote about it—here’s how he put it.
“Even serious students of international affairs are noting that the world seems to be becoming more dangerous, with many local cold wars turning hot, and suggesting that we may be witnessing the end of the Pax Americana.
But why is the Pax Americana in decline?”
Krugman’s answer, basically, is “The Republicans.” I’m going to explain it slightly differently. I think the problem goes deeper. And as I do, please note: I’m not blaming anyone, this isn’t about finger pointing, and its certainly about not about left vs right. Atrocities are horrific things and they should always be condemned. Don’t over-interpret it or take it personally—we’re going to try to speak a little objectively. This isn’t really about Israel and Gaza, as an explanation—that’s a sadly special case. I’m going to try and paint a picture for you about why the world order is breaking, in hard terms of political economy. And please note, “Pax Americana” isn’t my term, nor is the idea that it’s in decline mine, it’s something political scientists talk about, and think is breaking and fraying themselves, so the question is: why?
It’s not that America is, as Krugman seems to suggest, now a superpower without teeth. America has teeth aplenty. My interpretation is that America was and is a superpower, in fact, the world’s dominant power by a very long way—only that power hasn’t been used in wise and lasting ways. America’s Paradigm of Peace and Prosperity hasn’t even worked for itself…it ended up, today, a nation in profound crisis…so how could it also work for something as big as…the world? To build a stable, secure, optimistic, cooperative, and future-facing world (versus one desperately, angrily, now, regressing, racing back to pre-modernity)?
When I put it that way, perhaps you see a glimmer of what I mean.
Why is the world destabilizing? Why is democracy in steep, sharp, shocking decline, yes really—to the tune of, right about now, 5-10% a decade? Why do currents of conflict race around the globe, and why are authoritarianism and fascism resurging?
Let’s take a hard look at the world—not opinion, not speculation, an empirical, factual look. Hold on while I put on my economist slash World’s Top 50 Thinkers hat.
The world today is an eerie echo of America. What’s America’s investment rate? About 20% or so. What’s the world’s investment rate? About 20% or so. Now, that might not sound like a Big Deal to you, in fact, I know I sound like your Neighborhood Financial Advisor, but let me assure you, it’s the Number That Explains Everything. Why?
What does an investment rate of 20%…give…America? Americans? Not much. They don’t enjoy the sophisticated, robust, cutting edge social contracts that place like Canada and Western Europe enjoy. Made of advanced forms of public goods, like healthcare, retirement, higher education, media, and so on, right down to, for example, high speed rail, as universals. And so American life has fallen apart—now, there’s widespread poverty, two thirds of Americans living at the edge, paycheck to paycheck, over a third without enough every month to just pay the bills.
An investment rate of 20% isn’t enough. For what? To have modernity itself. Because an investment rate that low can’t provide the systems, institutions, and goods that we think of as modern. Those are public goods, based on shared investment, like Europe and Canada enjoy. Yet without them, what happens? Again, we just have to look. Empirically. At America itself. Democracy begins to implode, as people turn on it, feeling abandoned, betrayed, in rage, despair, old hatreds surging. It’s me or you. People or turn on one another, in a desperate battle for survival and existence. Peace implodes, and conflict rises in its place. So let me say it again. An investment rate of 20% is too low to have modernity itself.
Now let’s come to the world. What do you see?
The world lacks what are called global public goods. Just like America lacks public goods at its level. Precisely because in both cases, too-low investment levels are…eerily similar.
Let’s go back to Stiglitz’s foundational definition of global public goods to remind ourselves what they are. "In Stiglitz (1995) I identify five such global public goods: international economic stability, international security (political stability), international assistance, and knowledge." That's just a beginning—to it, we could everything from development itself to healthcare, education, and finance—but you get his basic, and big, idea.
So: America. A critical lack of national public goods. The world: a critical lack of global public goods. America, critical, as in: a threshold at which democracy itself begins to shatter. The world? Right there, too.
That’s not a coincidence. That’s a relationship.
The world lacks these Keys to Modernity, global public goods, for the same reason that America lacks public goods, its own keys, at a national level, too. Because, of course, American thinking, and I mean that in a formal way, opposes them. You’ll almost never hear, for an example, an American economist argue that everyone should have healthcare or retirement or so forth—just wouldn’t be “competitive.” Pure crackpottery, because of course….places like Europe do…and they have now vastly higher living standards.
That’s the Pax Americana. The real one. It’s not just about military might or deterrence. It’s about a paradigm. A broken one. The Paradigm that the World Should Develop Like or Into America, more or less, if you want to think about it that way. Another way to put that is what’s sometimes called the “Washington Consensus,” that is, neoliberalism, and I’ll come to that in a moment. Think about this way, if you like: keeping the peace, or producing peace? What’s the difference? And if America itself melted down into conflict and rage and paralysis by way of deprivation, inequality, and stagnation, wouldn’t a world oriented by it towards its model of growth and prosperity, do just that…too?
The world is a mirror image of America precisely because America is its dominant hyperpower, by a very long way. Hegemons create worlds that reflect their values, priorities, societies. It can scarcely happen any other way. And the real problem today, when it comes to “international order,” is that just as America’s Paradigm of Development failed for itself, it’s also failing for the world, too.
Let me make that more concrete for you with a counterfactual, and that just means, “a thing that could have happened but didn’t.” Imagine that the world was instead developed along the European or Canadian model.
It’d be very, very different. We’d have built a world…with…global public goods. Or at least more of them. We’d have focused on giving people around the world everything from healthcare to education to retirement, right down to bodily autonomy and safety, which would imply self-governance and self-determination. Grand institutions would have been constructed to bring those rights to life, whether at regional or international levels.
None of that happened. And of course as none of that happened, a lack of development is now catching up with the world. The UN warns that many of its goals—the most significant indicators of human progress we have—are way off track, stuck, going into reverse. That’s not a coincidence—these are the real world outcomes of the Pax Americana. The American paradigm hasn’t worked at a civilizational level, as a world.
As a consequence, destabilization is spreading. Conflict’s erupting. Democracy’s in increasingly dire shape, as people around the world turn to demagogues, seeking scapegoats for their resentments, frustrations, and woes. Think about what’s happening in America, politically: a point of paralysis has been reached. This is where we’re approaching in terms of global governance, too: as a world, we’re paralyzed.
How did all that come to be? Think about the way that global growth and development work. In an almost unstated away. Just in terms of norms and values. Institutions and organizations—whether international ones, banks, corporations, "multilateral" ones like, say the IMF and World Bank, aid agencies, whomever—don’t go out there and press for the world to have the equivalent of a European social contract. They press, if they do, for it to have something much more like an American social contract.
So people are to have basic American-style rights: freedoms of speech, expression, religion, perhaps, the right to vote, etcetera. That’s not a bad thing, but the rest is more or less to be left up to markets, who are supposed to fill the gap. A very real vacuum of public goods is left. This paradigm doesn’t press—not often, and not systemically, anyways—for a European style social contract, made of healthcare, retirement, higher education, transport, media, income, shelter, dignity, etcetera for all, affordably, universally, as the critical infrastructure of a society. There are exceptions, here and there, but as a system, our model of global development and growth, our paradigm of prosperity is broken in this way. China, for example, now has a generation of young people in crisis, just like in America.
Just as America denied itself modernity, the endgame of this model is much the same. The world is denied modernity, too. And as modernity fails to emerge, all that’s left is a vacuum, in which people’s living standards begin to stagnate and fall, despair and frustration set in, while inequality rises—and eventually, demagogues come along to take a wrecking ball to what’s left. And those demagogues take many, many forms. We’re left with old hatreds and ancient prejudices rising, and setting people against one another, often brutally, as threats proliferate, norms break down, and aggression and hostility surge. Chaos and disorder begin to reign.
That’s emphatically not a childish way of saying “America bad!” That isn’t the point. This is a set of observations about how the world came to approach this point of breakdown. There are indeed truly bad actors in the world, we all know who they are. No, I'm not saying they're the good guys. They're not. The point is paradigmatic, to understand how peace and prosperity are built, in enduring ways, what power is, what it should be used for, and how—and why, today, the global order is at risk of collapse. “The world no longer trusts U.S. promises.”—not my words, Krugman’s.
So this is about different paradigms of peace and prosperity. Do they come from markets, financialization, and a very, very minimal set of rights, by way of “small government,” backed up by military might, neoliberal slash Washington Consensus style? Or do they come from expansive social contracts, advanced rights, and sustained investment in institutions which provide universal public goods for all? That all used to be a theoretical question, but right about now, we’re beginning to see an answer emerging before us, by way of Big H History.
That's the point—an answer emerging before our eyes, as a rejoinder to this Grand Theory. History is teaching us that the old paradigm is broken.
The Pax Americana’s failure is becoming more and more apparent, and it’s very real. It’s evident in all the above—stalled levels of global development, a stagnant global economy, growing conflict, the resurgence of authoritarianism and fascism. Just as America itself was denied a future, and plunged into destabilization, the same outcome is spreading around the world. The world is a mirror of America, in these hard terms of political economy—the global political economy reflects America’s values, priorities, norms, goals, right down to being an eerie reflection of its basic economics, not because it wants to, particularly, but because that’s what power is.
So where does the world go from here? We don’t know. That’s why this decade is turning out so badly. The old paradigm’s failing spectacularly, before our eyes. And yet the new one has yet to be born. We’re in the in-between times. Our challenge this decade is that big, too: rethinking an age of mega-failure, hegemony, power, development, growth, what it means to be a world, and a civilization. We’re taking the first few steps, in places, at times—but not nearly fast or decisively enough. The demagogues are outrunning us. We have to change that—or else things only get worse from here.
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