The Misleading Metaphor of Decline

Analogies between the United States and post-imperial Britain are inaccurate and mischievous. “Americans can afford both social and international security, ” the author argues

WHEN THE UNITED STATES EMERGED from the Second World War with its armies victorious and its dollar impregnable, Arnold Toynbee argued that it had to succeed Britain as the leader of the world. Comparisons to Britain are still being made, but now they emphasize the negative rather than the positive. According to one recent poll, nearly half the American public believes that the United States, like post-imperial Britain, is in “decline.”

Some scholars have suggested that America’s decline follows a pattern that has recurred throughout history. A growing nation builds its military power to protect its expanding economic interests, but eventually the cost of sustaining such power saps its strength and another rising economic power takes its place. The sociologist Immanuel Wallerstein sees such imperial overstretch as a regular happening, with Venice starting to decline around 1500, Holland around 1660, Britain around 1873, and America around 1967. Paul Kennedy, in the best-selling book The Rise and Fall of the Great Powers (which was previewed in the August, 1987, Atlantic), writes that “the difficulties experienced by contemporary societies which are militarily top-heavy merely repeat those which, in their time, affected Philip II’s Spain, Nicholas II’s Russia, and Hitler’s Germany.”

Such historical analogies suggest that major foreignpolicy changes are in order, but if the analogies are misleading, the diagnosis may be wrong. Retrenchment could produce the very weakening of American power which it is supposed to avert. Withdrawal from international commitments might reduce American influence overseas without strengthening the domestic economy. In fact, the nations of the world have become so inextricably intertwined that efforts to draw back would surely be frustrated.

Concern about decline would be good for the United States if it cut through complacency and prodded Americans to deal with serious domestic issues like savings and education. But polls suggest that excessive anxiety about decline is turning American opinion toward nationalistic and protectionist policies that would constrain our ability to cope with the realities of growing international interdependence. Thus there is no virtue in either overstating or understating American strength. The former leads to a failure to adapt; the latter could lead to cures that do more harm than the disease.

The Vicissitudes of Decline

THE IDEA OF DECLINE HAS HAUNTED THE WESTern imagination since the fall of Rome, and a long history exists of premature and misleading predictions of decline. Many eighteenthcentury British statesmen, for example, lamented Britain’s decline as a result of losing the American colonies. Horace Walpole foresaw Britain’s reduction “from a mighty empire . . . [to] as insignificant a country as Denmark or Sardinia!” Colored as they were by the eighteenth-century view of colonial commerce, such prophecies could not foresee the new industrial base of power in the Victorian period which would give Britain a second century at the top. Yet even then, at the height of Britain’s ascendancy, Matthew Arnold worried of “an imminent danger of England losing immeasurably in all ways, declining into a sort of greater Holland.”

Decline bundles together two quite different concepts: a decrease in external power, and internal deterioration or decay. A country, though, may experience decline in one sense but not in the other. For example, the Netherlands flourished internally in the seventeenth century but declined in power relatively, because other nations became stronger. Spain, in contrast, lost external power in part because it suffered an absolute economic decline from the 1620s to the 1680s.

Obviously, internal deterioration can contribute to a loss of external power. Even so, it is often difficult to identify which internal changes accounted for the loss of power and when they occurred. Scholars have advanced more than two hundred causes for the decline of Rome and still disagree on dates. The Romans themselves often saw their world in despairing terms; in fact, prophecies of decline were heard as early as 154 B.C., six centuries before the conventional date for the fall of Rome. In the prime years of decline—A.D. 300 to 450—the Roman economy remained healthy.

As one historian concludes, “The ‘Rome’ that ‘declines’ is thus not one single thing but many things and the search for any one cause across the board is futile. So, too, is the search for any one period in which all aspects of Roman civilization were much changed.”The eastern half of the Roman Empire survived, under increasingly precarious conditions, for nearly a thousand years after Roman armies could no longer protect the western provinces. The Western Empire was not the victim of a rising challenger state. It succumbed to the long-term pressure of invading migratory tribes. “In any straight fight they could, and they usually did, defeat superior numbers of Germans,” one historian writes. “What they could not do was cope indefinitely with this kind of enemy.”

Power is a relational concept. It depends partly on what is happening at home, but even more on what is happening outside. An empire may last for a long time after aspects of its civilization begin to decay at home, as long as outside challengers are weak. Although civic corruption and a loss of administrative and military efficiency may have allowed nomadic tribes to sack Rome, Rome’s external challengers were weak. The “fall” in 476 came some two centuries after the onset of major corruption in the government and deterioration in the military.

A nation may also decline relative to others because it chooses not to use the resources of power at its disposal. For example, France in the early eighteenth century allowed its naval and fiscal resources to stagnate relative to Britain’s; but, unlike Spain’s decline in the previous century, the French one was not permanent. The stagnation in French war potential did not represent an absolute decline, as the subsequent military exuberance under Napoleon proved. Yet in terms of basic resources, the political scientist Charles Doran writes, “France’s ability to expand militarily was greater in 1750 than it would be in 1805.” To take a more modern example, the United States emerged from the First World War a potentially dominant global power. But it chose a policy of isolationism that made it a secondary player in world political events. American influence was less in 1928 than in 1918, but not because America had lost power.

What the Numbers Say

THERE IS NO QUESTION THAT THE UNITED States is less powerful at the end than it was in the middle of the twentieth century. Even by conservative estimates, the U.S. share of global production has declined from more than a third of the total after the Second World War to a little more than a fifth in the 1980s. The United States was strengthened by the war; the other great powers were devastated. In that sense American economic preponderance in the 1950s was anomalous, like being the boy on the block who dominates while others have the flu. American preponderance was bound to erode as other nations regained their economic health.

Paul Kennedy argues that the U.S. decline has been continuous: “The U.S. share of world GNP, which declined naturally since 1945, has declined much more quickly than it should have over the last few years.” The political scientist David Calico is even more alarmist: “Thanks to economic strain and mismanagement, relative decline has begun to turn absolute.”

But the figures do not support the case for a continuous decline in America’s share of world product. Charles Wolf, of the Rand Corporation, points out that “if a more appropriate and representative base year is used—say, the mid-1960s (or even a pre-World War II year such as 1938)—the remarkable fact is that the U.S. economy’s share of the global product was about the same ‘then’ as it is ‘now’: about 22% to 24%.”

Some estimates of the U.S. share of world product date the fading of what we might call the Second World War effect somewhat later than Wolf does, but the result is the same. For example, the economist Herbert Block estimates that the United States accounted for about a quarter of world product at the beginning of the twentieth century, and about a third in 1950. The postwar U.S. share declined until 1974 and then stabilized. The American Council on Competitiveness similarly finds that the U.S. share of world product has held constant at 23 percent since the mid-1970s. The U.S. share of the product of the major industrial democracies actually increased slightly in the 1980s. The Central Intelligence Agency, using numbers that reflect the purchasing power of different currencies, shows the American share of world product increasing, from 25 percent in 1975 to 26 percent in 1988.

Such numbers call into question the view that American decline has been either precipitous or continuous. They suggest instead that the Second World War effect lasted about a quarter century or so and that the American position thereafter stabilized. Most of the decline had worked its way through the system by the mid1970s.

According to the overstretch theory, a great power is likely to find that it is spending much more on defense than it did two generations earlier, yet its world is less secure. But American numbers do not fit the theory. Even after the Reagan Administration buildup, the current U.S. defense outlay is about six percent of GNP; in the late 1950s it was about 10 percent.

Furthermore, the United States defense burden is not at all like those of Spain and France in their last days of grandeur. Philip II’s Spain devoted three fourths of all government expenditure to war and war debt. The France of Louis XIV and the Russia of Peter the Great appear to have devoted 75 and 85 percent re spectively of their revenues to war and the military establishment. In the United States today about 27 percent of the federal budget is spent on defense (including veterans’ benefits). And unlike the historical examples, America’s overseas commitments do not involve the permanent occupation and control of conquered territories.

The ratio of America’s defense burden to its share of world product was actually lower in the 1980s than in the 1950s. Indeed, contrary to the theory of imperial overstretch, the U.S. defense burden today is lighter than it was in the 1950s, and the political burdens of U.S. commitment are lighter today than they were in the 1960s, during the Vietnam War.

This does not mean that the current defense budget is wisely constructed. On the contrary, the buildup of the 1980s was hasty and enormously wasteful, and the government has not made enough hard choices in cutting back the procurement of unnecessary weapons systems. Given the changes in world politics, a strong case can be made for allocating more resources to international institutions, communications, and assistance to critical countries. If such expenditures are necessary, the countrycan afford them. Unlike the historical examples— or the Soviet Union today, where defense expenditures constitute some 17 percent of GNP—the United States does not fit the theory of imperial overstretch.

The Decline of British Power

SOME CRITICS ARE skeptical of such aggregate measures and prefer historical analogy. The American situation, however, is different from the most frequently cited case, that of Britain. Explaining Britain’s decline has become almost an industry in itself. A long list of domestic causes has been adduced, and has been in the making for a long time. As early as 1898 Henry Adams believed that “British industry is quite ruined.”But he also believed that “Germany has become a mere province of Russia.”In 1900 his brother Brooks Adams wrote that since 1890 “an impression has gained ground that England is relatively losing vitality, that the focus of energy and wealth is shifting, and that, therefore, a period of instability is pending.”He blamed British lethargy and high living, in part, and pointed to the Boer War as an indication that Britain was no longer willing to accept casualties in war. Of course, that notion was soon disproved by the enormous British losses in the First World War.

In fact, the First World War showed Britain to be an impressive power. It had not only manpower but also industry capable of being mobilized for war, overseas investments that could finance the purchase of U.S. technology and war supplies, and a navy large enough to ensure control of the Atlantic. Britain could also call upon the resources of its empire. Of the 8.6 million members of the British forces in the First World War, nearly a third came from overseas (though four fifths of the expenditure was British). By 1918 Britain had the world’s largest air force and navy, and the empire had reached its maximum size. In 1921 both popular and informed opinion in Britain agreed with General Jan Smuts, of South Africa, that the British empire had “emerged from the War quite the greatest power in the world.”

Yet the war—or, more precisely, the thirty-year struggle with Germany—did more to hasten British decline than any other factor. Competing with Germany, rather than possessing an empire, is what drove up defense spending. It is perhaps too simple to say, along with Woody Allen in Zelig, that “Britain owned the world and Germany wanted it.”But if Bismarck and his successors had not unified the German states into a single Continental force after 1870 (with a population larger than Britain’s), the British era might have lasted longer. It was Germany, not the pre-1914 empire, that overstretched Britain.

OF COURSE, THE BRITISH ERA WOULD NOT HAVE lasted forever. Nothing does. Early in the nineteenth century Alexis de Tocqueville pointed out the enormous potential of the United States and Russia. In 1835 the English statesman Richard Cobden declared that “our only chance of national prosperity lies in the timely remodeling of our system, so as to put it as nearly as possible upon an equality with the improved management of the Americans.”In 1883 the Cambridge historian Sir John Seeley argued that federation of the empire was the only way that Britain would be able to compete with Russia and the United States, which were “on an altogether different scale of magnitude.”In 1878 the former (and future) Prime Minister William Gladstone worried that America “can, and probably will, wrest from us [our] commercial superiority.”

In short, Britain’s relative power was bound to decline, because of a number of external factors. The spread of industrialization raised new economic and military competitors. The growing strength of Germans meant that Britain would no longer have a free ride on the Continental balance of power. The spread of railways meant that Britain would no longer have as much time to raise interventionary forces and transport them to the Continent. The distribution of power in the regional balances of the Atlantic and the Pacific was also shifting, because of the growing strength of both the United States and Japan. By the turn of the century British planners felt they could no longer afford a navy that dominated the Pacific and the Western Hemisphere as well as home waters. Thus Britain signed an alliance with Japan and appeased the United States with a number of conciliatory measures, including accession to the Panama Canal, which further enhanced American naval strength by allowing the United States to shift its fleet quickly between two oceans. Henceforth, as Aaron Friedberg, a political scientist at Princeton, has shown, Britain applied its traditional two-power naval standard—having a navy equal to those of the next two contenders—only to home waters.

A final external cause of the decline of British power was the rise of nationalism, which helped to transform the empire from an asset into a liability. In 1914 London declared war on Germany on behalf of the entire empire. But long before post—Second World War anti-colonial nationalism stripped away Britain’s Asian and African colonies, the “white” dominions of Canada, Australia, and New Zealand were resisting rule from London. By the time of the Chanak crisis with Turkey, in 1922, London had discovered that it could not count on automatic support from the empire. After 1926 British military planners no longer considered the British Commonwealth to be a reliable basis for military plans. Commonwealth forces were at best a possible bonus. Yet, as the British historian Corelli Barnett points out, in wartime the continued existence of the empire “would pump away from England the military resources she needed for her own war in Europe.” American Lend-Lease in 1941 provided those resources, but by 1945 “British power had quietly vanished amidst the stupendous events of the Second World War.”

THERE WERE ALSO IMPORTANT INTERNAL CAUSES of the decline of British power. Among the most important were the failure to maintain the productivity of British industry, particularly in new sectors, and to improve the nature and level of education. The two factors were related. British governing-class education was really appropriate to a moment in history that had already vanished, according to the economist Andrew Tylecote. Britons hardly thought at all of British power in terms of industrial competitiveness, science, technology, or strategy. The nation found the imperial alternative “more attractive than the ‘industrial’ one, because its upper class was dominated by a landowning aristocracy which set the tone for the rest.”

While Britain continued to produce entrepreneurs who responded to market incentives, they focused on the staples of textiles, shipbuilding, and light industry rather than the new science-based industries. Britain failed to invest in the latest technology in such critical new industries as chemicals, electricity, and precision engineering. As the British writer David Marquand has argued, “The most sophisticated sectors of the late-nineteenth and early-twentieth centuries depended far more on applied science. ... It was in exports from these that Britain was most conspicuously outclassed.” In 1913 Britain controlled two thirds of world exports of manufactures in declining sectors (like textiles), but only one fifth of world exports in expanding sectors (like chemicals). Until 1902 Britain had no public secondary-school system, despite public awareness of German educational superiority. Britain had seven universities, to compare with twentytwo in Germany and nearly 700 colleges and technical schools in the United States.

The increasing economic importance of overseas investment was transforming Britain into a rentier society, in which financial interests maintained an overvalued currency detrimental to British industry. Overseas investment rose from 0.2 percent to 5.2 percent of GNP from 1870 to 1913. By 1900 eighty percent of the capital issues on the London market were for overseas investment. By 1914 Britain owned 43 percent of the world stock of investment overseas. As the Nobel laureate Sir W. Arthur Lewis put it, “She could not pioneer in developing new commodities because this now required a scientific base which did not accord with her humanistic snobbery. So instead she invested her savings abroad; the economy decelerated, the average level of unemployment increased, and her young people emigrated.”

Finally, Britain’s domestic political process did not allow the full transformation of Britain’s potential resources of power into effective influence. Aaron Friedberg convincingly shows that the problem was not complacency; concern about decline was widespread. At the turn of the century the press expressed concern that England lagged in scientific organization, applied technology, and worker training. But the debate was confused, with little agreement about what measures would be useful or what responses appropriate. While a return to primacy was impossible after 1900, and Britain did seek out new allies after the Boer War, the British elites could have done more to preserve Britain’s position and to prepare for coming challenges.

British Conservatives, however, believed that Britain was financially stretched to its limit, and feared the economic effects of raising income taxes. They failed to invest in the forces needed to maintain global naval supremacy, and disguised that fact from the public by keeping the old slogans. Thus the empire became dependent on the good will of the new regional powers, the United States and Japan. Henceforth Britain had to avoid embroilment with more than one first-class power in more than one region of the world at a time. Furthermore, Britain did not implement conscription (as the other major European powers had done by 1872) or pay for an adequate army to help maintain the balance on the Continent in the new age of rail mobilization. The 1906 plan for 120,000 men to assist France proved woefully inadequate in 1914.

The British debate over trade was phrased in terms of the polar extremes of protectionism and free trade. Little attention was given to temporarily protecting critical sectors or forcing reciprocity on foreign markets. Colonial Secretary Joseph Chamberlain tried to rouse his Conservative colleagues to a more coherent response, but his protectionist scheme would have made things worse. Not surprisingly, it attracted the support of the least competitive elements of British industry. In any event, he wound up splitting his party. Prime Minister Arthur Balfour’s moderate suggestion of selective retaliatory tariffs to force foreign markets open was lost in the ideological crossfire over free trade, and little attention was paid to the security implications of the British lag in the most modern sectors of industry.

Joseph Chamberlain was no more successful elsewhere in the security area. At a 1902 colonial conference he failed to persuade the colonies to share the burden of naval costs. His plaint that “the Weary Titan staggers under the too vast orb of its fate" did not pry forth new resources. Nor could he convince his colleagues that Britain’s burdens were relatively light. In fact, the entire government budget was only 15 percent of GNP (in modern Britain it is nearly 45 percent). And although the Boer War created a deficit from 1899 to 1903, the budget was in surplus thereafter; the national debt in 1907 was not much higher than it had been in the 1880s. The historian A.J.P. Taylor estimates that Britain spent 3.4 percent of its national income on armaments in 1914, while Germany spent 4.6 percent, France 4.8 percent, and Russia 6.3 percent. Other estimates place Britain ahead of Germany but behind France in its military burden.

So why did Britain decide that it could not afford to maintain naval supremacy or an adequate Continental expeditionary force? In large part because the adherents of the prevailing economic orthodoxs believed in the negative effects of government spending, and thev particularly opposed raising income taxes. The popular belief that Britain was suffering from imperial overstretch— despite the lightness of Britain’s defense burden, at three percent of GNP—prevented Britain from investing as well as it might have in the domestic and external resources of power which could have slowed decline.

Even if its leaders had played their domestic cards perfectly, however, Britain would have seen a significant decline in its power in the twentieth century. A.J.P. Taylor speculates that the impressive growth of German industry would have brought Germany to the mastery of Europe if it had not been for the First World War. The industrialization of America, Russia, and Japan was bound to shrink Britain’s influence. Moreover, nationalism was soon to erode the empire. In a sense, Britain rose to its leading position because it was on the first wave of the Industrial Revolution in a pre-nationalist era. But it has always been remarkable that such a small country in Europe could control a quarter of the world’s people in the largest Western empire since Roman times.

How the United States Is Different

THERE ARE AT LEAST FOUR MAJOR DIFFERENCES in the positions of power held by Victorian Britain and modern America. The first is the degree of predominance. Britain’s resources of power in the mid-nineteenth century were most impressive in naval force and manufacturing production. As the Harvard political scientist Robert Keohane has written, “Britain had never been as superior in productivity to the rest of the world as the United States was after 1945.”Nor is the twentieth-century United States as dependent on foreign trade and investment as nineteenth-century Britain was. Even during its heyday, around 1875, Britain ranked third in military expenditure. Not only is the United States more powerful in more ways than Britain was but there are differences of scale that suggest that its power may persist longer. Today it requires a united Europe, not just a united Germany, to challenge the United States for global leadership. Britain, an island about the size of Oregon, ruled a quarter of the world. But, as we have seen, the empire quickly fell victim to nationalism and ceased to be a reliable basis for British military plans.

Second, at least since 1865 the United States has been a single, continental-scale economy immune to nationalist disintegration. Today American imports account for only 12 percent of GNP, in contrast to the British figure of 25 percent in 1914. At the peak of its power, in the 1870s, Britain’s economy was only the third largest in the world, and it fell to fourth place in 1914. However, the American GNP today is much larger than those of the nearest competitor states. One should keep such differences of scale in mind when considering theories of overstretch.

Third, for all the loose talk (and looser definitions) of an American empire, there are important differences between Britain’s territorial empire and America’s areas of influence. Americans have more choice about types and levels of defense commitments than Britons had. There are more degrees of freedom for all parties. American trade is not drawn in the same degree to unsophisticated markets. By 1913 two thirds of British exports were going to semi-industrial and nonindustrial countries. Some modern historians argue that the territorial empire became a net drain on Britain. Whether one looks at NATO as a forward defense of American borders, in which Europeans provide most of the manpower, or as an act of American generosity, it is hard to see our alliances constituting a similar drain, particularly since the withdrawal of American troops to home bases would save money only it the units were also disbanded. Unlike Edwardian Britain, which had to leave its isolation and cast about for allies at the beginning of the century, the United States at the end of the century must transform and update the successful alliances with the great industrial democracies which have been critical to the global balance of power for the past forty years.

A fourth major difference lies in the geopoitical challenges that the two nations face. Most important, in 1900 Britain faced rising contenders in Germany, the United States, and Russia. The nearest of those contenders, Germany, had not only surpassed Britain in economic strength but also was becoming militarily dominant and a threat to Britain’s supremacy on the Continent. America’s external situation today is different. Its principal military adversary, the Soviet Union, is the power with a bad case of overstretch. Not only is the USSR confronted with an unstable Eastern European empire, but the Soviet economy has suffered a serious deceleration of the growth that previously allowed expansion. In addition, Soviet defense is often estimated to cost 15 percent of GNP, and some estimates place the costs of defense and empire at more than 20 percent of GNP—about three times as high as the relative burden on the U.S. economy. The British analogy would be apt if Kaiser Wilhelm II’s Germany, rather than passing Britain in economic and military strength, had been declining and looking for the chance to take a breathing spell from its military buildup.

None of the other major world powers is now overtaking the United States in both military and economic strength. Although Western Europe has a skilled population, a robust GNP, and the improved Common Market coming in 1992, few observers think that European integration will progress soon to a single government or a single security policy. Similarly, China might be a potential riv al of the United States’ over a much longer term, but China’s human and technological infrastructure is much less developed than that of the United States or even the Soviet Union. And while many Americans believe that Japanese economic strength is a greater challenge than Soviet military power, economic competition is not a zero-sum game, where one country’s gain is its competitor’s loss. Thus far Japan has chosen the strategy of a trading state rather than of a military power. There is no current analogue to the Kaiser’s Germany. Even a reunited Germany would possess an economy only one-fifth the size of that of the United States.

THE MORE INTERESTING COMPARISONS BETWEEN Britain and America lie in the domestic realm. Mere there are legitimate causes for concern. Productivity growth in the American economy has fallen to an annual rate of 1.4 percent from an average annual rate of 2.7 percent in the first two postwar decades. In the 1980s net national savings fell to an all-time low of 2.0 percent, and gross investment, at 17 percent of GNP, was at only about half the Japanese level of 30 percent. Civilian research and development accounted for 1.8 percent of GNP, while in Germany and Japan it accounted for 2.6 and 2.8 percent. Foreign inventors received almost half the U.S. patents granted in 1987, as compared with a third a decade earlier.

Even here one should be wary of too simple comparisons to Britain. Whereas Britain fell behind in the leading sectors of chemicals and electricity at the turn of the century, the United States remains one of the leaders in such critical new sectors as information processing and biotechnology. The United States attracts capital from the rest of the world; Britain exported it. Further, whereas emigration drained talented Britons from their homeland, immigration continually infuses the United States with new labor and energy.

Perhaps the most interesting domestic comparison, however, is political. Will the United States cope both with its international commitments as the nation that other nations look to for leadership and with its need for domestic reforms? The British experience suggests caution. The political processes of Victorian democracy tended to fragment the national debate. Conservative politicians failed to invest adequately in the future. There was a widespread reluctance to raise the level of taxation, which was low. Here the analogy with modern America becomes more apt: the United States is the world’s richest country, but it acts poor. Although America is one of the most lightly taxed of the industrial countries, the American public seems unwilling to invest adequately in the future, and political leaders have done little to stem the flow of resources from investment to consumption in the 1980s.

Leadership

EVEN A STRONG ECONOMY WILL NOT PREVENT the United States from following foolish policies. Political leadership is necessary to explain why certain policies—whether these are budget deficits, protectionist measures, or the curtailment of foreign aid—can lead to self-inflicted wounds. Effective influence requires a willingness to spend on foreign affairs. Despite a doubling of the national economy from 1960 to 1980, by the latter year the United States was spending less in real terms on elements of the budget directly concerned with foreign affairs: defense, foreign aid, information, and representation. Defense expenditures increased in the 1980s, but American outlays for other aspects of international affairs declined from $12.7 billion in 1981 to $10.5 billion in 1988. Phis reduction flies in the face of the growing importance of economic, information, and institutional resources in maintaining or creating national power. Some might ask why we should invest in power. Why not simply consume happily, like the Swiss or the Swedes? The answer, of course, is that the United States is too large to take a free ride in the international system. It is in this country’s interest to exercise an influence in the world commensurate with its size and its stake in the spread of open societies—which is to say, those that respect human rights—and open economies. It is important to emphasize that such leadership is a function primarily of size, not of America’s hegemonic mission to lead the world. Leadership is not hegemony. It means taking responsibility for one’s long-term political and economic interests.

“We can’t afford it" is the typical argument in a time of budget deficits, whether it is aid to Poland, investment in education, or fighting drugs. But if the United States were to follow policies that cut domestic consumption by the two percent of GNP by which it rose in the past decade, the richest country in the world could afford both better education at home and the international influence that comes from an effective aid and information program abroad. What is needed is increased investment in “soft power,” the complex machinery of interdependence, rather than in “hard power”—that is, expensive new weapons systems. As the Republican economist Herbert Stein remarks, “It is time to ask the 86 percent of the American people who are not poor to give up some small part of the increase in their consumption in order to fortify the national security, to provide more adequately for the future growth of the national income, to improve the lot of the poor among us.”

At home, leadership means pointing out that the American economy can easily afford to invest in international affairs—by paying our dues to international institutions, by providing aid to critical countries like Poland, and by maintaining open international markets—if Americans have the political will to do it. Without such leadership the American ability to convert potential power into actual influence is correspondingly diminished. A leader who wishes to maintain American power at the turn of the century must follow a strategy that rebuilds the domestic bases of American strength while also investing resources to maintain international influence. Both elements are necessary.

Although the United States faces major social, economic, and political problems, it has faced equal or larger problems in the past. One key to coping successfully with these problems is to remain open to the outside world and adaptable to change. Social flexibility, class fluidity, and economic openness are advantages that America has over Europe and Japan. It would be ironic if fears of decline led to policies of protectionism, resistance to foreign investment, and curtailment of immigration. Though there are few signs of long-term economic sclerosis so far, such policies could help to bring it on. Then again, if the anxiety over competitiveness leads to new policies on saving, research and development, and education which are addressed to the higher standards required by an informationbased economy, America’s capacity to reinvent itself may again prove a hidden strength.

AMERICANS ARE right to be concerned about the changing role of the United States in the world. However, seeing the problem as American decline and drawing analogies to Britain is misleading, for this directs attention away from the real problems arising out of long-term changes in world politics and suggests remedies that would weaken rather than strengthen America’s standing. Withdrawal from international commitments would reduce U.S. influence without necessarily strengthening the domestic economy. Indeed, recent experience suggests that what the United States thereby saved in international expenditure might merely increase domestic consumption rather than investment.

Although the next decade will require Americans to cope with the debts of the 1980s, there is no reason why the world’s wealthiest country cannot pay for its international commitments and its domestic investments. Americans can afford both social security and international security. The ultimate irony would be for Americans to perceive their country’s short-term problems as indicators of long-term decline and respond in a way that cut them off from the sources of their international influence.

As has happened many times before, the mix of resources that produces international power is changing. What is unprecedented is that the cycle of hegemonic conflict, with its attendant world wars, may not repeat itself. The United States at the end of the century retains more traditional resources of power than any other country has. It also has the ideological and institutional resources to retain its leadership in the new domains of transnational interdependence. In that sense the U.S. situation at the end of the twentieth century is totally different from that of Britain at the century’s beginning. The problem for American power today is not new challengers for hegemony; it is the new challenge of transnational interdependence.

A post—Cold War strategy for managing the transition to complex interdependence over the next decades will require that the United States commit sufficient resources to sustain the geopolitical balance, maintain an open attitude toward the rest of the world, develop new international institutions, and restore the domestic sources of American strength through major reforms and large-scale investments. The twin dangers Americans face are complacency about the domestic agenda and an unwillingness to pay whatever is necessary to maintain their capacity for international leadership. Neither attitude is warranted.