I read this on Long Waves.......we can only watch to see which course history takes.Does the last lines mean the cashing in of the US gold reserves.
Lessons from the fall of an empire
By Harold James
Published: December 29 2002 19:05 | Last Updated: December 29 2002 19:05
It is the time of year when people are casting about for good books to read to
resolve the current perplexity. If you are sitting in Washington, there are few
guides to the unique position of the US, whose military expenditure exceeds
that of the next 14 countries combined.
The most frequently cited historical parallels, Britain and its 19th-century
pax Britannica, or 16th-century Spain, the first country to grasp New World
prosperity to dominate the Old World, do not really fit modern America. Both
were locked in rivalry with other nearly equal European powers: France and (in
the British case) Germany.
Washington readers could do worse than go back to a study of the first real
exerciser of unipolar power, the Roman Empire. The book to read is Edward
Gibbon's classic study, whose first volume was (by chance) published in 1776,
the year of the signing of the American declaration of independence. Gibbon's
advice immediately looks quite attractive and relevant to today.
He begins with praise for the peaceful character of the Emperor Augustus and of
Roman realism and multilateralism: "Inclined to peace by his temper and
situation, it was easy for him to discover that Rome, in her present exalted
situation, had much less to hope than to fear from the chance of arms; and
that, in the prosecution of remote wars, the undertaking became, every day,
more difficult, the event more doubtful, the possession more precarious, and
less beneficial."
Previously secure countries can quickly drift away from the political grasp of
the hegemon, as resentments and anxieties about the unipolarity of the world
grow. Gibbon even had words that might help President George W. Bush understand
or deal with Gerhard Schröder's would-be independent foreign policy. "The
forests and morasses of Germany were filled with a hardy race of barbarians;
and though, on the first attack, they seemed to yield to the weight of Roman
power, they soon, by a single act of despair, regained their independence, and
reminded Augustus of the vicissitude of fortune." This is a good description of
the often counter-productive psychology of the need to slap the hegemon. But
such revolt alone is not enough to overthrow hegemonic power.
Why did the Roman version of uni- polarity collapse? Gibbon's empire depended
at the height of its success on a sort of multiculturalism, which Romans put in
terms of the admission of local deities to the quite crowded complex of the
Roman imperial pantheon. In the same way, the US has recently gone out of its
way to show how eagerly it will embrace a non-threatening version of Islamic
(or indeed Hindu or Confucian) values. A too emphatic insistence on any
uniquely Roman virtue or divinity would destroy a precarious notion of cultural
pluralism. But it was exactly that plurality of a social and economic kind that
proved to be a mechanism of disintegration.
Gibbon saw his story of decline and fall in terms of a revolt against Roman
universalism driven by a Christian and egalitarian protest against the unequal
distribution of property. This was an early version of an anti-globalisation
movement, in which inequalities stemming from the character of imperial power
touched off protests. "Most of the crimes which disturb the internal peace of
society are produced by the restraints which the necessary, but unequal, laws
of property have imposed on the appetites of mankind, by confining to a few the
possession of those objects that are coveted by many." Maybe Gibbon was also
making a contemporary reference of his own, to the weaknesses of the
late-18th-century British empire, with its global commercial culture, so
signally exposed and attacked by the American Revolution.
This 18th-century historian's picture of empire and its rules breeding
resentment is at odds with a deeply reasoned view, drawn from American social
science, about the way in which the modern world can be made peaceful. The
argument of the September 2002 US national security strategy initially appears
compelling. Because the US can so clearly outspend and defeat (pre-emptively if
necessary) any other power, all other powers have an interest in cutting back
military spending and threats to their neighbours. This will probably make them
wealthier and, therefore, more democratic and peaceful. The world will in this
manner be stabilised by the benign force of Washington - a dream very close to
that of Augustus.
Which of the arguments is right: the historian's view of long-term decline and
fall, or the social scientist's of permanent peace as a result of rational
calculation by rational leaders?
The answer depends as much on the stability of the country at the centre as on
the behaviour of the rest of the world. The US, unlike the British empire, is
building its rule on a foundation that is potentially quite unstable. The
British empire in its 19th-century heyday ran enormous current account
surpluses (7 per cent of gross domestic product on the eve of the first world
war). For more than 20 years, in the period of its cold war victory and of the
conversion of the world to a new consensus about markets, the US has had quite
large current account deficits. In 2001, the deficit was 4.2 per cent of GDP.
One way of reading this odd situation - which is popular with many Americans -
is that the rest of the world has bought into US stability. The deficits are
financed by capital inflows, as the non-American world buys the stock of
fast-growing US companies or - when the stock market looks bad - property.
Indeed, there appears to be a security premium that the rest of the world pays,
in that non-American purchases of US assets show consistently lower returns
than US purchases of foreign assets.
But nobody thinks that this kind of inflow can be sustained indefinitely. The
inflows of foreign capital could be rapidly reversed on some chance piece of
bad news. Such a reversal would involve a collapse of the US stock market, the
property market and the dollar. US consumers would no longer be able to binge
on cheap goods supplied by the rest of the world. American producers would try
to protect their markets; foreign producers would be thrown out of business and
no longer see any gains to be realised by peaceful integration in a benign
world economy.
The financial reversal would also bring the collapse of the US security policy
and of its calculated strategy of world pacification. The cost of US defence
spending would look much too high and scaling it down would give a chance to
would-be rivals, at least on a regional basis - China, for example.
The American case would then look more like that of Spain (which also ran a
current account deficit, financed by the outflow of precious metals from its
imperial possessions) than that of 19th-century Britain. And Gibbon's story of
decline would begin.
The writer is professor of history at Princeton University and author of The
End of Globalization
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