Then and Now: 1976 and 2020

The world has turned over many times since Alan Luxenberg first entered the Foreign Policy Research Institute and began his exemplary service and innovative leadership there. The year was 1976, and during the 1970s, the United States was experiencing grave challenges to its foreign policy and international role, which together amounted to a general crisis for America’s primacy in the international system. Now, in 2020 and 44 years later, as Alan prepares to retire from his distinguished presidency of FPRI, the United States is again experiencing grave challenges, which together amount to a second general crisis for America’s primacy.

It therefore might be illuminating to compare and contrast the international situations at the beginning and the end, in 1976 and in 2020, of Alan’s career with FPRI. In particular,
the general crisis of the 1970s, and how the United States successfully resolved it in its favor, may tell us something about the general crisis of today, and how the United States is addressing it now.

The World in 1976: The First General Crisis of American Primacy

In 1976, the international system was principally defined by the global competition between two superpowers, the United States and the Soviet Union, plus one great power, which was Communist China. The U.S. was the predominant and status quo power, but in the Soviets, it confronted a rising and revisionist power, one that was militarily comparable to the U.S. As for China, it was just beginning to recover from ten years of internal disruption during its Cultural Revolution and to re-enter into the international system with an active foreign policy.

The United States had recently suffered major setbacks, even debacles, in two major regions, and these effected its reputation and credibility not only in the regions themselves, but also in its global competition with the Soviet Union. One region was Southeast Asia, where the loss of South Vietnam, Cambodia, and Laos to Communist military forces seemed to portend a great leap outward in the power of the Soviet Union, not only in that region, but also around the world, as the Soviets made major advances in such places as Ethiopia, Mozambique, and Angola.

The second region was the Middle East, where a recent quadrupling of oil prices had helped to produce a major global economic crisis, known as the Great Stagflation (the combination of economic stagnation and monetary inflation), and also a massive and permanent transfer of American capital to the oil-producing countries of that region. The leader of these countries and of the oil-price revolution was Saudi Arabia, which was putatively a military and diplomatic ally of the United States, but was now actually an economic and financial adversary.

The U.S. debacle in Southeast Asia diminished the U.S. strategic position in international politics, and the U.S. debacle in the Middle East diminished the U.S. dominant position in the international economy. Together, they seriously diminished the power and prestige of the United States in its all-important global competition with the Soviet Union.

At the same time, in 1976, the United States was just recovering from a major setback, even debacle, in the legitimacy of its political institutions. This had been the Watergate crisis, which has lasted from 1972 to 1974, and which had resulted in the resignation of a president under the threat of impeachment, Richard Nixon, and the appointment of a new president of doubtful legitimacy, Gerald Ford.

The conjuncture of the strategic debacle of Southeast Asia, the economic debacle of the Middle East, and the political debacle of Watergate constituted a general crisis for the American primacy in the international system. For many foreign policy analysts at the time, it seemed that the United States had entered into a period of systemic, and perhaps permanent, decline. The only real question seemed to be how to manage and slow the process. The election of Jimmy Carter as president in 1976, and the later performance of his administration, acted to confirm this dismal judgment.

The World in 2020: The Second General Crisis of American Primacy

It is obvious that the position of the United States in 2020 bears important similarities with that of the U.S. in 1976. Once again, the international system is principally defined by the global competition between the three powers at its top. The United States is now the sole superpower, but China rapidly is approaching that status, and Russia is playing the role of a great power. The U.S. is the predominant and status quo power, but with China, it confronts a rising and revisionist power, one that is already economically comparable to the U.S. and may soon be militarily comparable to it in the region of East Asia. As for Russia, having recovered from ten years of internal disruption after the collapse of the Soviet Union in 1991, in the 2000s it re-entered into the international system with an active foreign policy. It is now another revisionist power confronting the United States, and it is doing so in several places around the world, particularly in Eastern Europe, Syria, and Venezuela.

The United States has recently suffered setbacks, even debacles, in at least one major region, which again is the Middle East. This time, however, the debacles—in Iraq, Syria, and soon Afghanistan—are in the strategic and military arena, rather than in the economic and financial one, and this makes them especially destabilizing and dangerous. However, the U.S. in this era has suffered an economic and financial debacle with the global crisis known as the Great Recession, which began in the United States in 2008, which spread to many U.S. allies, and which has only recently been left behind.

The U.S. has also experienced a setback, and potentially a debacle, in another major region, and this is Northeast Asia. Here, North Korea, added and abetted by China, has at last achieved its long-sought capability to land nuclear warheads upon the continental United States, and it will soon be able to make this capability invulnerable to a U.S. preemptive strike. This is unsettling the long-established U.S. alliances with South Korea and Japan, and raising the prospect that they may seek to replace their reliance upon the U.S. nuclear deterrent and become nuclear powers themselves.

The U.S. debacle in the Middle East and the potential U.S. debacle in Northeast Asia have each diminished the U.S. strategic position in international politics. The U.S. debacle in the Great Recession has diminished the U.S. dominant position in the international economy. Together, they have seriously diminished the power and prestige of the United States in its important global competition with China and with Russia.

At the same time, 2020, the United States is deep in the throes of a major setback, even debacle, in the legitimacy of its political institutions. This of course has been the crisis arising from first the candidacy and then the presidency of Donald Trump, and from the sustained efforts of American political and media elites to thwart him, which have now reached the stage of an impeachment process. In this crisis, however, the divisions within the U.S. political system seemed to be much broader and deeper than they were at the time of the Watergate crisis, and this makes them also especially destabilizing and dangerous.

The conjunction of the strategic debacles of the Middle East and Northeast Asia, the economic debacle of the Great Recession and its aftermath, and the political debacle of the Trump crisis constitute a second general crisis for American primacy in the international system. For many foreign policy analysts today, it again seems that the United States has entered into a period of systemic, and perhaps permanent, decline. For some of these analysts, the only real question seems to be how to manage and slow the process. The run-up to the presidential election of 2020, with all of the candidates for the Democratic nomination ignoring the grave foreign policy challenges and with all of them being feckless and divisive in their domestic policy proposals, has acted to confirm this dismal judgement.

The Solutions to the First General Crisis of American Primacy and the American Strategic, Economic, and Political Revival

But of course, the first general crisis of American primacy in the international systemdid not end in a systemic and permanent decline of the United States and of its power and prestige in its global competition with the Soviet Union. In the 1980s, the United States experienced a comprehensive and impressive revival, while the Soviet Union experienced a debilitating stagnation. In 1989, the Soviet empire in Eastern Europe collapsed and the Cold War ended on U.S. terms, and in 1991, the Soviet Union itself collapsed. How did the United States achieve this extraordinary reversal of its dismal condition in the 1970s?

One factor was the U.S. strategy vis-à-vis the other two powers in at the top of the international system. In the early 1970s, the greatest threat to the United States clearly came from the stronger of these two, the Soviet Union. President Richard Nixon and his National Security Advisor and Secretary of State, Henry Kissinger, chose to make an accommodation with the weaker of the two, Communist China. This was an exemplary case of the classic strategy of dividing one’s adversaries and focusing one’s resources upon the strongest of these. Even after Nixon’s resignation during the Watergate crisis, later presidents continued to pursue and deepen this pro-China policy, not only for the rest of the Cold War, but for almost three decades thereafter, or right down until the coming of the Trump administration.

A second factor was the U.S. exploiting its advantage in the high-technologies of the emerging information age and in their application to military systems, particularity precision-guided missiles and information-rich battlefield management. This development began during the Carter administration, but culminated during the Reagan administration with the U.S. Army’s Air-Land Battle Doctrine, the Navy’s Forward Maritime Strategy, and the Air Force’s Strategic Defense Initiative. The Soviets were not able to compete effectively on this high-technology level, and the efforts of the Soviet leadership to change their system so that it could compete (called “glasnost” and “perestroika”) produced so much disruption that it ultimately led to the collapse of that system.

A third factor was the dramatic revival of the U.S. economy. To eliminate the inflation part of the Great Stagflation, the Reagan administration and the new Chairman of the Federal Reserve Bank, Paul Volcker, deployed an active monetary policy, in particular very high interest rates. Then, to eliminate the stagnation part, the administration deployed reductions in regulations and in taxes—what is often called economic liberalization—to promote economic growth. The result was that, by 1984, the U.S. economy entered a period of steady growth and rising prosperity that continued through the rest of the Cold War.

The revival of the U.S. economy, in turn, led to a fourth factor, the revival of the legitimacy of U.S. political institutions. Reagan won re-election as president in 1984, largely because of this economic revival. Moreover, since the rising growth and economic prosperity continued through the rest of the Cold War, the legitimacy of the political institutions followed suit. This was largely the reason why Reagan survived what was called the Iran-Contra political scandal. In dismal economic circumstances, this scandal might have become more like the Watergate crisis. Moreover, the experienced leaders of the Republican administration and the Democratic Congress often engaged in traditional kinds of bargaining, which led to political compromises and bipartisan legislation.

The conjuncture of the strategic revival based upon the pro-China policy and high-tech weaponry, the economic revival based upon active monetary policy and economic liberalization, and the political revival based upon economic prosperity and bipartisan compromises brought an end to the first general crisis of the American primacy. Together, these factors contributed mightily to the United States bringing about a successful end to the Cold War and to it becoming the sole superpower in the international system.

From the First General Crisis to the Second

This discussion raises an obvious and now urgent question: Can the same factors—or some version of them—which resolved the first general crisis of American primacy also help to resolve the current second general crisis? Are there lessons to be learned from the past successes, which can be fruitfully applied to the present challenges? And here, we will discover some disturbing paradoxes.

The first factor was the U.S. accommodation with China, then the weaker of the other two powers at the top of the international system, while the U.S. confronted the Soviet Union, then the stronger of the two. This helped the United States to prevail decisively in the Soviet-American Cold War. However, it also facilitated the steady rise of China, so that it became the strongest other power, and there is now a Sino-American Cold War.

The problem with the U.S. accommodation with China wasn’t that it occurred, but that it lasted too long. By the classic strategy of dividing one’s adversaries and focusing one’s resources on the strongest of these, the United States should have shifted its focus sometime in the 1990s, after the collapse of the Soviet Union and at a time that analysts of international politics were already discussing the rise of China and its potential threat to the U.S. And, continuing this strategy, the United States should have then made an accommodation with Russia, whose president was then Boris Yeltsin. Russia’s geographical position in the center of Eurasia made it an obvious potential partner in limiting the geopolitical expansion of China. In particular, the U.S. should have cooperated with Russia on the way that North Atlantic Treaty Organization would expand to the east, rather than ignoring and humiliating it. As it was, the first major factor in the U.S. success in the Soviet-American Cold War contained the seeds of the serious and ominous threat that the U.S. now faces in the new Sino-American Cold War, along with the new Russo-American Cold War.

The second factor was the U.S. exploitation of the military applications of the high-technologies of the emerging information age. This, too, helped the United States to prevail decisively over the Soviet Union. However, it also demonstrated to other nations, in particular China, that high-technology was going to create the central domain of military operations in the future. As early as the 1990s, the Chinese began the systematic application of new information technologies to their program of military modernization and expansion.

The problem with the U.S. military use of high-technologies wasn’t that it occurred, but that it did not last long enough. As the United States and other nations entered deeper into the information age, and high-technologies got higher and higher, the U.S. began to lag behind in its military applications (e.g., cyberwar, artificial intelligence, hypersonic missiles, and deep-sea systems). Conversely, China made military applications of new technologies a central part of is national grand strategy, e.g., its systematic program for “civil-military fusion.” By now, Chinese capabilities in several such military systems are equal to, or even ahead of, their U.S. counterparts.

The third factor was the revival of the U. S, economy, particularly with the use of monetary policy and economic liberalization. This also helped the United States to prevail over the Soviet Union. However, the success of monetary policy soon led to it being the chief method with which U.S. policymakers tried to solve economic problems. This, in turn, facilitated the increasing financialization of the U.S. economy, along with its relentless de-industrialization. Moreover, the success of economic liberalization soon led to it being applied to virtually every aspect of the U.S. economy, including investment decisions. This, in turn, facilitated the movement of American capital abroad, where it was employed in building up foreign industries, along with, again, de-industrialization in the United States.

The problem with the U.S. use of monetary policy and economic liberalization wasn’t that it occurred, but that it lasted too long and went too far. It would have been far better for the United States if financial sector had remained subordinate to, and supportive of, the industrial sectors in the U.S. economy. And it would have been far better if capital generated within the United States had been re-invested within the U.S. itself, rather than in the economies of foreign nations, particularly those that were likely adversaries, such as China. Instead, the United States persisted in its policies of capital misallocation to the point that this hollowed-out the American industrial heartland and created a vast population of left-behind workers and their families and communities. This, in turn, brought into being the large political constituency for Donald Trump and his presidency.

By now, China is the largest industrial power in the world, and it will soon become the largest economic power more generally. This enormous Chinese industry has greatly facilitated China’s grand strategy, e.g., as in its rapid build-up of its military and in its far-reaching Belt and Road Initiative. And the gravitational pull of the enormous Chinese economy is gradually but steadily drawing many countries around the world into its orbit. China presents a long-term challenge to American primacy in the international system that is probably as great, or greater, than any such challenge before. And this challenge is amplified by the fact that, at least for now, Russia is cooperating with China and is part of America’s problem, and not part of the solution.

Under Alan Luxenberg’s leadership, FPRI has played a vital role and been an outstanding asset in understanding and addressing the challenges posed by China and Russia. Alan has organized a continuous series of innovative and illuminating lectures, seminars, and projects, which together have provided the best education to be found in America about the realities of these nations and their implications for U.S. foreign policy. And what he has established at FPRI will provide the knowledge and wisdom that will be necessary, as America once again seeks to resolve in its favor a general crisis in its primacy in the international system.