America's superpower embrace

Events of the past decade have tainted US-style capitalism and values, but it's far too early to write off America and call a new world order.

FT.com

I hear a recurring refrain from China these days: America’s strength comes not from its democratic and free-market values, but merely from the size of its economy and the power of its soldiers and weapons. There is nothing universal about America’s democratic and economic ideals, Chinese officials insist. Democracy is a relative concept, and markets have a centuries-old habit of spinning out of control. The US remains a superpower only because its economy remains on top. Soon, they warn, this advantage will be gone.

It is no surprise that many Chinese love this argument. It flatters their system and their current success. No need for genuine pluralism or large-scale privatisation of state-owned companies. China’s economy will soon surpass America’s; so say economists on both sides of the Pacific. So, is America exceptional because it is strong, or is it strong because its values are exceptional? That is a question the next president must answer.

It is accepted wisdom that America is in decline, but what about its strengths? Its economy is not simply the world’s largest; it is twice the size of second-place China’s, and its per capita income is higher than those of China, India, Russia and Brazil combined. For all the worry over the US credit rating and emerging alternatives to the dollar, global volatility has only reinforced its dominance as the reserve currency. America’s military is not simply the most capable. It is the only force that can project power in every region. Washington spent more on defence in 2010 than the next 17 nations combined, and even significant expected cuts won’t much narrow that advantage.

The US does of course face formidable challenges. Spiralling federal debt, high unemployment, and lower real wages have taken their toll on its self-esteem. For the moment, Republican demands for smaller government have made new stimulus spending all but impossible. Abroad, Washington will have to do more with less, and developing states now have more power with which to obstruct US plans.

Yet investment in the future continues apace. No nation is home to more elite universities and graduate schools, more major multinational corporations, and more breakthroughs in state-of-the-art technology. Silicon Valley’s latest tech start-ups have built enough momentum to fuel talk of a new bubble. Development of unconventional gas technologies has been the single most economically significant innovation of the past several years; US-based companies have led the way. All these traditional measures of strength suggest the country is doing fine.

American values, on the other hand, have taken quite a beating. The US has been an indispensable force for stability and prosperity in recent decades, not only because its middle class is the world’s largest, its soldiers the best equipped, and its technology the most advanced. The true source of its lasting significance is that these advantages are a by-product of its faith in liberal democracy, the rule of law, and market-driven free enterprise.

The Soviet Union did not buckle beneath the weight of US economic and military might. It was pulled apart by millions of Soviet citizens who demanded the self-determination that Lenin once promised and Soviet power never delivered. It was not America’s tanks but its ideals that felled the Wall.

These ideals have lost lustre in recent years. The new century began with contested ballots and a presidential election decided in court, a spectacle that made it harder for Americans to champion democracy abroad. The September 11 attacks generated support around the world, but the opening of Guantnamo Bay prison, the Abu Ghraib scandal, and civilian deaths following US drone attacks inside Pakistan have done lasting damage to America’s ability to defend international law and human rights. Meanwhile, the collapse of Enron and WorldCom; the 2008 financial crisis; and bailouts for American International Group and automakers have undermined confidence in US-style capitalism. As the US economy struggles to restore lost jobs, China has rebounded.

In the coming year Barack Obama and his Republican opponent in the presidential election will have extended debates over the nature of US power. It will not be easy to find differences on the details of their plans for Middle East peace, China, Iran or North Korea, but differences in their visions of America’s role in the world will be all too apparent. Obama will argue that restoring the nation’s economic health is necessary for the US to project power abroad, and that values without strength cannot sustain a foreign policy. He will not use the politically clumsy phrase "leading from behind,” but he will herald the principle of limited commitment that toppled Muammer Gaddafi with no loss of American life and a minimal taxpayer contribution.

His challenger will counter that strength without values leaves America without purpose, that it is and must remain an "exceptional” nation, and that it must defend its values everywhere they are challenged. Obama’s vision will fail to inspire. His opponent’s will simply ignore a decade’s damage to US credibility, its leverage and US public tolerance for new commitments overseas.

Beijing’s values represent no greater ideal. They appeal only to those who dream of maintaining power and manipulating markets for political or personal gain. China’s tens of thousands of protests each year suggest a yearning for something beyond stability and state-driven growth. Like demonstrators in Russia, Syria and elsewhere, they want responsive governance, a chance to create their own wealth, and a system that respects their rights and extends their freedoms.

To be clear: the world still needs American ideals and it is up to the next president to seize the opportunities to practise what Americans preach.

The writer is president of Eurasia Group and author of The End of the Free Market.

Copyright The Financial Times Limited 2011.