The Rise And Fall Of Great Powers

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

The very attempt to reform an unstable, diminishing-return system often precipitates its collapse.

The Rise and Fall of Great Powers  

Our collective interest in the rise and fall of empires is not academic. The meteoric rise of China and the financialization rotting out global capitalism are just two developments that suggest we are entering an era where some great powers will collapse, others will remake themselves and others will gain ascendancy.

In How Empires Fall (April 17, 2013), I discussed Adrian Goldsworthy's How Rome Fell: Death of a Superpower and an old favorite on the same topic, Michael Grant's excellent The Fall of the Roman Empire.

Paul Kennedy's influential book from 1987, The Rise and Fall of the Great Powers, seeks generalizations about what causes the rise and decline of great powers, be they empires or nation-states.

Kennedy avoids the temptation to extract grand theories from history, quietly mocking Wallersteins's "world systems" and related analyses. In this he follows fellow historian Fernand Braudel, who also hesitated to draw overarching theories from the messy history of capitalism.

Kennedy proposes one mechanism that he claims does hold true over time: it's not the absolute wealth and power of any one nation or empire that matters, it's the economic growth rate of competitors and its wealth and power relative to theirs that matter. A nation whose economic base is growing at a lower rate than a competitor slowly become relatively weaker than its rival, even though its absolute wealth is still increasing.

He also notes a tendency for powers in relative decline (i.e. those growing less robustly than their neighbors/rivals) to spend more on military security as their position in the pecking order weakens. This diversion of national surplus to military spending further saps their economic vitality as funds are shifted from investment to unproductive military spending. This creates a feedback loop as lower investment weakens their economic base which then causes the leadership to respond to this weakening power with more military spending.

This feedback creates lags, where an economically weakening power may actually increase its military power, until the overtaxed economy implodes under the weight of the high military spending.

This dynamic certainly seems visible in the history of the Soviet Union, which at the time of this book's publication in 1987 was unanimously considered an enduring superpower with a military that many believed could conquer Western Europe with its conventional forces.

This debate over the relative superiority of Soviet arms now seems quaint in the light of the collapse of the USSR a mere four years later, but it worth recalling that one of the most influential defense-doctrine books of the early 1980s was The The Third World War: August 1985 a novel by Sir John Hackett, about a fictional Soviet attack on Western Europe in 1985.

It was widely recognized by the late 1980s that the Soviets' relative power was in decline compared to the U.S., as the U.S. had worked its way through the malaise and restructuring of the 1970s and re-entered an era of strong economic and technological growth in the 1980s, rapidly outpacing the sclerotic Soviet economy.

It's also worth recalling the truly dismal status of the Soviet and Eastern Bloc economies compared to the Western economies: common inexpensive consumer items such as kitchen toasters were rare luxuries. In other words, while the Soviet economy was probably still expanding in the 1980s, the rate and quality of its expansion was considerably less than the growth of the West.

If one economy grows by 1% a year and another grows by 5% a year, in a mere decade the faster-growth economy will have expanded by more than 62%, while its slower-growing rival's economy grew only 10.5%.

Many observers (especially on the Left, where suspicion of military spending is never far below the surface) see the U.S. as following this same path to decline and fall, as post-9/11 defense spending has skyrocketed while growth has stagnated. Despite what I see as wasteful spending on overlapping intelligence agencies and insanely costly programs like the F-35 fighter, U.S. defense spending remains around 5% of GDP (Pentagon/National Security budget is around $690 billion, GDP is around $15 trillion).

Though statistics from the Soviet era are not entirely reliable, various scholars have estimated that fully 40% of the Soviet GDP was being expended on its military and military-industrial complex.

During the height of the Reagan buildup, the U.S. was spending about 6% of its GDP on direct military expenditures. If you include the Security State (CIA, NSA, et al.), the Veterans Administration and other military-related programs (DARPA, etc.), the cost was still less than 10% of GDP.

How about America's position relative to other Great Powers or alliances? Interestingly, America's decline has been noted (and predicted) since the 1970s. Other nations such as Japan were growing much faster and were expected to overtake the U.S., based on the extrapolation of high growth rates into the future.

Once again the same predictions are being made, only this time it is China that is logging high annual growth rates that are being projected far into the future. The more things change, the more they remain the same.

Kennedy ends his book with a brief chapter looking ahead from 1987. He is careful not to make any outright predictions, but it is fair to say that he completely missed the bursting of Japan's miraculous high growth economy and the implosion of the Soviet Union a mere four years later in 1991. With the benefit of hindsight, we can discern the dynamics that led to these abrupt declines of relative power. But at the time, Japan's economy was universally regarded as superior to the U.S. economy and the USSR was widely viewed as a permanent superpower rival to the U.S.

How can we be so wrong about projecting present trends when we have so much data at our disposal? Why can't we identify the trends that end up mattering? Reading political-economic history books written a few decades ago reinforces our humility: we cannot predict the future, except to say that projecting present trends leads to false predictions.

Virtually no one in 1987 foresaw the limited Internet of the time exploding into a globally dominant technology, yet a mere decade later the web browser, cheaper memory, faster processors and broadband cable and DSL launched a digital revolution.

In 1987, pundits were predicting that Japan's "5th generation" computing would soon dominate what was left of America's technological edge. They were spectacularly wrong, as the 5th generation fizzled and Japan became an also-ran in web technology, a position it still holds despite its many global electronic corporations and vast university research system.

Japan's modern economy was set up in the late 1940s and early 1950s to exploit the world of that time. Sixty years later, Japan is still a wealthy nation, but its relative wealth and power have declined for 20 years, as its political-financial power structure clings to a model that worked splendidly for 40 years but has not worked effectively for 20 years.

The decline is not just the result of debt and political sclerosis; Japan's vaunted electronics industry has been superseded by rivals in the U.S. and Korea. It is astonishing that there are virtually no Japanese brand smart phones with global sales, and only marginal Japanese-brand sales in the PC/notebook/tablet markets.

The key dynamic here is once the low-hanging fruit have all been plucked, it becomes much more difficult to achieve high growth rates. That cycle is speeding up, it seems; western nations took 100 years to rapidly industrialize and then slip into failed models of stagnation; Japan took only 40 years to cycle through to stagnation, and now China has picked the low-hanging fruit and reverted to financialization, diminishing returns and rapidly rising debt after a mere 30 years of rapid growth.

There is certainly evidence that China's leadership knows deep reform is necessary but the incentives to take that risk are low. Perhaps that is a key dynamic in this cycle of rapid growth leading to stagnation: the leadership, like everyone else, cannot quite believe the model no longer works. There are huge risks to reform, while staying the course seems to offer the hope of a renewal of past growth rates. But alas, the low hanging fruit have all been picked long ago, and as a result the leadership pursues the apparently lower-risk strategy that I call "doing more of what has failed spectacularly."

Though none of the historians listed above mention it, there is another dangerous dynamic in any systemic reform: the very attempt to reform an unstable, diminishing-return system often precipitates its collapse. The leadership recognizes the need for systemic reform, but changing anything causes the house of cards to collapse in a heap. This seems to describe the endgame in the USSR, where Gorbachev's relatively modest reforms unraveled the entire empire.

Director Michael Apted has been filming a remarkable series of documentaries following the lives of 14 English people since the age of 7: The Up Series (Wikipedia) is a series of documentary films produced by Granada Television that have followed the lives of fourteen British children since 1964.(The titles: 7 Up, 14 Up, and so on, the latest being 56 Up.) The Up Series, eight films (Seven Up - 56 Up)

We expect those children with few advantages in life (i.e. lower-class) to do less well than those with many advantages, and this linear expectation is fulfilled in some cases. (This is the expectation of the working-class children themselves.)

But in most cases, the individuals' lives are entirely non-linear: some decades they do less well, in others they do much better, and the dynamics that arise and dominate each stretch of their lives are not very predictable.

This series reinforces our humility about predicting the life paths of individuals.

So is there a unifying theme here? I would say yes, and it is embodied in this quote from Charles Darwin, co-founder of our understanding of natural selection and evolution: "It is not the strongest of the species that survives, nor the most intelligent, but the ones most adaptable to change."

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mikla's picture

The article fails to mention the biggest issue:  The people in charge are morons.

Seriously, they are absolute idiots.  Any solution they propose would be insanely stupid, and if not, they are not competant enough to execute the simplest of plans.

Midasking's picture

The system is working great for the people in charge... maybe they aren't morons but crooks! http://tinyurl.com/pp588mj

mikla's picture

Agreed that they are crooks.  However, my point was something along the lines of:

Never before in the History of the World with the most inbred six-fingered Monarchs have we had such a stupid collection of "Life's Losers" be in charge of society.  They know absolutely nothing about anything, with no experience, and demonstrate no competence on any topic.

Yes, they are merely organized crime.  However, past crime lords actually had competence and understanding at some level.

I find it amazing any peoples anywhere listen to these "people in charge" about any topic whatsoever.

Beam Me Up Scotty's picture

"Many observers (especially on the Left, where suspicion of military spending is never far below the surface) see the U.S. as following this same path to decline and fall, as post-9/11 defense spending has skyrocketed while growth has stagnated."

The lefties were concerned about military spending when Bush was in office.  Now they could care less too.  Military spending is A-OK under Obama.  In fact, everything that they hated Bush for, is A-OK under Obama.  Patriot Act, NDAA, drones, war......you name it.  If they hated Bush for it, they LOVE Obama for it.

markmotive's picture
On the way up many benefit from the rising tide, but as the peak approaches the disparities between rich and poor grow as the wealthy seek to fortify their power. As the empire overexpands, limits to resources per capita means that distribution must change for the wealthy to maintain their living standards. For this reason, even a slow decline or long plateau can still cause massive pain and suffering.

-------------------

Documentary about the Plunder, Hypocrisy and Violence of Empire: The Power Principle

http://www.planbeconomics.com/2013/05/documentary-about-plunder-hypocris...

Skateboarder's picture

Looks like a nice documentary set, thanks for the link.

espirit's picture

"Though none of the historians listed above mention it, there is another dangerous dynamic in any systemic reform: the very attempt to reform an unstable, diminishing-return system often precipitates its collapse."

CHS - Normally I follow your line of thinking and concur with your analysis, but find it difficult to decypher the above quote with any real meaning.  By this, do you assume that there is a real attempt at reforming such a flawed system?  I believe hypothetically there is/was a conscience effort to get where we are today, and am not convinced reform is what's coming next, but do understand sunk costs effects and and their relationships to societal collapse.

rejected's picture

Their stealing our money,,, our lifestyle,,, our heritage and our means of support. Our freedom,,, our liberty and our privacy.  Our sons,,, our daughters and our family.

 

Not bad for a bunch of "losers" dabbling in organized crime........  Wonder what that makes us...

 

 

jbvtme's picture

only because you thought it was yours to begin with.  these "losers" share the same genes (granted just barely) as the egyptian nobility.  freud was killed because he revealed the connection between akhenatan and rothschild.

RockyRacoon's picture

From another writer on Roman history:

Society, at least in Rome, was beginning to become
fossilised. The hierarchy, still fluid in the centre, was growing
petrified toward the summit. The regular inflow which should
have continuously renewed it gave way too often before acci-
dental pressure and unexpected shocks. Slowed down and diverted
from their course, the equalitarian currents tended to exaggerate
essential inequalities. The democratic order tottered with the
wavering of the middle classes, who had been its firm founda-
tion; it was crushed under the double weight of the masses,
from whom a crazed economic system had stolen all hope of
normal betterment, and of a corrupt bureaucracy which aggra-
vated the absolutism of the monarch whose fabulous wealth it
commanded and translated into acts of arbitrary omnipotence.
Thus the brilliance of the Urbs of the second century was al-
ready shrouded in the shadows which under the later empire
spread from Rome over the rest of the known world, and Rome
lacked the courage to shake herself free of the sinister gloom
that thickened round her. To struggle with success against the
evils of their day, societies have need to believe in their own
future. But Roman society, cheated of its hopes of gradual and
equitable progress, obsessed alternately by its own stagnation
and by its instability, began to doubt itself just at the time when
the conscious unity of its established families was cracked and
breaking.

Carcopino's "Daily Life In Ancient Rome"

SOCIETY AND SOCIAL CLASSES         page 75

Skateboarder's picture

But this is *insert country*. We can't fail, we're AWESOME.

And our 'future music' (deprived of all musical qualities) gets the bitchez rubbin all up in yer junk, holla knawmsayin.

ZerOhead's picture

Well rewarded crooks... if Clinton can book $100 million Obama could be the first to rake in $1 billion...

http://www.celebritynetworth.com/articles/celebrity/bill-clinton-has-ear...

 

Buckaroo Banzai's picture

The surest sign of a degenerate society is when entering politics becomes the simplest and most direct way of accumulating tremendous wealth.

The parasites are overcoming the host.

sschu's picture

accumulating tremendous wealth

I hope you caught the Friday interview with Hugh Hewitt and Dr Larry Arnn, the topic was just as you state. Arnn is a pretty well read guy and he defines it all very accurately, we have essentially become subjects (no longer citizens) who are led by a tyrannical oligarchy.

The question now becomes, how can we overcome what our government has become and where in the past has this ended in anyway peacefully?

The answers to both are troubling.

sschu

 

zerozulu's picture

The surest sign of a degenerate society in my opinion homosexuality.

 

When men are looking for women batter than themselves and women are looking for men batter than them self, weaker member of the society are left outside the ball park, will go homo.

Kiwi Pete's picture

Making money from public speaking tours is not a crime. If he's made $100mil from that then good on him.

According to the article he left public office with a net worth of less than a million dollars. Given the wealth that real poitical crooks leave office with I'd say he was an example of an honest politician.

andrewp111's picture

True. Lyndon Johnson was a government employee all his life and he died with an estate of $5 million. (this was back in the day before the big inflation, folks.)

espirit's picture

Nothing to do with wifey = DoS = CIA?

Uh, okay...

Peter Pan's picture

Maybe the people in charge are moronic crooks. That accounts for both the stupidity of their strategies as well as their profiting.

Go Tribe's picture

Yep. In this government, anyone can make money.

whoisjohngalt11's picture

The fact anyone allows the system to control them is the problem,LACK OF FREEDOM is the problem , where in men give up and quit trying to excel..

ZerOhead's picture

But how can that be?... I mean after all 2 of the last 3 Presidential power couples were both lawyers... and Harvard/Oxford lawyers are smart as whips... so if they are not morons what are they then?

Sofa King's picture

I believe the word you are looking for is Psycopaths.

mjcOH1's picture

No.  Psychopaths get locked up.   Sociopaths get elected.

Anusocracy's picture

Sociopaths are psychopaths that make the rules.

espirit's picture

Sociopathic Psychopaths?

Normal as the sky is blue... wait, it is blue in the Matrix - isn't it?

AlaricBalth's picture

That all depends on who you think is in charge. The puppets ( Obama, Merkel, Abe, et al) are useful idiots. The puppet masters are actually quite shrewd.

mikla's picture

Totally agree there too.  These "elected-leaders" that keep making headlines are middle-management.  They might be "useful idiots" (and they are at some level), but putting Homer Simpson at the controls of the Nuclear Reactor doesn't guarantee that he's competent enough to follow your very basic instructions.

Homer

TeamDepends's picture

The top cop is probably never seen.

Philip K. Dick

mofreedom's picture

idiots need the power of the gun and the dependancy of the sloths to survive.

Village-idiot's picture

They aren't morons; they're puppets obeying instructions.

Why do they do it?

For financial gain.

For position and power.

To protect their own lives and the lives of their families.

They know that the alternative is to be down in the $h!t with the commoners.

Remember the biblical warning about gaining the whole world but losing your immortal soul.

espirit's picture

For fear of a painfull and gruesome death.

HardAssets's picture

The recent interviews of NSA whistleblower Tice by Sibel Edmonds suggest that the middle manager politicians, judges, etc.  are sleaze bags who are selected for that very reason. They are corruptible and can be easily blackmailed.

toady's picture

Interesting. I didn't think to count out the number of years between beginning to rise and fall.

Focusing on military build up & spending doesn't really work for me. The true timing of the beginning of the fall is when you first hear the words 'finance', 'finacialization', or 'big bank'.

RockyRacoon's picture

Another quote from Carcopino's "Daily Life In Ancient Rome" (see above):

"Rome's political supremacy, her gigantic urban development, condemned her to display intense and unremitting activity not only in speculation and trade but in varied manufactures and productive work. Let us reflect that all the roads of Italy led to Rome, and all the lines of Mediterranean navigation, and that Rome, Queen of the World, attracted the best of the earth's products. She arrogated to herself the financing and direction of the world's activities and claimed the right to consume the world's riches. It is obvious that she had to toil unceasingly after her fashion to maintain this dominion."   -- p. 174

What's old is new again...

scrappy's picture

So true.

 

Prioitize.

 

Triage.

 

Healthcare, ag, and the worst MIC boondoggles to start our restructuring.

 

Of course that takes responsible adults, not what we have now.

 

Then there's that pesky TBTF and crap monetary system, corporate "personhood" only when it suites them, money as "speech", and No Rule of Law.

 

Sigh.

meghaljani's picture

All these nations ended up with zero growth after they accepted income redistribution as their way to go ahead. All of them grew as long as they had capitalistic model. Their growth stopped after they engaged in inflationary credit expansion. There is no mystery here. Big government kills growth. 

NidStyles's picture

Can't call something an Empire until it has an Empire sized government after all.

Anusocracy's picture

Government destroys everything it touches because amplifies the worst elements in those things.

bank guy in Brussels's picture

There is a more complex perspective, arguing that the US essentially did go broke circa 1971, but was able to use  several artificial tricks to keep the game going a few more decades

And also that it was the US which destroyed Japan's power in the 1980s, via a criminal scheme targeting Japan's economic strength

Since the 1970s, the USA has used several devious but major tricks to keep an increasingly sclerotic and zombified US economy alive and with the temporary appearance of 'booming' -

Petro-Dollar

Narco-Dollar

Reserve Currency Privilege

Global Debt Ponzi centred in Wall Street

And in 1985, the US via its miliary diktat, forced Japan against its will to agree to the Plaza Accord, re-valuing Japan's currency against Japanese wishes ... causing the subsequent few years of bubble and trade imbalances,  and then the Japanese 1990 mega-crash from which it is still recovering ... Japan's hurt was another prop for the US 'least dirty shirt' plan

The same Plaza Accord greatly harmed Germany as well, which was hurting thru the 90s but then was able to get rich via its own devious scheme with the fixing of European currencies and then the euro, leeching off of other European countries

All these schemes of America, and the German-euro scheme as well, are coming to an end, not too long from now I think

Dr Jim Willie is likely correct ... the grand American mother of all Ponzis is nearing the final act

andrewp111's picture

Yeah, but just about everyone in the world is broke. That isn't our problem.  Our problem is the high cost of doing business in the USA which drives manufacturing to places like China and Pakistan - and these high costs are driven by regulatory burdens and the enormous constituency of no-growthers (mostly Democrats) who are killing growth politically every way they can. 

RockyRacoon's picture

You are addressing one of the symptoms, not the basic disease.

Skateboarder's picture

The fundamental fallacy of western medicine, to make all them nasty symptoms go away temporarily, never bothering to address or treat the root cause. That's the 21st century way of life.

Kiwi Pete's picture

I will stick my neck out here and make a prediction. Never write off America. If flexibility is the hallmark of a succesful empire then they will stay top dog. No other major power will out inovate them, despite their flaws.

Japan will continue it's slide into irrelevence. China will go the same way as Japan. Europe has hobbled itself with the Euro straightjacket. Germany has the Euro millstone around its neck.

SAT 800's picture

We don't need any innovation. We need rational thinking and analysis; adherence to reality; and very large changes in virtually every assumption and government activity that exists today. The government; bought and paid for by the Corporate Overlords, is the problem. Functional Bankruptcy and devaluation of the currency makes you top rat on a garbage heap. It won't do you any good.

Anusocracy's picture

What's needed is voluntary interaction not coercion.