The US seems to be in a panic about its loss of power and ability to discipline and punish other states around the world.
US secretary of state Marco Rubio recently said the quiet part out loud, with his recent statement about countries turning away from the dollar: “There’ll be so many countries transacting in currencies other than the dollar that we won’t have the ability to sanction them.”
That Rubio seems inexperienced at economic diplomacy is less significant than the general panic about the US decline, hence the “Make America Great Again” campaign. The issue is bigger than Rubio and Donald Trump, but Rubio’s statement is not without substance. The relative decline of the dollar’s buying power; the dollar as a safe haven; its use to discipline and punish (through sanctions); and its service as the global reserve currency, are all serious matters worthy of discussion.
The US began to internationalise its currency in 1913. It has served that country’s interests in a number of ways, with the help of its Western Europe, North American and Oceania allies. When John Maynard Keynes suggested the creation of an international currency in about 1944, the then US treasury secretary, Harry Dexter White, pushed for the dollar.
Barry Eichengreen’s Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System should help readers get a grip on these issues — especially how US allies in Europe backed Washington. Nevertheless, the biggest takeaway from Rubio’s statement is the mild panic over the loss of ability to discipline and punish. It is, I would suggest, part of the steady (probably terminal) decline of the US.
It may not happen in our lifetime, but it is quite clear that Trump will not stop the US decline.
Reading only the first chapter of Edward Gibbons’s The History of the Decline and Fall of the Roman Empire, gives some perspective, as does Paul Kennedy’s The Rise and Fall of Great Powers. It’s probably impolite, if the US may be likened to a horse with a broken leg, to make reference (even as a metaphor) to Equus occidentalis.
It may not happen in our lifetime, but it is quite clear that Trump will not stop the US decline. The Europeans are also feeling the heat (the late economist Angus Maddison considered North America and the antipodes outgrowths of Europe). The Brics countries are exploring a new currency for trade between member states, and Sahel countries (most notably Burkina Faso, Mali and Niger) are considering a new currency to break monetary unity with France. China is also starting to internationalise its currency, but it’s starting a century after the US.
All things considered, the US is starting to lose its grip on the whip it has used to discipline and punish countries (or activities) it believes act like some kind of perturbatory disturbance to the “natural order of things”. The US treasury’s office of foreign assets control now lists about 38 sanctions against countries and actors in the world, from Iran to the International Criminal Court and “rough diamond controls”.
Whether you are a Marxist and believe capitalism contains the seeds of its own destruction, or a liberal capitalist such as Kennedy, who simply accepts that great powers rise and fall, the decline of the US is inevitable. We may take a leaf from behavioural psychology texts — we cannot read anyone’s mind, but we can learn, or draw conclusions, from their behaviour. History tells us great changes in the world have always been accompanied by war.
The one thing that needs greater consideration is if we say, for instance, that a particular war is because of a particular problem in a particular region, at what point may we ask whether all the wars around the world represent a problem with the world. We may then speak of wars, and not war, as the accompaniment of global change.
• Lagardien, an external examiner at the Nelson Mandela School of Public Governance, has worked in the office of the chief economist of the World Bank as well as the secretariat of the National Planning Commission.
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