Sunday, February 26, 2012

Consequences of the Cold War

Yesterday, I commented on the new biography of George F. Kennan by John Lewis Gaddis. Kennan interests me because he used broad historical thought to understand and respond to contemporary international issues. In particular, as Gaddis tells us, Kennan’s analysis of the Soviet Union made use of Edward Gibbon’s argument about the Roman Empire, that maintaining an empire strains the political resources of an imperial power.  While Kennan is often heralded as the architect of containment theory, he also became concerned that efforts to contain Communist expansion around the world would ultimately strain the resources of the United States.
As we look back at the Cold War, we may want to consider how the strains and challenges of that era re-shaped American government and society, and to think about how some of our current problems may be consequences of that re-shaping. War generally tends to concentrate power in a central government: as Randolph Bourne observed, “war is the health of the state.” The long global struggle with the Soviet Union, immediately following the hot war of the 1940s, moved more control from state and local governments toward Washington, D.C. As I’ve argued in a number of places, expanding federal control over public education had its roots in the effort to mobilize the socialization and technical training of Americans to face a foreign enemy. I think one can connect the increase in domestic centralization in  all aspects of American life to the projection of American power around the world. The emergence of government as the largest employer in the nation, with concomitant increases in expenditures, resulted from the projection of American power around the world.
We won the Cold War essentially by outspending the Soviets. The USSR was always much weaker than we were in its internal structure, since it maintained itself as a superpower by forcing converting much of its inefficiently produced surplus and the inefficiently produced surplus of its subject nations into military might.  The United States, with a more productive economy, could extend itself much further before going bankrupt. Nevertheless, the Cold War did place us on the path of ever-greater internal and foreign non-investment expenditures. The first crisis from these expenditures came at the beginning of the 1970s, when the effort to simultaneously fund a war in Southeast Asia and a war on poverty tended to both push up wages and prices and place a drag on productivity. We temporarily escaped from this dilemma by becoming an investment center. Cutting capital gains taxes in the 1980s, while retaining internal subsidies of consumption and external spending on our competition with the Soviets, did help in the re-starting of domestic investment and the attraction of foreign investment, but this was largely speculative investment in overvalued new communications technologies and in non-productive consumption. 
The end of our struggle with the Soviet Union has not ended history, and challenges from foreign powers remain with us. But perhaps the end of the Cold War, our current recession, and present debates over the proper size and activities of the federal government should lead us to reflect on how our present situation may have resulted from strains created by the interlinked projection of American power abroad and centralization of control at home.

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