Supreme Effort

A lesson in British decline

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Supreme Effort : A lesson in British decline - Samuel H. Adamson

Abstract

This paper charts the failure of the post-war British governments to adequately acknowledge and adapt to the changing world order, in which the United States (U.S.) was in ascendancy and Britain, with its Empire, was in decline. Characterized by the deliberate preservation of sterling’s prestige on the international stage, fueled by a lingering nostalgia for the halcyon days of international British supremacy, the argument put forward describes the punishing and painful damage inflicted upon the domestic British economy in an effort to achieve successive governments’ international agenda. The conclusion is, therefore, that a strong element of dynamic self-awareness should be promoted when an international power is faced with decline, in order to better facilitate a controlled and measured descent, rather than an abrupt and precipitous deterioration.

Introduction

“We in this small island have to make a supreme effort to keep our place and station,
the place and station to which our undying genius entitles us!”[1] —— Churchill

When, in 1988, Jeffrey E. Garten asked the question “Is American Decline Inevitable?” one cannot help but draw the immediate conclusion, “Yes.” If ever history has presented one notably convincing and consistent model, it is that of the rise and fall of empires. Take, for example, A Study in History — the twelve volume magnum opus of historian Arnold J. Toynbee, detailing the growth, flowering and decline of over 20 major civilizations, ranging from the Egyptian, Andean and Sinic to the Mexican, Yucatec and Babylonic. It is of interest (in the context of Garten’s argument) to note that Toynbee himself remarks that, “Of the twenty-two civilizations that have appeared in history, nineteen of them collapsed when they reached the moral state the United States is in now.”[2] His assertion may include a certain degree of hyperbole, but the general sentiment is one that deserves recognition and, indeed, has been the subject of growing attention in recent years.

Even before the collapse of the Soviet Union, Paul Kennedy was drawing attention to the relative decline of the United States. In his seminal work The Rise and Fall of the Great Powers, Kennedy presents the thesis that due to the incessant fluctuations in relative strength between nations (resulting from technological, political, economic innovations, etc.), the power and influence of “leading nations” never remain constant. Consequently, such nations find themselves in a position where they are no longer able to fulfill the commitments they made at times of relatively greater prosperity, and the resulting misallocation of national resources leads to the beginning of decline. Kennedy labels this syndrome, “imperial overstretch” and, making reference to its extensive international obligations (“whose mere listing leaves one breathless”), identifies the United States as a possible sufferer, concluding that “the fundamental grand-strategical dilemma remains: the United States today has roughly the same massive array of military obligations across the globe as it had a quarter of a century ago, when its shares of world GNP, manufacturing production, military spending, and armed forced personnel were so much larger than they are now.”[3]

Even in a post-Soviet world, there is a continued use of the word “overstretch” with reference to the United States and its relative decline. Today, the contrastive subject is a rising China rather than a crumbling USSR, financial crises and trillion dollar wars are cited as evidence for American “overstretch.” Notably, Robert A. Pape of the University of Chicago makes extensive use of statistical data to paint a compelling portrait of a global power experiencing a significant loss in international influence and in particular identifies the beginning of a new and precipitous decline post-2000.

Pape argues that economic strength is at the heart of the United States’ global influence, noting that “[p]roductive capacity — defined by indicators such as wealth, technology and population size — is a prerequisite for building and modernizing military forces.”[4] Therefore, in support of his declinist thesis, Pape presents a cogent set of data detailing the fall in the U.S. share of world product using three distinct measurements, reproduced below as table 1 and table 2.

His first choice of measurement (a comparison of each country’s output in current-year U.S. dollars, table 1) is that which is most frequently used by Pape’s opponents. Indeed, he makes explicit reference to its employment by Brooks and Wohlforth in their 2008 argument for America’s exploitation of its hegemonic position.[5] However, whereas Brooks, Wohlforth and others tend to employ single year “snapshots” to paint an overly rosy view of U.S. unipolar dominance, Pape examines the trend over time and, deftly turning their own figures against them, confronts his critics head-on, concluding that the U.S. will see a 32 percent drop in its percentage of world product between 2000–2013. His justification for taking a long-term trend perspective is clear:

Single-year ‘snapshots’ of America’s relative power are of limited value for assessing the sustainability of its grand strategy over many years. For grand-strategic concerns —especially how well the United States can balance its resources and foreign-policy commitments— the trajectory of American power compared to other states is of seminal importance.[6]

As further evidence for the declinist trend identified in table 1, Pape also employs two further methods of calculating the U.S.’s percentage of world product: constant-dollar calculations and purchasing power parity, both of which are commonly used to determine GDP (table 2). Although the percentage drop predicted using these alternative methods is less than that of table 1, Pape remains resolute, remarking that “regardless of the metric, the trend is the same.”[7] Indeed, both predict a significant decline of around 20 percent which Pape states “form[s] the lower bound of America’s decline.”[8] His conclusion is unambiguous and frank: “Simply put, the United States is now a declining power.”[9] He continues,

The United States has always prided itself on exceptionalism, and the U.S. downfall is indeed extraordinary. Something fundamental has changed. America’s relative decline since 2000 of some 30 percent represents a far greater loss of relative power in a shorter time than any power shift among European great powers from roughly the end of the Napoleonic Wars to World War II. It is one of the largest relative declines in modern history.[10]

Garten himself does not fundamentally disagree with Pape’s conclusion that the U.S. is in decline. Indeed, he expresses his own concern at the “speed at which Washington’s power and influence are tumbling down.”[11] But the purpose of the review and thesis Garten presents is to find solutions to this decline, rather than to encourage an analysis of its nature in order to better prepare the nation for the coming realignment in international station. This is where this paper finds issue with Garten’s discourse. The argument presented here aims to warn of the dangers of remaining stubborn and inflexible in the face of decline and, by contrast, extols the virtues of maintaining a sense of self-perspective regarding international position. Rather than “breaking the fall” of decline as Garten would have it, this paper encourages an awareness of the inevitability of decline and the importance of a self-aware dynamic reaction to it, thereby allowing a more controlled and gradual decline, rather than a crashing to earth as is exemplified by the British case.[12] This argument will be illustrated using the example of the post-war British governments’ failure to properly identify and accept Britain’s changing place and status on the world stage. Taking the preservation of sterling’s prestige as its primary illustration, this paper argues that by focusing excessively on Britain’s international role, domestic industry was time and again subject to punishing economic policy for the sake of maintaining sterling’s prestige. In response to the effects of this internationally focused policy set, growing domestic unrest eventually led to a breakdown of the post-war consensus, precipitating a painful decline for the British economy. As such, it will also be seen that although the short term effects were particularly painful, the heavy burden of mismanagement of the economy —particularly throughout the 1950s and 1960s— is still being felt in Britain today, thus adding weight to the central argument of the paper.

The Rise And Fall Of Sterling [13]

Following the victories of Nelson and Wellington in the early nineteenth century, Britain was able to seize upon an invaluable opportunity to develop an unrivalled naval dominance and begin to propagate British influence throughout the globe. The fortuitous circumstances of a century of relative British stability compared to the political distemper of the continent, combined with what Balogh describes as London’s “double superiority” of “mercantile supremacy [and] industrial leadership” had established Britain as the world’s unrivalled colonial power by the mid-nineteenth century.[14] Moreover, the security afforded to sterling transactions by the seemingly omnipresent British merchant ships (with Royal Navy backing), the financial liberalism of British colonies and the legal support of British law in financial transactions provided the groundwork for the development of sterling as an international currency of trade and, later, reserve. There is no suggestion here, however, that sterling was without its drawbacks. Indeed, as with any international reserve currency, those who chose to take advantage of sterling had to bear the brunt of London’s justifiably self-serving monetary policy. However, the lack of any credible alternative prior to the ascent of the dollar ensured sterling’s global position as Top Currency. (Technically, however, sterling was only Top Currencyin those states not under British political control. Throughout the Empire, sterling was utilized as a Master Currency. Colonial governments were obliged to use it, albeit often through the pegging of local currencies (of alternative appellation) to the pound.)

The process of sterling’s decline (or “slippage”) from its position as Master and Top currency began, predictably, with the decline of British political and imperial power. Perhaps the first watershed in the transition of world currencies from sterling to the dollar came when, in the face of failing confidence in British supremacy in the inter-war period, combined with the high price of sterling at a time of severe balance of payments difficulties, the British government was forced to abandon the Gold Standard in 1931. Consequently, the world had to decide how best to ensure the stability of their own currencies. Canada responded by turning away from the pound towards the dollar, while the major European powers formed a “gold bloc” and the rest of the Empire remained, for the most part, loyal to Britain, forming as they did the “sterling bloc.” Strange notes:

“between the wars [..] [sterling] had first of all required the support of another strong currency— the dollar: that it had, with American support, tried to regain its pre-war position of universal acceptability; but the opposition to this purpose, which was primarily political and not technical in character, had been underestimated. And under the stress of a crisis in international financial markets, which constituted a major threat to the whole international commercial and monetary system, the Top Currency role had to be —finally and reluctantly— abandoned.”[15]

Subsequently, in an already evolving international environment, the crippling financial burden imposed on Britain by the Second World War presented the United States with an opportunity not dissimilar to the British position in the early nineteenth century. Taking full advantage of the geopolitical situation (as Britain had done) and combining it with what Jean-Jacques Servan-Schreiber described as the “all too potent […] U.S. know-how, business methods, and brain power,” the United States was in a position to gradually assume the role of international hegemon.[16]Moreover, with its gradual political ascendancy came economic power and, ultimately, dominance. As Aubrey notes, “The United States […] emerged from the Second World War as the world’s financial center and its currency as the most important medium of exchange. The dollar has become the hub of the international monetary system on which the stability and liquidity of other currencies depend.”[17] Aubrey’s observances were the plain fact of the matter, and it is this transition from sterling’s international dominance to that of the dollar which forms the crux of this paper.

Protecting The Prestige Of Sterling

The influence exerted by the British Empire is unparalleled in history. Even in the wake of the First World War and the beginning of sterling’s decline, Britain was able to maintain an Empire that covered a quarter of the globe and governed the same proportion of the earth’s population. Both its beginning and end are marked by military victories and heroes that enjoy unrivalled legend in British history and culture. It is little wonder then, that the generation of politicians, colonial administrators and bureaucrats who were presented with the beginning of decline found it not only difficult to plan for but rather must have found the idea of decline itself entirely inconceivable. Indeed, it is perhaps easy to find sympathy for those who saw victory in two world wars as a validation of the old, British-dominated world system, rather than the catalyst for its removal.

This paper argues that the apparent refusal by Britain to recognize the detrimental effects of the international economic policies it pursued post-1945 was primarily motivated by a failure to recognize the shift in power and position on the international stage, both of the United States and Great Britain itself. By maintaining the policies of the old world order, Britain time and again inflicted punishing policy on the domestic economy and by the time the extent of the situation was realized, the damage was so significant that there is argument as to whether Britain has actually ever recovered.

This repeated damage to Britain’s domestic economy is best illustrated by what has come to be known as the “stop-go” cycle of the post-war period. In a herculean attempt to preserve sterling’s international position, a succession of British governments between 1950 and the early 1960s maintained an artificially high, fixed exchange rate under the Bretton Woods system, encouraging sterling’s use as a reserve currency by other governments. ‘Devaluation’ became taboo within the Treasury and Foreign Office and indeed throughout the government. The idea of devaluing the pound was analogous with acknowledging British decline on the world stage — a fact no government seeking re-election would be willing to concede. The responsibility felt by successive governments regarding the protection of sterling (and also themselves) is aptly illustrated by an excerpt of an emotive 1949 House of Lords Speech concerning devaluation, made by Lord Woolton:

“The ordinary people of this country do not understand what devaluation means, but they feel disturbed. Their pride has had a shock. To them the pound sterling abroad is a matter of pride; it is a sort of financial Union Jack; and they hate to see any foreigner putting his flag above theirs.”[18]

In addition to this, the large reserves of sterling still held by foreign governments continued to put pressure on Britain, both diplomatically and financially. Were Britain to devalue the pound, not only could this make sterling vulnerable to huge speculation and a subsequent plunge in its value, but there was also a sense of duty maintained in London on a diplomatic level, the feeling being that a revaluation of the pound would essentially amount to a defaulting by Britain on its international obligations to overseas holders of sterling.[19]

The absolute rejection of devaluation as a policy option and the maintenance of the pound’s strength therefore had the effect of incentivizing the British people to consume more imports, while making British exports particularly uncompetitive abroad. The result was, of course, severe and recurrent balance of payment crises for which there was an extremely limited range of policy tools available. The apparent consensus of successive governments was to deflate the domestic economy when aggregate demand was critically affecting the balance of payments. Then, following what was deemed to be a sufficient curtailment of demand, a reflationary budget would then be introduced, beginning the whole process again. This is the essence of the ‘stop-go’ cycle which characterized the British economy between 1950 and the early 1960s. So, for example, 1951 saw Clement Attlee’s government pursuing deflationary measures that, due to international pressures on the pound, were only to be reversed in 1953–4 during the Churchill restoration. Domestic deflation then was re-imposed as sterling again came under pressure from international speculators in the period 1955–56. Harold Macmillan’s government then proceeded to followed expansionary and deflations policies within just a few months during 1957.[20]

The Damage Inflicted

By the beginning of the 1960s, there began a gradual recognition that the economy was experiencing chronic underperformance, although by this point the damage done to Britain’s domestic economy through the ravages of the deflation/expansion cycles was considerable. It was, Blank notes, “difficult, almost impossible, to repair.”[21] The mal-effects were most keenly felt in the comparatively low rate of growth in Britain since 1950, in particular in comparison to Germany and Japan which were undergoing exponential export-driven growth — the polar opposite of what British governments had been unwittingly engineering. With each deflationary budget the Treasury introduced, investment was severely affected. Sir Alec Cairncross, then the government’s Chief Economic Advisor, emphasizes the point: “‘Monetary policy affects, and is intended to affect, investment much more than consumption,’ and in practice this means particularly ‘industrial investment’ as well as the smaller firms ‘because they are more vulnerable than their large competitors.’”[22] Pollard cites the example of the British Motor industry, whose decline was particularly exacerbated by a lack of proper investment, resulting in a “failure to bring the capital equipment up to date.”[23] He also notes that in “growth industries heavily based on science and technology, like electronics and man-man fibres […] we find the same story of inadequate investment in new capacity and tardy adoption of new technology, so that the windfall technical lead which was acquired during the war and still held in 1950 was lost and competitive power suffered.”[24] The resultant poor levels of growth can be seen in table 3.

Unlike its economic rivals on the continent, by this period Britain had already made full use of the gains in efficiency to be drawn from the transfer of labor from agriculture to industry. On the continent, however, this process was only now taking place in earnest, with France in particular experiencing great growth gains as a result. Blank maintains, however, that the other economic tools which were also accelerating the French economy and producing the German Wirtschaftswunder — namely “capital investment” and “the application of technological and managerial knowledge to production” — were also, technically, available to the British government.[26] However, the consistently recurring deflationary spates in defense of sterling had dramatically limited the British government’s ability to utilize either of these factors, adding to the woes of British industry.

Transition To Further Strife

Although by the early 1960s there was a growing domestic awareness as to the station Britain ought to be occupying within the global economy, the “tragic and absurd”[27] situation in which it found itself was only to become worse as, with increased awareness, came the apportioning of blame: “Industrialists, the TUC, academics, and the media, even high-ranking civil servants, all pointed to ‘stop-go’ economic policies as the major cause of the stagnation which seemed to grip the British economy,”[28] whereas the government remained unrepentant and made no signs of even moving towards the dethroning of sterling. At a conference held by the Federation of British Industry in the winter of 1960, Viscount Amory, the then Chancellor of the Exchequer made no diversion from the Treasury’s “traditional priorities,” declaring his primary concern to be that “sterling must be kept strong and respected.”[29]

The standoff between industry and government was exacerbated by the frustration of the labor unions throughout the 1960s and led to the next major phase of British decline. In 1945, Clement Attlee’s Labour government had been elected on a revolutionary manifesto, marking what many saw as a break away from the old, rigid order and a move towards a Britain more responsive to the needs of the common man, who, after all, had just secured Britain’s triumph over fascism. At the heart of Attlee’s “New Jerusalem” vision, was the creation of the Welfare State and a commitment to achieving full employment. In what came to be known as the “Welfare Compromise,” the nation’s new order was to be achieved

“…by the use of Keynesian economic policies in which government acted to regulate demand and smooth the business cycle by public expenditure. […] Government intervened to regulate macroeconomic variables but left the details of employment relationships to be resolved by employers and employees.”[30]

This non-legalistic system of volunteerism served British business, workers and government with a good deal of success for many years, with healthy levels of growth and employment maintained for the best part of twenty-five years. It was not until the 1960s (when the pressures of propping up sterling and the consequent under-investment in British industry began to be felt by the government) that increasingly interventionist policies emerged, disrupting the Welfare Compromise and eventually ensuring its downfall. By the introduction of the 1964 Industrial Training Act and the 1965 Redundancy Payments Act, for example, the government was acting outside of its traditional remit within the post-war compromise. Similarly, a tightening of the judicial system was evidenced in 1964 when judgments were made restricting the labor union’s power to strike. Both Labour and Tory governments alike were making these “incursions into the old voluntary system of regulation.”[31]

Labour And The Unions

In spite of its evolving nature and organization, the Labour Party remained a party which was created by and for the representation of British workers. Their election in 1945, bolstered by the nation’s wartime triumph, represented the beginning of the powerful post-war compromise, and a nation unified in its desire for progression, regained power and social justice. However, the loyalty of the unions was to be tested to breaking point during the 1960s by the combination of repeated demands placed on the purchasing power of British people as part of the post-war stop-go cycles (at a time when the acquisition of consumer durables was for many a real sign of progress and wealth) and the beginning of the end of the Welfare Compromise through the introduction of Labour’s price and incomes policy. The social revolution of the time also played no small part in the re-evaluation of the party in the eyes of previously dependable voters, and the new post-war generation of workers began to call into question a government, which after all, was still made up of Oxbridge-educated political impresarios.

Wilson’s eventual devaluation of sterling in 1968 was too little too late. And although “the illusions about Britain’s financial and military role in the world —of which Mr. Wilson had originally been the foremost exponent, and which had held the country back for so long— were at long last jettisoned, ” the tardiness of this realization only served to force upon the government the need for further restrains on the domestic economy: “The economy was still more drastically deflated, public expenditure was cut, and unemployment was permitted to rise to its highest level since 1940.[32] Prices rose and real disposable income fell for many workers.”[33] It is clear to see how this must have felt like somewhat of a betrayal to the Labour faithful. The “white heat of technological revolution” of which Wilson had spoken so highly was nothing compared to the white heat of incandescent rage expressed by union officials at this time. British industrial relations subsequently began to experience a precipitous decline.

Plumbing New Depths

The late 1960s and 1970s became characterized by growing strife within British industry, the now chronic underinvestment caused by the sterling-induced stop-go cycles exacerbating the ruinous state of industrial relations. The sharp increase in strikes witnessed in the U.K.at the end of the 1960s is illustrated in figure 1.

Supporting this evidence, Blank notes:

After 1966, the paths of the unions and the government diverged sharply. There was a strong trend towards the left in many unions, and union-government cooperation declined significantly. Strikes increased as workers sought to force higher wage settlements to keep pace with inflation and to maintain their living standards. That a Labour government was in power and demanding still greater sacrifices of higher levels of unemployment, declining standards of living, and reduced social welfare programs, substantially heightened the alienation of unions.[34]

The aggravation and malcontent of the unions and the damage to British economy were only to be worsened with the coming of Heath’s 1970 Conservative government, which embarked on a campaign at odds with its predecessors, but to equally damaging effect:

[The government] was totally opposed to incomes policy and disbanded the Prices and Incomes Board. It abolished the [Industrial Relations Commission] and throttled back the Ministry of Technology’s interventionist approach to industrial policy. The new government was determined to confront the unions: it promised to put heavy pressure on public and private sector employers to resist wage increases and introduced a new industrial relations act.[35]

The result has come to typify the 1970s — soaring inflation and unemployment or stagflation. Exacerbated by the 1973 oil crisis and the non-cooperation of the National Union of Mineworkers, Britain hit its lowest point with the introduction of the three-day working week in early 1974 and inflation peaking at 26.9 percent a year later.

Heath’s government subsequently lost the February 1974 election, though the general malaise of the British electorate was evidenced by the election of a hung parliament. Moreover, in spite of initial hopes surrounding the “social contract” being brought about by the newly elected Labour government of October 1974, it would not prove to be the perpetual cure that Britain sought. Struck as an agreement between the shadow Labour cabinet and the Trades Union Congress in joint abhorrence at the 1971 Tory Industrial Relations Act and an unwillingness to return to the fraught relations of the previous Labour government, the new “social contract” essentially amounted to the acceptance by both parties of the repealing of the incomes policy and a return to collective bargaining, with the trade unions agreeing to “exchange their support in voluntary wage restraint for legislation favourable to trade unions.”[36]This new agreement with the unions, combined with an immediate pay-off of the miners’ union led to a relatively calm period in industrial relations, though in the long-run it would become clear that Wilson’s restored government had merely papered over the cracks in the economy and, in fact, the major structural flaws remained. Indeed, in trying to pressure the unions into taking a fourth year of wage restraint with a pay limit of only five percent there was again widespread industrial malcontent, resulting in the infamous “Winter of Discontent” of 1979.[37]

Thatcher’s Lingering Legacy

This Britain of “discontent” was that which Margaret Thatcher inherited in May 1979. In so many ways distinct from her predecessors (of either party), Thatcher’s approach to the problems of high inflation, unemployment and unruly labor unions was, unsurprisingly, equally divergent. Basing policy on her own brand of neo-liberalism and monetarism, Thatcher brought the government’s focus to the reduction of levels in inflation, rather than the nation’s level of unemployment. With an unmitigated and unrepentant belief in individualism, government non-intervention, privatization and deregulation, Thatcher was attempting to revitalize British industry by focusing on inflation control:

The government announced that it would not directly intervene in the economy via incomes policy-type measures aimed at controlling wages and prices. Instead the government was committed to using tight monetary controls and high interest rates to control the economy and to use deflation and unemployment to reduce wage claims and price inflation.[38]

Much debate remains as to the successes this revolutionary set of principles had on the British economy, with Thatcher attracting perhaps as much violent criticism as she does idolatrous praise. Her fierce attacks on labor unions and the liberalizing deregulation of the City led to simultaneous bust and boom for different sectors of society, fueling the controversial nature of her legacy. What is clear, however, is that her reorienting of Britain’s means of government has not been drastically shifted since she unleashed the raw forces of laissez-faire onto the British market. Most significantly, the deregulation of the financial markets cemented and expanded Britain’s focus and dependence on the City — a fact of which Britain is all too aware in the current financial crisis.

Wider Implications Of The British Experience

The aim of this essay is to demonstrate the extent to which the initial failure by British governments to recognize, accept and adapt to the country’s new position in the post-war world had deep, painful and long-lasting effects on the domestic British political economy. Rather than being a time of reflection and re-evaluation of the world order, the post-war consensus amongst successive governments was that Britain’s victory was a validation of the old, rather than a trigger for its removal. As such, sterling was expected to continue as the world’s reserve currency and the preferred unit of exchange. From 1945 until the major devaluation of 1968, one after the other, British governments oriented economic policy towards the maintenance of sterling’s international prestige, through the manipulation of the domestic economy. Using deflationary packages to curb demand and defend the pound against external pressure, the government indirectly (but repeatedly) inflicted punishing restrictions on British industry through a chronic underinvestment in capital. As Samuel Brittan has it, “The position of sterling as an international currency, with all the risks to which it exposed Britain, was regarded as desirable in itself, like a prisoner kissing the rod with which he is being beaten.”[39] In a desperate attempt to improve British competitiveness, British governments then began to intervene in industrial relations, to the detriment of the Welfare Compromise that had presided over a relatively stable period from 1945 –1960. Government-union cooperation worsened throughout the 1960s under a Labour government and reached exploding point following the election of Heath’s conservative government. The British economy plumbed new depths in the 1970s, with factories being reduced to a three- day working week and with the entire population having to endure the infamous “Winter of Discontent.” Such harsh times brought about harsh measures, to be administered by Margaret Thatcher. Her reshaping of the British political economy marks the beginning of the current era for Britain, for better or worse. With increased focus, she drew onto the City’s financial services; however, at the moment it is difficult to see past the latter. Britain, still today, feels the pain of bone-breaking readjustment to the post-war world.

It should also be emphasized that the thesis put forward here is only one example of the way in which the British government failed to adapt properly to the nation’s declining position in the post-war world. This paper could easily have taken as its topic of investigation the exuberant defense spending exhibited by an unbroken succession of British governments, characterized by the costly maintenance of an independent nuclear deterrent in obeisance to the “Top Table” argument or, as Churchill had it, “our badge to the Royal Enclosure.”[40]

The wider lessons to be drawn from the British experience are complex and difficult to identify clearly, as each declining hegemon (of which there have been —and will be— many) faces a potentially different set of international and domestic conditions. However, there is a clear and universal warning to be taken from the illustration presented here — a world power that may be in decline needs, more than ever, to maintain a high level of vigilance and flexibility in its attitudes to its international position. Being prepossessed of pretensions of past glories serves for nothing; rather it inhibits a nation in its readjustment. Therefore, the attitudes put forward by E. Garten in his essay regarding American decline (as outlined at the beginning of this paper) should be regarded as, at best, unhelpful, and at worst severely damaging to the future of the United States. For reasons that will not be argued here, however, I find myself in complete agreement with Garten regarding the undesirable nature of American decline, particularly in light of the candidates currently waiting in the wings to take the crown. Indeed, it is for that reason that this paper argues that it is wrong to assess the methods of “how to remedy signs of decline” (as Garten does), but rather suggests that it is instead critical to accept the inevitability of its occurrence, allowing for a more controlled descent, thereby minimizing domestic damage and allowing declining powers to still exert a good deal of influence on the international stage — at least due in part to their masterfully orchestrated readjustment to their dethronement.

Notes & References

  1. Randolph Spencer Churchill and Martin Gilbert, Winston S. Churchill, vols. 3-4 (Boston: Houghton Mifflin, 1988), p. 773.
  2. Quoted in Dan J. Sanders & Galen Walters, Equipped to Lead: Managing People, Partners, Processes, and Performance (New York: McGraw-Hill, 2008), p. 12.
  3. Paul Kennedy, The Rise and Fall of the Great Powers (New York; Random House, 1987) p. 521; for the quotation “whose mere listing leaves one breathless,” please refer to Barry Rubin, “The Reagan Administration in the Middle East” in Kenneth Oye et al., eds., Eagle Defiant: United States Foreign Policy in the 1980s (Toronto: Little, Brown and Company, 1983) p. 367.
  4. Robert A. Pape, “Empire Falls,” The National Interest, 22 January 2009, http://www.nationalinterest.org/PrinterFriendly.aspx?id=20484.
  5. Stephen G. Brooks and William C. Wohlforth, “World Out of Balance: International Relations and the Challenge of American Primacy” (Princeton: Princeton University Press, 2008).
  6. Pape, op. cit.
  7. Ibid.
  8. Ibid.
  9. Ibid.
  10. Ibid.
  11. Jeffrey E. Garten, “Is American Decline Inevitable?” World Policy Journal 5, no. 1 (Winter 1988): p. 151.
  12. Ibid., p. 151.
  13. This section makes use of Strange’s now classic delineation of four (not necessarily mutually exclusive) scenarios in which a people or government may come to use the currency of another: Master Currency – an inherently political arrangement whereby a politically and economically superior state imposes its currency on one of lesser status (e.g. the imposition by European powers of their currencies upon their colonies); Negotiated Currency – a currency which has previously had the political or economic power which allowed them to function as a Master Currency but following a decline in power must now engage in diplomatic negotiations to induce the adoption of its currency (e.g. Sterling, post-war); Top Currency, one which through its economic strength, frequently bolstered by political prowess, becomes the choice reserve currency of world markets, (currently the dollar); Neutral Currencies also enjoy a strong economic standing, and are consequently used as a private reserve currency by private users to whom the currency’s issuing state is politically indifferent (e.g. Swiss Franc). Please refer to Susan Strange, Sterling and British Policy: A Political Study of an International Currency in Decline (Oxford: Oxford University Press, 1971).
  14. Thomas Balogh, Unequal Partners, vol. 2 (Oxford: Oxford University Press, 1963), p. 25.
  15. Strange, op. cit., p. 55.
  16. Life, May 17, 1968, p. 49, quoted in C. Fred Bergsten, Dilemmas of the Dollar (New York: New York University Press, 1996), p. 176.
  17. Henry G. Aubrey, “The Dollar in World Affairs: An Essay in International Financial Policy” (New York: Harper & Row, 1964), p. 109.
  18. House of Lords Debates, Hansard, 1949, 8 April 2010, http://www.parliament.the-stationery-office.co.uk/pa/ld/ldhansrd.htm.
  19. Peter A. Hall, Governing the Economy: The Politics of State Intervention in Britain and France (Oxford: Oxford University Press, 1986), p. 58.
  20. Ibid., pp. 50–51.
  21. Stephen Blank, “Britain: The Politics of Foreign Economic Policy, the Domestic Economy, and the Problem of Pluralistic Stagnation” International Organization 31, no. 4 (Autumn 1977): p. 691.
  22. Sidney Pollard, The Wasting of the British Economy, 2nd ed. (Guilford: Biddles, 1982), p. 49.
  23. Sidney Pollard, The Development of the British Economy 1914 — 1990, 4th ed. (London: Edward Arnold, 1992), p. 244.
  24. Ibid.
  25. Adapted from G.B. Stafford, The End of Economic Growth?: Growth and Decline in the U.K. since 1945 (Oxford: Martin Robertson, 1981), p. 106.
  26. Blank, op. cit., p. 697.
  27. Andrew Schonfield, British Economic Policy Since the War (London: Penguin, 1958), p. 218.
  28. Blank, op. cit., p. 698.
  29. Ibid., p. 698.
  30. Howard F. Gospel and Gill Palmer, British Industrial Relations, 2nd ed. (London: Routledge, 1993), p. 165.
  31. Ibid., p. 167.
  32. Samuel Brittan, Steering the Economy: The British Experiment (New York: The Library Press, 1971), p. 379.
  33. Blank, op. cit., p. 709.
  34. Ibid., p. 709.
  35. Ibid., p.710.
  36. Gospel and Palmer, op. cit., p. 243.
  37. George Sayers Bain, ed., Industrial Relations in Britain (Oxford: Basil Blackwell, 1983), p. 169.
  38. Gospel and Palmer, op. cit., p. 252.
  39. Brittan, op. cit., p. 223.
  40. Peter Hennessey, Cabinets and the Bomb (Oxford: Oxford University Press, 2007), p. 116.
Samuel H. Adamson is a second-year MAIA candidate at the Johns Hopkins University SAIS Bologna Center. He completed his first year at the Viennese Diplomatische Akademie and holds an undergraduate degree in Oriental Studies from the University of Oxford. Aside from international economics, his current research interests include the dynamics of global drug markets, particularly in Afghanistan.