The financial crisis of 2008 has not just toppled once proud corporate giants and eviscerated American assets, livelihoods, and credit. It has touched off an anxious debate over whether the debacle heralds a long-predicted decline in U.S. global power—nothing short of the beginning of the end of the American century.
Overseas and in America, the meltdown is being widely interpreted as a bellwether event, the moment when the American colossus is forced by its own imprudence to throttle back on its globe-straddling ambitions and begin climbing down from the summit of its primacy. A dramatic sign is the emergency Washington summit of the G-20 on November 15. The leaders of 20 key economies will start remaking the power structure of global finance to give rising nations a bigger role.
The rumblings about America's decline are understandable. The financial crisis represents this year's third shock, coming after spiking energy and food prices. Even with a bold intervention by Washington to shore up financial markets, the scope and velocity of the made-in-America financial tumble have thrust forward doubts about the future—and the attractiveness—of the freewheeling U.S. capitalist model, about America's true strength overseas, and about the durability of a post-Cold War order with the United States as the unchallenged, full-service superpower. "The U.S. will lose its status as the superpower of the world financial system," Peer Steinbrück, the finance minister of Germany, declared in September. "This world will become multipolar."
That prediction came from the top ranks of a close U.S. ally and trading partner. From would-be rivals and those nursing resentments of Washington, the reaction has been more caustic. "Economic egoism is also a consequence of the unipolar vision of the world and of the desire to be its mega-regulator," Russian President Dmitry Medvedev said last month. He blamed the United States for having "let slip" a chance for a more democratic world order after the rush of global solidarity with America following 9/11. Why? Because of Washington's "desire to consolidate its global rule," he said. Even as world leaders gathered at the United Nations in September, the chatter behind the public speechifying veered onto one topic: U.S. decline. "The corridors are full of it," said a senior U.N. diplomat with no track record of U.S. bashing. He shook his head over "America's blindness to recognize how the world has changed."
American centrality. The Bush administration, by contrast, has sought to reassure Americans that their status as the premier economic and military power—U.S. "centrality," as Secretary of State Condoleezza Rice puts it—will endure. Indeed, some measures of American pre-eminence remain impressive—and relatively unchanged. With less than 5 percent of the world's population, the United States still produces about one quarter of global gross domestic product—more than three times the share held by Britain at the height of its empire in the mid-1800s. Some 60 percent of the world's reserve currencies are held in U.S. dollars. One third of the world's 500 largest companies are American, and one third of its patent filings are, too, by one measure. America's military budget represents just under half of the world's total defense spending. Seventeen of the world's top 20 universities are in the United States. And American popular culture penetrates into nearly every corner of the world.
Yet Americans are feeling sour about their country's international standing. The need to preserve American primacy remains, for the time being at least, a given to most Americans. A Chicago Council on Global Affairs opinion poll released in September found that 53 percent of Americans worry that the United States has already lost leverage for achieving its aims overseas. Improving U.S. stature received more backing as being of the highest priority than any other goal, with 83 percent calling it "very important."
The new decline debate has reached a full boil just as Americans are electing a new president. Bush administration officials dismiss the talk of decline as a predictable and episodic ritual. "We've been here before," says Eliot Cohen, Rice's counselor and a leading neoconservative foreign policy figure. "It is periodically fashionable to talk about how the United States is all washed up." No doubt, other low points have occasioned bouts of declinist gloom. Take the 1970s, with the painful setbacks of Vietnam, Watergate, stagflation, and musings about "malaise." Many analysts, here and overseas, saw the geopolitical advantage shifting toward the Soviet Union—an assessment that, in retrospect, seems ludicrous. In the mid- and late-1980s, concerns about a debilitating American "imperial overstretch" failed to come true. Japan, with its industrial success and high-profile acquisitions of American assets, was pegged by some to have attained a trajectory that would eclipse U.S. economic might—another short-lived projection.