The Bubble of American Supremacy A prominent financier argues that the
heedless assertion of American power in the world resembles a
financial bubble—and the moment of truth may be here
by George Soros
t is generally agreed that September 11, 2001, changed the course of
history. But we must ask ourselves why that should be so. How could a
single event, even one involving 3,000 civilian casualties, have such a
far-reaching effect? The answer lies not so much in the event itself as
in the way the United States, under the leadership of President George
W. Bush, responded to it.
Admittedly, the terrorist attack was historic in its own right.
Hijacking fully fueled airliners and using them as suicide bombs was an
audacious idea, and its execution could not have been more spectacular.
The destruction of the Twin Towers of the World Trade Center made a
symbolic statement that reverberated around the world, and the fact that
people could watch the event on their television sets endowed it with an
emotional impact that no terrorist act had ever achieved before. The aim
of terrorism is to terrorize, and the attack of September 11 fully
accomplished this objective.
Even so, September 11 could not have changed the course of history to
the extent that it has if President Bush had not responded to it the way
he did. He declared war on terrorism, and under that guise implemented a
radical foreign-policy agenda whose underlying principles predated the
tragedy. Those principles can be summed up as follows: International
relations are relations of power, not law; power prevails and law
legitimizes what prevails. The United States is unquestionably the
dominant power in the post-Cold War world; it is therefore in a position
to impose its views, interests, and values. The world would benefit from
adopting those values, because the American model has demonstrated its
superiority. The Clinton and first Bush Administrations failed to use
the full potential of American power. This must be corrected; the United
States must find a way to assert its supremacy in the world.
This foreign policy is part of a comprehensive ideology customarily
referred to as neoconservatism, though I prefer to describe it as a
crude form of social Darwinism. I call it crude because it ignores the
role of cooperation in the survival of the fittest, and puts all the
emphasis on competition. In economic matters the competition is between
firms; in international relations it is between states. In economic
matters social Darwinism takes the form of market fundamentalism; in
international relations it is now leading to the pursuit of American
supremacy.
Not all the members of the Bush Administration subscribe to this
ideology, but neoconservatives form an influential group within it. They
publicly called for the invasion of Iraq as early as 1998. Their ideas
originated in the Cold War and were further elaborated in the post-Cold
War era. Before September 11 the ideologues were hindered in
implementing their strategy by two considerations: George W. Bush did
not have a clear mandate (he became President by virtue of a single vote
in the Supreme Court), and America did not have a clearly defined enemy
that would have justified a dramatic increase in military spending.
September 11 removed both obstacles. President Bush declared war on
terrorism, and the nation lined up behind its President. Then the Bush
Administration proceeded to exploit the terrorist attack for its own
purposes. It fostered the fear that has gripped the country in order to
keep the nation united behind the President, and it used the war on
terrorism to execute an agenda of American supremacy. That is how
September 11 changed the course of history.
Exploiting an event to further an agenda is not in itself reprehensible.
It is the task of the President to provide leadership, and it is only
natural for politicians to exploit or manipulate events so as to promote
their policies. The cause for concern lies in the policies that Bush is
promoting, and in the way he is going about imposing them on the United
States and the world. He is leading us in a very dangerous direction.
he supremacist ideology of the Bush Administration stands in opposition
to the principles of an open society, which recognize that people have
different views and that nobody is in possession of the ultimate truth.
The supremacist ideology postulates that just because we are stronger
than others, we know better and have right on our side. The very first
sentence of the September 2002 National Security Strategy (the
President's annual laying out to Congress of the country's security
objectives) reads, "The great struggles of the twentieth century
between liberty and totalitarianism ended with a decisive victory for
the forces of freedom—and a single sustainable model for national
success: freedom, democracy, and free enterprise."
The assumptions behind this statement are false on two counts. First,
there is no single sustainable model for national success. Second, the
American model, which has indeed been successful, is not available to
others, because our success depends greatly on our dominant position at
the center of the global capitalist system, and we are not willing to
yield it.
The Bush doctrine, first enunciated in a presidential speech at West
Point in June of 2002, and incorporated into the National Security
Strategy three months later, is built on two pillars: the United States
will do everything in its power to maintain its unquestioned military
supremacy; and the United States arrogates the right to pre-emptive
action. In effect, the doctrine establishes two classes of sovereignty:
the sovereignty of the United States, which takes precedence over
international treaties and obligations; and the sovereignty of all other
states, which is subject to the will of the United States. This is
reminiscent of George Orwell's Animal Farm: all animals are
equal, but some animals are more equal than others.
To be sure, the Bush doctrine is not stated so starkly; it is shrouded
in doublespeak. The doublespeak is needed because of the contradiction
between the Bush Administration's concept of freedom and democracy and
the actual principles and requirements of freedom and democracy. Talk of
spreading democracy looms large in the National Security Strategy. But
when President Bush says, as he does frequently, that freedom will
prevail, he means that America will prevail. In a free and open society,
people are supposed to decide for themselves what they mean by freedom
and democracy, and not simply follow America's lead. The contradiction
is especially apparent in the case of Iraq, and the occupation of Iraq
has brought the issue home. We came as liberators, bringing freedom and
democracy, but that is not how we are perceived by a large part of the
population.
It is ironic that the government of the most successful open society in
the world should have fallen into the hands of people who ignore the
first principles of open society. At home Attorney General John Ashcroft
has used the war on terrorism to curtail civil liberties. Abroad the
United States is trying to impose its views and interests through the
use of military force. The invasion of Iraq was the first practical
application of the Bush doctrine, and it has turned out to be
counterproductive. A chasm has opened between America and the rest of
the world.
The size of the chasm is impressive. On September 12, 2001, a special
meeting of the North Atlantic Council invoked Article 5 of the NATO
Treaty for the first time in the alliance's history, calling on all
member states to treat the terrorist attack on the United States as an
attack upon their own soil. The United Nations promptly endorsed
punitive U.S. action against al-Qaeda in Afghanistan. A little more than
a year later the United States could not secure a UN resolution to
endorse the invasion of Iraq. Gerhard Schröder won re-election in
Germany by refusing to cooperate with the United States. In South Korea
an underdog candidate was elected to the presidency because he was
considered the least friendly to the United States; many South Koreans
regard the United States as a greater danger to their security than
North Korea. A large majority throughout the world opposed the war on
Iraq.
eptember 11 introduced a discontinuity into American foreign policy.
Violations of American standards of behavior that would have been
considered objectionable in ordinary times became accepted as
appropriate to the circumstances. The abnormal, the radical, and the
extreme have been redefined as normal. The advocates of continuity have
been pursuing a rearguard action ever since.
To explain the significance of the transition, I should like to draw on
my experience in the financial markets. Stock markets often give rise to
a boom-bust process, or bubble. Bubbles do not grow out of thin air.
They have a basis in reality—but reality as distorted by a
misconception. Under normal conditions misconceptions are
self-correcting, and the markets tend toward some kind of equilibrium.
Occasionally, a misconception is reinforced by a trend prevailing in
reality, and that is when a boom-bust process gets under way. Eventually
the gap between reality and its false interpretation becomes
unsustainable, and the bubble bursts.
Exactly when the boom-bust process enters far-from-equilibrium territory
can be established only in retrospect. During the self-reinforcing phase
participants are under the spell of the prevailing bias. Events seem to
confirm their beliefs, strengthening their misconceptions. This widens
the gap and sets the stage for a moment of truth and an eventual
reversal. When that reversal comes, it is liable to have devastating
consequences. This course of events seems to have an inexorable quality,
but a boom-bust process can be aborted at any stage, and the adverse
effects can be reduced or avoided altogether. Few bubbles reach the
extremes of the information-technology boom that ended in 2000. The
sooner the process is aborted, the better.
The quest for American supremacy qualifies as a bubble. The dominant
position the United States occupies in the world is the element of
reality that is being distorted. The proposition that the United States
will be better off if it uses its position to impose its values and
interests everywhere is the misconception. It is exactly by not abusing
its power that America attained its current position.
Where are we in this boom-bust process? The deteriorating situation in
Iraq is either the moment of truth or a test that, if it is successfully
overcome, will only reinforce the trend.
Whatever the justification for removing Saddam Hussein, there can be no
doubt that we invaded Iraq on false pretenses. Wittingly or unwittingly,
President Bush deceived the American public and Congress and rode
roughshod over the opinions of our allies. The gap between the
Administration's expectations and the actual state of affairs could not
be wider. It is difficult to think of a recent military operation that
has gone so wrong. Our soldiers have been forced to do police duty in
combat gear, and they continue to be killed. We have put at risk not
only our soldiers' lives but the combat effectiveness of our armed
forces. Their morale is impaired, and we are no longer in a position to
properly project our power. Yet there are more places than ever before
where we might have legitimate need to project that power. North Korea
is openly building nuclear weapons, and Iran is clandestinely doing so.
The Taliban is regrouping in Afghanistan. The costs of occupation and
the prospect of permanent war are weighing heavily on our economy, and
we are failing to address many festering problems—domestic and global.
If we ever needed proof that the dream of American supremacy is
misconceived, the occupation of Iraq has provided it. If we fail to heed
the evidence, we will have to pay a heavier price in the future.
eanwhile, largely as a result of our preoccupation with supremacy,
something has gone fundamentally wrong with the war on terrorism.
Indeed, war is a false metaphor in this context. Terrorists do pose a
threat to our national and personal security, and we must protect
ourselves. Many of the measures we have taken are necessary and proper.
It can even be argued that not enough has been done to prevent future
attacks. But the war being waged has little to do with ending terrorism
or enhancing homeland security; on the contrary, it endangers our
security by engendering a vicious circle of escalating violence.
The terrorist attack on the United States could have been treated as a
crime against humanity rather than an act of war. Treating it as a crime
would have been more appropriate. Crimes require police work, not
military action. Protection against terrorism requires precautionary
measures, awareness, and intelligence gathering—all of which
ultimately depend on the support of the populations among which the
terrorists operate. Imagine for a moment that September 11 had been
treated as a crime. We would not have invaded Iraq, and we would not
have our military struggling to perform police work and getting shot at.
Declaring war on terrorism better suited the purposes of the Bush
Administration, because it invoked military might; but this is the wrong
way to deal with the problem. Military action requires an identifiable
target, preferably a state. As a result the war on terrorism has been
directed primarily against states harboring terrorists. Yet terrorists
are by definition non-state actors, even if they are often sponsored by
states.
The war on terrorism as pursued by the Bush Administration cannot be
won. On the contrary, it may bring about a permanent state of war.
Terrorists will never disappear. They will continue to provide a pretext
for the pursuit of American supremacy. That pursuit, in turn, will
continue to generate resistance. Further, by turning the hunt for
terrorists into a war, we are bound to create innocent victims. The more
innocent victims there are, the greater the resentment and the better
the chances that some victims will turn into perpetrators.
The terrorist threat must be seen in proper perspective. Terrorism is
not new. It was an important factor in nineteenth-century Russia, and it
had a great influence on the character of the czarist regime, enhancing
the importance of secret police and justifying authoritarianism. More
recently several European countries—Italy, Germany, Great
Britain—had to contend with terrorist gangs, and it took those
countries a decade or more to root them out. But those countries did not
live under the spell of terrorism during all that time. Granted, using
hijacked planes for suicide attacks is something new, and so is the
prospect of terrorists with weapons of mass destruction. To come to
terms with these threats will take some adjustment; but the threats
cannot be allowed to dominate our existence. Exaggerating them will only
make them worse. The most powerful country on earth cannot afford to be
consumed by fear. To make the war on terrorism the centerpiece of our
national strategy is an abdication of our responsibility as the leading
nation in the world. Moreover, by allowing terrorism to become our
principal preoccupation, we are playing into the terrorists' hands. They
are setting our priorities.
recent Council on Foreign Relations publication sketches out three
alternative national-security strategies. The first calls for the
pursuit of American supremacy through the Bush doctrine of pre-emptive
military action. It is advocated by neoconservatives. The second seeks
the continuation of our earlier policy of deterrence and containment. It
is advocated by Colin Powell and other moderates, who may be associated
with either political party. The third would have the United States lead
a cooperative effort to improve the world by engaging in preventive
actions of a constructive character. It is not advocated by any group of
significance, although President Bush pays lip service to it. That is
the policy I stand for.
The evidence shows the first option to be extremely dangerous, and I
believe that the second is no longer practical. The Bush Administration
has done too much damage to our standing in the world to permit a return
to the status quo. Moreover, the policies pursued before September 11
were clearly inadequate for dealing with the problems of globalization.
Those problems require collective action. The United States is uniquely
positioned to lead the effort. We cannot just do anything we want, as
the Iraqi situation demonstrates, but nothing much can be done in the
way of international cooperation without the leadership—or at least
the participation—of the United States.
Globalization has rendered the world increasingly interdependent, but
international politics is still based on the sovereignty of states. What
goes on within individual states can be of vital interest to the rest of
the world, but the principle of sovereignty militates against
interfering in their internal affairs. How to deal with failed states
and oppressive, corrupt, and inept regimes? How to get rid of the likes
of Saddam? There are too many such regimes to wage war against every
one. This is the great unresolved problem confronting us today.
I propose replacing the Bush doctrine of pre-emptive military action
with preventive action of a constructive and affirmative nature.
Increased foreign aid or better and fairer trade rules, for example,
would not violate the sovereignty of the recipients. Military action
should remain a last resort. The United States is currently preoccupied
with issues of security, and rightly so. But the framework within which
to think about security is collective security. Neither nuclear
proliferation nor international terrorism can be successfully addressed
without international cooperation. The world is looking to us for
leadership. We have provided it in the past; the main reason why
anti-American feelings are so strong in the world today is that we are
not providing it in the present.