For those of us uninitiated, Pax Americana is a term used to refer to the period post World War 2, when the US became the dominant economic and military power which supposedly contributed to relative peace in the western hemisphere. Especially the period post the collapse of the Soviet Union has been termed Long Peace, suggesting the most peaceful period in world history. However, several political commentators have called the end of Pax Americana resulting from an increasingly multi-polar world in which American dominance is being questioned. This blog by Noah Smith helps us understand the factors that contributed to the end of this era and the implications of the same.
He starts by highlighting the several ongoing military conflicts today including the Russia-Ukraine and Israel-Hamas conflicts:
“In recent weeks, Azerbaijan has moved to fully reclaim the territory of Nagorno-Karabakh, sending 120,000 ethnic Armenians fleeing for their lives — a massive episode of ethnic cleansing.…
Meanwhile, Serbia is building up troops on its border with Kosovo, whose independence has been in dispute since the U.S. intervened against Serbia in the 1990s….
These are just a few signs of an unraveling global order. Pax Americana is in an advanced state of decay, if not already fully dead. A fully multipolar world has emerged, and people are belatedly realizing that multipolarity involves quite a bit of chaos.”
Not to forget the big threat of a Chinese invasion of Taiwan.
What drove the Long Peace period:
“Political scientists and historians have many theories for why the Long Peace happened (and there are even a few who think it was just a statistical illusion). Democratic peace theory says that countries fought less because their people brought their leaders under tighter control. Capitalist peace theory says that the spread of global trade and financial links made war less attractive economically; it’s also possible that rich countries are more materially satisfied and thus less likely to fight. The UN and other international organizations may have also tamped down conflict.
But the simplest and most parsimonious explanation for the Long Peace is that American power kept the peace. If countries sent their armies into other countries, there was always the looming possibility that America and its allies could intervene to stop them — as they did in the Korean War in 1950, the Gulf War of 1991, Bosnia in 1992 in Bosnia, Kosovo in 1999, and so on.”
The blog also cites the other side of the argument where US
intervention may have incited conflicts too:
“Of course, it’s difficult to draw the line between interventions that prevent conflict and interventions that stir it up. Was the Vietnam War a U.S. attempt to halt a North Vietnamese takeover of South Vietnam, or was it the U.S. intervening in an internal South Vietnamese civil war? The answer depends on your point of view. But note that even the possibility of an intervention that ultimately makes a conflict worse can still serve as a deterrent. If there’s a crazy guy who will go anywhere there’s a fight and start shooting bullets into the crowd, that’s a good reason to avoid starting a fight.”
What killed Pax Americana?
“First there was the Iraq War, which was a clear-cut case of the U.S. starting a major international conflict rather than interceding to stop one. Saddam Hussein was brutal, but after his 1991 defeat he was only brutal within his borders. Yet he was attacked anyway; the U.S. behaved like a revisionist power at a time when it should have been guarding the status quo.
If the U.S. threat of intervention doesn’t depend on whether or not you send your army outside of your borders — if the U.S. might just attack you anyway because they don’t like you — then the incentive to avoid interstate conflict is reduced. Iraq also weakened U.S. appetite for intervention.
At the same time, the U.S. was becoming militarily weaker. The War on Terror reoriented the U.S. military toward counterinsurgency and away from defeating enemy armies. The defense-industrial base was allowed to wither — in 1995, the U.S. could produce about 30 times as many artillery shells as it can now, and China can produce about 200 times as many ships as the U.S. This is a catastrophic loss of hard power, and it means that even a modest diversion of U.S. military resources (like the Ukraine War) can largely remove the threat of U.S. intervention elsewhere.
Finally, a new great-power coalition arose that was capable of matching or exceeding U.S. power. China’s massive growth has given it a manufacturing capacity as great as the entire West combined, meaning that even if we could fix the problems with our defense-industrial base, we’d be outmatched in a protracted one-on-one fight.”
At the end of the article, Noah provides a couple of links for further reading on the subject for those interested.
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Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.
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