Mapping America’s Recovery
Imagine a country laid low by foreign wars, ravaged by plague, and weakened by political dysfunction, economic recession, and multiple bankruptcies. Instead of preparing for the future, its leaders engage in fierce disputes over the balance of trade, wage bitter debates over religion and immigration, and stoke tensions between city dwellers and rural workers. If this portrait of a society coming undone sounds familiar, that’s because it describes Spain in the seventeenth century and, increasingly, the United States today.
There are, of course, important differences between Imperial Spain and modern-day America, but the resemblances are striking and should give pause to even the most optimistic analysts of America’s place in the world. While history may not repeat itself, as the historian Paul Kennedy taught us a generation ago, the United States can learn much from the missteps and innovations of great powers past. America’s decline is not inevitable, but the demand for wise U.S. leadership is inescapable.
Spain’s descent was many things, but a surprise it was not. Contemporaries sounded the alarm. In fact, one of the first uses of the word “decline” in Spain came from one of its most prominent reformers, Martín Gonzáles de Cellorigo. His words seem eerily applicable to present times: “Those who can will not and those who will cannot.”
The decline of Spain over the seventeenth century sprang from a tangle of causes: imperial overstretch, poor leadership, the rise of trade monopolies, monetary inflation, economic stagnation, and demographic decline.
But history shows that bad luck often stems from bad policy. Malnutrition, agricultural decay, and the forced expulsion of some three hundred thousand formerly Spanish Muslims in the early seventeenth century stripped the Crown of Aragon of skilled workers and sped the loss of revenue. Unremitting warfare compounded Spain’s difficulties. The mismatch between defense commitments and available resources undermined the productive capacity of the Spanish crown.
In the search for wise recovery strategies, the United States need not follow the path of Spain. Indeed, there are valuable lessons it can learn from one of Spain’s arch-competitors, the Dutch.
Despite near constant war with their neighbors, the Dutch nurtured science and technology, leading to important breakthroughs in fields from optics and biology to map-making and ballistics. Instead of pulling up the drawbridge to foreign talent, Holland made a virtue out of necessity. The Dutch policy of religious tolerance and its commercial vibrancy attracted skilled immigrants from across Europe. Even as its relative power declined, the Dutch managed to preserve influence in important sectors from finance and insurance to scientific innovation.
So which path will the United States take: the path of profligacy or the path of adaptation, openness, and innovation? The answer, of course, depends on the choices it makes. The lessons of history suggest four principles.
First, avoid the trap of short-term gains and play the long game well. Too often leaders base their judgments on short-term political calculations instead of longer-term strategic consequences. The fashionable attractions of nobility in seventeenth-century Spain reveal the dangers of myopic thinking. By contrast, Dutch investments in science and technology paid long-term dividends and helped conserve its influence amid shifting geopolitical currents.
The historians Richard Neustadt and Ernest May defined the practice of “thinking in time” for a generation of policy makers. In their study of the Cuban Missile Crisis, they noted that President John F. Kennedy and his executive committee “saw the issues before them as part of a time sequence beginning long before the onset of crisis and continuing into an increasingly indistinct future.” The time horizons of leaders represent one of the intangibles of a nation’s power: how far out do leaders look? Do they consider the long-term implications of their policies?
As in the Cold War, the United States should implement strategies that attend to the connections between foreign policy and economic policy. But those basic connections need to be adapted and applied to a new suite of challenges, including today’s environmental crisis, rising nationalism, transnational networks of organized crime and corruption, and the need to manage the impact on resources, ecosystems, and supply chains of a swelling global middle class.
Just as important, the imperative of playing the long game should not distract from the need to play the short game well. If leaders of declining powers falter in setting or executing near-term priorities, they can weaken domestic and international support for their long-term strategy.
Second, craft the strategy before the shock of decline. Adapting to shifting geopolitical currents requires changes in culture and psychology as much as in politics and economics. The Spanish nurtured a culture that valued land and war over trade and industry. Some have called this privileged attitude “the hidalgo mentality,” after the Spanish word for minor nobility. Rank became the measure of all things, while the value of work declined. The disdain of the hidalgo for the enterprising merchant and productive ordinary Spaniards deprived the Crown of a deep well of human capital.
Spain’s fiscal challenges were both the source of its undoing in the seventeenth century and, learning from its errors, the wellspring of financial innovations in the eighteenth century. After the War of Spanish Succession, Bourbon monarchs implemented fiscal and financial policies that allowed for more efficient debt servicing and the exploitation of resources from the New World. There were limits to the success of these practices, but the Spanish Crown managed to construct a “fiscal military state” that remained competitive by aligning institutions with the political will to reform.
An important aspect of thinking long term is to craft strategies of adaptation before events force the hand of leaders in declining powers. In earlier eras, only external shocks roused the United States from its strategic slumber. Examples include the Japanese attack on Pearl Harbor of December 7, 1941, and the U.S. intervention into World War II; the Korean War and the formulation in 1950 of National Security Council Memorandum 68; and the terrorist attacks of 9/11 prompting an overhaul of U.S. homeland security. America needs an equivalent dose of strategic vision today, but the spark for that vision must come from leaders who see the future and prepare accordingly. Waiting for a crisis to hit can lead declining powers to overreact in the periphery, overplay their hand in the core, and over-invest in short-term measures that weaken the productive capacity of the state in the long run.
Third, robust diplomacy backed by resources is the sharpest and most cost-effective tool in a declining power’s arsenal. Striking the right balance between diplomatic acumen and military muscle is challenging in the best of times. It is infinitely harder in the worst of times, when conflict looms, political orders erode, and hostile powers seek vulnerabilities to exploit. Turbulence abroad makes it more difficult to manage the trade-offs at home. When leaders of a great power confront a threatening international landscape, as the case of Spain demonstrates, they are more likely to spend excessive sums on the military and accumulate greater debt. Steady investments in cost-effective diplomatic initiatives worldwide can reduce foreign turmoil, build alliances, prevent conflict, and free up resources for investment at home that strengthens a declining nation’s power base instead of depleting it.
Finally, put the drivers of U.S. productivity first: R&D, science and technology, education, and infrastructure. Dutch institutions facilitated investment, reduced risk, and advanced trade. By contrast, one of the seminal facts about America today is that it suffers from a productivity problem: average annual growth in productivity declined from 2.1% over the 1987–2004 period to 1.2% over the 2004–2014 period. Declining productivity growth can prove fatal to great powers. If a nation loses the ability to innovate, it grows lethargic. Stagnant powers consume their seed corn for the future, while abandoning the field to more enterprising competitors.
To jump-start the engines of productivity, the U.S. government—in the spirit of the American engineer Vannevar Bush’s 1945 report to President Franklin Roosevelt titled “Science: The Endless Frontier”—should launch a commission to study and propose new ways to organize and structure the U.S. science and technology innovation ecosystem. This critical reorganization should include a multiyear commitment to promote basic research among all potential contributors, from the federal level to universities, industry, foundations, and state and local governments.
One of the lessons of history is that if leaders act on the conviction that decline is inevitable, they may adopt policies that are potentially damaging rather than ones they could have undertaken if they had acted on the conviction that decline is reversible. America need not tempt war or engage in costly arms races to protect its interests and values in a competitive environment. Instead, it should nurture its economic fundamentals, perceive its strengths and weaknesses clearly, link arms with its allies, set the rules of the road for international relations, and deftly exploit the inefficiencies in authoritarian models of governance.
Cellorigo’s warning is relevant still today: those who can must and those who will can.
Andrew Imbrie is a senior fellow at Georgetown University’s Center for Security and Emerging Technology. He served previously as a member of the policy planning staff at the U.S. Department of State.