1
Globalization
and America
King Edward's new policy of peace was very successful and
culminated in the Great War. . . . [Afterward] America was . . .
clearly top nation, and History came to a [full stop].—W. C. Seller and R. J. Yeatman, 1066 and All that (1931)
The United States became the country we know today at the end of World War I, when it took over the role of "top nation" from Britain. The story of its rise to this position of strength began at the end of the Civil War. After the demise of slavery, America spread west over the plains, swiftly settling the continent and bringing twelve new states into the union. With the winning of the West came the transformation of the United States into the world's largest economy. By 1917, when the United States entered World War I, America stood out among nations, its anomalously large economy yoked in uneven harness to an anomalously small government with unusually few powers. Perhaps paradoxically, the United States could not have diverged so significantly from the behavior of other countries had other countries not involved themselves so significantly in American affairs. The globalization of the nineteenth century, in which powerful forces reached across national boundaries to bind the earth's people tightly together, pushed American development in a peculiar direction. We need neither admire nor despise these peculiarities to note them and assess how much they resulted from the impact of international factors.1
From the first, European settlers in America claimed they were making a special society in the New World, but they did not mean a society like the powerful and peculiar nation the United States became. John Winthrop may have told his fellow Puritans in 1630 that their settlement "shall be as a Citty upon a Hill," and Ronald Reagan may have echoed him in 1989, referring to the "shining city upon a hill," but their Americas and their figures of speech, though superficially similar, differed profoundly.2 When Winthrop spoke to his Puritan flock they had not yet landed on the Massachusetts shore. They had still to build themselves even a modest shelter from the elements, and his "Citty" stood in the far future. When he imagined the people of the world looking to America, he envisioned them critically comparing the New World's people to their godly ideals, and he shuddered to think what might happen if the Puritan project fell short of virtue in the world's sight: "wee shall open the mouthes of enemies to speake evil of the wayes of god," he warned.3 By contrast Reagan knew his "city" shone before the people of the earth, and he spoke confidently of their opinion that the United States served as a powerful exemplar of freedom. Between Winthrop and Reagan lay more than three centuries of history and a world of difference, but the bit of history that made the most difference happened relatively recently, and indeed within Reagan's lifetime. The world into which he was born, at the start of the twentieth century, was only just awakening to what a strange success European settlement had made in America.
Even if Reagan was right about what the world thinks of the United States, the earth's people have more often envied than imitated America. At the end of World War I, the United States stood out as an empire with considerable experience of conquest but little experience of administering other peoples or indeed of administering its own affairs, which it preferred to leave to the energies of private enterprise. In the years since, American leaders have frequently repeated their hope that the world would come to follow the U.S. example. But unlike Britain, which during its reign as top nation seeded the globe not only with its governmental system so that Westminster could regard itself unblushingly as the Mother of Parliaments but also with the Anglican Church and British banking and a hundred greater and lesser cultural institutions like cricket, the United States has lent the world neither its system nor its habits of government.4 It remains now as it was in 1917, both immune to the trends of national development that elsewhere prevail and also apparently unable to persuade other peoples to follow its lead.
Moreover, the insistence of American optimists that, the evidence of history notwithstanding, the world will naturally come around to the American way of doing things has more than once led to disaster. In the 1920s, at the close of the first modern era of globalization, American leadership preserved neither peace nor prosperity in the world. And in the early twenty-first century, after another decades-long bout of globalization, the United States still stands at the forefront of nations, still mighty, still apparently called upon to lead a world of people who do not—perhaps because they cannot—follow its example.
If today Americans wish to avoid repeating the catastrophes of the 1920s we must understand why the United States became an unfollowed leader, and why other nations are still unlikely to imitate it. Likewise, citizens of the rest of the world who wish to understand why the world's top nation remains relentlessly peculiar will need to know how it became that way. The answer is simple, if paradoxical: the United States' extensive connections to the rest of the world have created and maintained the nation's peculiar habits of government. No other nation enjoyed America's unique place within the network of worldwide forces that commentators today summarize under the term globalization, nor have these forces affected the development of other countries as they have America. To frame the idea as a hypothesis: globalization has reinforced American character. And like all hypotheses, particularly those that rely on the use of -ations and notions like national character to sum up complexities, this one bears elaboration before we test it against the evidence.
AMERICAN CHARACTER
First, Americanness needs clearer definition. If we wish to know why this nation is different from all other nations, we should make sure we know how it is different.
Scholars dislike the suggestion that America has an unusual history. We worry that an emphasis on American difference too easily slides into a celebration of American exceptionalism, or a belief that the United States can freely defy the tedious norms that govern other nations. This is a legitimate concern. Noticing that the United States has historically enjoyed considerable success with an empire built on the cheap might well lead us to continue this tradition in circumstances where it will not succeed. Noticing that the United States has historically gotten along with a habitually half-hearted commitment to social welfare might lead us to go on supposing minimal social policies will continue to suit us in the future. Yet this legitimate concern leads scholars to make some unpersuasive arguments about the past: that America's western conquests constitute not just an empire—for that case can be made—but an empire like others; that America's limited nineteenth-century pensions policies constitute not just a kind of social insurance—for that case, too, can be made, at a stretch—but a social insurance plan like others; that these histories constitute suitable foundations for modern growth in both areas.
In this book I proceed on the assumption that whatever our hopes for the future, they will fail of fulfillment if we poorly represent the past. We need to notice and explain salient differences in American development much as a natural historian might notice and explain salient differences that define a species: not to glorify it, but simply to identify it. Noting, for example, that an elephant has a trunk, and other animals do not, does not mean praising the elephant, but it helps us understand the elephant—moreover, it helps us understand the environment in which the elephant developed. An elephant has a trunk because its DNA codes for it, but that DNA survived because it represented a fit adaptation to the elephant's circumstances. So, too, with the ideas that support America's exceptional behavior: they survived because they represent adequate adaptations to historical circumstances. If we want to understand their survival, we had better understand those circumstances.
Thus, while we might want to invoke ideas or culture to explain what makes the United States stick out, we should resist this temptation. Analysis of culture, while it tells us what Americans want, tells us little about what they actually get. Americans have long expressed a devotion to liberty, both political and economic, and a proportionate distaste for government power. This devotion explains much about American desires. But history does not always permit the expression of desires and ideals in law and customs. To employ the genetic metaphor again, we may say that the United States has the gene for liberty—but, like all genes, it needs a favorable environment for its expression.5
Therefore we should discuss Americanness as an outcome rather than as an input, and we should focus on the influential elements in the historical environment, and their effect on the expression of American ideals. This choice would put us in the good company of some early students of American habits who studied the material environment and the international circumstances in which Americans lived. In the early nineteenth century, the German poet and politician J. W. Goethe looked at the mineral endowments of the New World and declared, "America, you have it better."6 Writing at about the same time, the French political thinker Alexis de Tocqueville went a step further and noted that what distinguished the United States from otherwise comparable countries was not only its location in the New World but also its close connection to the Old: "In spite of the ocean which intervenes, I cannot consent to separate America from Europe. . . . The position of the Americans is therefore exceptional, and it may be believed that no democratic people will ever be placed in a similar one." America's position in an enviable environment, sustaining a vital and dynamic connection to Europe is, more so than culture, something we can carefully and conscientiously isolate and define for study. Moreover these hard facts surely influence culture, as Goethe and Tocqueville saw, and (for those inclined to make what the Puritans would have thought heretical guesses) they may even attest to the plans of Providence.7
In terms of an international ranking, we can describe Americanness as follows. The United States is today the world's largest economy and the world's greatest producer and consumer of energy resources, yet it depends on the investment of capital and labor from the rest of the world to carry on its routine affairs; and its government spends a smaller proportion of its people's wealth than other rich countries' governments do.8 These characteristics make the United States recognizably American around the world today. Yet they have not always described the United States. If these attributes define Americanness now, then the United States became American during a particular and well-defined phase in its development. Specifically, during the half century following the Civil War, stretching up to the start of World War I in Europe in 1914, the United States became the America we recognize. During this time its economy quintupled in size, with its growth accounting for a quarter of the world's economic growth. On the eve of World War I, American productivity amounted to almost a fifth of the world's economic output, whereas five decades earlier, after the Civil War, it had measured under a tenth. This unmatched expansion made the United States into the power it now is: the richest country in the world, with an economy more than twice the size of the next largest. This transformation also left the United States, on the eve of its intervention in World War I, a country aloof from the rest of the world, the only major nation neither convulsed by revolution (as with China or Russia) nor already sunk into the war.9
Now, we might reasonably grant that the United States differs from other countries in these ways, and that it has done so in fairly similar ways since this great nineteenth-century transformation, while objecting that all countries differ from one another. After all, countries, like kindergarteners, are each special in their own way. In having its own distinct and definite character, then, we might say that the United States is only being normal. There are two problems with using this reasoning as an excuse for setting aside distinguishing features of the American case. First, even if we concede that each nation differs in some degree from all other nations, it is nevertheless true that in recent history no other country's own special attributes have mattered so much to the rest of the world's people. American eccentricity has mattered, and for the present continues to matter, more than that of other nations, sometimes to notably violent effect. Even if in the foreseeable future we might want to know more than we do about (let us say) Chinese, Russian, or Brazilian peculiarities, just now we have a pressing need to know more about American peculiarities.
Second, conceding that each nation possesses its own specific character slights the glaring extent to which the United States goes its own way. Even if the present era of American predominance proves fleeting, and even if when it goes, it reduces our interest in understanding American character, it presents an important historical problem with an enduring present-day relevance: during the late nineteenth century, when globalization was pushing more nations to become more like one another, the United States was becoming less like other countries. Even if all nations were in some way unique, no nation differed so much from its fellows in so many important ways as did the United States. Nor should this point hold interest only for students of history, for in the present age of globalization, as much of the rest of the world converges in standards of living, there is reason to believe that the United States is once again diverging.
If we wish to speak in terms not only of difference but of significant difference, we might try thinking about national attributes not only in words but in numbers. It is important, or anyway honest, to admit that these numbers, like all historical data, can represent only estimates, inevitably prone to error. They are best guesses about an era long before the relentless enumeration of everything came to seem practical, let alone desirable. But rough estimates can serve a good purpose by drawing attention both to differences and to degrees of difference.10
For example, the era in which the United States emerged as an exceptional great power saw rich nations scramble to plant their flags in pieces of Africa and Asia, and for this reason it is often known as "the age of empire."11 The United States, which acquired the Philippines, Puerto Rico, Cuba, and some other extraterritorial possessions in these years, became a colonial power like other rich countries. But it did not follow what appears to be the colonial rule. Generally speaking, richer countries had bigger empires—unless the country was the United States, which exhibited little acquisitive instinct proportionate to its ability, at least outside its continental borders. (See figure 1.1.)12
Likewise the late nineteenth century saw modernizing nations lay the basic foundations of what would become modern welfare states. Governments responded to the long-term and cyclical unemployment characteristic of industrialization by transferring private wealth to needy people for the public benefit. Germany under Otto von Bismarck passed the first proto–welfare legislation, but the Reich soon fell behind other nations in its willingness to tax its people for social welfare. As a general rule, richer countries paid richer benefits to their poorer citizens, although Scandinavian and Antipodean nations took more of their taxpayers' money for the poor. And as before, the United States appears in this picture as an outlier well off the beaten track of customary behavior: Unlike some developing countries that spent nothing on such policies, it did not wholly ignore social spending trends. But it did not spend on the same lines as other, more developed industrial democracies, either. (See figure 1.2.)13
Figure 1.1 Size of extraterritorial empire in square kilometers as a function of size of GDP in millions of 1990 international Gheary-Khamis dollars. (For further discussion, see note on page 223.)
Figure 1.2 Social spending as a share of GDP, graphed as a function of GDP in millions of 1990 international Gheary-Khamis dollars. (For further discussion, see note on page 223.)
The United States' reluctance to use state power proportionate to its economic strength extended even to matters bearing on its basic economic stability. For example, just as the nineteenth century witnessed the growth of empires and proto–welfare states, it also saw the emergence of central banks, whose designers and supporters expected them to, as editor of The Economist Walter Bagehot urged in 1873, "lend freely" to ease financial panics.14 As industrial economies grew and evidence accumulated, the science of economics came to support Bagehot's intuition, and countries created central banks to lend freely in a crisis, or else they adapted older institutions to serve the purpose. Except in the United States: Congress did not create the Federal Reserve System until late in America's industrial development, and even then had no intention of creating a central bank in the generally understood sense of the term. For one thing, proper central banks did not as a rule have twelve coeval and far-flung offices as the Federal Reserve did, as such a design would tend to undermine their centrality. (See figure 1.3.)15
Figure 1.3 Age of central banks as a function of 1913 GDP in millions of 1990 international Gheary-Khamis dollars. (For further discussion, see note on page 223.)
Thinking about these examples, we can begin to describe how the United States stood apart from other countries in this period. We can see that while government power did grow in the United States, it grew differently than we might have expected. The three foregoing examples of major developments in the nineteenth century from which the United States notably diverged (in extraterritorial possessions, social policy status, and central banks) could accompany others. Despite having built a million-man modern army in the 1860s, by World War I the United States had a much smaller army than other major and even minor powers. (In the early 1910s, the U.S. military was about the size of Ethiopia's.) America spent less of its money through its government than other countries, and relative to the size of its economy it had a smaller government than the Netherlands. Despite its industrial development and the wage gap between its workers and its middle class, its Socialist Party was the least popular socialist or labor party in the modern nations. The United States acted differently from other industrial democracies, and also from other New World nations. A clever person might explain away any one of these peculiarities and make the United States appear more normal in one particular or another, but as the examples showing the United States as an outlier stack up, they lead to one obvious conclusion: whatever trends prevailed among other groups of nations in the nineteenth-century world, the United States went its own way.16