The Accidental Superpower

CHAPTER 1

The World We Think We Know

On July 1, 1944, 730 delegates from the forty-four Allied nations and their respective colonial outposts convened at the Mount Washington Hotel in the skiing village of Bretton Woods, New Hampshire, with a mission to do nothing less than decide the fate of the postwar world. The scores of luminaries included high-ranking bankers, economists, government ministers, and the future leaders of Canada, France, Greece, New Zealand, and Peru. They had trained in overnight from Atlantic City, New Jersey, and were greeted by a sprawling resort in disarray: Many of the rooms lacked running, potable water; there wasn't enough ice or Coca-Cola to go around; staffing was so thin that some nearby Boy Scouts had to be drafted; and the establishment's manager locked himself in his office with a case of whiskey and refused to come out. This couldn't have been how the conference's organizers and lead delegates—Harry Dexter White of the United States and Lord John Maynard Keynes of the United Kingdom, who'd been discussing and planning the conference for nearly three years—had imagined the opening days.

But despite this inauspicious beginning, the delegates set to work on the agenda White and Keynes had laid out and over the next three weeks engaged in multilateral negotiations that were responsible for creating the World Bank, the International Monetary Fund, and the International Bank for Reconstruction and Development: the institutions that helped knit devastated Europe back together and that hammered out the foundations of the free-trade-dominated global economic system that endures to this day.

At least that is how history records it.

The banks and the fund—really, the negotiations themselves—were sideshows. The attendees had arrived in Bretton Woods knowing that they had no real leverage to negotiate or bargain with the United States; they had mainly come to hear what White and the other Americans had to say. And what the Americans had to say shocked them all.

On the eve of the conference, White and the American delegation were fully aware that they had the upper hand going in. America was running the Allied side of the war. Everything from Sicily to Saipan was in essence an American effort fought with American equipment and American fuel. Even in terms of manpower the fronts were largely American affairs, with American troops tending to outnumber all other combatants, Allied and Axis combined, by a two-to-one margin. Only grand affairs such as the Normandy landings featured the sort of multinational resolve the propaganda lauded. In the Pacific, the Americans were carrying the war all by themselves. For the majority of the attendees at the conference, the Americans weren't simply saviors or urgently needed auxiliary forces for ongoing combat missions, they were the war effort.

Immensely popular in his third term as president and seen by many as a shoo-in for a fourth, Franklin Delano Roosevelt had indicated that the Americans wanted to discuss the shape the world would take once the war had ended. This in itself raised international eyebrows. Until that point there really hadn't been a "global system" in an economic sense. Instead, various European nations maintained separate trade networks stemming from their earlier imperial ventures, in which their colonies served as resource providers and captive markets while mother countries produced finished goods. What interempire trading that occurred was largely limited to goods, whether raw materials or specific manufactures, that could not be sourced within the respective "closed" systems. Most of this cross-empire trade flowed through enterprising peoples like the Dutch who excelled at brokering deals among imperial leaders. Protecting each empire's trade were its national naval forces, and the use of navies to guard national commerce and raid the commerce of competitors was as old an industry as the use of sail and oar.

It was the naval component that signaled to many of the Bretton Woods delegates that the past they'd known was over. Even if (thanks to American help) they were able to win their homes back from the Axis, they had no navies. Building a navy is one of the most expensive and time-consuming projects a nation can undertake in the best of times, and it wasn't something that a country emerging from rubble and occupation could even consider. The current and future lack of naval power meant that almost all of the delegates at the conference knew full well that their countries wouldn't be able to use trade to bootstrap themselves back to normality, as they usually might. They would, for decades to come, be at the mercy of whoever could offer them security or economic well-being or both.

Keynes and the other delegates knew they were on the verge of momentous and unforeseeable change. But at least one aspect of the brave new world to come seemed both inevitable and imminent: There was about to be only one navy. The Americans' late entry into the war meant that the Nazis had been able to destroy the navy of every country in the world except Britain, France, and Japan. Then, to deny the Germans control of French ships, the British had sunk the remnants of the French fleet while it was in port in Algeria. And no one had any doubt that when the Americans (to say nothing of the Russians) were finished with the Germans and Japanese, they'd be lucky to float merchant marines. As Keynes realized all too clearly, the British could still claim to have a potent navy, but it was a subsidiary force compared to the American fleet—and that was before considering that the Americans now had more troops on the ground in Great Britain than the British did. The obvious lopsidedness of the playing field may have led Keynes to write that his American counterparts "plainly intend to force their own conceptions through, regardless of the rest of us."

For French delegates such as Vincent Auriol, future president of France (1947–54), and Pierre Mendès France, future prime minister (1954–55), the sense of relief and gratitude they felt toward the Americans for loosening the German stranglehold on their country must've been mixed with equal measures of disbelief and apprehension. Although they were at the mercy of friends rather than enemies, Auriol and Mendès France would be "negotiating" from a position of abject weakness, and they must've been wondering if their eighteenth-century predecessors had not inadvertently helped to create the monster that would now devour them.

The tension in the Mount Washington Hotel was palpable, not simply because the temperature was high and cool beverages scarce. Auriol and Mendès France, along with the Canadians, Australians, Danes, Belgians, Indians, Mexicans, Brazilians, Bolivians, Colombians, Ecuadorians, Cubans, Peruvians, Dominicans, and others in attendance, most certainly expected White and the American team to take a well-worn page from history and unveil the details of a Pax Americana: how the United States would fold all the far-flung European imperial holdings—up to and including the territories of the European states themselves—into a global American imperial system. It was what the Soviets expected the Americans to do, and, given their pasts, likely what various European nations would have done had the roles been reversed.

Imperial designs or no, the very fact that the delegates were attending a conference in New Hampshire rather than somewhere outside Novosibirsk spoke volumes about where their hopes rested. White and the American team didn't let the others sweat it out for long, and they presented their two-part plan with all the kindness and amused patience that comes from a position of unassailable strength. The first part alone likely stunned the conference into baffled silence: The Americans had no intention of imposing a Pax. They didn't plan to occupy key transshipment or distribution nodes. There would be no imperial tariff on incomes or trade or property. There would be no governors-general stationed in each of the Americans' new imperial outposts. No clearinghouses. No customs restrictions. No quotas.

Instead, the Americans said that they would open their markets. Anyone who wanted to export goods into the United States could do so. The Americans acknowledged that devastated Europe was in no condition to compete with American industry, which hadn't been touched by the scourge of war, so this market openness would be largely one-way. The Americans suggested ideas about a new global system to reduce tariffs, but that was to be negotiated separately and later.

As startling and unexpected as part one of the plan was, part two must have rolled the Europeans in particular back on their heels. The Americans offered to use their navy to protect all maritime trade, regardless of who was buying or selling the cargoes. Even trade that had nothing to do with the United States would be guaranteed by the overwhelming strength of the American navy. Far from proposing a Pax that would fill their coffers to overflowing with trade duties, levies, and tariffs, the Americans were instituting the opposite: a global trading system in which they would provide full security for all maritime trade at their own cost, full access to the largest consumer market in human history, and at most a limited and hedged expectation that participants might open their markets to American goods. They were promising to do nothing less than indirectly subsidize the economy of every country represented at the conference.

Either believing the deal too good to be true or that the heat had softened the Americans' brains, the delegates quickly agreed, ratifying the terms via signature in the hotel's Gold Room on July 22, 1944. This, however, was exactly what White and the Americans wanted. For no matter how the plan was regarded by the delegates or the rest of the world, it was firmly rooted in the United States' unique strengths: a singular combination of geography, industry, and technological development that constituted the primary source of American power, and that in turn is the subject of this book.

The Deal with the Americans

Over the next year World War II reached its conclusion. Nazi Germany and Imperial Japan were crushed. American troops guarded Western Europe's borders with the Soviet Empire. While American aid helped get Western Europe back on its feet, it was American markets' absorption of every bolt, table, and car that the Western Europeans could produce that proved to be the determining factor in resuscitating their fortunes. The American economy, never touched by the bombs that devastated Europe, was larger than any that the Europeans had ever had entry to, and the ability to access that market allowed the Europeans to export their way back to affluence.

In the early years, the cost levied upon the Americans by the Bretton Woods system was easily managed. Europe was in shambles and America was economically robust. Accepting European exports without question was only a few notches above charity. But as Europe recovered, the price grew. And that was just the beginning. The Americans didn't limit the deals made at Bretton Woods solely to their allies. The terms of the agreements were steadily expanded to countries not at the conference, to former colonies that became independent, to the defeated Axis powers, and in time to countries that were once pernicious rivals.

As more countries signed on, the price of the system continued to grow. As the Cold War ended and entire swaths of the globe changed economic and political orientations, the price grew, and as years turned to decades, the system expanded ever outward, until nearly the entire world had acceded to this American-guaranteed network. In fact, the Bretton Woods agreements are the single most important factor behind the Japanese and Korean miracles, the European Economic Community and its successor the European Union, the rise of China… and the statistical monster that is the U.S. trade deficit.

But many questions remain. Why did the Americans buck history and offer this deal rather than take a more direct role in global leadership, as the major powers before them had done? How did the Americans get so… huge that they could offer such a deal in the first place? More to the point, why did the Americans put themselves at such an economic disadvantage in order to offer it? Given that economic disadvantage, why are the Americans still offering this deal, seven decades after the war ended? Finally, just how strong is American commitment to the economically disadvantageous system that makes the contemporary world possible?

These are the questions that frame the contemporary world. This book is about the answers to these questions and the future they lead to.

As unhinged and precarious as Keynes and the other delegates must have felt their world had become by July 1944, it is striking how little has changed in the international system in the decades since. At Bretton Woods the United States produced about one-quarter of global GDP, about the same proportion as it does in 2014. At Bretton Woods the United States was responsible for nearly half of global defense outlays, about the same proportion as in 2014. At Bretton Woods the American military controlled half of global naval tonnage, about the same proportion as it does in 2014. At Bretton Woods the United States was the only country that for the past eighty years had exited every decade with an economy larger than when it had entered, a record of the modern age that the Americans have since extended to 150 years. Courtesy of the devastation and disruption of World War II, the United States had been catapulted forward to constitute the world's second oldest continuous government, a title it still holds in 2014.¹ At the time of Bretton Woods, the Americans were the only country in the world that hadn't had foreign boots on its soil in over a century, a record it continues to hold to the present day.

Most readers are probably unaware of the robustness and stability of this record. Some may be wondering how this record meshes with the conventional contemporary wisdom that the United States' best days are behind it. The conventional contemporary wisdom isn't simply wrong, it's laughably so. In 2014, we're not witnessing the beginning of the end of American power, but the end of its beginning. In fact, we're on the cusp of a shift in the international order just as profound as those delegates back in 1944 experienced. The free trade era Bretton Woods created is winding toward an unceremonious end. But there is no grand plan, no great conspiracy. Impersonal factors beyond our control are not only tearing down the world we think we know, but also haphazardly putting a new one in its place.

I've divided this book into four parts. The first, chapters 2 through 4, deals with how geography shapes international interactions, primarily focusing on what makes some countries more powerful than others and ultimately what makes the United States more powerful than all. In the second section, chapters 5 through 7, we'll dive into the current moment of history and break down trends that are all—independently—coming to a head. We'll see how they are all far past critical mass, and are now irresistible, even accidental. We'll revisit Bretton Woods in a new context, as well as address the world's demographic time bombs and the emergence of the shale industry as a major international factor.

The remainder of the book is reserved for the future. In chapters 8 through 10 we'll peer forward through the years until 2030, exploring the new world about to emerge, complete with the shape of a greatly revised American alliance system and the major aggressive powers. Finally, we'll close out with the five crises of the future, the major threats and challenges of a fundamentally new era.

For now let us focus on the why of the world as we know it. The premier tool in this regard is geopolitics, the study of how place matters. How rivers lead people to interact differently than mountains. How those differences lead to great variations in wealth, culture, and military strategy. Geopolitics strips away the ideological, the emotional, and the normative (what we want, what we feel, and what we seek), leaving only what is.

It all comes down to three geographically based factors.

The first I call the balance of transport. Successful countries find it easy to move people and goods within their territories: Egypt has the Nile, France has the Seine and Loire, the Roman and Inca Empires had their roads. Such easy movement promotes internal trade and development. Trade encourages specialization and moves an economy up the value-added scale, increasing local incomes and generating capital that can be used for everything from building schools and institutions to operating a navy. Such constant interconnections are the most important factors for knitting a people into a nation. Such commonality of interests forms the bedrock of political and cultural unity. With a very, very few exceptions, every successful culture in human history has been based on a culture of robust internal economic interactions, and that almost invariably comes from easy transport.

But note that I called it a balance of transport. Long-term success isn't simply based on economic dynamism. Countries also have to be able to protect themselves. Just as internal trade requires more than a little help from geography—well-rivered plains preferably—so too does defense. Successful countries also have borders that are easy to protect. It does no good to have a great internal trading network if the next country over can park its tanks on your lawn. Deserts or mountains are good for such border zones. Oceans are better. It is this balance—easy transport within, difficult transport beyond—that is the magic ingredient for success.

The second factor is the ability of a country to benefit from the package of technologies known as deepwater navigation, including everything from easily portable compasses to cannon. In many ways deepwater navigation is simply a (gross) extension of the balance of transport. It adds a series of technologies that allow sailors to know where they are when they lose sight of land, as well as ensuring sufficient engineering robustness so that cargoes and crews can make it safely to their destination despite challenges natural and man-made. Economically, deepwater navigation allows countries to extend their local economies to the global level, radically increasing wealth opportunities. Militarily, countries that can operate on the deep blue sea can keep security threats far from their shores.

Third, there is the package of technologies known as industrialization: assembly lines, interchangeable parts, steam power, and the like. If deepwater navigation extended the balance of transport to a global scale, then industrialization put it on steroids. Industrialization is about using machinery both to increase worker productivity and to marry production to higher-output forms of energy like coal and oil, as opposed to wind and water. These changes increase economic output by an order of magnitude (or more). Courtesy of industrialization, vast portions of the planet that had been chronically stuck in a technological dark age suddenly became capable of development. Such is the ultimate cause of the rise of countries like Brazil, Russia, and India.

In all three cases—the balance of transport, deepwater navigation, and industrialization—the United States enjoys the physical geography most favorable to their application. Two facts stand out. First, since the root of American power is geographic and not the result of any particular plan or ideology, American power is incidental. Even accidental.

Second, the United States wasn't the point of origin for any of the respective technologies that created the modern world. Consequently, we need to turn to other countries and other times to show how and why these three factors arose, took on importance, and came to dominate the human condition. Then we'll be ready to explore how and why these technologies favor the United States more than anyplace else in the world.

For the first concept—the balance of transport—we'll have to go back.

Way back.