Decline of the American empire? Why educational self-injury may turn out to be worse than financial

Empires as commonly understood were based on force and political control. These, however, ended with the rise of civil society, nationalism and anti-imperialism. ‘Empire’ is now proxy for American global hegemony, referring to its power to enforce its will through a consensual global order of its own making. With that caveat, let us examine the proposition through the lens and arc of history.

Empires in the past ultimately yielded to superior powers beyond their borders. Rome fell to ‘barbarians’ from western Europe, Islamic empires to Mongols, the Chinese and Indian empires to newly industrialized Europe and an overstretched British Empire to the US.

Paul Kennedy argued several years ago that modern empires (since 1500) declined not through military collapse, but through ‘imperial overreach’ that stretched resources beyond fiscal breaking point. Attention is drawn to America’s tendency to repeatedly get entangled in wars overseas and to the dramatic deterioration in US public finances.

The rapid rise of China with its unstoppable trade competitiveness is seen as a symptom of US decline. A possible alliance of middle powers in response to the Trump onslaught, as proposed by Canadian Prime Minister Mark Carney at the World Economic Forum in Davos, could also conceivably contain US imperialist tendencies.

But how much is history a guide for the decline of the American Empire?

Before the Industrial Revolution, there were few technological gaps between empires. Despite the rise of China, a big technological gap now exists between China and Europe on one hand and the US on the other. It is difficult to see the US defeated militarily anytime soon. A global alliance of middle powers would not change this reality.

The argument then turns to the decline of the US dollar through debasement. In the past, the intrinsic value of a currency was measured in relation to its extrinsic anchor, namely bullion. Currency debasement altered the metal content, resulting in a growing difference between its intrinsic and extrinsic value. Currencies debased by precious-metal dilution eventually collapsed.

Currencies, however, no longer have a bullion anchor. They have been pegged on a fixed basis to the US dollar (or allowed to float against it), which gave up its gold convertibility in the early 1970s and has been a fiat currency ever since.

The dollar’s status as a global reserve currency and its use for trade explain why the US printing excessive dollars, as seen during the global financial crisis of 2008-09, has had little effect on its strength. The global appetite for dollars (or dollar assets like US Treasury bonds) seems endless, like gold in the past; this has prevented the ill effects of imperial overstretch. Today, though, we are in uncharted territory. History offers little guidance.

Is the steep rise in the price of gold over the last two decades a canary in the goldmine auguring the demise of the dollar as the top reserve currency? Since all currencies are linked to the dollar, this may augur the death knell of fiat currency per se. Currencies have had anchors all through history; fiat money has been around for only half a century. If printing money to finance huge deficits is akin to debasement, it is not just the dollar that’s at risk.

The strategic depth of the American Empire is based on its technological superiority, as reflected in theatres of war. This, in turn, is anchored in the dynamism of its unparalleled university system.

Despite its aged infrastructure and countries like Japan and China moving ahead in applied sciences, the US university system straddles cutting edge fundamental research that drives future tech applications like a colossus. About 70-80% of STEM Nobel laureates were at some point associated with this system. For any assessment of the US Empire, we need to look at the health of its university system.

President Trump’s unprecedented attack on the American university system and use of federal authority to constrain intellectual freedom and deprive it of the best young minds from abroad is a monumental self-goal. It is akin to what might have happened had the Romans taxed or banned road building, Mongols mounted archery, Spanish ship-building or Britain the steam engine.

This attack represents more than the whim of an idiosyncratic president. It reflects the resentful mindset of a bigger social underclass of which the ‘MAGA’ phenomenon is symptomatic. This underclass is a byproduct of neo-liberal capitalism, untempered by the kind of redistributive social policies characteristic of European capitalism.

US capitalism has dealt a body blow to the ‘American Dream’ and created a sizeable underclass with shrinking access to new technologies and the university system needed to get ahead in life.

This soured dream has generated resentment against America’s privileged elite, with spillovers not just for its university system and aspects of liberal democracy that are seen to be associated with privilege, but also for US foreign relations. It threatens to transform the American Empire from a relatively benign one enforced through a consensual global order into a malign one increasingly relying on hard power both at home and abroad.

The biggest threat to the American Empire arises not from ‘barbarians’ beyond its borders, but from political forces within.

The jury is still out on whether the famed US system of institutional checks and balances would auto-correct to restrain executive excess—as seen in civil society’s pushback against ICE in Minneapolis and the rise of leaders like Zohran Mamdani in New York promising a Roosevelt type ‘New Deal’—or result in a broad collapse that makes it hard for this empire to recover over the decades.

A malign empire is inherently unstable in an age where both civil society and nationalism remain strong.

The author is a retired Indian Administrative Service officer and former secretary, Prime Minister’s Economic Advisory Council.