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Is The United States In A State Of Irretrievable Decline? – Analysis


By Manoj Joshi


The United States (US) has entered into what can be termed as a new Cold War against Russia and China. While this is being put across as a contest between democracy and authoritarianism, people are not buying it. The obvious reason for the US move appears to be a desire to maintain its global primacy against the China challenge.

In balance, it can be argued that notions of a US decline are premature. The country continues to have a vibrant economy, backed by substantial financial heft and research and development (R&D) prowess, and is demographically comfortable. It also remains the world’s leading military power. However, its soft power has been dented by developments back home and its inconsistent behaviour globally.

Standard measures of prosperity like Gross Domestic Product (GDP) show that there is little change in the American share for the last forty years as it remains around 25 percent of the world’s GDP. In 1980, the US share as a proportion of the world GDP was 25.16 percent; today, forty years later, the proportion is roughly the same at 24.2 percent. The US almost matches the share of its proportion of global GDP by spending some 27.3 percent of the worldwide spending on R&D as compared to China’s 21.9 percent. The continuing attraction of the US as the foremost international destination for research and education gives it the ability to acquire talent from all parts of the world.

Yet, in the eyes of the world, the US setbacks—beginning with the war in Vietnam and followed by the disastrous interventions in Iraq and Afghanistan—have provided space for its rivals to advance.

Domestic developments

The real setback to the US has been in its soft power and this has manifested in various ways. One measure of this is the deep political divide in its domestic politics, where polls consistently show that 70 percent of Republican voters do not see Biden as the legitimate winner of the 2020 Presidential elections. The country’s financial sector was also nearly gutted by the global financial crisis of 2008. As a result, the wealth of American families is yet to recover from the impact of that event. Income inequality in the US has increased since 1980 and is greater than in peer countries. Over time, the country has assumed that its superior democracy and governance system will see it through any competition. However, this system now appears to be hopelessly gridlocked. The ability of its political system to function in a bipartisan manner no longer exists.


Given this situation, the country seems unable to deal with its festering social problems, ranging from mass shootings and gun-related violence to chronic poverty, homelessness, and drug abuse. This inevitably has given rise to the view that the US is in a state of irretrievable decline.


Linked to this is the US’ faltering approach to globalisation. The US, which largely remained unscathed by World War II, helped shape what is called the liberal international order. It is based on three legs—the UN system to maintain international order, associate agencies to promote health and labour standards, and finally, agencies like the World Trade Organization, International Monetary Fund, and the World Bank to regulate the global economic system. To deal with the challenge of the erstwhile Soviet Union, the US also crafted a worldwide chain of military alliances—North Atlantic Treaty Organization, Central Treaty Organization, Southeast Asia Treaty Organization—of which only the first-named has survived.

The US-created global trading system was skilfully used by China to emerge first, as the factory of the world, and then, as a steadily growing military power. With its focus on the War on Terror and disasters in Iraq and Afghanistan, the US began to neglect large parts of the world. Within the US too, political trends emerged questioning the American global role and the premises of liberal internationalism, which further questioned the US paying a disproportionate share for everything—global security and the UN system.

This led to the election of Donald Trump as the President in 2016 and many of the issues that were simmering came to a boil. The Trump administration focused on a trade war with China, disdained international organisations, and walked out of the Trans-Pacific Partnership (TPP). Worse, the President was dismissive toward America’s own military allies and partners and demanded they pay a fair share for their security. And when the world was hit by the COVID-19 pandemic, the US declined to take the global leadership to combat it.


When compared to China, the US has seen a decline. In purchasing power parity terms, the US’ share of the global GDP has declined from 50 percent in 1950 to 14 percent in 2018, whereas China’s has surpassed it at 18 per cent. The Chinese population is four times larger than that of the US and its economy has been growing three times faster. Other areas such as R&D and STEM education are also growing fast in China. If the present trends are projected 20 years ahead, one can get an idea of the coming Chinese dominance.

Where once, in the 1950s and 1960s, American assistance built up Europe and transformed the educational and agricultural sector in India and other countries, China has come up with Belt and Road Initiative to provide hard infrastructure across the world. While there is a lot of talk about how countries have gotten into a debt trap through Chinese projects, the reality is that the Chinese are the only game in town. Between 2001 and 2018, China provided loans worth US$ 126 billion to African countries and invested US$ 41 billion. While the US has been trying to match the Chinese, it has little to show for it as of now. The latest proposals of the G7 to unleash US$ 600 billion remain only on paper. 

Retaining hegemony: The new Cold War 

As the new Cold War hovers, the overwhelming impression is that of a lack of coherence in the US response. The Trump administration disdained Obama’s emphasis on domestic reforms like the Affordable Care Act as well as the TPP to outcompete China on the economic front. It used a variety of means such as tariffs, export control regulations, and restrictions on certain categories of Chinese students to check China. However, it also clearly identified China as the main threat to the US hegemony in the Indo-Pacific.

On the other hand, the Biden administration is yet to give an official version of its China policy. But its efforts to make huge public investments in social, infrastructural, and environmental programmes have failed to overcome the political gridlock in the US Congress.

The Ukraine War and the future

A lot of this analysis is subject to the developments that are unfolding with the Ukraine war, but equally and vitally, depends on the unfolding political developments in the US. As for the war, it has certainly revitalised and strengthened the US alliance system in Europe. But two years down the line, the possibility of a Trump or a Trumpist in power could once again question the utility of the alliances and introduce uncertainty and inconsistency into the US global policy.

The Ukraine war, with its ‘no limits’ Russia–China alliance poses its own challenges. Where Russia was once an entity of declining importance to the US, today, it has emerged as a major distraction capable of derailing the American project of challenging China in the Indo-Pacific. The structural issues bedevilling the US are obvious. While it remains the greatest military power in the world and its dominance of the financial system, though less complete, is still formidable, perhaps, the time has come for the US to alter their world view as the City on a Hill, one destined to lead the world.

Global hegemony, which it attained in 1945, remains a key to its global perspective.  As long as the US was top-dog in the economic and military areas, this was seen as logical. But we are at a point where the Chinese economy has already overtaken that of the US and in the next 20 years, it may be several times larger, enabling China to match the US military expenditures too. China has a vision of its own—born out of its own global standing in history—that it is the Middle Kingdom.

Whether the US can maintain its current hegemonic status is moot. But without doubt, it will remain a major, if not dominant, world power well into the future. However, to maintain that status and compete successfully with China, it needs to reboot its soft power, based on the attraction of its social, political, and economic system. It must become as much the leader in security and trade-related issues, as women’s rights, protecting the environment, and fighting for democracy and racial equality. It already has a formula for dominance in its alliance system, but it needs to make them more transparent and workable. More than that, it must find a way to live with other power centres like China, a path that is not necessarily dependent on its global hegemony. The world is learning of the global consequences of the Ukraine war the hard way. A US–China conflict, perhaps involving Taiwan, could have even more serious repercussions.

Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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