BOOKS & THE CULTURE Burdens of Empire BY RICHARD RYAN BEYOND AMERICAN HEGEMONY By David Calleo New York: Basic Books, 1987 288 pages, $20.95 WHO CAN SAY whether David Calleo is a child of fortune or the victim of bad luck? His remarkable study of U.S. foreign policy, Beyond American Hegemony, has been both bolstered and eclipsed by the success of Paul Kennedy’s widely celebrated The Rise and Fall of Great Powers. The Kennedy work, an epic recreation of the successive empires that have dominated Western history during the past four centuries, concludes by arguing that America’s post-war dominion is now undergoing the same erosion of influence that subverted previous world powers. In the same spirit, Beyond American Hegemony reviews the alliance between American and Western Europe over the last 40 years and concludes that the United States, having reached the horizon of its influence, must radically revise its international posture to survive in a pluralistic world. Calleo’s work is loaded with statistics and dispassionate analysis, the grist of policymaking which Callen brings to life with his sharp sense of the history behind the data. He opens with a tribute to George F. Kennan, the dean of liberal thought in American foreign policy. In the years immediately following World War II, Kennan urged his colleagues in the foreign policy community to adopt a “balance of power” approach to the problems confronting the Western alliance. Rather than seeking to project U.S. influence through the benevolent coercion of the Marshall plan and other elements of the U.S. protectorate, Kennan argued for a rather old-fashioned arrangement wherein the U.S. would encourage its European allies to resume their historic positions as influential arbiters in the international community. Kennan, in other words, adamantly opposed the “Pax Americana,” the universal application of American political and economic principles throughout the world. Kennan’s arguments were ignored at the time, though he subsequently became famous as the father of “containment,” the strategy of limiting Soviet influence by Richard Ryan writes about politics from Washington, D. C. countering Soviet diplomatic and military initiatives around the world. Callen points out that containment, as Kennan conceived it, was a purely regional strategy, intended to limit Soviet gains in Europe but offering no direction elsewhere in the world. Indeed, Kennan has come to reject the foreign policy with which he is popularly identified, precisely because subsequent administrations used his theory to justify everything from the Korean war to our longstanding reluctance to allow Soviet participation in a Middle Eastern peace conference. The irony of Kennan’s fate his best arguments either rejected or misunderstood does not escape Calleo; but he also notes that following World War II it was probably inevitable that the strongest of the victorious should rush to fill the power vacuum created by the cataclysm. Balance-of-power arrangements arise by necessity, not by reticence on the part of superpowers. Calleo thinks American leaders will redistribute their global burdens, not because they ;are eager to retreat from their imperial postwar dominance, but because economic forces dictate that they cut the cost of maintaining their empire. The commitment to American hegemony has become intolerably expensive in comparison to the benefits it yields. In the analysis that follows his treatment of Kennan’s ideas, Calleo balances economic and strategic issues with a virtuosic command of detail, and a rare sense of how consistently these policy areas interact. The economic analysis is especially relevant: because of concerns over the deficit, the cost of our overseas obligations has for the first time in years become an issue of public debate. At one point during his convention speech in Atlanta, Jesse Jackson summarized a case that Calleo makes in depth: the nations of Western Europe have greater combined population and Gross National Product than the United States, and in recent years both France and Germany have shown greater fiscal and monetary discipline in managing their economic affairs. Yet we spend half our grotesquely inflated military budget meeting our NATO commitments, an unjustified expense in light of our many domestic needs. But Calleo does not stop with fiscal arguments. He continues with what is certainly the best brief analysis of international monetary policy I have read. The Bretton Woods agreement of 1944 made the dollar the basis for most international monetary transactions. When European economies gathered strength in the 1960s, the United States began to run larger and larger trade deficits as Americans took advantage of undervalued overseas goods. By the early 1970s, the Nixon administration was ready to revert to floating exchange rates while simultaneously rolling back overseas costs through the process of detente. The legacy of Lyndon Johnson’s great society programs, however, forced continued high levels of government spending. The Nixon administration dealt with the ensuing credit crunch by trying to expand the economy through lower interest rates. As Calleo observes, the result was hardly more palatable than problems associated with fixed exchange rates: “Imperial costs combined with the nascent welfare state promoted an unbalanced fiscal policy and a too-expansive monetary policy; hence, the weak dollar.” The weak dollar created the usual inflationary pressures. By the late ’70s inflation produced a monetarist reaction under Fed Chairman Paul Volcker, which in turn produced an artificially strong dollar that caused our trade deficit to soar. At the same time huge budget deficits powered an economic expansion that drew billions in foreign investment to the United States and created an illusion of financial prosperity even while American companies were collapsing in the face of overseas competition. The result has been a new devaluation of the dollar that is meant to make our goods and services competitive on the world market. But with our budget deficits remaining in the $200-billion range the result may simply be a new round of inflation, as consumers use cheap money for spending and the under-financed government soaks up credit that might otherwise go to private investment. Fiscal discipline alone will make no difference if monetary policy continues to fluctuate so erratically, in the Calleo reading of events; he even goes so far as to voice some sympathy for a modified gold standard. The point is that any kind of arbitrarily imposed monetary restraint is preferable to the current wild swings in interest and exchange rates. In light of recent economic history, Calleo’s monetarism makes sense. THE TEXAS OBSERVER 17
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