Niall Ferguson on why the end of America’s empire won’t be peaceful

This By-invitation commentary is part of a series by global thinkers on the future of American power—examining the forces shaping the country’s global standing, from the rise of China to the withdrawal from Afghanistan. The contributions will be available here.

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“THE MULTITUDES remained plunged in ignorance… and their leaders, seeking their votes, did not dare to undeceive them.” So wrote Winston Churchill of the victors of the first world war in “The Gathering Storm.” He bitterly recalled a “refusal to face unpleasant facts, desire for popularity and electoral success irrespective of the vital interests of the state.” American readers watching their government’s ignominious departure from Afghanistan, and listening to President Joe Biden’s strained effort to justify the unholy mess he has made, may find at least some of Churchill’s critique of interwar Britain uncomfortably familiar.

Britain’s state of mind was the product of a combination of national exhaustion and “imperial overstretch”, to borrow a phrase from Paul Kennedy, a historian at Yale. Since 1914, the nation had endured war, financial crisis and in 1918-19 a terrible pandemic, the Spanish influenza. The economic landscape was overshadowed by a mountain of debt. Though the country remained the issuer of the dominant global currency, it was no longer unrivalled in that role. A highly unequal society inspired politicians on the left to demand redistribution if not outright socialism. A significant proportion of the intelligentsia went further, embracing communism or fascism.

Meanwhile the established political class preferred to ignore a deteriorating international situation. Britain’s global dominance was menaced in Europe, in Asia and in the Middle East. The system of collective security—based on the League of Nations, which had been established in 1920 as part of the post-war peace settlement—was crumbling, leaving only the possibility of alliances to supplement thinly spread imperial resources. The result was a disastrous failure to acknowledge the scale of the totalitarian threat and to amass the means to deter the dictators.

Does Britain’s experience help us understand the future of American power? Americans prefer to draw lessons from the United States’ history, but it may be more illuminating to compare the country to its predecessor as an Anglophone global hegemon, for America today in many ways resembles Britain in the interwar period.

Like all such historical analogies, this one is not perfect. The vast amalgam of colonies and other dependencies that Britain ruled over in the 1930s has no real American counterpart today. This allows Americans to reassure themselves that they do not have an empire, even when withdrawing their soldiers and civilians from Afghanistan after a 20-year presence.

Despite its high covid-19 mortality, America is not recovering from the kind of trauma that Britain experienced in the first world war, when huge numbers of young men were slaughtered (nearly 900,000 died, some 6% of males aged 15 to 49 died, to say nothing of 1.7m wounded). Nor is America facing as clear and present a threat as Nazi Germany posed to Britain. Still, the resemblances are striking, and go beyond the failure of both countries to impose order on Afghanistan. (“It is clear,” noted The Economist in February 1930, after “premature” modernising reforms had triggered a revolt, “that Afghanistan will have none of the West”.) And the implications for the future of American power are unnerving.

So many books and articles predicting American decline have been written in recent decades that “declinism” has become a cliché. But Britain’s experience between the 1930s and the 1950s is a reminder that there are worse fates than gentle, gradual decline.

Follow the money

Start with the mountains of debt. Britain’s public debt after the first world war rose from 109% of GDP in 1918 to just under 200% in 1934. America’s federal debt is different in important ways, but it is comparable in magnitude. It will reach nearly 110% of GDP this year, even higher than its previous peak in the immediate aftermath of the second world war. The Congressional Budget Office estimates that it could exceed 200% by 2051.

An important difference between the United States today and the United Kingdom roughly a century ago is that the average maturity of American federal debt is quite short (65 months), whereas more than 40% of the British public debt took the form of perpetual bonds or annuities. This means that the American debt today is a great deal more sensitive to moves in interest rates than Britain’s was.

Another key difference is the great shift there has been in fiscal and monetary theories, thanks in large measure to John Maynard Keynes’s critique of Britain’s interwar policies.

Britain’s decision in 1925 to return sterling to the gold standard at the overvalued pre-war price condemned Britain to eight years of deflation. The increased power of trade unions meant that wage cuts lagged behind price cuts during the depression. This contributed to job losses. At the nadir in 1932, the unemployment rate was 15%. Yet Britain’s depression was mild, not least because abandoning the gold standard in 1931 allowed the easing of monetary policy. Falling real interest rates meant a decline in the burden of debt service, creating new fiscal room for manoeuvre.

Such a reduction in debt-servicing costs seems unlikely for America in the coming years. Economists led by the former treasury secretary, Lawrence Summers, have predicted inflationary dangers from the current fiscal and monetary policies. Where British real interest rates generally declined in the 1930s, in America they are projected to turn positive from 2027 and rise steadily to hit 2.5% by mid-century. True, forecasts of rising rates have been wrong before, and the Federal Reserve is in no hurry to tighten monetary policy. But if rates do rise, America’s debt will cost more to service, squeezing other parts of the federal budget, especially discretionary expenditures such as defence.

That brings us to the crux of the matter. Churchill’s great preoccupation in the 1930s was that the government was procrastinating—the underlying rationale of its policy of appeasement—rather than energetically rearming in response to the increasingly aggressive behaviour of Hitler, Mussolini and the militarist government of imperial Japan. A key argument of the appeasers was that fiscal and economic constraints—not least the high cost of running an empire that extended from Fiji to Gambia to Guiana to Vancouver—made more rapid rearmament impossible.

It may seem fanciful to suggest that America faces comparable threats today—not only from China, but also from Russia, Iran and North Korea. Yet the mere fact that it seems fanciful illustrates the point. The majority of Americans, like the majority of Britons between the wars, simply do not want to contemplate the possibility of a major war against one or more authoritarian regimes, coming on top of the country’s already extensive military commitments. That is why the projected decline of American defence spending as a share of GDP, from 3.4% in 2020 to 2.5% in 2031, will cause consternation only to Churchillian types. And they can expect the same hostile reception—the same accusations of war-mongering—that Churchill had to endure.

Power is relative

A relative decline compared with other countries is another point of resemblance. According to estimates by the economic historian Angus Maddison, the British economy by the 1930s had been overtaken in terms of output by not only America’s (as early as 1872), but also Germany’s (in 1898 and again, after the disastrous years of war, hyperinflation and slump, in 1935) and the Soviet Union (in 1930). True, the British Empire as a whole had a bigger economy than the United Kingdom, especially if the Dominions are included—perhaps twice as large. But the American economy was even larger and remained more than double the size of Britain’s, despite the more severe impact of the Great Depression in the United States.

America today has a similar problem of relative decline in economic output. On the basis of purchasing-power parity, which allows for the lower prices of many Chinese domestic goods, the GDP of China caught up with that of America in 2014. On a current-dollar basis, the American economy is still bigger, but the gap is projected to narrow. This year China’s current-dollar GDP will be around 75% of America’s. By 2026 it will be 89%.

It is no secret that China poses a bigger economic challenge than the Soviet Union once did, since the latter’s economy was never more than 44% the size of America’s during the cold war. Nor is it classified information that China is seeking to catch up with America in many technological domains with national-security applications, from artificial intelligence to quantum computing. And the ambitions of China’s leader, Xi Jinping, are also well known—along with his renewal of the Chinese Communist Party’s ideological hostility to individual freedom, the rule of law and democracy.

American sentiment towards the Chinese government has markedly soured in the past five years. But that does not seem to be translating into public interest in actively countering the Chinese military threat. If Beijing invades Taiwan, most Americans will probably echo the British prime minister, Neville Chamberlain, who notoriously described the German bid to carve up Czechoslovakia in 1938 as “a quarrel in a far away country, between people of whom we know nothing”.


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A crucial source of British weakness between the wars was the revolt of the intelligentsia against the Empire and more generally against traditional British values. Churchill recalled with disgust the Oxford Union debate in 1933 that had carried the motion, “This House refuses to fight for King and country.” As he noted: “It was easy to laugh off such an episode in England, but in Germany, in Russia, in Italy, in Japan, the idea of a decadent, degenerate Britain took deep root and swayed many calculations.” This of course is precisely how China’s new breed of “wolf-warrior” diplomats and nationalist intellectuals regard America today.

Nazis, fascists and communists alike had good reason to think the British were succumbing to self-hatred. “I did not even know that the British Empire is dying,” George Orwell wrote of his time as a colonial policeman in his essay “Shooting an Elephant.” Not many intellectuals attained Orwell’s insight that Britain’s was nevertheless “a great deal better than the younger empires that [were] going to supplant it.” Many—unlike Orwell—embraced Soviet communism, with disastrous results for Western intelligence. Meanwhile, a shocking number of members of the aristocratic social elite were attracted to Hitler. Even readers of the Daily Express were more inclined to make fun of the Empire than to celebrate it. “Big White Carstairs” in the Beachcomber column was an even more absurd caricature of the colonial type than David Low’s Colonel Blimp.

The end of empires

America’s empire may not manifest itself as dominions, colonies and protectorates, but the perception of international dominance, and the costs associated with overstretch, are similar. Both left and right in America now routinely ridicule or revile the idea of an imperial project. “The American Empire is falling apart,” gloats Tom Engelhardt, a journalist in The Nation. On the right, the economist Tyler Cowen sardonically imagines “what the fall of the American empire could look like.” At the same time as Cornel West, the progressive African-American philosopher, sees “Black Lives Matter and the fight against US empire [as] one and the same”, two pro-Trump Republicans, Ryan James Girdusky and Harlan Hill, call the pandemic “the latest example of how the American empire has no clothes.”

The right still defends the traditional account of the republic’s founding—as a rejection of British colonial rule—against the “woke” left’s attempts to recast American history as primarily a tale of slavery and then segregation. But few on either side of the political spectrum pine for the era of global hegemony that began in the 1940s.

In short, like Britons in the 1930s, Americans in the 2020s have fallen out of love with empire—a fact that Chinese observers have noticed and relish. Yet the empire remains. Granted, America has few true colonies: Puerto Rico and the US Virgin Islands in the Caribbean, Guam and the Northern Mariana Islands in the north Pacific, and American Samoa in the south Pacific. By British standards, it is a paltry list of possessions. Nevertheless, the American military presence is almost as ubiquitous as Britain’s once was. American armed-forces personnel are to be found in more than 150 countries. The total number deployed beyond the borders of the 50 states is around 200,000.

The acquisition of such extensive global responsibilities was not easy. But it is a delusion to believe that shedding them will be easier. This is the lesson of British history to which Americans need to pay more heed. President Joe Biden’s ill-advised decision for a “final withdrawal” from Afghanistan was just the latest signal by an American president that the country wants to reduce its overseas commitments. Barack Obama began the process by exiting Iraq too hastily and announcing in 2013 that “America is not the world’s policeman.” Donald Trump’s “America First” doctrine was just a populist version of the same impulse: he too itched to get out of Afghanistan and to substitute tariffs for counterinsurgency.

The problem, as this month’s debacle in Afghanistan perfectly illustrates, is that the retreat from global dominance is rarely a peaceful process. However you phrase it, announcing you are giving up on your longest war is an admission of defeat, and not only in the eyes of the Taliban. China, which shares a short stretch of its vast land border with Afghanistan, is also closely watching. So is Russia, with zloradstvo—Russian for Schadenfreude. It was no mere coincidence that Russia intervened militarily in both Ukraine and Syria just months after Obama’s renunciation of global policing.

Mr Biden’s belief (expressed to Richard Holbrooke in 2010) that one could exit Afghanistan as Richard Nixon exited Vietnam and “get away with it” is bad history: America’s humiliation in Indochina did have consequences. It emboldened the Soviet Union and its allies to make trouble elsewhere—in southern and eastern Africa, in Central America and in Afghanistan, which it invaded in 1979. Reenacting the fall of Saigon in Kabul will have comparable adverse effects.

The end of American empire was not difficult to foresee, even at the height of neoconservative hubris following the invasion of Iraq in 2003. There were at least four fundamental weaknesses of America’s global position at that time, as I first argued in “Colossus: The Rise and Fall of America’s Empire” (Penguin, 2004). They are a manpower deficit (few Americans have any desire to spend long periods of time in places like Afghanistan and Iraq); a fiscal deficit (see above); an attention deficit (the electorate’s tendency to lose interest in any large-scale intervention after roughly four years); and a history deficit (the reluctance of policymakers to learn lessons from their predecessors, much less from other countries).

These were never deficits of British imperialism. One other difference—in many ways more profound than the fiscal deficit—is the negative net international investment position (NIIP) of the United States, which is just under -70% of GDP. A negative NIIP essentially means that foreign ownership of American assets exceeds American ownership of foreign assets. By contrast, Britain still had a hugely positive NIIP between the wars, despite the amounts of overseas assets that had been liquidated to finance the first world war. From 1922 until 1936 it was consistently above 100% of GDP. By 1947 it was down to 3%.

Selling off the remaining imperial silver (to be precise, obliging British investors to sell overseas assets and hand over the dollars) was one of the ways Britain paid for the second world war. America, the great debtor empire, does not have an equivalent nest-egg. It can afford to pay the cost of maintaining its dominant position in the world only by selling yet more of its public debt to foreigners. That is a precarious basis for superpower status.

Facing new storms

Churchill’s argument in “The Gathering Storm” was not that the rise of Germany, Italy and Japan was an unstoppable process, condemning Britain to decline. On the contrary, he insisted that war could have been avoided if the Western democracies had taken more decisive action earlier in the 1930s. When President Franklin Roosevelt asked him what the war should be called, Churchill “at once” replied: “The Unnecessary War.”

In the same way, there is nothing inexorable about China’s rise, much less Russia’s, while all the lesser countries aligned with them are economic basket cases, from North Korea to Venezuela. China’s population is ageing even faster than anticipated; its workforce is shrinking. Sky-high private-sector debt is weighing on growth. Its mishandling of the initial outbreak of covid-19 has greatly harmed its international standing. It also risks becoming the villain of the climate crisis, as it cannot easily kick the habit of burning coal to power its industry.

And yet it is all too easy to see a sequence of events unfolding that could lead to another unnecessary war, most probably over Taiwan, which Mr Xi covets and which America is (ambiguously) committed to defend against invasion—a commitment that increasingly lacks credibility as the balance of military power shifts in East Asia. (The growing vulnerability of American aircraft carriers to Chinese anti-ship ballistic missiles such as the DF-21D is just one problem to which the Pentagon lacks a good solution.)

If American deterrence fails and China gambles on a coup de main, the United States will face the grim choice between fighting a long, hard war—as Britain did in 1914 and 1939—or folding, as happened over Suez in 1956.

Churchill said that he wrote “The Gathering Storm” to show:

how the malice of the wicked was reinforced by the weakness of the virtuous; how the structure and habits of democratic States, unless they are welded into larger organisms, lack those elements of persistence and conviction which can alone give security to humble masses; how, even in matters of self-preservation … the counsels of prudence and restraint may become the prime agents of mortal danger … [how] the middle course adopted from desires for safety and a quiet life may be found to lead direct to the bull’s-eye of disaster.

He concluded the volume with one of his many pithy maxims: “Facts are better than dreams.” American leaders in recent years have become over-fond of dreams, from the “full spectrum dominance” fantasy of the neoconservatives under George W. Bush to the dark nightmare of American “carnage” conjured up by Donald Trump. As another global storm gathers, it may be time to face the fact that Churchill understood only too well: the end of empire is seldom, if ever, a painless process.


Niall Ferguson is a senior fellow at the Hoover Institution and managing director of Greenmantle, a political-economic advisory firm. His latest book is “Doom: The Politics of Catastrophe” (Allen Lane, 2021).