David Blair is Vice-President and Senior Economist at the Center for China and Globalization (CCG).

War changes countries, win or lose. The winner’s basic social and economic character often changes much for the worse. For example, Rome’s ultimate victory in the three Punic Wars against Carthage changed the nature of the Roman state so drastically that the Republic could not survive.

 

From the time of the overthrow of the last king in 509 BC until the Punic Wars (264-146 BC), Rome was a substantially middle-class republic. It certainly was not an egalitarian democracy, but much of the population was made up of independent farmers or artisans—what one would call middle-class today. The patrician class, largely represented by the Senate, was constrained to respect many of the wishes of the lower classes because both the economy and the military were staffed by local average people. There was no way for the rich to make money or to succeed in war without the active support of the rest of the population. However, the victories over Carthage created a situation in which the highest elites no longer depended on the lower classes. They were able to use foreign conquests to consolidate their domestic power—creating what was in reality an imperial state more than a century before Augustus formally took power.

 

By the time of the de facto creation of the Roman Empire and the destruction of the republic, there was no going back. The traditional cultural and political strengths of the Roman Republic had been eliminated beyond hope of restoration. The Roman imperial state’s entire economic and political structure depended on the ability to continue and expand the external empire.

“Both China and the U.S. have accumulated government debt. China used this debt to build infrastructure… Meanwhile, Washington has used its debt to finance wars…” / Source: Guliver Image

The Roman Republic could have continued to exist as an Italian nation-state in a multilateral Mediterranean world. However, that option was not available to the de facto empire because there was no inherent strength to the imperial state except its military power and, possibly, some trade and globalization benefits that could be promised to the conquered peoples.

 

Throughout the Republican period, roughly 500-200 BC, Rome fought a series of wars against nearby cities and tribes, eventually establishing a primacy in central Italy, largely inhabited by Latin speakers with similar cultures to that of Rome. This expansion eventually led to contact and conflict with Gauls in the Po River valley to the north and Greek speakers in southern Italy and Sicily. Essentially, Rome went from being a city-state to a kind of nation-state during the 300 years of the functioning republic.

 

The turning point was when expansion to the south led Rome to come into conflict with the Carthaginians in Sicily, who became Rome’s first peer competitor. Rome became an imperial state after the final defeat of the Carthaginians in 146 BC. It was no longer a nation-state.

 

Unfortunately, the English language word “empire” is often used to mean a large state, usually ruled by a monarch. For example, we talk about the Chinese empire, but China was a very large nation-state, never an empire in the same sense as the Roman empire. The Roman empire itself, at least in its early stages when it replaced the republic around 200 BC, was not a formal monarchy. The key distinction between the Republic and the Empire was that Rome began to rule over large numbers of foreigners. Roman military and economic power became dependent on its non-Italian possessions.

 

With the establishment of the empire, the Roman elites no longer depended on the common people for either wealth or power. They imported large numbers of foreign slaves and confiscated land to establish very large slave-worked latifundia.The army also no longer depended primarily on local people, especially after Consul Marius professionalized the army around 100 BC. The culture of the Roman state became highly militarized.

 

Since its very beginning, Roman culture was not peaceful, but the war against Carthage significantly coarsened the thinking of the elite. For example, Cato’s recurring statement “Carthago delenda est,” usually translated as “Carthage must be destroyed,” actually means something like “Carthage must be deleted.” It is a forthright call for genocide. In this context, it is disturbing to hear the March 2024 statement by Latvian President Edgars Rinkevics: “We should not draw red lines for ourselves, we must draw red lines for Russia and not be afraid to enforce them. Ukraine must win, and Russia must be defeated. Russia delenda est.” Obviously, Russians will interpret this statement as a call for genocide from a NATO national leader.

 

The military of the late “Republic” and the early empire had the reputation of being highly capable. But most of what followed the Punic Wars were not really wars against peer competitors. Rome mostly faced decadent remnants of Alexander the Great’s empire, some wars against small powers, and guerilla wars against less developed peoples. The only peer competitor they faced before the series of Germanic invasions of the fifth century AD, was Persia, against which they were never very successful.

 

The end result of the creation of an empire is that the Roman patricians depended on the imperial possessions but not very much on local people. So, they were concerned mostly with maintaining the empire. By the end of the Third Punic War, the Republic was dead, even though its formal dissolution took another 150 years to complete. By winning the Carthaginian wars, the average working people of Rome lost almost everything.

 

Following the defeat of Carthage, the only thing “Roman” about the Roman empire (which still pretended to be a Republic) was that the Roman elites became the imperial rulers. The average people of Rome were placed in a much worse economic and political position. By formal imperial times, after about 100 AD, the state became essentially a military dictatorship ruling a kind of globalist state, with some little pretense of respect for the Senate, which represented the old Roman elite. For the last 250 years of the empire, even the emperors had little to do with Rome or its founding traditions. Little of the culture or polity of old Rome survived.

 

The Roman Empire did build infrastructure, enforced relative peace, and established some institutions that the conquered people supported or, at least, were afraid to change. But its power rested primarily on professional military forces, not on enthusiastic support of the population. This worked only as long as the Empire faced no existential threat or real peer competitor.

After Constantine, Christianity did provide a unifying spirit. Still, disputes among Christian leaders over what appear to us today to be arcane issues weakened this unification and created animosity against the central authorities in Rome, Ravenna, and Constantinople. Essentially, the Roman Empire had no populace determined to defend the continuation of its existence.

 

Problems Caused by Fighting and “Winning” Wars

Many times, a defeat, as long as it is not near-complete destruction, can strengthen a country’s culture. In my opinion, the Serbian loss of Kosovo, though it had a severe psychological and internal political impact at the time, may have strengthened the character and economy of Serbia by removing the need to focus on the military control of a hostile population.

 

The response to the terrorist attacks on September 11th, 2001, led to a militarization and securitization of the U.S. government and of typical American life that would have been inconceivable to most average Americans earlier. In significant ways, this amounts to a repudiation of the old Constitutional order and a reduction in the everyday rights and living standards of Americans. As U.S. President Dwight D. Eisenhower stressed in his farewell address in 1961, this shift away from civilian rule actually started early in the Cold War. After the U.S. defeat in Vietnam, I thought the American culture would be strengthened by focusing more on the economy and culture rather than geopolitical adventures. I felt that the United States would never be stupid enough to do something like the misadventure in Vietnam again.

 

Often, military successes lead to long-term geopolitical disasters. For example, the Eastern Roman general Belisarius (circa 500-565 AD) proved to be one of the best military strategists of all times. However, his successful campaigns against the Arian or Donatist Christians in North Africa (now Tunisia and Algeria), along with his campaign against the Persians, weakened those countries so much that they had little spirit to resist the Muslim conquest in the next century. Similarly, his short-lived conquest of Italy contributed greatly to the long-term split between Western and Eastern Christians.

 

Similarly, the apparent easy victory in the First Gulf War led to an arrogance and overconfidence that has plagued U.S. foreign policy for more than three decades. Large sections of the national security establishment drew the conclusion that adopting a strategy in which the United States would be the world’s policeman would be both cheap and easy—with the additional benefit that the country would be the unipolar world leader. So, American policymakers got into wars and proxy wars around the world.

 

The State of the U.S. Working Class

I’m afraid that the United States is now in the stage between the Punic Wars and the formal establishment of the empire. The pretense of Republican institutions survives, but the real decisions are not made by these institutions. Recently, we have seen a sharp decline in the respect of U.S. elites for either the formal institutions set up by the Constitution or the traditional culture of the American people.

 

There are many indications of much weakened American working and middle classes. For example, the shocking facts about health and life expectancy were reported by Angus Deaton and Anne Case in their 2020 book, Deaths of Despair and the Future of Capitalism. Several data series indicate the overall changes. Median Real Wages in the United States have not risen since the series became available in 1979. At the time of this writing, median real wages are actually lower than they were in 1979. So, American working people have not received a wage increase for 45 years.

 

This does not mean that no additional wealth has been created. Instead, resources have been redirected away from workers toward a variety of capital owners and rentiers in society. The share of labor compensation has fallen from around 64 percent of GDP in the 1950s and 1960s to about 59.5 percent now.

 

Other indicators of reduced emphasis on economic growth to benefit ordinary people include the fact that entrepreneurship has declined sharply since 1990, total factor productivity has stagnated, and the U.S. government debt and interest paid on the debt of the federal government has soared.

 

Although China and America find themselves at substantially different stages of development, it is informative to compare the rapid real wage increases in China since 2000 to the long stagnation in the United States. Even in today’s difficult economic situation, real wages are increasing at a rate of about 4 percent per year, about the same as the growth rate of GDP.

 

Both China and the United States have accumulated large amounts of government debt. However, China used this debt to build infrastructure and quality-of-life investments such as parks and housing. Meanwhile, Washington has used its debt to finance wars, consumption by people dealing with falling wages, and out-of-control healthcare costs that were not accompanied by better health outcomes.

 

Some assert that the changes in the U.S. economy are somehow natural consequences of technological changes, international competition, or the rise of a “deserving” or highly productive elite. These harms to the working class were primarily the consequences of federal government policies designed to transfer wealth to a small elite.

 

A series of government policy changes, starting in the 1980s and coming to fruition in the 1990s, took money away from the working class and redistributed it toward rentiers and financial capital.

 

First, the federal government essentially decided not to enforce antitrust laws. Almost all sectors of the U.S. economy became more concentrated, and oligopolists in the tech and financial sectors were able to dominate much of the economy—thus extracting large portions of income for themselves. There have been some indicators that this might be changing—current antitrust suits against Google and Apple, for example—but I will believe this when I see it.

 

Second, financial “reforms” in the 1990s allowed the banking industry and other financial sectors to become much more concentrated. In particular, the Interstate Banking Act of 1994 allowed large sections of the national economy to be dominated by five or ten large banks. The 1999 Gramm-Leach-Bliley Act removed the New Deal restrictions on merging investment and commercial banks. At the same time, the large investment banks went from being partnerships, where partners bore any losses, to corporations, where the losses were limited.

 

The net result of this was to create a financial system that favored a combination of sub-prime loans that have the potential of very high returns and risky investments that could pay off with monopolistic returns. At the same time, the banks moved away from financial support for the real economy of industry, farms and small businesses because they were not nearly as profitable as riskier investments.

 

Third, following the tech crash in March 2000, the U.S. Federal Reserve has adopted a policy of highly expansionary monetary policy with its resultant very low interest rates. The effect of such low interest rates is to transfer wealth from working people to already wealthy asset holders.

 

The history of Amazon shows the impact of these policies on small businesses and entrepreneurial businesses. Amazon lost money on its retail sales for roughly 20 years. Why would any investor be willing to continue to finance such losses for such a long time? The new neoliberal banking system was willing to take large risks over the lower but steady profits of traditional industrial investment. The potential payoff to investment in Amazon was monopolistic returns. And expansionary monetary policy made huge investment funds available that needed to be deployed somewhere.

 

The bet paid off. Now, Amazon is able to use its monopolistic position to take the lion’s share of profits from its suppliers and third-party sellers while being confident that the government will allow this. Much of the American small business sector has been devastated.

 

These policies also encouraged American corporations to no longer depend on American workers. Apple’s unofficial slogan “Designed in California, assembled in China,” shows the trend of de-emphasizing the real economy of workers and industry. We now see the consequences of this as Apple loses its innovative edge to places that combine design, research, production, and engineering excellence, such as the Pearl River Delta (Guangdong province, Hong Kong, and Macau) in China.

 

At the same time as these industrial policy changes, the U.S. government has become less dependent on average Americans. Expansionary monetary policy and low interest rates allowed the government to increase spending without the need for popular approval of current tax rates. The unique role of the U.S. dollar as the world’s principal reserve currency played a key part in this by creating the belief that the American government could borrow without limit and without causing real interest rates to rise, an option available to no other country. As we have seen recently, the attempts to weaponize the role of the dollar and the U.S.-based financial system have led many countries around the world, not just Russia and China, to urgently create alternatives to the dollar as the means of payment or unit of account.

 

A quick way to summarize recent American history is as follows: The Clinton Administration gave the big Wall Street banks everything they wanted. The George W. Bush Administration gave the military-industrial-intelligence establishment (as well as the banks) everything they wanted. And the Obama Administration gave the Silicon Valley and Healthcare oligopolists (as well as the banks and the military-industrial-intelligence complex) everything they wanted. The bottom line is that American domestic and foreign policies have sharply reduced the dependence of the American elite upon the American working class over the last 40 years.

 

Models of International Relations

Since the end of World War II, American foreign policy and theory have been driven by a set of ideas that goes by a variety of names: liberal internationalism, the United States as the world policeman, American exceptionalism, rules-based order, full-spectrum dominance, America as the indispensable nation, American imperialism, and so forth. Each of these titles emphasizes a different aspect of the same policy. They all imply America’s role as world leader and hegemon.

 

This policy was originally developed in response to the interwar isolationism in the U.S., which was widely seen as a mistake that led to the rise of Nazism and the resultant world war. In combination with a healthy fear of nuclear weapons on both sides, this policy prevented a major direct war between the United States and the Soviet Union. In combination with the New Deal economic policies implemented by President Franklin Roosevelt, this policy’s economic and trade aspects led to 30 years of rising real wages and widespread prosperity in the United States, along with economic miracles in France, Germany, and Japan.

 

Tragically, the practitioners of the liberal internationalist policy interpreted the end of the Soviet Union and the easy victory in the First Gulf War as a green light to try to reinforce the American primacy aspects of the strategy. Because a long series of wars has exposed the actual difficulty of acting as world policeman and the lack of strategic competence of the military-industrial-intelligence complex—and because an unexpected all-azimuth peer competitor has arisen—U.S. policy has become increasingly aggressive and militarized. The elite’s growing lack of dependence on or concern for the American working class has reinforced this tendency. 

 

A second, much less widely followed, school of international relations is realism, best expressed in the writings of John Mearsheimer and Graham Allison. Basically, this theory sees states as Newtonian power-seeking billiard balls. In this view, states will act to maximize their power, regardless of the internal nature of each state. The Administration of George H.W. Bush (1989-1993) was largely a realist administration, in sharp contrast to the liberal internationalist Clinton, W. Bush, and Obama Administrations that followed.

 

In practice, a realist American foreign policy would have been much less aggressive and militarized. Realist thinking would not have supported the Iraq invasion or the Afghan war. Realists would have recognized Russia’s fear of NATO expansion and would not fuel the war in Ukraine. But, on the other hand, both Mearsheimer and Allison see the rise of China as a peer competitor as warranting an American great power response.

 

Thucydides’ View of Human Nature: Greed, Pride, and Fear

Although I highly respect the work of Graham Allison, my reading of Thucydides does not support a “realist” interpretation of the causes of the Peloponnesian War. In my reading, Athens unnecessarily precipitated the war with its haughty, disrespectful attitude that wounded the pride of the Spartans and many other Greek cities.

 

Thucydides said that people are motivated by greed, pride, and fear. Athens could have reduced some of the opposition to its rise by respecting other states’ opinions. They felt themselves so superior that they hurt the pride of others. Of course, by this time, Athens was depending on its empire for lots of revenue, so greed was involved, too. And Athens’ attitude added to the fears of many other states.

 

The Thucydidean analysis can be viewed as another school of foreign policy which has had some, but too little, impact on American foreign policy. George H.W. Bush went to great lengths to provide physical support and to assuage the fear and pride of the Soviet Union and then Russia. Had he been re-elected, he certainly would not have supported the expansion of NATO to Russia’s borders.

 

More recently, in his first term, President Donald Trump demonstrated a Thucydidean understanding of human nature and sometimes applied it to his foreign policy. In contrast, the Biden Administration sent its Secretary of State around the world lecturing down, pointing his finger at and threatening many nations.

 

Trump’s relations with North Korea’s Kim Jong-Un illustrate the importance of showing respect (“face” in the Asian context) for others. Without changing anything in terms of military capabilities, Trump’s meeting with Kim calmed the situation. It is unfortunate that the Biden Administration chose not to continue this effort and moved toward a more direct military approach, maybe because many people in Washington are profiting from arms sales to South Korea and Japan.

 

Similarly, Israel’s aggressive policies are substantially motivated by fear. My view is that Palestinians are motivated by a combination of wounded pride and fear. The Trump Administration’s attempts to create, and then expand, the “Abraham Accords” between Israel and the Arab world, could have assuaged both fear and pride and might have conceivably prevented the ongoing conflict in the Middle East. Unfortunately, this was also not pursued.

 

New Foreign Policy Avenues

The world is now at a very dangerous turning point. The possibility of a direct conflict between NATO and Russia, possibly going nuclear, cannot be ignored. Nor can the long-term damage and dangers that would be caused by a permanent cold war between the West and China.

 

Liberal internationalism is failing and becoming more militarized and aggressive as the dream of American primacy becomes less attainable. Realism would probably reduce the dangers of constant small wars, but still sees a long-term conflict between the United States and China as inevitable.

 

It is time to look elsewhere for foreign policy guidance. Leaders who understand Thucydides’ views of human motivation would be able to better manage and pacify the coming multilateral world. It is also worthwhile for Western scholars and policymakers to try to better understand the Chinese concept of Tianxia (all under heaven) and its modern incarnation in the Chinese government’s goal of a “new type of great power relations.”

 

It is also crucial for policymakers to understand the domestic motivations and implications of geopolitical strategies. As we saw in the Roman Republic, even a successful aggressive, and militarized foreign policy can easily lead to the destruction of the core values of the state and ordinary people.

Back to Table of Contents