America has stayed ahead of competitors because of strong values, institutions and economic performance. But the successful formula is facing threats.
In a nutshell
- The erosion of America’s social fabric threatens its global standing
- A high-performing society requires the triumph of the public good
- Adam Smith: The “prevalence of injustice’’ destroys societies
With Russia out of the superpower game, the United States will be faced instead with the challenge of standing up to China. To many Americans, this will be construed as a battle of values. And in that battle, the thinking goes, the U.S. will be sure to prevail. American superiority is defined not only in moral terms. American values have also been associated with superior performance characteristics, ensuring that America will remain ahead of the competition.
These propositions have become hardwired into American self-imagery, and the imagery of America in many other countries. In his January 11, 1989, farewell speech, President Ronald Reagan (1981-1989) exulted in America as a beacon of freedom for all. Democracy promoters have since been hard at work seeking to spread American values worldwide.
The American magazine magnate Henry Luce provided an eloquent formulation of the missionary role of the U.S. In a February 1941 editorial in “Life Magazine,” captioned “The American Century,” he made a strong plea for America to assume the role of a Good Samaritan for the world. Under American hegemony, democracy and other American ideals would “do their mysterious work of lifting the life of mankind from the level of the beasts to what the psalmist called a little lower than the angels.”
Since its entry into World War II in 1941, America has certainly had a good run. But will it last? The key to answering this crucial question lies in what the American political scientist Joseph Nye refers to as “power conversion capability,” defined as the ability of a country to transform resources into power and influence.
The role of values
America remains more powerful than China. Yet, the growth of the Middle Kingdom over the last three decades has been spectacular, while America has been in the process of relative decline. Both observations entail important messages concerning the prospects for America to remain ahead.
They raise questions about the presumed link between American values and economic performance. China has achieved its tremendous record of growth despite refusing to emulate the core institutions of a market economy, and its power conversion capability is beyond doubt. The comparison highlights the impact of eroding values on American performance. While Mr. Nye is convinced that by the end of the American Century, in 2041, America will still play the central role in the global balance of power, he also expresses concern about “a decrease in relative external power and domestic deterioration or decay.”
The key to what the future may hold lies in understanding that what matters to economic performance are those internalized personal values that guide individual action. They differ significantly from noble public values like freedom, democracy, the rule of law and human rights. And it is far from clear how and whether the promotion of such public values will also lead to a transformation in personal values. This is why democracy promotion has failed to gain traction.
From survival to self-realization
The long-term path to modern Western society was associated with two parallel shifts in basic value formation. One saw society move from survival to self-realization values, and the other entailed traditional values being replaced by secular-rational values.
The former is well in line with modernization theory. Increasing material welfare results in a gradual shift from absolute social norms toward increasingly rational, tolerant and trusting values. As individuals become less concerned with securing their daily material basic needs, they develop values that relate to subjective well-being, quality of life and self-identification. Such new values range from environmental protection, feminism and LGBT rights to animal rights, veganism and climate change activism.
The poorest and least developed nations score high on survival and traditional values, while the best achievers score high on self-realization and secular-rational values.
In the transformation from a prevalence of traditional values to embracing secular-rational ones, the lines crossed were of profound significance. Societies marked by traditional values tend to emphasize religion, absolute standards and family. They favor large families, reject divorce and take a pro-life stance on abortion, euthanasia and suicide. They value social conformity over individualistic achievement, prefer consensus rather than open conflict, support deference to authority and have high levels of national pride and a nationalistic outlook. Societies with secular-rational values have opposite preferences on all these topics. And they are the high performers.
Given that it captures a transformation of fundamental moral norms, this shift is more complex than the shift from survival to self-realization values. It suggests a dynamic that stands in sharp contrast to the argument on modernization and is more in line with the Weberian scholars who hold that cultural traditions are remarkably enduring and shape the political and economic behavior of societies today.
Evidence from the World Values Survey shows that while the poorest and least developed nations score high on survival and traditional values, the best achievers score high on self-realization and secular-rational values. Despite lavishly funded Western policies of value promotion, these lines of division have proven to be highly resilient over time, ensuring that underachieving countries have remained poor.
What makes these observations relevant today is that the development of American society over the past three decades has been associated with an accelerating erosion in the quality of institutions. The enterprise sector and the complex of research and higher education have both remained strong, but political scientists have expressed growing concern over a decline in “social capital,” an erosion of those internalized personal values that combine to make up what Adam Smith once referred to as the “immense fabric of human society.”
Three trajectories of societal erosion
That has proceeded along three interacting trajectories.
The first is the shift from survival to self-realization values. The first couple of centuries after the Declaration of Independence saw American society score substantial gains from this shift in personal values. It was conducive to the development of democracy because such values favor interpersonal trust, tolerance and participation. In recent decades, the proliferation of various forms of political activism has suggested that focusing on self-realization is becoming a problem rather than an asset. While the variety of causes that mark the intensifying cultural wars are both worthy and of great personal importance, the formation of such values has also been associated with distrust, moral condemnations, ostracism and deplatforming (denying opponents access to social media fora or other discussion venues).
The second trajectory is where America deviates most strongly from other high achievers. Despite increasing affluence, large segments of American society have remained beholden to traditional values. In contrast to the predictions of modernization theory, which suggests a reduced role of religion and associated family values, the resilience of traditional values has become stronger over recent decades. The process has been fueled by the Republican Tea Party movement and the religious right. It has focused on deeply moral issues like abortion and LGBT rights and has provided fertile ground for demagoguery. When Donald Trump launched his campaign to “make America great again,” he surfed on the role of family values. When campaigning to “drain the swamp,” he tapped into mounting feelings of distrust of the federal government that also fueled the formation of armed militias.
The third trajectory where America has suffered serious erosion in the quality of institutions refers to the foundations of the rules-based market economy. Proponents of free markets have been keen on quoting Adam Smith on the vital role of self-interest as a driving force in market development. However, they have not been equally keen on citing his dire warnings about the negative consequences of unconstrained self-interest seeking. The actual key to the success story of the West was that its market societies provided room for creative self-interest while upholding strong moral norms to constrain such interests. The collapse in moral standards against the greed that marked the roaring 1980s was an important watershed, setting the stage for a form of unbridled self-interest seeking that would result in a fundamental transformation of American society. At a time, discussions on income distribution featured talk about the top 1 percent of wealthy people, and now there is talk of the top 1 percent of the top 1 percent.
Although this process has been associated with forming a class of destitute people amid tremendous affluence and with a savaging of the middle class held to be the bedrock of democracy, the political elites have not been overly concerned.
If U.S. society descends into tribal warfare, it will not only become harder to convince other nations of the superiority of the American way, it will also entail a gradual deterioration in economic performance.
When Barack Obama ran for president in 2008, he campaigned harshly against Wall Street greed. After he had moved into the White House, that was soon forgotten and replaced with personal wealth building. When Donald Trump ran for office, he could tap into an ample supply of discontent from what Hillary Clinton called a “basket of deplorables.”
These three trajectories may come across as extreme or even sensational. And it must be hedged that media amplify fringe phenomena alien to the majority. That said, they still highlight the nature of the slow-moving erosion of Smith’s “immense fabric of human society,” which may have a profound longer-term impact on the quality of institutions.
In a worst-case scenario, American society will develop along a trajectory where both traditional and self-realization values are turbocharged and where there will be little room for interpersonal trust, tolerance and broad participation. Battlegrounds will range from local school boards to elite academic establishments. In the former, advocates of creationism will stand against those who favor gender reassignment. In the latter, battles will rage over divisive issues like white privilege, Critical race theory, and the Black Lives Matter movement.
As the two camps sink ever deeper into outright demonization of the other side, the inability to cohabit space with neighbors who hold the “wrong” values will trigger interstate migration that will cement the emerging pattern of “pure” red and blue states. One implication of such migration is that the outcome of presidential and congressional elections will be determined by a shrinking number of battleground states, implying that to most voters, such elections become less and less important. Another is that increasing challenges against election results will cause an erosion in the legitimacy of the electoral process and the vital role of federal government institutions.
It is possible to envision a counter scenario, where the dominant parties assume responsibility for curbing the proliferation of narrow interests in personal agendas and agree on the restoration of those encompassing interests in the public good that emerged to create modern high-performing societies and economies. Economic policymakers could also recall the wisdom of Adam Smith: “Society may subsist, though not in the most comfortable state, without beneficence; but the prevalence of injustice must utterly destroy it.” For as long as the most corrosive processes remain fringe phenomena, it is still possible to envision a return to the good path if the ills are cured rather than merely the symptoms alleviated.
The main implication for American foreign policy and its “power conversion capability” is that it will become increasingly difficult to explain what hides behind the facade of the elusive “American values.” If American society descends into something that looks more like tribal warfare, it will not only become harder to convince other nations of the superiority of the American way. Given that the quality of institutions will determine the quality of economic performance, it will also entail a gradual deterioration in economic performance beyond relative decline.