Subject: The Bubble of American Supremacy by George Soros
The Atlantic Monthly | December 2003 | The Bubble of American Supremacy

A prominent financier argues that the heedless assertion of American
power in the world resembles a financial bubble-and the moment of truth
may be here

by George Soros


It is generally agreed that September 11, 2001, changed the course of
history. But we must ask ourselves why that should be so. How could a
single event, even one involving 3,000 civilian casualties, have such a
far-reaching effect? The answer lies not so much in the event itself as
in the way the United States, under the leadership of President George
W. Bush, responded to it.

Admittedly, the terrorist attack was historic in its own right.
Hijacking fully fueled airliners and using them as suicide bombs was an
audacious idea, and its execution could not have been more spectacular.
The
destruction of the Twin Towers of the World Trade Center made a symbol
ic
statement that reverberated around the world, and the fact that people
could watch the event on their television sets endowed it with an
emotional impact that no terrorist act had ever achieved before. The
aim
of
terrorism is to terrorize, and the attack of September 11 fully
accomplished this objective.

Even so, September 11 could not have changed the course of history to
the extent that it has if President Bush had not responded to it the
way
he did. He declared war on terrorism, and under that guise implemented
a radical foreign-policy agenda whose underlying principles predated
the tragedy. Those principles can be summed up as follows:
International
relations are relations of power, not law; power prevails and law
legitimizes what prevails. The United States is unquestionably the
dominant
power in the post-Cold War world; it is therefore in a position to
impose its views, interests, and values. The world would b enefit from
adopting those values, because the American model has demonstrated its
superiority. The Clinton and first Bush Administrations failed to use
the
full potential of American power. This must be corrected; the United
States must find a way to assert its supremacy in the world.

This foreign policy is part of a comprehensive ideology customarily
referred to as neoconservatism, though I prefer to describe it as a
crude
form of social Darwinism. I call it crude because it ignores the role
of cooperation in the survival of the fittest, and puts all the
emphasis
on competition. In economic matters the competition is between firms;
in international relations it is between states. In economic matters
social Darwinism takes the form of market fundamentalism; in
international
relations it is now leading to the pursuit of American supremacy.

Not all the members of the Bush Administration subscribe to this
ideology, but neoconservatives form an influential group within it.
They
publicly called for the invasion of Iraq as early as 1998. Their ideas
originated in the Cold War and were further elaborated in the post-Cold
War
era. Before September 11 the ideologues were hindered in implementing
their strategy by two considerations: George W. Bush did not have a
clear mandate (he became President by virtue of a single vote in the
Supreme Court), and America did not have a clearly defined enemy that
would
have justified a dramatic increase in military spending.

September 11 removed both obstacles. President Bush declared war on
terrorism, and the nation lined up behind its President. Then the Bush
Administration proceeded to exploit the terrorist attack for its own
purposes. It fostered the fear that has gripped the country in order to
keep
the nation united behind the President, and it used the war on
terrorism to execute an agenda of Ameri can supremacy. That is how
September 11
changed the course of history.

Exploiting an event to further an agenda is not in itself
reprehensible. It is the task of the President to provide leadership,
and
it is only
natural for politicians to exploit or manipulate events so as to
promote their policies. The cause for concern lies in the policies that
Bush
is promoting, and in the way he is going about imposing them on the
United States and the world. He is leading us in a very dangerous
direction.


The supremacist ideology of the Bush Administration stands in
opposition to the principles of an open society, which recognize that
people
have different views and that nobody is in possession of the ultimate
truth. The supremacist ideology postulates that just because we are
stronger than others, we know better and have right on our side. The
very
first sentence of the September 2002 National Security Strategy (the
President's annual laying out to Congress of the country's security
objectives) reads, "The great struggles of the twentieth century
between
liberty
and totalitarianism ended with a decisive victory for the forces of
freedom-and a single sustainable model for national success: freedom,
democracy, and free enterprise."

The assumptions behind this statement are false on two counts. First,
there is no single sustainable model for national success. Second, the
American model, which has indeed been successful, is not available to
others, because our success depends greatly on our dominant position at
the center of the global capitalist system, and we are not willing to
yield it.

The Bush doctrine, first enunciated in a presidential speech at West
Point in June of 2002, and incorporated into the National Security
Strategy three months later, is built on two pillars: the United States
will
do everything in its power to maintain its unquestioned military
supremacy; and the United States arrogates the right to pre-emptive
action.
In effect, the doctrine establishes two classes of sovereignty: the
sovereignty of the United States, which takes precedence over
international
treaties and obligations; and the sovereignty of all other states,
which is subject to the will of the United States. This is reminiscent
of
George Orwell's Animal Farm: all animals are equal, but some animals
are
more equal than others.

To be sure, the Bush doctrine is not stated so starkly; it is shrouded
in doublespeak. The doublespeak is needed because of the contradiction
between the Bush Administration's concept of freedom and democracy and
the actual principles and requirements of freedom and democracy. Talk
of spreading democracy looms large in the National Security Strategy.
But when President Bush says, as he does frequently, that freedom will
prevail, he m eans that America will prevail. In a free and open
society,
people are supposed to decide for themselves what they mean by freedom
and democracy, and not simply follow America's lead. The contradiction
is especially apparent in the case of Iraq, and the occupation of Iraq
has brought the issue home. We came as liberators, bringing freedom and
democracy, but that is not how we are perceived by a large part of the
population.

It is ironic that the government of the most successful open society in
the world should have fallen into the hands of people who ignore the
first principles of open society. At home Attorney General John
Ashcroft
has used the war on terrorism to curtail civil liberties. Abroad the
United States is trying to impose its views and interests through the
use
of military force. The invasion of Iraq was the first practical
application of the Bush doctrine, and it has turned out to be
counterproductive. A ch asm has opened between America and the rest of
the
world.

The size of the chasm is impressive. On September 12, 2001, a special
meeting of the North Atlantic Council invoked Article 5 of the NATO
Treaty for the first time in the alliance's history, calling on all
member
states to treat the terrorist attack on the United States as an attack
upon their own soil. The United Nations promptly endorsed punitive U.S.
action against al-Qaeda in Afghanistan. A little more than a year later
the United States could not secure a UN resolution to endorse the
invasion of Iraq. Gerhard Schröder won re-election in Germany by
refusing
to
cooperate with the United States. In South Korea an underdog candidate
was elected to the presidency because he was considered the least
friendly to the United States; many South Koreans regard the United
States
as a greater danger to their security than North Korea. A large
majority
throughout the world opposed the war on Iraq.


September 11 introduced a discontinuity into American foreign policy.
Violations of American standards of behavior that would have been
considered objectionable in ordinary times became accepted as
appropriate
to
the circumstances. The abnormal, the radical, and the extreme have been
redefined as normal. The advocates of continuity have been pursuing a
rearguard action ever since.

To explain the significance of the transition, I should like to draw on
my experience in the financial markets. Stock markets often give rise
to a boom-bust process, or bubble. Bubbles do not grow out of thin air.
They have a basis in reality-but reality as distorted by a
misconception. Under normal conditions misconceptions are
self-correcting,
and the
markets tend toward some kind of equilibrium. Occasionally, a
misconception is reinforced by a trend prevailing in reality, and that
is
when a
boom-bust process gets under w ay. Eventually the gap between reality
and its false interpretation becomes unsustainable, and the bubble
bursts.

Exactly when the boom-bust process enters far-from-equilibrium
territory can be established only in retrospect. During the
self-reinforcing
phase participants are under the spell of the prevailing bias. Events
seem to confirm their beliefs, strengthening their misconceptions. This
widens the gap and sets the stage for a moment of truth and an eventual
reversal. When that reversal comes, it is liable to have devastating
consequences. This course of events seems to have an inexorable
quality,
but a boom-bust process can be aborted at any stage, and the adverse
effects can be reduced or avoided altogether. Few bubbles reach the
extremes of the information-technology boom that ended in 2000. The
sooner
the process is aborted, the better.

The quest for American supremacy qualifies as a bubble. The dominant
position the United States occupies in the world is the element of
reality that is being distorted. The proposition that the United States
will
be better off if it uses its position to impose its values and
interests everywhere is the misconception. It is exactly by not abusing
its
power that America attained its current position.

Where are we in this boom-bust process? The deteriorating situation in
Iraq is either the moment of truth or a test that, if it is
successfully overcome, will only reinforce the trend.

Whatever the justification for removing Saddam Hussein, there can be no
doubt that we invaded Iraq on false pretenses. Wittingly or
unwittingly, President Bush deceived the American public and Congress
and
rode
roughshod over the opinions of our allies. The gap between the
Administration's expectations and the actual state of affairs could not
be
wider.
It is difficult to think of a recent military operation that has g one
so wrong. Our soldiers have been forced to do police duty in combat
gear, and they continue to be killed. We have put at risk not only our
soldiers' lives but the combat effectiveness of our armed forces. Their
morale is impaired, and we are no longer in a position to properly
project
our power. Yet there are more places than ever before where we might
have legitimate need to project that power. North Korea is openly
building nuclear weapons, and Iran is clandestinely doing so. The
Taliban
is
regrouping in Afghanistan. The costs of occupation and the prospect of
per...


Meanwhile, largely as a result of our preoccupation with supremacy,
something has gone fundamentally wrong with the war on terrorism.
Indeed,
war is a false metaphor in this context. Terrorists do pose a threat to
our national and personal security, and we must protect ourselves. Many
of the measures we have taken are necessary and proper. It can e ven be
argued that not enough has been done to prevent future attacks. But the
war being waged has little to do with ending terrorism or enhancing
homeland security; on the contrary, it endangers our security by
engendering a vicious circle of escalating violence.

The terrorist attack on the United States could have been treated as a
crime against humanity rather than an act of war. Treating it as a
crime would have been more appropriate. Crimes require police work, not
military action. Protection against terrorism requires precautionary
measures, awareness, and intelligence gathering-all of which ultimately
depend on the support of the populations among which the terrorists
operate. Imagine for a moment that September 11 had been treated as a
crime.
We would not have invaded Iraq, and we would not have our military
struggling to perform police work and getting shot at.

Declaring war on terrorism better suited the purp oses of the Bush
Administration, because it invoked military might; but this is the
wrong
way
to deal with the problem. Military action requires an identifiable
target, preferably a state. As a result the war on terrorism has been
directed primarily against states harboring terrorists. Yet terrorists
are
by definition non-state actors, even if they are often sponsored by
states.

The war on terrorism as pursued by the Bush Administration cannot be
won. On the contrary, it may bring about a permanent state of war.
Terrorists will never disappear. They will continue to provide a
pretext
for
the pursuit of American supremacy. That pursuit, in turn, will continue
to generate resistance. Further, by turning the hunt for terrorists
into a war, we are bound to create innocent victims. The more innocent
victims there are, the greater the resentment and the better the
chances
that some victims will turn into perpetrators.

The terrorist threat must be seen in proper perspective. Terrorism is
not new. It was an important factor in nineteenth-century Russia, and
it
had a great influence on the character of the czarist regime, enhancing
the importance of secret police and justifying authoritarianism. More
recently several European countries-Italy, Germany, Great Britain-had
to
contend with terrorist gangs, and it took those countries a decade or
more to root them out. But those countries did not live under the spell
of terrorism during all that time. Granted, using hijacked planes for
suicide attacks is something new, and so is the prospect of terrorists
with weapons of mass destruction. To come to terms with these threats
will take some adjustment; but the threats cannot be allowed to
dominate
our existence. Exaggerating them will only make them worse. The most
powerful country on earth cannot afford to be consumed by fear. To make
the war on terro rism the centerpiece of our national strategy is an
abdic...


A recent Council on Foreign Relations publication sketches out three
alternative national-security strategies. The first calls for the
pursuit
of American supremacy through the Bush doctrine of pre-emptive military
action. It is advocated by neoconservatives. The second seeks the
continuation of our earlier policy of deterrence and containment. It is
advocated by Colin Powell and other moderates, who may be associated
with
either political party. The third would have the United States lead a
cooperative effort to improve the world by engaging in preventive
actions
of a constructive character. It is not advocated by any group of
significance, although President Bush pays lip service to it. That is
the
policy I stand for.

The evidence shows the first option to be extremely dangerous, and I
believe that the second is no longer practical. The Bush Administration
has done too much damage to our standing in the world to permit a
return
to the status quo. Moreover, the policies pursued before September 11
were clearly inadequate for dealing with the problems of globalization.
Those problems require collective action. The United States is uniquely
positioned to lead the effort. We cannot just do anything we want, as
the Iraqi situation demonstrates, but nothing much can be done in the
way of international cooperation without the leadership-or at least the
participation-of the United States.

Globalization has rendered the world increasingly interdependent, but
international politics is still based on the sovereignty of states.
What
goes on within individual states can be of vital interest to the rest
of the world, but the principle of sovereignty militates against
interfering in their internal affairs. How to deal with failed states
and
oppressive, corrupt, and inept regimes? How to get rid of the likes of
Saddam? There are too many such regimes to wage war against every one.
This
is the great unresolved problem confronting us today.

I propose replacing the Bush doctrine of pre-emptive military action
with preventive action of a constructive and affirmative nature.
Increased foreign aid or better and fairer trade rules, for example,
would
not
violate the sovereignty of the recipients. Military action should
remain a last resort. The United States is currently preoccupied with
issues
of security, and rightly so. But the framework within which to think
about security is collective security. Neither nuclear proliferation
nor
international terrorism can be successfully addressed without
international cooperation. The world is looking to us for leadership.
We
have
provided it in the past; the main reason why anti-American feelings are
so strong in the world today is that we are not providing it in the
present.