Kai Ryssdal: Our mission this week, best as we can, has been to bring a bit of perspective to the economic unease out there. To make sense of what seems to be the new normal. We figure a good place to wrap up things is with a little historical perspective.
For that, we’ve called David Kennedy, he is a professor of history at Stanford University.
Good to have you with us.
David Kennedy: Glad to be here.
Ryssdal: We had a conversation earlier this week with an investment banker and an economist regarding the American economy right now, and we thought we’d end things by throwing the same question to an historian. What’s your sense of where this economy is?
Kennedy: Well, it’s interesting. When this crisis first broke two or three years ago, I thought at that time that one of the things the distinguished it from the event to which it was being constantly compared, the Great Depression of the 1930s, was how much international cooperation there was, almost reflexively and instantaneously.
As time has gone on, it seems there is another edge to that sword, and that is the systemic, global character of this crisis. It seems to me we’re demonstrating worldwide that we have not evolved our international institutions commensurate with the evolution of the global economy. We don’t really have adequate tools to deal with a crisis that is this endemic.
Ryssdal: Is it possible that we have just not learned the lessons of the 1930s?
Kennedy: Well we’ve learned a lot of lessons from the 1930s, but the character of the crisis is different. It’s like there’s some version here of the old adage about the generals fighting the last war, that our policymakers are effectively counterpunching to the last depression, but they might not necessarily fully understand the character of this one.
Ryssdal: What damage do you think we’ve done to our international economic heft? I mean, we’re the biggest economy in the world, going away, but we’ve taken a beating over the last three years.
Kennedy: Yes we have, but in a sense, we’ve been taking a beating for quite a while. A lot of us of a certain age think that the normal condition of the international the United States as the hegemonic leader and the rest of the world as more-or-less willing followers or players in the game. And that was true for a long time — two or three decades, I’d say, after World War II concluded. But the inability of the U.S. to maintain that kind of dominance over the international system, economically, militarily, morally and otherwise, has been questioned by a lot of people going back 30-, 40-year or more. Though you’re correct, we still have the world’s largest economy, we don’t dominant the world economy as a percentage of world production the way we did in the late 1940s, 1950s and 1960s.
Ryssdal: So is this crisis over the last several years the thing that hastens the end of empire?
Kennedy: Well I get a little nervous when people use the word “empire” to describe the U.S.
Ryssdal: Then, the end of hegemony?
Kennedy: I think that’s a more, frankly, responsible way to put it — the end of hegemony. And yes, I think that’s been a long time coming. Arguing from an historical analogy, there’s something to worry about here.
The 19th century is conventionally thought of as the period of the Pax Britannica, when Great Britain led the world system in terms of security guarantees, the international economic equilibrium, and so on, and did a pretty good job of it. Britain lost the capacity to do that starting with World War I. It just couldn’t do it.
There was a famous British historian who once said in 1918, at the end of WWI, world economic leadership was handed to the United States and the offer was refused. And what happened? We had a 20- or 30-year interval between WWI and 1945 when there was no effective leader in the international system. And we get tremendous economic instability and upheaval. We call that the Great Depression. And we get the most destructive war in the history of humanity, WWII. And then the United States steps into that role, finally, in 1945 and takes a hegemonic position, and the world is a reasonably stable and prosperous place for quite a long time thereafter.
Ryssdal: Which leads right to last question, which is, what does the world look like when the United States is not that power.
Kennedy: Well, it looks like a world where there are several other states, or associations of states like the European Union, will be expected to assume some of the role that the United States has played. But orchestrating the ambition and aspirations and priorities of several players, it’s a game that hasn’t been played for a long time in the international arena and there’s a big question mark about how that will work going forward.
Ryssdal: David Kennedy, professor of history at Stanford University. Thanks so much for your time.
Kennedy: Thank you, Kai.
Ryssdal: And here a few of your thoughts on what it means to be number one.
Rick Prince: Oh I definitely think we’re number one. As flawed as we are, we still are the best.
Pam Victor: I would like to see America be part of the team.
Maria Lomanto: Maybe we’re going to land in a more realistic place?
Sarah Mansfield: If there’s another country that’s making more money, that’s not necessarily going to make me feel threatened or uncomfortable.
Trevor Fisher: We’re certainly not the powerhouse we used to be.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.