sify if a change in government led tonlarge increases in social spending (rathernthan productive investment), higherntaxation levels, a drop in business confidencenand a flight from sterling.”nThose on the left who favor isolationnand passivity in foreign policy and whonwant to shift funds from the militarynand business into the welfare state willnfind no support in Kennedy. If theyncontinue to cite his book, it must benconsidered an act of fraud and deception.nThis should then serve as a remindernthat nations need to guardnagainst a decline in willpower as well asnin material power.nKennedy’s capitalism, however, isnnot the “pure” theory of the classicalnliberals like Smith and Ricardo but ofnmercantilists like Hamilton and List.nGovernments promoted economicngrowth as part of the “nation-building”nthat marked the advance from feudalismnduring the 15th to 17th centuries,na period that “witnessed a centralizationnof political and military authorityn. . . accompanied by increased powersnand methods of state taxation.”nGovernments needed a larger taxnbase both to consolidate their authoritynover local barons and to finance thenincreasing costs of war that followednthe “military revolution” wrought byngunpowder. The size of armies multipliednas professional infantry and artillerynreplaced knights and feudal levies.nRoyal navies were formed with heavilynarmed, long-range warships that nonnon-European power could match.nWars became longer and ranged overnlarger areas. They became true tests ofnstrength, fought to the point of exhaustionnand beyond; World War I was notnthe first nor the last global war ofnattrition.nGovernments had to adopt “supplyside”npolicies to stimulate economicngrowth or fall behind their rivals. “Itnsounds crudely mercantilistic to expressnit this way,” writes Kennedy, “butnwealth is usually needed to underpinnmilitary power, and military power isnusually needed to acquire and protectnwealth.”nFalling behind in any part of thenequation was deadly. Hapsburg Spainnhad the finest army in Europe, but itsneconomy could not keep up with thenwealth of its many rivals. Its core wasnthe Gastillian economy, which wasn”heavily dependent on imports of for­neign manufactures and on the servicesnprovided by non-Spaniards.” As itsnown trade and industry lagged behindnEngland and France, it became dependentnon a flow of gold and silver fromnits American colonies, which provedninsufficient.nIn contrast, the Dutch were once anGreat Power but did not possess thenmanpower or other internal resourcesnneeded to defend their position againstntheir larger rivals. This is the perennialnproblem of small “trading states.”nMore disastrous was the fate of Poland-nLithuania, which, despite its large territory,nwas beset by “an aristocratic anarchynthat was to make it a byword fornpolitical ineptitude.” It vanished fromnthe map.nThis interaction between wealth andnpower intensified with the IndustrialnRevolution. Control over technologynand manufacturing became the essentialnelements of national power andnimperial expansion. By 1900, Europenpossessed 62 percent of world manufacturing,nwith the United States accountingnfor another 24 percent. Inncomparison, the Third World had onlyn11 percent and was overrun.nBut the balance of power is nevernstable. England, once the leader, fellnbehind in manufacturing during thensecond half of the 19th century. Inn1880, England still led the worid innindustrial potential but by 1913 hadnslipped to third place behind the U.S.nand Germany. This relative decline hasnnow become an absolute decline innindustrial output. In a century, Englandnhas moved from its peak as anglobal superpower to one of the poorestnstates in Europe. Kennedy hasnspent most of his career examining thisnBritish collapse, and he fears the samenominous fate awaits America. This isnwhat has made his book so popular, butnthis question must be viewed againstnhis broader historical landscape.nThe U.S. share of worid GNP declinednfrom 25.9 percent in 1960 ton21.5 percent in 1980. Kennedy believesnit will decline further to about 18npercent by the year 2000. More dangerousnthan the decline in overall GNPnis the relative decline of Americannindustry, which is the foundation of thencountry’s strength. Though U.S. industrialnoutput continues to increase, itnnow suffers large trade deficits in suchnstrategic fields as machine tools, steel,nnnoil, automobiles, computers, and electronics,nindicating that the industrialnbase is not keeping up with the demandneven in peacetime. Indeed, bothnthe USSR and the EEG outproducenthe U.S. in basic manufacturing, andnJapan is closing the gap. Judging fromnthe past, such shifts “have a decisivenimpact upon the military/territorial order.nThis is why the move in the globalnproductive balances toward the “Pacificnrim” which has taken place over thenpast few decades cannot be of interestnmerely to economists.”nThis does not mean that the U.S. isnabout to drop out of the ranks of thenGreat Powers. The U.S. has problems,nbut so does everyone else. Indeed,nfrom Kennedy’s survey of the othernpower centers, the U.S. has the strongestn”natural” position. Western Europenis divided, making it impossible for it tonmuster its aggregate strength with thenkind of coherent strategic vision necessarynto act as a Great Power. And in then1980’s its rate of real economic growthnis slower than that of any other powerncenter.nJapan is likely to grow “much richer”nin the future, particularly in highntechnology; but its wealth depends onntrade. This makes it vulnerable to externalnevents. Nations in such a positionnmust either seek control over areasncrucial to their economy or follow annappeasement policy. Japan has chosennthe latter. It is the perfect Gobdenitenstate incapable of acting as a GreatnPower.nBut there is good news as well,nmainly that the Soviets have evenngreater problems. Their share of worldnmanufacturing is also falling. Furthermore,nthe coalition it heads is markedlyninferior to NATO in economic potential,neven if it is currenfly superior inndeployed military strength. Also, Moscownmust worry about Ghina andnJapan. This means that the odds arenagainst Moscow in any long-term contestnduring which the West mobilizesnits potential strength into actual power.nThe USSR is a classic example ofn”imperial overstretch.”nSeveral things can be done to exploitnthis. The most obvious is to supplynevery enemy of the Soviet Empire withnthe means to resist. Aid to the Afghannrebels has cost the Soviets dearly.nThere are rebel movements in Africanand Gentral America where we couldnAUGUST 1988 / 27n