The one sphere in which the United States did not have an excessive advantage was the military sphere. The Soviet Union possessed a very strong military force, and its troops were occupying a large segment of territory in east-central Europe and northeast Asia (Manchuria and Inner Mongolia in China, the northern half of Korea, and southern Sakhalin and the Kuril Islands in Japan). It is true that as of 1945 the United States had nuclear weapons, but even this advantage would evaporate by 1949.
As a result, if the United States were going to play the role of hegemonic power, it would have to come to some kind of terms with the Soviet Union and neutralize its military strength. This was particularly true since internal political pressure in the United States led to a relatively rapid demobilization of its land forces worldwide.
It is my contention that what ensued was a tacit “deal” between the United States and the Soviet Union, to which we have given the metaphorical name of Yalta. It seems to me that this deal had three components. The first was a de facto division of the globe into two spheres of influence, more or less along the lines of the location of the armed forces of each of the two countries at the end of the war. There was a Soviet bloc, which would come to be defined as running from the Oder-Neisse line in central Europe to the 38th Parallel in Korea (and including mainland China, after the definitive defeat of the Kuomintang by the Chinese Communist Party forces in 1949).
What the United States and the Soviet Union in effect agreed to observe was the primary (virtually exclusive) right of each to decide matters within its sphere. A crucial element of this de facto agreement was there would be no attempt to change these boundaries by military (or even political) means. After 1949, this accord was reinforced by the concept of “mutually assured destruction” based on the fact that both sides had sufficient nuclear strength to respond to any attack and destroy the other.
The second part of the tacit agreement was the de facto economic disjuncture of the two zones. The United States would offer no assistance in the reconstruction of the Soviet bloc. Its aid would be limited to its zone—the Marshall Plan in western Europe, comparable aid to Japan and later to South Korea and Taiwan in east Asia. US aid to its allies was not simply altruistic philanthropy. It needed customers for its flourishing industries, and reconstructing the economy of these allies made them good customers, as well as faithful political satellites. The Soviet Union in turn developed its own regional economic structures, ones that reinforced the autarkic character of the Soviet zone.
The third part of the “deal” was to deny that there was any deal. Each side proclaimed very loudly in its particular language that it was in a total ideological struggle with the other. We came to call this the “Cold War.” Note however that it was and remained to the end a “cold” war. The purpose of the very loud rhetoric was not in reality to transform the other, at least not before some very distant moment when the other side would somehow crumble. In this sense neither side was trying in any immediate time span to “win” the war. Each sought rather to oblige its satellites (euphemistically called allies) to toe a very strict political line, as dictated by the two superpowers. Neither side would ever support in any meaningful sense rebellious forces within the other camp, since this might lead to the undoing of the primary agreement of a military status quo between the two superpowers.
Once the military status quo was achieved, the United States could proceed to realize its overall political and cultural dominance in the world-system—with its automatic majorities in the United Nations and multiple other transnational institutions. The sole exception was in the one agency that controlled military matters—the U.N. Security Council, where the veto power of each side ensured the military status quo.
This arrangement worked very well in the beginning. And then the self-liquidating character of a geopolitical quasi-monopoly began to take its toll. The two most significant geopolitical changes in the two decades following 1945 were revolts in the Third World and the economic recovery of western Europe and Japan.
What were labeled then as Third World countries (and which we tended later to call the South) had very little to gain in the geopolitical status quo that the two superpowers were attempting to impose on the world. Some of them began to defy the arrangements. The Chinese Communist Party refused to make a deal with the Kuomintang, as the Soviet Union wanted them to do. Instead they defeated the Kuomintang and came to state power. The Viet Minh and the Viet Cong proceeded on their own path, defeating both the French and the Americans. Fidel Castro and his guerrillas came to power, and almost upset the world apple cart in 1962. The Algerians went forward to independence to the chagrin (at least initially) of the French Communist Party. And Nasser successfully took control of the Suez Canal.
Neither the United States nor the Soviet Union was in fact happy with this turmoil. Each adjusted to this reality in similar ways. Initially, each side insisted on a forced choice of loyalties in the Cold War, believing, as the then US Secretary of State, John Foster Dulles, famously said, that “there are no neutrals.” But later, both sides felt it necessary to soften their stance and try instead to woo those who sought to be neutral. In the process, the Soviet Union “lost” China. And the United States paid a very heavy economic and political price for its Vietnam War.
The other change—one that affected the United States more than the Soviet Union—may be seen in the political consequences of economic recovery in the midst of the incredibly expansive Kondratieff A-phase that prevailed. By the early 1960s, it was no longer true that the United States could sell automobiles (for example) more cheaply in Germany or Japan than local producers. Indeed, the contrary was beginning to occur. German and Japanese automobiles were successfully entering the US market.
The new economic strength of the erstwhile satellites of the United States turned them into genuine competitors on the world market. By the late 1960s, the United States no longer held a significant economic edge over its major allies in the sphere of world production, or even in transnational commerce. The basis of geopolitical hegemony was beginning to fray.
After 1945, the world-system enjoyed the largest (by far) expansion in capital accumulation that it had ever known since the launching of the modern world-system in the long sixteenth century. After 1945, the world-system also enjoyed the largest (by far) expansion of geopolitical power in the period of US hegemony that it had ever known since the launching of the modern world-system. These two cycles were simultaneous and reached the point of self-liquidation more or less simultaneously. The biggest upturns would be followed by the biggest downturns. The world-system had in the process moved very far from equilibrium as an historical system. Its restorative mechanisms seemed to have been stretched beyond repair. It was now entering into structural crisis.
THE STRUCTURAL CRISIS, CIRCA 1970 TO?
There were two crucial developments that contributed to this structural crisis. The first had to do with the long-term secular trends of the world-economy, which would now make it extremely difficult for capitalists to accumulate capital endlessly. And the second had to do with the conjunctural end of the dominance by centrist liberals of the geoculture, which would undermine the political stability of the world-system. Let me treat each in turn.