The Soviets couldn’t keep up in the arms race. It pushed the nation to near-bankruptcy and triggered a catastrophic disintegration. The Union broke up into 13 countries, and its Warsaw Pact satellites petitioned to become members of the European Union (EU) and the North Atlantic Treaty Organization.
But why did the Soviet Union get wiped out? It controlled huge land areas with ample natural resources. It had an excellent educational system, which nurtured a highly skilled workforce. (Even today Russia has a much higher percentage of graduates than the US.) It had good research & development ecosystems and roughly matched the West in terms of space programmes and weaponry. It even had deep cultural traditions that produced writers, musicians, artists, and ballet dancers.
The critical difference lay in contrasting political systems. The West had functional democracies, where voters could vote out bad governments. It had educational systems where students and professors could discuss awkward subjects like slavery, colonialism, racism, gender bias and political chicanery and that translated into corrective action over the decades.
Freedom of speech allowed citizens to protest policies they disliked. Writers, musicians, artists and filmmakers could tackle sensitive subjects and criticise anything or anybody. Freedom of labour meant an EU citizen could live anywhere in the EU and the US attracted talent from all over the world, which gravitated to its great universities, research institutes, and into industry.
Economic freedom also meant scientific and engineering breakthroughs were rapidly converted into mass-market money-making ideas. The internet started as a defence project. The Soviet space programme matched that of the US, but it made no difference to the lives of Soviet citizens. Meanwhile, US’ National Aeronautics and Space Administration tendered out to the private sector, and licensed thousands of patents that transformed industries ranging from textiles and telemedicine to gym equipment, solar power, water supply, and robotics. Moreover, other economic barriers came down. Supply chains went global to the point where it is now difficult to trace where every component of a car or cellphone is made.
There have been some interesting developments since the 1990s. One was China’s adoption of a “hybrid” model that allows economic freedom and constructive greed to flourish, while firmly damping political aspirations. To a lesser degree, various repressive regimes in Asia and West Asia have fostered similar models with some degree of success. Sadly, Russia has turned into a repressive oligarchy rather than adopting the Chinese model of vibrant economic competition.
The hybrid model led to the success of the Asian Tigers and it has catapulted China to near the top of the global economic heap. Intriguingly, although democracy came late to South Korea and Taiwan, it seemed an inevitable progression once per capita in those nations rose to the high-income zone. Will this also happen in China?
This has played out over decades. But another interesting development has occurred only in the last year. Having won the Cold War due to possessing an open society that encouraged talent to migrate into the country, and having dominated the global economy by being its largest buyer of goods and services, the US now seems to be looking to move towards the Soviet and post-Soviet models.
The Trump government has shut down freedom of labour by its anti-immigration policies. It has discouraged freedom of thought on university campuses and in the media. It has encouraged oligarchies. It has taken a string of anti-scientific positions on healthcare, and climate change. It has forced its own citizens to pay huge tariffs on imports, and it is raising H-1B visa fees, which will cause similar frictions in high-end services. It is disengaging from the United Nations.
Obviously, it is not easy to roll back a global economy that has been trending towards more openness for decades. But the US may lose its pre-eminent position. That could mean a transition from a unipolar world to a multipolar one. What changes that will lead to is imponderable. But it would be prudent to game scenarios where commodities and trade deals are not by default denominated in US dollars and the global economy consists of multiple trading blocs.
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