The Dialectics of Rise and Decline
No. 4 2011 October/December
Joseph S. Nye Jr

Distinguished Service Professor at Harvard University and author most recently of The Future of Power.

Russia in Global Affairs Since the End of the Cold War

When the Soviet Union did not use force to support the communist government in East Germany and the Berlin Wall was pierced by jubilant crowds in November 1989, the Cold War could be said to be over.

But why did it end? One argument is that containment worked. George Kennan argued right after World War II that if the United States could prevent the Soviet Union from expanding, there would be no successes to feed the ideology, and gradually Soviet communism would mellow. New ideas would arise, people would realize that communism was not the wave of the future, that history was not on its side. In some larger respect, Kennan was right. American military power helped deter Soviet expansion while the soft power of Western culture, values, and ideas eroded communist ideology. But the puzzle of timing remains: Why 1989? Why did the Cold War last four decades? Why did it take so long to mellow? Alternatively, why didn’t it last another ten years? Containment worked, but that does not give the full answer.

Another explanation is “imperial overstretch.” The Yale historian Paul Kennedy has argued that empires over-expand until that overexpansion saps the empire’s internal strength. With more than a quarter of its economy devoted to defense and foreign affairs (compared to 6 percent for the United States in the 1980s), the Soviet Union was overstretched. But Kennedy went on to say that none of the over-expanded multinational empires in history ever retreated to their own ethnic base until they had been defeated or weakened in a great power war. The Soviet Union, however, was not defeated or weakened in a great power war. A third explanation is that the U.S. military buildup in the 1980s forced the Soviets to surrender in the Cold War. There is some truth to that insofar as President Ronald Reagan’s policies dramatized the extent to which the Soviets were imperially overstretched, but it does not really answer the basic question. After all, earlier periods of American military buildup did not have that effect. Why 1989? We must look for deeper causes, because to think that American rhetoric and policy in the 1980s were the prime cause of the Soviet Union’s decline may be similar to the rooster who thought that his crowing before dawn caused the sun to come up – another example of the fallacy of spurious causation.

We can gain more exact insights into the timing of the end of the Cold War by looking at our three types of causes: precipitating, intermediate, and deep. The most important precipitating cause of the end of the Cold War was an individual, Mikhail Gorbachev. He wanted to reform communism, not replace it. However, the reform snowballed into a revolution driven from below rather than controlled from above. In both his domestic and foreign policy, Gorbachev launched a number of actions that accelerated both the existing Soviet decline and the end of the Cold War. When he first came to power in 1985, Gorbachev tried to discipline the Soviet people as a way to overcome the existing economic stagnation. When discipline was not enough to solve the problem, he launched the idea of perestroika, or “restructuring,” but he was unable to restructure from the top because the Soviet bureaucrats kept thwarting his orders. To light a fire under the bureaucrats, he used a strategy of glasnost, or open discussion and democratization. Gorbachev believed that airing people’s discontent with the way the system was working would put pressure on the bureaucrats and help perestroika work. But once glasnost and democratization let people say what they were thinking, and vote on it, many people said, “We want out. There is no new form of Soviet citizen. This is an imperial dynasty, and we do not belong in this empire.” Gorbachev unleashed the disintegration of the Soviet Union, which became increasingly evident after the failed coup by hard-liners in August 1991. By December 1991, the Soviet Union ceased to exist.

Gorbachev’s foreign policy, which he called “new thinking,” also contributed to the end of the Cold War. This policy had two very important elements. One was changing ideas such as the concept of common security in which the classical security dilemma is escaped by joining together to provide security. Gorbachev and the people around him said that in a world of increasing interdependence, security was a non-zero-sum game, and all could benefit through cooperation. The existence of the nuclear threat meant all could perish together if the competition got out of hand. Rather than try to build as many nuclear weapons as possible, Gorbachev proclaimed a doctrine of “sufficiency,” holding a minimal number for protection. The other dimension of Gorbachev’s foreign policy change was his view that expansionism is usually more costly than beneficial. The Soviet control over an empire in Eastern Europe was costing too much and providing too little benefit, and the invasion of Afghanistan had been a costly disaster.

Thus by the summer of 1989, the Eastern Europeans were given more degrees of freedom. Hungary allowed East Germans to escape through its territory into Austria. This exodus of East Germans put enormous pressure on the East German government. Additionally, Eastern European governments no longer had the nerve (or Soviet backing) to put down demonstrations. In November, the Berlin Wall was pierced—a dramatic conclusion to a crescendo of events occurring over a very short period. We can argue that these events stemmed from Gorbachev’s miscalculations. He thought communism could be repaired, but in fact, in trying to repair it, he punched a hole in it. And like a hole in a dam, the pent-up pressures began to escape, rapidly increasing the opening and causing the entire system to collapse.

That still leaves the question, “Why 1989? Why under this leader?” To some extent, Gorbachev was an accident of history. In the early 1980s, three old Soviet leaders died, one soon after the other. It was not until 1985 that the younger generation, the people who had come up under Khrushchev, the so-called generation of 1956, had their chance. But if the members of the Communist Party Politburo had chosen one of Gorbachev’s hard-line competitors in 1985, it is quite plausible that the declining Soviet Union could have held on for another decade. It did not have to collapse so quickly. Gorbachev’s personality explains much of the timing.

As for the intermediate causes, Kennan and Kennedy are both on target. Two important intermediate causes were the soft power of liberal ideas, and imperial overstretch, emphasized by realists. The ideas of openness and democracy and new thinking that Gorbachev used were Western ideas that had been adopted by the generation of 1956. One of the key architects of perestroika and glasnost, Alexander Yakovlev, had been an exchange student in the United States and was attracted to American theories of pluralism. The growth of transnational communications and contacts pierced the Iron Curtain and helped spread Western popular culture and liberal ideas. The demonstrated effect of Western economic success gave them additional appeal. While hard military power deterred Soviet expansionism, soft power ate away the belief in communism behind the Iron Curtain. When the Berlin Wall finally fell in 1989, it did not succumb to an artillery barrage, but to an onslaught of civilian hammers and bulldozers.

As for imperial overstretch, the enormous Soviet defense budget began to affect other aspects of Soviet society. Health care declined and the mortality rate in the Soviet Union increased (the only developed country where that occurred). Eventually even the military became aware of the tremendous burden caused by imperial overstretch. In 1984, Marshall Ogarkov, the Soviet chief of staff, realized the Soviet Union needed a better civilian economic base and more access to Western trade and technology.

Thus the intermediate causes of soft power and imperial overstretch are important, though ultimately we must deal with the deep causes, which were the decline of communist ideology and the failure of the Soviet economy. Communism’s loss of legitimacy over the postwar period was quite dramatic. In the early period, immediately after 1945, communism was widely attractive. Many communists had led the resistance against fascism in Europe, and many people believed that communism was the wave of the future. The Soviet Union gained a great deal of soft power from their communist ideology but they squandered it. Soviet soft power was progressively undercut by the de-Stalinization in 1956 that exposed his crimes; by the repressions in Hungary in 1956, in Czechoslovakia in 1968, and in Poland in 1981; and by the growing transnational communication of liberal ideas. Although in theory communism aimed to instill a system of class justice, Lenin’s heirs maintained domestic power through a brutal state security system involving reform camps, gulags, broad censorship, and the use of informants. The net effect of these repressive measures on the Russian people was a general loss of faith in the system as voiced in the underground protest literature and the rising tide of dissent advanced by human rights activists.

Behind this, there was also decline in the Soviet economy, reflecting the diminished ability of the Soviet central planning system to respond to change in the world economy. Stalin had created a system of centralized economic direction that emphasized heavy metal and smokestack industries. It was very inflexible – all thumbs and no fingers – and tended to stockpile labor rather than transfer it to growing service industries. As the economist Joseph Schumpeter pointed out, capitalism is creative destruction, a way of responding flexibly to major waves of technological change. At the end of the twentieth century, the major technological change of the third industrial revolution was the growing role of information as the scarcest resource in an economy. The Soviet system was particularly inept at handling information. The deep secrecy of its political system meant that the flow of information was slow and cumbersome. Ronald Reagan’s defense build-up added pressure on an already economically stressed political regime.

Soviet goods and services could not keep up to world standards. There was a great deal of turmoil in the world economy at the end of the twentieth century, but the Western economies using market systems were able to transfer labor to services, to reorganize their heavy industries, and to switch to computers. The Soviet Union could not keep up with the changes. For instance, when Gorbachev came to power in 1985, there were 50,000 personal computers in the Soviet Union; in the United States there were 30 million. Four years later, there were about 400,000 personal computers in the Soviet Union, and 40 million in the United States. Market-oriented economies and democracies proved more flexible in responding to technological change than the centralized Soviet system that Stalin created for the smokestack era of the 1930s. According to one Soviet economist, by the late 1980s, only 8 percent of Soviet industry was competitive at world standards. It is difficult to remain a superpower when 92 percent of industry is subpar.

Following the breakup of the Soviet Union, Russia has undergone a significant transformation. Renouncing the planned economy of the Soviet state, post-Cold War Russia tentatively embarked on a path of democratization and economic liberalization under Boris Yeltsin. That road was fraught with peril, however. Following the advice of the International Monetary Fund, the Russian government at first embraced economic “shock therapy” as a way of making the transition from economic autocracy to liberal democracy. Yet shock therapy so disrupted Russian society that it was quickly shelved in. As the economic and political situation deteriorated, Russian nationalism and state control was rejuvenated under the presidency of Vladimir Putin.

Where does this leave Russia today after the transformative events of two decades ago? Some see it as a key emerging economy and member of the so called BRICs. Goldman Sachs coined the term in 2001 to call attention to profitable opportunities in what the investment firm considered “emerging markets.” The BRICs’ share of world product rose rapidly from 16 to 22 percent from 2000 to 2008, and collectively they did better than average in the global recession that began in 2008. Together, they accounted for 42 percent of world population and one third of world growth in the first decade of the century.

Ironically, an economic term took on a political life of its own despite the fact that Russia fit poorly in the category. In June 2009, when the foreign ministers of the four countries met in Yekaterinburg, the BRICs held 42 percent of global foreign reserves (though most of that was Chinese). President Dmitry Medvedev stated that “there can be no successful global currency system if the financial instruments that are used are denominated in only one currency,” and although Russia accounts for only 5 per cent of China’s trade, the two countries announced a currency clearing agreement.

But while a meeting of BRICS (which has now expanded to include South Africa) may be convenient for short term diplomatic tactics, it lumps together countries which have deep divisions, and it makes little sense to include Russia, a former superpower, with the three developing economies. Of the four, Russia has the smallest and most literate population and a much higher per capita income, but more importantly, many observers believe that Russia is declining while the other three are rising in power resources. According to The Financial Times, just two decades ago, “Russia was a scientific superpower, carrying out more research than China, India and Brazil combined. Since then it has been left behind not only by the world-beating growth of Chinese science but also by India and Brazil.” The heart of the BRIC acronym is the rise in the resources of China, not Russia.

Nikita Khrushchev famously boasted in 1959 that the Soviet Union would overtake the United States by 1970 or 1980 by the latest. As late as 1976, Leonid Brezhnev told the French president that communism would dominate the world by 1995. Such predictions were bolstered by reported annual economic growth rates ranging between five and six per cent and an increase in the Soviet share of world product from 11 to 12.3 percent between 1950 and 1970. After that, however, the Soviet growth rate and share of world product began a long decline. What is surprising in retrospect is how wildly inaccurate were the American assessments of Soviet power. In the late 1970s, a “Committee on the Present Danger” argued that Soviet power was surpassing the United States, and the 1980 election reflected such fears.

The collapse of the Soviet Union in 1991 left a Russia significantly shrunken in territory (76 per cent of the USSR), population (50 percent of the USSR), economy (45 percent of the USSR) and military personnel (33 percent of the USSR). Moreover, the soft power of communist ideology had virtually disappeared. Nonetheless, Russia had nearly 5,000 deployed nuclear weapons, and more than a million persons under arms, though its total military expenditure was only 4 percent of the world total (a tenth of the U.S. share), and its global power projection capabilities had greatly diminished. In economic resources, Russia’s $2.3 trillion gross domestic product was one-seventh that of the U.S., and its per capita income (in purchasing power parity) of $16,000 was roughly a third that of the United States. Its economy was heavily dependent on export of oil and gas, with high tech exports representing only 7 percent of its manufactured exports (compared to 28 percent for the U.S.) In terms of soft power, despite the attractiveness of traditional Russian culture, Russia has little global presence. In the words of Sergei Karaganov, Russia has to use “hard power, including military force, because it lives in a much more dangerous world and has no one to hide behind from it, and because it has little soft power – that is, social, cultural, political and economic attractiveness.”

Russia is no longer hampered by Communist ideology and a cumbersome central planning system, and the likelihood of ethnic fragmentation, though still a threat, is less than in the past. Whereas ethnic Russians were only half of the former Soviet Union, they are now 81 percent of the Russian Federation. The political institutions for an effective market economy are largely missing, and corruption is rampant. Russia’s robber baron capitalism lacks the kind of effective regulation that creates trust in market relationships. The public health system is in disarray, mortality rates have increased and birth rates are declining. The average Russian male dies at 60, an extraordinary low number for an advanced economy. Mid range estimates by UN demographers suggest that Russia’s population may decline from 145 million today to 121 million by mid-century. Russia will have to import 12 million immigrants by 2020 just to stand still demographically, and this seems unlikely.

Many Russian futures are possible. At one extreme are those who project decline and see Russia as a “one crop economy” with corrupt institutions and insurmountable demographic and health problems. Others argue that with reform and modernization, Russia will be able to surmount these problems, and that the leadership is headed in this direction. Late in 2009, President Medvedev issued a sweeping call “for Russia to modernize its economy, wean itself from a humiliating dependence on natural resources and do away with Soviet-style attitudes that were hindering its effort to remain a world power.” But dysfunctional government and pervasive corruption make modernization difficult. Peter Aven, president of Alfa Bank, argues that “economically, it looks like the Soviet Union more and more. There is a huge dependency on oil, a need for capital, a need for serious reforms, while the social burden is very strong. Stagnation is the main threat.” It remains to be seen whether the return of Vladimir Putin to the presidency will lead to the reforms needed to keep Russia vibrant in a global information age. Whatever the outcome, because of its great human capital, its skills in cyber technology, and its proximity to Europe and China, Russia will have the potential if not the will to reform.

From the American point of view, Russia still retains the potential to pose a threat largely because it is the one country with enough missiles and nuclear warheads to destroy the United States, and its relative decline has made it more reluctant to renounce its nuclear status. Russia also possesses enormous scale, an educated population, skilled scientists and engineers, and vast natural resources. But it seems unlikely that Russia would again possess the resources to present the same sort of balance to American power that the Soviet Union presented during the four decades after World War II. In balance of power terms, both Russia and the United States share an interest in shaping the international environment in ways that encourage a rising China to become a responsible stakeholder.

In my book The Future of Power, I argue that there are two great power shifts occurring at the beginning of this century: a shift of economic power from the West to Asia, and a shift of power from governments to non-governmental actors. In a world of new transnational challenges created by non-state actors – such as global financial instability, climate change, terrorism and pandemics – the United States and Russia have much to gain from working together to cope with these new challenges. In short, the U.S. has more to gain from partnership with a strong reformed Russia rather than a weak declining Russia. Let us hope that will be the direction for Russia in the third decade after the end of the Cold War.