This essay argues that American foreign policy toward China and Russia in the post-Cold War period, delineated from 1989 to 2016, was characterized by a gradually eroding faith in the generally uncontested primacy of American power. In the 1990s, U.S. policymakers assumed that liberal democratic capitalism would spread throughout the world. However, by the 2000s, China was amassing vast material, military, and technological power, and buying up public and private American debt, which allowed it to enable U.S. hegemony in the short term but undermine it in the long-term. Russia’s American-endorsed experiments in market (neo)liberalization led to a severing of the assumed connection between liberal economics and liberal democracy as Putin used the market to strengthen authoritarian state power. Meanwhile, the costly War on Terror and the destruction of American wealth through free trade agreements and the Great Recession diminished confidence in the U.S., which allowed Russia and China to challenge U.S. strategic interests. Ultimately, the election of Donald Trump marked the final passing of halcyon post-Cold War illusions of uncontested American primacy.
The scholarly debate on the causes of the end of the Cold War has placed significant emphasis on the role of communist economic stagnation in bringing about the collapse of communism. This chapter brings a new material factor – communist sovereign debt – to the forefront, and in so doing, it offers a redefinition of the materialist explanation for the end of the Cold War. The global financial history of the end of the Cold War has four important implications. First, it makes the timing of the end of the Cold War far less contingent upon Gorbachev’s rise than previously thought. Second, it allows us to refine the causal connection between Soviet relative decline and the peaceful nature of the end of the Cold War. Third, global financial history transforms our understanding of Western leverage over the events that comprise the end of the Cold War. And fourth, the history of sovereign debt in the Eastern Bloc de-exceptionalizes the revolutions of 1989 in world history and places them within the context of broader global currents that continue to this day.
From Banks to Bonds: Euromoney Magazine and the Transformation of Global Finance in the 1980s
(2020)
This article reviews the pages of Euromoney magazine to analyze how changes in the global financial architecture during the early 1980s contributed to the rise of neoliberalism in the late 20th century. The shift in sovereign debt issuance on the Euromarkets from syndicated bank loans to bonds in the early 1980s upended the cornerstones of the market that had prevailed in the 1970s: illiquid loans that were kept on banks’ balance sheets; indiscriminate lending to countries with heterodox ideological leanings and questionable socio-economic standing; and lending decisions based on personal relationships. In its place, the Eurobond market offered a much larger, liquid, impersonal, unequal, and coercive financial reality, one that remains largely in place to this day.
This chapter sheds new light on the peaceful democratic transitions from communism in Poland and Hungary in the late 1980s by examining the International Monetary Fund's (IMF's) relations with the two countries. Within the national historiographies of the Polish and Hungarian transitions, scholars have seen evidence of "negotiated" or "rationed" revolutions, as the communist regimes of each state worked with elite elements of the opposition to broker power sharing agreements. In contrast to prevailing historiography, the chapter argues that the countries' troubled sovereign debt positions were significant causes of the political transitions in Warsaw and Budapest. Utilizing newly released archival material from the IMF's archive in Washington, DC, it argues that the two governments embraced roundtable democratization as a means of imposing austerity without unleashing social unrest. The chapter further argues that communism came to an abrupt and peaceful end in Poland and Hungary because the governments used political liberalization to gain society's acceptance of economic discipline.
Fugitive Leverage: Commercial Banks, Sovereign Debt,
and Cold War Crisis in Poland, 1980–1982
(2017)
This article examines a familiar Cold War event, the Polish Crisis of the early 1980s, but from an unfamiliar perspective: international financial history. Historians have yet to examine how the growing international activity of Western commercial banks and the Eastern Bloc’s heavy borrowing on international capital markets during the 1970s influenced the course of the late Cold War. This article covers the history of the Eastern Bloc’s largest borrower—Poland—and its road to sovereign default in 1981. It examines how financial diplomacy among banks, communist countries, and the U.S. government catalyzed the formation of the labor union Solidarność (Solidarity). Ultimately, this article speaks to an important theme in the history of U.S. capitalism since World War II; namely, how the construction of global finance influenced U.S. foreign policy. The end of the Cold War in the fall of 1989 was the result not only of communism’s loss of legitimacy among the peoples of Eastern Europe, but also its loss of creditworthiness on global financial markets.
This article recovers the public debate over world government that unfolded in the United States between the end of World War II and the start of the Korean War. American political culture in these years was in a state of crisis, as the sovereignty of the nation appeared to be under attack from the material forces of the modern world. Fundamental questions about the organization of the international system in the age of industry, telecommunication, and atomic weaponry set the philosophical backdrop to the era. World government was not the only political solution proposed for these problems, but it was a solution that received the serious attention of politicians, policy makers, and the public at large. The anxious idealism of world government then anchored the Cold War’s first dissents as the national security state was born and containment became the cornerstone of Cold War diplomacy. As the “cold” conditions of the Cold War became permanent fixtures of the domestic and international scene by the end of 1950, reevaluations of the international system’s fundamentals receded from the prominent place they held among liberal internationalists during the years of grace from 1945 to 1950.