From Hegemony to Hesitation. After the Pax Americana

We are witnessing profound transformations in the global political and economic system established after the Second World War. Central to this economic order was the Bretton Woods system, built on the dominance of the US dollar as the primary reserve currency and regulated exchange rates overseen by the IMF.

Leadership in the Western world shifted from Britain to the United States, although London's financial district, the City, maintained significant influence. As a leading naval power and key NATO member, the US assumed responsibility for the Western bloc's security, actively promoting globalization through the removal of trade barriers and the free movement of capital and goods. This facilitated rapid post-war European recovery and transformed China from an agrarian nation into the world’s second-largest economy. Russia's integration into global markets following the collapse of the USSR also accelerated global economic growth, particularly benefiting Western Europe and Germany by providing access to inexpensive energy resources and new consumer markets.

The United States, as the issuer of the world's reserve currency, faced the task of maintaining global demand for the dollar, financing growing national debt and military strength, and sustaining political influence through various costly and inefficient international institutions under the banners of democracy and liberalism.

This arrangement satisfied all parties: Western businesses increased shareholder profits through lower costs, top managers secured prominent positions on the Forbes list, and institutional participants in stock markets, including investment banks, prospered.

However, globalization eventually faltered. What exactly happened?

A prime example is China, the offspring of Western globalization. Enthralled by cheap labor and massive profits, the West failed to notice that it had transformed China from a "paper dragon" into a real one capable of seriously challenging American economic and technological dominance. Debates may arise concerning the comparative number of patents or the actual ownership structure of major Chinese companies, but China—thanks to Western investments, technologies, and its state-driven strategies—not only evolved from an agrarian country into a highly developed industrial state but also sharply raised its technological level, systematically pushing Western capital out of strategic industries.

The West created a competitor that has become a significant economic and technological challenge, not only for the United States but for the entire Western world.

It is noteworthy that, unlike the confrontation with the USSR, there is currently no ideological "high fence" between the US and China. Nevertheless, fundamental differences persist between liberal-democratic and authoritarian state-capitalist approaches to managing economies and societies. Unlike the USSR, Chinese capital is deeply integrated into the Western financial system, making China one of the largest creditors to the United States. American attempts to erect "fences" through tariffs and sanctions harm both sides, risking high inflation and economic instability.

Another indication of globalization’s disruption is US monetary hegemony, which for a long time was acceptable to the West due to the stability it provided. However, the 2008 mortgage crisis served as a serious signal marking the end of the "Great Moderation." The world realized that financial markets had become an independent global force, sometimes beyond even the control of the Federal Reserve and the US government, contributing significantly to the 2008 crisis. It became clear to everyone that apart from the Federal Reserve's printing press, other "printing presses" operated by investment banks existed, issuing quasi-dollars through various structured products.

Thus, the US emerges from the era of "American-style" globalization with record-high national debt, and the future of the dollar as a reserve currency becomes crucial for the sustainability of the American economy. Recognizing these immense challenges, American elites are abandoning their traditional roles as defenders of democracy and liberalism, reducing support for international institutions and entering pragmatic agreements with countries that can guarantee investment inflows and dollar support. The US also actively opposes economic rapprochement between Europe and China, tightening control over key maritime and land trade routes to preserve its dominance.

“Make America Great Again” is more than a campaign slogan—it’s a a desperate bid to reclaim a leadership role for which no clear strategy currently exists. What follows, inevitably, will be a period of experimentation—risky, reactive, and likely turbulent.

Yet globalization will not die. It has outgrown its American parent. As U.S. influence wanes, other power centers will rise, redrawing the world’s political and economic cartography. The only certainty is that the years ahead will be anything but dull.