Arresting National Decline

Desolation, from Thomas Cole's The Course of Empire series

-by Haydar Khan

I do not believe that civilizations have to die because civilization is not an organism. It is a product of wills.
-Arnold J. Toynbee

What causes national and civilizational decline? Can such decline be reversed? Is the U.S, which currently exhibits multiples signs of national senescence, ranging from its failed response to the Covid–19 pandemic to a longer-running pandemic of prescription drug overdoses to infrastructure decay, truly an exception to this seemingly inevitable force of historical decline? Does the U.S. face a real-world version of Galadriel’s test in J.R.R. Tolkien’s Lord of the Rings saga? Galadriel, an elf-like queen who is offered and resists the One Ring, a magical device that corrupts and eventually destroys any wielder, states: “I pass the test... I will diminish, and pass into the West and remain Galadriel.” What is our American “One Ring”? It is the myth of American Exceptionalism to all forms of decline.

The phenomenon of national and civilizational decline has been examined by historians and intellectuals for centuries. The most prominent account of decline comes from English historian Edward Gibbon’s The History of the Decline and Fall of the Roman Empire. This six-volume series, published from 1776-1789, largely attributed Roman decay to a decline in civic virtue and the influence of a rising Christianity. Oswald Spengler, the German historian and philosopher active in the early decades of the last century, studied the life cycle of human societies and offered his thoughts in his two-volume The Decline of the West, published in 1918 and 1923. In Spengler’s view, there were two phases in human societies: a Culture phase, characterized by creativity and growth, and a decline phase of stifling practicality in lieu of creativity, which Spengler called the Civilization phase. Arnold Toynbee, the noted British historian, devoted immense penmanship to the life cycles of human civilizations. A Study of History is a twelve-volume work written over three decades (1934–1961). In this vast endeavor, Toynbee developed a model to explain the beginnings and ends of civilizations. For Toynbee, growth is led by a creative minority and decline is caused by the inability of the creative minority, to continue innovating. Philosopher Henri Bergson, we may note, had earlier explored the same themes in Creative Evolution and The Two Sources of Morality and Religion, his final two books.

Gibbon, Spengler, and Toynbee provide descriptions of decline and explanations for it, but none of these men offer specific prescriptions for halting decline. (Only Bergson makes such an attempt.) In our time, however, there are two thinkers given to systematic design who have compelling, technically accomplished, and somewhat overlapping explanations as to the root nature of our twenty-first century decline. At the same time, each has proposed solutions that are, for the most part, in stark contrast to each other. These contemporary American thinkers are Professor James K. Galbraith, the progressive economist, and Peter Thiel, the venture capitalist and entrepreneur.

Professor Galbraith’s explanation of U.S. decline is nothing if not comprehensive. He finds the root cause in the economic sphere, generated by a set of interlinking factors. Galbraith accompanies his exploration of the economics of decline with a short set of measured, New Deal-style, risk-averse prescriptions for reversing it. All this is laid out in The End of Normal, a work focused primarily on the U.S. case.

Peter Thiel’s focus is on U.S. and (more broadly) Western decline. He, too, offers an economic explanation for America’s condition. Reflecting his background as a venture capitalist, Thiel’s thesis is rooted primarily in technological stagnation. But his proposal for reversing America’s decline transcends the economic and technological spheres to incorporate cultural and psychological considerations. This is a strength. It is a common error to treat economics as divorced from cultural, historical, and psychological considerations. It is Thiel’s move beyond economics that, I contend, will earn his solutions acceptance in lieu of Galbraith’s. What is the specific advantage that Thiel’s movement has? It lies in his resort to the scapegoat mechanism of Thiel’s intellectual mentor, the late Réne Girard.

Let us explore the analyses and proposals of Galbraith and Thiel, two formidable theorists in the Toynbee tradition, and consider carefully the insights of Réne Girard, the French social critic, historian, and philosopher, who professed at Stanford for many years before his death in 2015.

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James Galbraith is a public intellectual with numerous articles and books to his credit on an impressive variety of topics. His investigations range from income inequality and financial corruption to militarism. Galbraith has argued in the past, most notably in The Predator State (2008) that the U.S. government has been captured by oligarchs and has been repurposed from serving the public good to enriching said oligarchs. Assailing wealthy, powerful elites and fighting for the public purpose is a tradition that Galbraith inherits from his father, the late John Kenneth Galbraith, a prominent economist and Rooseveltian New Dealer. In this context, it may surprise those familiar with Galbraith père et fils that six years ago the younger man published The End of Normal, a pessimistic book about America’s poor growth prospects.





In Normal, Galbraith argues that there are four fundamental and interacting components to the economic decline of the U.S. The first is a choke-chain effect on economic growth, when demand for natural resources (primarily hydrocarbons) exceeds available supply. The Covid–19 crisis has altered this imbalance, but only temporarily, not structurally. As is well-known, the U.S. emerged from World War II an undamaged industrial colossus relative to a devastated Western Europe and an exhausted Soviet Union. It was awash in its abundant oil resources and able to secure access to foreign resources by way of, among other things, the efforts of U.S. intelligence services. These factors allowed America to embark on a path of stable economic growth that endured until the first oil shock of the 1970s. But the scale and efficiency the U.S achieved due to these circumstances came with a tradeoff: The increase in economic size meant a larger proportion of total production costs would be fixed: expenses, such as infrastructure and pensions, that are inelastic because they are not dependent on the level of goods or services produced.

These fixed costs skyrocketed with the first oil shock and brought stable economic growth in the U.S. to a very abrupt halt. The two oil shocks thus induced a period of economic uncertainty due to the decline of cheap, steady oil supplies. This was structural, as against situational disruption, which is what the spread of Covid–19 faces us with today. Increased financialization and speculation characterized the economic system that evolved to cope with this reduction in opportunity for “honest profit.” Here we find the choke-chain effect: The shift toward finance capital inflated the price of scarce resources, so slamming the lid on future growth.

This transformation of the U.S. economy into a financialized/speculative mode is Galbraith’s second factor to explain U.S. economic decline. Here he considers the “financial casino” induced by the unstable nature of commodity prices and de- regulation. This, he argues, has resulted in chicanery not only in the commodities markets but also in the information-technology sector. Out of this came the dot.com crash in 2000 and subsequently the collapse of the once-stable U.S mortgage market, which led to the great financial crisis of 2008. As Galbraith excellently puts it: “Fraud is a response, in short, to the failure of lenders to adjust to a decline in real possibilities.”

The third of Galbraith’s decline factors is the changing nature of warfare. This leaves the once-preeminent U.S. military incapable of projecting power in a transformed geopolitical environment and securing dependable access to cheap resources (linking into the aforementioned factor of rising resource costs).

Galbraith goes on to identify other shifts that render the U.S. military unable to conduct war effectively: the increasingly urban nature of conflict zones, the evolution of asymmetric technologies (drones, explosives), an ever-present media and readily available internet access to facilitate rapid reporting that reveals the carnage of war, short tours of duty that are insufficient in establishing stable long- term occupations, the decline in duration of military occupations, and the immense cost of training and maintaining soldiers.

Galbraith’s fourth and final factor is the rate of “creative destruction” in the digital technology sphere. This is destroying more jobs than it is creating, he argues. The growth-dampening effect of this “digital storm” is two-pronged, as Galbraith explains: “First, the price of the equipment required to make the new digital products—measured per unit of output-- falls rapidly over time, reducing the value of business investment in the GDP. Second, the products themselves replace marketable output.”

What to do about these four impediments to economic growth? This is Galbraith’s question, and his replies are as follows: reduce military spending, decentralize banking, regulate and reduce the size of influential financial institutions, strengthen existing public-insurance programs, temporarily lower age requirements for Social Security, increase the minimum wage, and increase estate and gift taxes to reduce dynastic wealth and encourage philanthropy. The purpose of these modest proposals is to achieve a sustainable, slow-growth economic model. Galbraith’s proposals to combat decline are at their core redistributionist in the New Deal tradition, but they are rather tame next to the New Deal Keynesians of the 20 th century. The reason for this intellectual caution? Galbraith states his case clearly: “The institutional, infrastructure, resource basis, and psychological foundations for a Keynesian revival no longer exist.”

From the vantage point of 2020, Galbraith’s case seems amply supported by evidence. Barak Obama, instead of ushering in a New Deal 2.0 in response to the 2008 financial crisis, bailed out Wall Street, failed to punish speculators, delivered only moderate economic stimulus, and pushed for lobbyist-friendly medical reform legislation that failed to correct the many defects of the U.S. health-care system. When Democratic Socialist Bernie Sanders ended his second presidential bid on April 8, it marked another failure to bring a program of fundamental reforms-- a program intended at its core to reverse the trend toward decline-- into the White House. The Covid–19 crisis, despite its severity and urgency, does not appear to be prompting any new efforts in this direction.

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Peter Thiel made his initial fortune by co-founding (and then selling) the electronic-payments service PayPal. Since that time, Thiel has created various other enterprises, ranging from venture-capital firms such as Founders Fund to a data-analysis firm named Palantir. In addition to his success as a venture capitalist, Thiel is member of the steering committee of the Bilderberg meetings, an annual conference where European and American elites discuss how to maintain and promote free-market capitalism. He was a supporter of Donald Trump’s presidential campaign, a highlight of which was Thiel’s delivery of a pro–Trump speech at the Republican National Convention in July 2016. In that speech, Thiel explained Trump’s rise as a response to national decline resulting from the damaging consequences of free trade, out-of-control militarism, increasingly expensive health care, rising student loan debt, and stagnant wages. Galbraith, of course, shares many of these concerns.





Thiel’s explanation for our national decline has been delivered, with much more detail, in various other formats over recent years. An essay Thiel wrote for the National Review (2011) elaborates his declinist viewpoint. In The End of the Future, Thiel argues that technological and scientific progress, the basis for economic growth, have stalled out. The lack of innovation in energy, agricultural, medicine, and science in general, he contends, have cut into standards of living that can no longer be attenuated by accumulation of consumer debt and cheap goods from free-trade partners, particularly China. Even gains in the digital tech sector, where Thiel made his initial fortune, are explained as having stalled out and now amount to illusory productivity.

So far, Galbraith and Thiel seem to be traversing similar paths, especially as regards the impediments to growth of rising resource costs and increased digitization. However, Thiel diverges from the progressive Galbraith and speculates that the decline in technological innovation has been concealed by battles over identity politics. It is here Thiel begins to bring questions of culture and psychology into his inquiry. As he puts it: “Today’s aged hippies no longer understand that there is a difference between the election of a black president and the creation of cheap solar energy; in their minds, the movement towards greater civil rights parallels general progress everywhere.” Thiel has recently fleshed out his proposal for dealing with this decline in a speech delivered at the first National Conservativism Conference in July 2019. In “The Star Trek Computer Is Not Enough,” he retraces the ground covered in his earlier National Review essay while also exploring new themes. He assails Silicon Valley for its lack of innovation and its too-close-for-comfort relationship with China, while also attacking China for its unfair trade practices.

Later in the speech, Thiel also delivers a jeremiad against higher education for handing out overrated, grade-inflated educations and saddling students with debt that cannot be discharged in bankruptcy. He claims that, as mentioned in the National Review piece, the American left ignores national decline by obsessing over identity politics, while the right is in a state of denial about national decline as it insists that the U.S. is “exceptional” and immune to such decay. This is Thiel’s argument for registering a psychological component in any effort to achieve the national solidarity necessary to channel government resources into reversing decline. Indeed, Thiel, who is known for his adherence to libertarian philosophy, acknowledges that government in the past was capable of achieving amazing feats, such the Manhattan Project and the Interstate Highway System. Its shambolic response to the Covid–19 pandemic stands as tragic testimony to the lapse of “can- do” America.

What, then, is this psychological factor that can reverse our national decline, so overcoming the hurdles on right and left? This is Thiel’s question. His reply appears to be the use of Girard’s famous scapegoat mechanism to break a societal bottleneck.

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Réne Girard was a French polymath who made intellectual contributions to a wide variety of fields, ranging from philosophy to anthropology. He is best known for his theories of mimetic desire and the scapegoat mechanism. Mimetic desire is the theory that mimicry (imitation) is fundamental for human society. It is necessary to acquire skills, as in an apprenticeship, but left unchecked, unrestricted mimesis causes us to covet what others have. This Girard calls mimetic desire. Desire of this kind can escalate and lead to conflict and violence. In essence, a contradictory conflict of societal messaging (mimicry is necessary and mimicry is dangerous), results in what fellow polymath Gregory Bateson called a double bind.

Girard’s solution to nullifying this double bind is his other well-known intellectual contribution: the just-mentioned scapegoating mechanism. According to Girard, society nullifies the Batesonian double bind by committing what is called a Logical Types error (a member of a group taken to represent the entire group) and assigning blame to an innocent victim called a scapegoat. Consequently, if the scapegoat is sacrificed, the potential for violence can be discharged and societal cohesion maintained. A good example of scapegoat theory is Christianity itself. Jesus represents a vessel of sorts, taking upon himself the sins of mankind and extinguishing them upon his death on the cross.

Peter Thiel has acknowledged Girard’s impact on his life and way of thinking (here and here) and even spoke at a memorial service for Girard after he died.

Although Thiel does not acknowledge doing so, it appears he has taken Girard’s insights and applied them to the political realm. In effect if not by conscious design, he has selected as collaborative scapegoats Google, the politically correct “left,” and China. It appears that Thiel, and fellow travelers such as Missouri Senator Josh Hawley, want to rally the fractious American people (as FDR did in is time) by focusing their anger on enemies, foreign and domestic, to generate unity and get the populace to consent to great technological innovations underwritten by the government while being distracted from the true sources of our inability to progress technologically and economically. If the culprits above are scapegoats in the Girardian sense, to what degree is the blame laid upon them false, and what true culprit is Thiel distracting from?

As Galbraith pointed out in The End of Normal, the era of solid economic growth from the end of World War II to the oil shock of the 1970’s has been over for quite a while. What we in the U.S. experience now is a consequence of the end of that solid growth era: a country ruled by corporate elites who have captured the machinery of government to enrich themselves at the expense on non-elites. This is what Galbraith calls the predator state. These predatory oligarchs and their rule of the country are what Thiel, a billionaire, seems to want to distract from while simultaneously drumming up anger against his coalition of scapegoats to make possible great technical and scientific projects underwritten by the government. What about Thiel’s scapegoats?

Thiel has made the accusation that Google is committing treason by working for the Chinese government on AI research, spurning working with the U.S. government, and should be investigated by the FBI and the CIA. It appears, however, that Thiel, as a libertarian, has ideological opposition to AI and is ideologically and personally given to cryptocurrencies, Bitcoin in particular. As Thiel said in an interview with LinkedIn founder Reid Hoffman: “Crypto is decentralizing, AI is centralizing. Or, if you want to frame it more ideologically, crypto is libertarian and AI is communist." There is a further irony, in that Thiel’s company Palantir, is utilized by various U.S. government agencies for data collection and surveillance, a seeming contradiction for an ideological libertarian.

What of the PC left and its obsession with identity politics? There may be a kernel of truth to Thiel’s accusation that the American left’s obsession with identity politics conceals the lack of material progress in the U.S. since the end of the era of solid growth. Intellectuals on the left, such as the American literary theorist Walter Benn Michaels and political scientist Adolph Reed, have long criticized leftist obsessions with identity politics as a neoliberal weapon to distract from issues of class and economic inequality. Thiel has taken this issue, grounded in reality, and intertwined it with his dislike of his ideological enemies, Google and China. As he stated in an interview with conservative TV personality Tucker Carlson: “There’s probably a broad base of Google employees that are ideologically super left wing, sort of woke, and think that China’s better than the U.S. or that the U.S. is worse than China.”

We arrive at the dominant scapegoat in Thiel’s playbook: China. Like Thiel’s accusation against the left, his scapegoating of China has kernels of truth in it. There were warnings about the dangers of free-trade agreements such as GATT in the early 1990’s. Sir James Goldsmith, financier and politician, cautioned about the dangers in his books The Trap and The Response. In particular, Goldsmith was concerned about the negative effects of labor arbitrage on the fabric of Western societies and even had a prescient warning about China’s ability to provide Western corporations with a massive reservoir of cheap labor and run large trade surpluses: “China is determined to recapture its preeminence in Asia and to make itself so strong that it will never again be subjected to perceived slights or indignities from the West. If it keeps itself together, it will become a great world superpower, geopolitically, militarily and economically.” Goldsmith published this thought in 1995. Fast forward to 2020: China is by some measures the world’s largest economy, the world’s leading manufacturing economy, and largest exporter of goods. It has ambitious plans (Made in China 2025) to move beyond dominance in manufacturing cheap goods and dominate high-tech industries such as robotics, artificial intelligence, and biotechnology.

So it appears Thiel’s focus on China is not without merit. But he seems to want take a highly competitive rival and convert it into an enemy of the U.S., as evidenced his numerous speeches and interviews about China. Adversary and competitor are two different things. There is a bit of blame deflection here, as it was U.S. corporations and their owners who chose (and were not forced) to engage in free trade with China, taking advantage of its massive army of cheap labor and nonexistent safety standards for profit-- and thus abetting China’s growth into a formidable economic powerhouse.

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If we are to accept Galbraith or Thiel in their respective explanations for decline and their propositions for reversal, then the U.S. has two paths before it: a moderate approach using New Deal Lite economic mechanisms to achieve a slow yet growing economy, or a bold, risk-taking approach to governance that relies on the primordial scapegoating mechanism described by Réne Girard.

The major issue with Galbraith’s progressive approach is that the solidarity needed to achieve even the slow-growth approach he advocates is notoriously absent. This is the missing psychological factor that Galbraith acknowledged was necessary for another full-blown New Deal and is a critical limiting factor in this weaker case as well. Indeed, it was only the threat of the rising fascist tide that united the citizenry and enabled FDR to ramp spending to levels that ended the Great Depression in America, not the New Deal. The looming threat of environmental devastation from climate change would seem to have the necessary properties needed to unify the populace but the abstract nature of such a collective action problem (“the enemy is us”) seemingly puts such an approach out of reach.

The current divide between the American left and right appears to be an unbridgeable, ever-widening gap, making bipartisan electoral support for Galbraithian reform measures extremely unlikely. Indeed, even among what passes for the left in the U.S. is caught up in internecine battles over class issues (evinced by Bernie Sanders populism) versus culture and identity issues. The consequences of this battle were on full display in the results of the 2020 Super Tuesday elections. Bernie Sanders, standard bearer of a class focused American progressivism, was trounced by corporatist Democrat Joseph Biden, who dominated him among African–American voters and female voters. This autumn’s election, however it is fought amid the Covid–19 crisis, could well deliver Biden to the White House. Unfortunately, Biden is far less likely to attempt Galbraithian reforms than Sanders, as Biden is a defender of the Obama status quo. Indeed, as this essay is being finalized, an Obama alumnus, former Secretary of the Treasury, Lawrence Summers, is apparently advising Biden on his post-Covid-19 economic revival plan. Therefore, due to partisan divisions and lack of a unifying threat, it seems that the Galbraithian approach is doomed to fail.

It appears that Thiel notes this weakness in collective psychology and goes on to exploit the left’s fractious state. In brilliant, Aikido-like fashion, he converts it into a domestic scapegoat (part of what his ally Hawley calls the “cosmopolitans”) to unite the right and political moderates-- and distract, essential to note, from the corporate oligarchy. In addition to taking advantage of the left’s division by employing the scapegoat mechanism, Thiel targets China, bundled together with the ineffective left and technical rival Google, as a replacement for the old Cold War scapegoat, the defunct Soviet Union. The Soviet threat, however formidable or otherwise, induced a level of domestic political cooperation and national unity that allowed for great endeavors such as the aforementioned Interstate Highway Program, so this method has a proven track record.

One flaw in Thiel’s approach is that, as Galbraith points out, the material conditions that allowed for ambitious, Manhattan Project-level investments are no longer present. What government programs might have to be sacrificed to achieve such endeavors? Thiel himself states in the aforementioned “The End of the Future” essay: I am not aware of a single political leader in the U.S., either Democrat or Republican, who would cut health-care spending in order to free up money for biotechnology research-- or, more generally, who would make serious cuts to the welfare state in order to free up serious money for major engineering projects. This connects to another potential flaw in Thiel’s scheme: Will the psychological advantage of Thiel’s strategy be sustainable if, say, what remains of the social safety net is sacrificed for such purposes? Why not reroute spending from a wasteful (and ineffective, as argued by Galbraith) military to bolster industrial R&D ambitions. Perhaps Thiel ironically needs to reject another sacred tenet of free-market orthodoxy, fear of national debts and deficits. Thiel has already demonstrated his capacity to reject herd thinking, as he has rejected the aversion to government supported industrial policy. This would allow preservation of the social safety net while simultaneously embarking on an expansion of what economists call the Production Possibilities Frontier. However, an embrace of a heterodox school of thought like Modern Monetary Theory (MMT) may be beyond the pale, even for Thiel. In addition to backlash from shredding the social safety net, what civil liberties might be sacrificed in the name of waging a new Cold War against China? Right now (March 2020), the U.S. and much of the world is under threat of the virus Covid–19, which seemingly originated in China. Senator Hawley has used this as a springboard to drum up support for an investigation into a coverup by China and, along with others, has even implied that China owes the U.S. and the world reparations for the virus. At the same time, many countries (Israel, China, UK) are implementing harsh measures to quash the virus. Will the protections of the U.S. Constitution be shredded to stop the growth of the viral infections and simultaneously be weaponized to quell dissent against a war with China?

Does Thiel nurse mimetic desire for what China-- with its social cohesion, manufacturing capacity, and ability to plan-- is able to accomplish and the U.S. cannot any longer? The connections Thiel makes between economics and other factors are astute, as are the connections that Galbraith makes. But as they stand, neither position is likely to make headway by itself. There are numerous reasons for this, as I have suggested. It begins to look as though the way out of our national impasse lies in a system beyond that of the purely Schumpetarian approach of Thiel and the purely Rooseveltian approach of Galbraith, a synthesis that takes the best of both positions and provides a way forward for the U.S.

A special thanks to P.L., J.G., and I.W. for their feedback and assistance.