Economy International Joseph E. Stiglitz

Joseph E. Stiglitz: How the U.S. Could Lose the New Cold War

Since the United States seems serious about confronting China in an extended contest for global supremacy, it had better start getting its own house in order. Other countries will not want to ally themselves with a power that rests on increasingly uncertain economic, social, and political foundations.
Vladimir Putin, left, and Xi Jinping. [MEAphotogallery / CC BY-NC-ND 2.0]

By Joseph E. Stiglitz | Project Syndicate

The United States appears to have entered a new cold war with both China and Russia. And US leaders’ portrayal of the confrontation as one between democracy and authoritarianism fails the smell test, especially at a time when the same leaders are actively courting a systematic human-rights abuser like Saudi Arabia. Such hypocrisy suggests that it is at least partly global hegemony, not values, that is really at stake.

For two decades after the fall of the Iron Curtain, the US was clearly number one. But then came disastrously misguided wars in the Middle East, the 2008 financial crash, rising inequality, the opioid epidemic, and other crises that seemed to cast doubt on the superiority of America’s economic model. Moreover, between Donald Trump’s election, the attempted coup at the US Capitol, numerous mass shootings, a Republican Party bent on voter suppression, and the rise of conspiracy cults like QAnon, there is more than enough evidence to suggest that some aspects of American political and social life have become deeply pathological.

Of course, America does not want to be dethroned. But it is simply inevitable that China will outstrip the US economically, regardless of what official indicator one uses. Not only is its population four times larger than America’s; its economy also has been growing three times faster for many years (indeed, it already surpassed the US in purchasing-power-parity terms back in 2015).

While China has not done anything to declare itself as a strategic threat to America, the writing is on the wall. In Washington, there is a bipartisan consensus that China could pose a strategic threat, and that the least the US should do to mitigate the risk is to stop helping the Chinese economy grow. According to this view, preemptive action is warranted, even if it means violating the World Trade Organization rules that the US itself did so much to write and promote.

This front in the new cold war opened well before Russia invaded Ukraine. And senior US officials have since warned that the war must not divert attention from the real long-term threat: China. Given that Russia’s economy is around the same size as Spain’s, its “no limits” partnership with China hardly seems to matter economically (though its willingness to engage in disruptive activities around the world could prove useful to its larger southern neighbor).

But a country at “war” needs a strategy, and the US cannot win a new great-power contest by itself; it needs friends. Its natural allies are Europe and the other developed democracies around the world. But Trump did everything he could to alienate those countries, and the Republicans – still wholly beholden to him – have provided ample reason to question whether the US is a reliable partner. Moreover, the US also must win the hearts and minds of billions of people in the world’s developing countries and emerging markets – not just to have numbers on its side, but also to secure access to critical resources.

In seeking the world’s favor, the US will have to make up a lot of lost ground. Its long history of exploiting other countries does not help, and nor does its deeply embedded racism – a force that Trump expertly and cynically channels. Most recently, US policymakers contributed to global “vaccine apartheid,” whereby rich countries got all the shots they needed while people in poorer countries were left to their fates. Meanwhile, America’s new cold war opponents have made their vaccines readily available to others at or below cost, while also helping countries develop their own vaccine-production facilities.

The credibility gap is even wider when it comes to climate change, which disproportionately affects those in the Global South who have the least ability to cope. While major emerging markets have become the leading sources of greenhouse-gas emissions today, US cumulative emissions are still the largest by far. Developed countries continue to add to them, and, worse, have not even delivered on their meager promises to help poor countries manage the effects of the climate crisis that the rich world caused. Instead, US banks contribute to looming debt crises in many countries, often revealing a depraved indifference to the suffering that results.

Europe and America excel at lecturing others on what is morally right and economically sensible. But the message that usually comes through – as the persistence of US and European agricultural subsidies makes clear – is “do what I say, not what I do.” Especially after the Trump years, America no longer holds any claim to the moral high ground, nor does it have the credibility to dispense advice. Neoliberalism and trickle-down economics were never widely embraced in the Global South, and now they are going out of fashion everywhere.

At the same time, China has excelled not at delivering lectures but at furnishing poor countries with hard infrastructure. Yes, these countries are often left deeply in debt; but, given Western banks’ own behavior as creditors in the developing world, the US and others are hardly in a position to point the finger.

I could go on, but the point should be clear: If the US is going to embark on a new cold war, it had better understand what it will take to win. Cold wars ultimately are won with the soft power of attraction and persuasion. To come out on top, we must convince the rest of the world to buy not just our products, but also the social, political, and economic system we’re selling.

The US might know how to make the world’s best bombers and missile systems, but they will not help us here. Instead, we must offer concrete help to developing and emerging-market countries, starting with a waiver on all COVID-related intellectual property so that they can produce vaccines and treatments for themselves.

Equally important, the West must once again make our economic, social, and political systems the envy of the world. In the US, that starts with reducing gun violence, improving environmental regulations, combating inequality and racism, and protecting women’s reproductive rights. Until we have proven ourselves worthy to lead, we cannot expect others to march to our drum.

Joseph E. Stiglitz
Joseph E. Stiglitz

Joseph E. Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, is a former chief economist of the World Bank (1997-2000), chair of the US President’s Council of Economic Advisers, and co-chair of the High-Level Commission on Carbon Prices. He is a member of the Independent Commission for the Reform of International Corporate Taxation and was lead author of the 1995 IPCC Climate Assessment.


  1. It is not “The United States” it is the United States Government.

    1. I try to be consistent using ‘American’ when I refer to the people, the ‘US’ when I refer to the United States Government. Saves typing.

  2. Fool, Capitalist, with a big Millionaire. When will you all stop running these columns by CAPITALISTS, and these fellows in the super elite, defedning USA?

    USA needs to go the way of the Dodo. Same with EU, Nato, and, alas, this is it for the Elite Trained and Cured Economists, those that call themselves Nobel Laureates.

    Follow Hudson, Michael, even though he is not from that Chosen Class of folk, that tribe of economists who hang out with their own kind:

    So in practice, one of the Fed’s two directives has to give. And hardly by surprise, the “full employment” aim is thrown overboard – if indeed it ever was taken seriously by the Fed’s managers. In the Carter Administration (1777-80) leading up to the great price inflation of 1980, Fed Chairman Paul Volcker expressed his economic philosophy in a note card that he kept in his pocket, to whip out and demonstrate where his priority lay. The card charted the weekly wage of the average U.S. construction worker.

    Chairman Volcker wanted wages to go down, blaming the inflation on too much employment – meaning too full. He pushed the U.S. bank rate to an unprecedented 20 percent – the highest normal rate since Babylonian times back in the first millennium BC. This did indeed crash the economy, and with it employment and prosperity. Volcker called this “harsh monetary medicine,” as if the crash of financial markets and economic growth showed that his “cure” for inflation was working.

    Apart from employment and wage levels, another victim of Volcker’s interest-rate hike was the Democratic Party’s fortunes in the 1980 presidential election. They lost the White House for twelve years. The party thus is taking great courage – or simply being ignorant – by entering on this autumn’s midterm election by emulating Mr. Volcker’s attempt to drive down wage levels by financial tightening, which already has crashed the stock market by 20 percent.

    President Biden has thoroughly backed up Republican-appointed Federal Reserve Chairman Jerome Powell in endorsing a financial crash in hope that it will roll back U.S. wage levels. That is the policy of the Democratic Party’s donor class and hence political constituency.

  3. Excellent summation. What is painfully obvious to anyone outside the circles of power and hubris, the probability of addressing domestic issues and supporting developing nations, seems to me to be zero.
    Rather than being the helping nation, according to the International Gallop Pole, the US is seen as the most dangerous nation on earth.
    As Chris Hedges and others have said, we are watching late stages of empire, with little hope of recovery.
    Thanks for all you do with Scheerpost.

  4. If America is to again lead the world in … whatever… it might just figure out what the rest of the world is. Professor Stiglitz repeats the often heard claim, such as, “Given that Russia’s economy is around the same size as Spain’s…” I have heard Russia compared to Italy or just as a gas station masquerading as a country.
    Imagine removing Spain from the world economy. No more queso manchego, vino riojano, or wonderful olive oil. That would be it. Remove Russia and part of the world freezes, the other starves.
    There is a distortion in measuring GDP in that it just measures transactions, not necessarily productivity, so when a house burns down, rebuilding it adds to GDP, just as much as building a new house. America’s GDP measures financial transactions, even bank service fees, with equal weight to John Deere’s tractors. This is perhaps why Russia is compared to Spain or Italy.
    In regard to China, China’s labor is considered much cheaper than America’s, but seldom does anyone consider why, other than to imagine that Chinese labor is either enslaved or exploited. The fact that Michael Hudson explains is that due to extensive public infrastructure, that is healthcare, housing, education, etc, Chinese labor is much more efficient than American labor and does not require American wages.
    There is just no way a neoliberal, finance capital economy can compete fairly with an industrial economy, especially a socialist industrial economy, and America will continue to fail until a top to bottom remake of the economy.

    1. Tedder, Chinese labour is not exploited nor enslaved. Ordinary people in North America and Australia complain bitterly that these rich people are buying up too much real estate and driving up housing costs the last 20 years.
      So, obviously they are not under paid as compared to workers at our McD, Wal-Mart, etc.
      They are not much more efficient workers, but efficient savers and the top half and bottom half are not a huge gap in pay as compared to stark American inequality.
      And importantly,
      their govt does not waste billions on military as compared to US, example: nearly useless $500 million Littoral warship( over $70 miles annual to operate) but provides jobs and benefits in Wisconsin (?) and obscene profits to M I complex.

      1. Yes, indeed. The US government complains that Chinese labor has an advantage over American labor and they are surely correct. Michael Hudson often points out that the American system has made American labor uncompetitive. Just in education, the Chinese system shows its superiority. No Chinese has to go into debt to achieve a degree of any kind, while in the US, graduates are saddled with lifelong debt, and this is so at all levels, which forces workers to demand sufficient wages to pay these debts. The US is also a rentier economy where workers can pay as much as 43% of income for housing, while in China I understand workers pay about 10%.
        “Socialism with Chinese characteristics” provides genuine benefits to workers, while ‘Capitalism with American characteristics’ wastes those benefits on the owning class.

  5. Stiglitz, with his consistent pro Democratic party bias and steady stream of pot shots at Donald Trump (as though he were a cause, instead of merely a symptom of American dysfunction), is emblematic of the hopelessly divided US, firmly on the path to dissolution and chaos.

    It’s not “How the US *could* lose the new cold war”, it’s “Why the US will inevitably lose (has already lost) the new cold war”. The whole world can only hope the new cold war doesn’t turn nuclear hot.

  6. Since Nobel foundation was bought by Wall Street in 1969 we have economic and financial capitalism propagandists claiming phony scientific credentials.

    They are no scientists, they are Wall Street peddlers and Ponzi schemers and manipulators with some math skills. And they are not Nobel Prize laureates as Nobel considered classical economic theory as a gimmick to steal money.

    Nothing that Stiglitz wrote is true, None of it.

    America was never great she was sick American drug induced Dream. America was arrogant, brutal, soulless and genocidal. Never won cold war fair and square. US super weapon that end the war was bribery, corruption and deceit.

    The apparent Decent lives that many Americans had first time in US history in 1950s and 60s were only possible for one reason alone.

    The US elites were scared to death of Ideological war with nuclear Soviets, the real Cold War that if lost would have sparked workers revolution in America backed by Soviets.

    The capitalist class would have been whipped and shorten at the neck, their wealth returned to people from whom those anglo American aristocratic elites stole it during at least two centuries. The real regime change would have happen.

    And hence mass bribery campaign commenced aimed to pacify and to politically fool working people, (who saw ugly totalitarianism and dictate of capital during Great Depression) that capitalism can have a human face. It can’t.

    All that campaign was underlaid by myths of social advancement via occupational and higher education based on meritocracy backed by massive DOD and corporate schools and university grants for tuition free colleges with access available to talented all.

    Many Workers suddenly were taken care by corporations they worked for. The legally binding negotiated contracts, decent pay, free guaranteed decent retirement, and free for workers healthcare.

    For small businesses ideological laws were passed promoting or requiring small business subcontracting by big governments and corporations.

    Some big corporations had over hundred thousand small businesses as contractors with stable long term contracts.

    Government developed system of hospitals to guarantee high quality healthcare free of charge for all who had no corporate funded medical insurance.

    Those who could not work meaningful welfare system, Medicare and social security provided decent social net.

    Unfortunately it had nothing to do with nice and friendly face of Capitalism changing their ways. In fact it was nothing but straight denial of capitalism for strategic reasons of western oligarchic elites wanting to survive and stifle revolution.

    All of that phony game of makeup and pretend was a part of ideological warfare US elite fought with Soviet Union and communists worldwide.

    And it showed because such “wonderful life” was not “given” to hundreds of thousands of enemies of the capitalist state like communists, socialists, leftists, artists, journalists, writers, academics workers activists teachers subscribing to all variety of Marxists social theories etc., .

    The army of frontline social workers who were facing reality of inhumane face of capital system and hence as a band aid advocated certain deadly for the system ideas of solidarity and antagonistic class interests, self emancipation and real systemic solutions were also persecuted, prosecuted, intimidated even killed but most of all fired, blacklisted left without any economic opportunities to survive, pushed to the margins of society or emigration.

    Such reality of the system was shown in Covid era when ugly face of Big Pharma and Medical Industrial Complex was again revealed amid declarations of love of humanity.

    But the party did not last long. As soon as western and eastern elites grew closer despite loud but shallow ideological rhetoric and entered a period of “detente” where ideological threat subsided and cooperation or conniving finally led to deliberate dismantling of Soviet Union in just over two short decades.

    The Soviets in 1970s and 1980s scaled down their support for western working class and international communist parties including radical leftists like BR, FLQ, ETA, RAF or AD, IRA or even FATAH to name few that smelled rot of new found love between Soviet and western elites and feared Soviet ideological sellout and support of globalization in early nineteen seventies.

    As existential fear subsided the makeup dissolved and old familiar ugly face of capitalism reappeared in America slowly but surely in a span of twenty years with periodic crashes that steadily pauperized and debt enslaved Americans. As more precarious life ensued more welfare and desperately needed social net was weaken and finally almost eliminated.

    American woke up from torpor of “America the Greatest” trying to drown in liquor and drugs ugly reality of global capital rule where decent working people are rendered worthless, left to rot.

    Even today few American working people understand that their gains in those decades were all paid by more vicious workers exploitation by the same American capital in foreign countries as profits were sanctified, never to be shared equitably.

    In the end all those great jobs were shipped where more profits can be made leaving angry dissolute people bitter left with Stars and Stripes on. stupid Tshirt and mountain of unpayable debt.

    As we see in last two decades human face of capitalism was nothing but a tragic delusion countless believed and now will be paying for it with their sweat, blood and their lives.

    In the end Roman Empire as American empire became rotten to the core begging to be knock down to retain last shred of dignity America never had and die on its feet.

    1. stig cannot think qualitaively–typical bourgeois economist—Russia gdp by purchasing power #5—-nearel no debt and vast reserves….largely irrelevant since rouble at historic high and Russian reserve fund increases by 13 billion euros each month.

    2. exactly—-Groys described USSR as “an esthetic experiment”
      USA now reflects Heine’s famous poem—“well fed rats”—they prefer the cage
      “the problem with amerikans is nor Orwellian it is huxleyan: amerikans love their oppression”. Neil Postman
      the marxian social historian, Christopher Lasch: “in amerika equality means money…in USA the citizen has been transformed into a client, the worker into a consumer”
      “the amerikan world view is nihilism with a happy ending”. Alan Bloom

  7. Given the surrender of western states to neoliberal private interests in the 80s, the only aspect of a Cold War that really matters is whether it would adversely affect capitalists’ ability to accumulate wealth. And the odds of that… unlikely.

  8. As a first impression, the US’ war on BOTH Russia and China seems inept, even irrational — until the grand scheme is considered.

    The main target IS China, but first Russia must be replaced by a herky-jerky collection of independent statelets, even semi-independent provinces only technically still part of Russia.

    Here’s one of the fantasies:

    This Is because Russia blocks the penetration of Central Asia by the US and NATO, to terminate the Road and Belt initiative and the The International North-South Transport Corridor, which will eventually make the Suez Canal and “control” of the sea largely irrelevant. Europe becomes a peninsula on one end of giant Eurasia, the US and its butt-lubed Britannic mascot– offshore islands.

    The US has successfully goaded Putin into a too-long-postponed reaction and is pushing to achieve its goal.

    Putin is far from an ideal leader to resist the US: his Slavophile mysticism and racist/reactionary efforts and actions are odious.

    However, he’s what exists, and the left cannot afford to join with the neocon Democrats to destroy Russia.

    Another odious fact we’re stuck with is that the loudest anti-war faction here at present are the MAGAs: not because they have any cohesive grasp of geopolitics but because of Trump’s opportunistic play on Americans’ inherent isolationism.

    The left needs to carve out its own space, attack the Democrats on this and other issues and work to effect a Macron-like pratfall on the establishment.

    Anti-Chinese assertions by people purporting to be “progressives” are a betrayal, they are on the side of our enemies.

    The only hope for the planet, a diminishing hope — is a decisive defeat of the US’ foreign policy and its ownership class.

    Together, China and a redirected US can act together to reverse climate change, enforce global disarmament and end vast inequalities. The alternative is global catastrophe, possibly with a thermonuclear exclamation point.

    1. yaba gaba gibbereish—-you are more than odious—you know zero about Putin or Russians,,,projecting your racism is typically amerikan—disgusting

  9. “ Given that Russia’s economy is around the same size as Spain’s, its “no limits” partnership with China hardly seems to matter economically…”

    Wow! Has Stiglitz been asleep since Feb 24? He still seems to think Russia is a country with a gas station whereas in terms of PPP, natural resources, agricultural products, and industrial production the real economy is probably larger than Germany’s.

    1. “ American and Western policy towards Russia is founded on two serious errors…

      “But these two are endlessly repeated and, no matter how many times they are proven wrong, they remain the foundational assumptions of the West’s attempts to change or control Russia.

      “First is the idea that the Russian economy is feeble, unbalanced and dependent on income from the West. The second is that Putin is the chief of a band of thieves who, who if made to feel pain, will get rid of him. ”

      Two Big Errors About Russia – By Helmholtz Smith

  10. if only sticky understood anything this essay would not be so pathetic and ignorant—Hofstadter rightly described US academics as “technicians that serve power w a thin understanding of everything”. 3 years ago Georgi Derlugian wrote: “US academia is far more effectively censored than was Soviet academia”
    amerikans cannot distinguish Neo realism, post-colonial their, structuralism, emancipatory theory, functionalism, conflict theory, parsonianism, dialectics from dialogical from Kantian concepts of reason, yet they believe they comprehend society and politics

  11. America is not a monolith. You need to differentiate between:
    – the AmeriCANs, who represent <1% of the US population and are striving against the forces of evil to regain true democracy of, by and for their fellow Americans. People like Chris Hedges, Richard Wolff, Abby Martin and yes, Joseph Stiglitz.
    – the AmeriCANTs who are the unfortunate powerless vast majority trying to eke out a living, but falling ever further behind due to a system that is rigged against them… and
    – the AmeriCUNTs, who are the <1% psychopaths who have hijacked and rigged the system

  12. Other historic AmeriCANs:
    JFK, RFK, MLK Jr, Malcolm X… although unfortunately they were all assassinated.
    Oh wait, here is one who was not assassinated: Gary Webb, who exposed criminal CIA drug running activities. Poor Gary commited suicide by shooting himself in the head TWICE, at least according to those CIA reports.

    1. We don’t honor Gary Webb often nor well enough. He paid the price for being a true investigative journalist and for not compromising with anything less than the truth.

      Michael Hastings also died mysteriously in a single vehicle crash. He was apparently working to break some sensitive story on Afghanistan. In his last days expressed fear for his life.

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