Except for a few memorial plaques and an equestrian statue of Genghis Khan, nothing in the rather bleak city of Ulaanbaatar reminds us that this remote corner of the world was once the center of the earth, back when the Mongols‘ world domination spanned almost the entire Eurasian continent – from China to Persia and Iraq to Russia. And anyone who visits little Austria today, a sleepy country nestled in the mountains, would find it hard to imagine that Vienna ruled over a multinational state for centuries. What shall we, finally, say about England, the predominant industrial power until a little over a hundred years ago, which at its peak was ruling over several continents? Today it has lost almost all of its once illustrious industries. England would be a poorhouse without its still vibrant financial sector and the oil off its shores. Sic transit gloria mundi!
Yes, national greatness, especially that of a world-dominating power, resembles a brief state of intoxication, followed by great disillusionment. The higher the pedestal of power that a nation has achieved, the deeper the fall it faces in later times. None of the external hallmarks of power is immune to being transformed from a blessing into a curse. This starts with the world’s reserve currency and ends with military bases, the actual strongholds of power.
After the Second World War, a large part of the world lay in ruins, while the US had not suffered any war on its territory. Thanks to Franklin D. Roosevelt’s New Deal, their economy was on the way to regaining its former strength, and they were able to afford a military superiority of over 50% of all global defense spending. Thirty years earlier, in the First World War, the US had already emerged as a decisive power due to its industrial superiority. By the end of the Second World War, this position was undisputed. The role of the US as a leading power quickly gave the dollar the status of a world reserve currency. Everywhere else, currencies fluctuated, were subject to devaluation and could at any moment wipe out savings on a large scale. By contrast, the dollar became the safest means of payment.
More and more countries began to conduct not only their trade with the US, but also the business among themselves in dollars. In this way prices and costs could be calculated most reliably. But to get American dollars in the first place, they had to sell goods to the United States. But that alone was not enough. Under no circumstances could they buy goods from the US to the same extent – doing so they would not have increased their supply of dollars.
The result was not long in coming. The success of the dollar as a global reserve currency was bound to lead to a negative trade balance for the United States – just as the success of any other national currency when it takes on the role of a global reserve currency. Apparently, Donald Trump and his advisors do not get this point, or do not want to understand this mechanism. “They – our competitors – are ripping us off. They sell us their goods but buy much less from us. This cannot continue!” Indeed, things do not have to stay that way. The situation may change very quickly, but only if the dollar loses its position as the world’s reserve currency. The Chinese are just waiting to help their own currency, the yuan, achieve this position.
The inevitable negative balance of trade proves to be both a curse and a blessing for the alpha state. It is a blessing because it enables a unique kind of trade. While all other states trade in equivalent goods, with money only appearing as a means of transaction, the world reserve currency serves as an international means of payment and is therefore in demand by all states for its own sake. All are willing to exchange their goods for mere dollars, i.e. for nothing more than printed paper (without themselves buying goods of the same value from the US).
However, this is advantageous only in the short term. In the long perspective, the blessing turns out to be a curse, because the world reserve currency state is no longer forced to produce what it may obtain so conveniently from outside its borders. Its development therefore carries the seed of decay from the very beginning. At the start of its career, it owes its superior power to a high-class industry (on top of which it then builds its military power), but when the industrial power becomes more and more transformed into a financial one, the reserve currency begins to erode its very basis through progressive deindustrialization. In order to obtain dollars, the competitors produce far more industrial goods for the market of the alpha state than the other way around. In the 1980s, at the height of its own industrial development, Japan flooded the United States with its industrial products, but in turn imported almost exclusively agricultural goods from them. Until April 2025, the same applied to China, which supplied Walmart and all other US supermarkets with up to ninety percent of their goods. Since the 1990s, the large American industrial companies had in turn accelerated this process by relocating ever larger areas of their production to low-wage countries – mainly to China – in order to gain price advantages on the world market.
The most successful exporters: Japan, Germany and China, ended up generating such a large dollar surplus that finding a safe investment turned out to be a major challenge. This surplus has to be invested somewhere – profitably, but above all securely. This is where the alpha state comes into play again. Who could better be trusted to guarantee the required security than the world’s strongest military power? The trade partners of the United States turned to the American stock market and to US government bonds in order to invest their surplus. So, they soon become the largest creditors of the United States, which in turn became the largest debtor of its competitors.
This, too, turned out to be both a blessing and a curse to the alpha state. It is a blessing because the US economy has access to funds on a scale unmatched by any other country. The enormous resources that it had to raise for its own protection and that of its allies in the confrontation with the Soviet Union, as well as the wars in Iraq and Afghanistan, were largely paid for with deposits from foreign creditors. As for the latter two wars, they cost around 400 billion dollars between 2003 and the end of 2006. During roughly the same period, the Chinese foreign exchange administration acquired American government bonds and state-guaranteed mortgage bonds worth 464 billion dollars. These wars were indirectly paid for by China. But, of course, the United States sits on a mountain of debt. This remains a minor concern as long as its government upholds America’s position as a world power. But what if it is no longer in a position to do so and the dollar collapses…
The curse is evident in this case as well, because the worldwide demand for dollars strengthens the dollar’s exchange rate against all other currencies to such an extent that American industrial products are increasingly difficult to sell on the world market – a further step towards deindustrialization. Moreover, some countries like for instance China deliberately manipulated their currency, devaluing it against the dollar to create advantages for its exports to the US. Trump and his advisors are quite aware of this challenge. With their erratic tariff experiments, they are spreading so much uncertainty that the dollar could collapse at the end of their dangerous games. The resulting economic isolation would not lead the large United States to ruin, as they depend much less on foreign countries than the other way around. But with the decline of the dollar, the US would lose its status as a leading power. Do Trump and his advisors want this to happen when making it great again?
The third factor that inevitably erodes the initial strength of an alpha state is the exorbitantly high military expenditure that it incurs to assert and secure its power. As already mentioned, at the end of World War II, the US accounted for more than fifty percent of global defense spending. They were the undisputed leading power. Today, the US accounts for merely 38 percent, while China, the second largest military power, already accounts for 14 percent. If China’s economy grows by five percent annually, government revenue and military spending will grow by the same amount. It is a mere matter of calculation that China will have caught up with the United States militarily by 2030 to 2035 at the latest.
Donald Trump, whose intelligence and character must otherwise be considered highly dubious, has clearly recognized the decline in American power. The bleak rust belts across the country can no longer be overlooked. Hence his promise to make America great again. He also pretends to know who is to blame for this decline, namely the allies who enjoy the American protective shield but still refuse to pay for it. Of course, here too Trump is only half right. The US – nor any other alpha state for that matter – has ever risen to the status of a leading power out of altruistic motives, but because this rise initially brought enormous advantages. Power is an aphrodisiac that gives nations and states their economic and military drive in international competition. It is power that determines the international pecking order. Not Germany or France can tell the US what to do or not to do. The existing power relationship naturally works in the opposite sense. This fact was demonstrated before the eyes of the world shortly before Russia’s attack on Ukraine, when Olaf Scholz and Joe Biden met in Washington.
Everyone knew at the time that the Putin regime’s financial support from the Europeans had already been a thorn in the side of Donald Trump during his first term in office. He had put Angela Merkel under considerable pressure to renounce Russian gas supplies. Joe Biden, for his part, was firmly opposed to these German gas imports. During their joint press conference in Washington – which was shortly before the Russian attack on Ukraine – Biden spoke in plain terms to the German Chancellor: “If Russia invades Ukraine, then there will be no longer a Nord Stream 2. We will bring an end to it.” When a reporter asked how that could happen, given that the project was under sovereign German control, Biden added: “I promise you, we’ll be able to do it.”
This unequivocal and unmistakable threat probably just slipped out of President Joe Biden’s mouth, who sometimes used to be carelessly honest. In any case, Russia had no interest in blowing up the pipeline; it could have simply turned off the gas tap. At most, Ukraine had an interest, because it had to forgo a large part of its transit fees because of Nord Stream 2. But Ukraine did not have the complex logistics for such a step. It certainly could not have ensured that the positioning signals on the ships traveling there were temporarily switched off at the time of the attack. If it turns out that a Ukrainian ship was at the relevant location at the relevant time, then this only speaks to the CIA’s ability to cover all tracks and point in the wrong direction.
In retrospect, Joe Biden’s blowing up of Nord Stream 2 seems fully justified. It was an untenable situation that the American president gave Ukraine its full support while its ally, Germany, had no qualms about filling Putin’s war chest. I do, however, believe that the US should have acknowledged its authorship, which to this day it vehemently denies (see my article from 29.9.2022).
And that brings me to the second and decisive part of my little investigation into the role and task of the alpha state in world politics. Why does the world need any superpower at all? The answer should be obvious. Within states, order usually prevails – except in the case of their disintegration in civil wars. The relationship between states, on the other hand, is always threatened by anarchy because until today there is no world order that is decided and enforced by a world government. In the history of civilization, the task of defining certain basic rules for behavior between states could therefore only be performed by the state that was the strongest at that time. A multipolar world order in which no one and everyone has their say is an illusion, most loudly demanded and proclaimed by those who are just waiting to do away with it for their own benefit.
The alpha state that must establish the world order can, however, appear in this mission in two fundamentally different guises – as a cruel leviathan or as a mild-mannered hegemon. Leviathan is that terrible monster which, according to Thomas Hobbes, uses all the means at its disposal to establish an order that is binding on all its members. Since people in a state of nature know no rules that protect their property and survival from the greed of their fellow human beings, a supreme power is needed to which they submit. In extreme cases, this power rests on weapons alone. Then a privileged minority rules over a subjugated majority. This was the case until three hundred years ago in all agrarian mass societies, where a minority of 10 to a maximum of 20 percent was forcibly supplied by the remaining 90 to 80 percent with food and services. After the industrial revolution, food production increased dramatically. As a result, the parasitic minority turned to other scarce and highly coveted resources, especially raw materials such as coal, oil, gas, uranium, rare earth elements, etc.
However, exploitative rule based on violence must always reckon with uprisings from below. This compels Leviathan to exercise comprehensive control in order to keep the population in check through all-round surveillance, and to radically restrict all civil liberties. The former Soviet Union embodied this type in its purest form. People were promised happiness and equality, in other words, paradise on earth. Those, however, who didn’t believe in it, experienced hell on earth – they were deported to one of the many gulags or physically exterminated. Putin’s Russia has continued this tradition; the system is based on surveillance that extends into the private sphere and on unbridled brutality against dissidents. Under Xi Jinping, China too has turned into a surveillance state, but it allows its citizens a much greater degree of freedom than its Russian neighbor. As long as they accept the party’s guidelines, which so far have brought the country an incredible economic boom, China’s citizens can and should develop freely in business, science and technology.
Europe will have to make up its mind and take a decision. Although a great economic power, it is too internally divided to serve as an alpha state. In other words, it has only the choice between Leviathan and the American hegemon. Compared to other world powers, the latter’s regime was rather mild. It cannot be compared to the terror practised by Stalin, Putin, Khamenei, but also by Xi Jinping – all of whom were or are the declared foes of freedom. The United States did not take revenge on its former adversaries, Germany and Japan, but on the contrary allowed them free access to a good part of its technical achievements. After President Nixon’s state visit to Beijing (1972), it exercised this generosity towards China as well. This country’s phenomenal rise from a backward agrarian state to a leading industrial power is due not only to the proverbial diligence, Confucian discipline and high level of education of its population, but above all to American generosity. In just two or three decades, it was able to acquire almost free of charge all the scientific and technical knowledge that the West had accumulated in three hundred years.
Europe has no choice but to continue to stand by the United States, but as a power that contributes significantly to the costs of public goods. International peace and order are the highest of all public goods. We know that peace reigns in a state only because the police and the judiciary ensure it by convicting and punishing thieves, murderers and swindlers. The same applies to peace between states. The fact that they do not attack each other is to the credit of the strongest state, as long as the latter is able to prevent any disruption of the international order through its vigorous intervention. If it can no longer bear the costs alone, then the allies must take on their share of the burden. This applies, for example, to the Red Sea, which has become a dead sea since Yemen started causing unrest there on behalf of Iran. 95 percent of all goods passing through the Red Sea are of European and Chinese origin, but Europe and China are standing idly by. Once again, it is the Americans who are called upon to deploy their military power. “We have to do the dirty work for them. The Europeans can’t do it,” was the comment from the American side some time ago.
World peace does not come about because the idealists among us demonstrate their peaceful attitude; as in every nation state, it must be secured by appropriate institutions and measures. If Europe does not want to come under the yoke of Leviathan, it must contribute to this peace alongside the US. The mistakes of American politics should not be an excuse. American presidents have at times pursued foolish policies, such as the Vietnam and Iran wars. One was as dreadful as it was unnecessary. The other was unbelievably stupid, because by destroying Iraq, the United States bred, so to speak, their mortal enemy, Iran. But is it for us Europeans to look down our noses at them? It was not so long ago that Europe tore itself apart in fratricidal wars.
However, the greatest misfortune that could have befallen the United States and the rest of the world is Donald Trump, a man who, by his very person, calls into question everything that has so far made up the fame and greatness of his country. He despises truth and is vulgar and brutal to a degree that could lead to war. “They will kiss my ass to make a deal with me.” It is foreseeable that China, an ancient cultural nation, is more likely to start a war with such a man than to negotiate with him. Trump not only has an intense aversion to truth, but also to education, which he actively opposes, thus willfully jeopardizing the primacy that the United States has held to this day in the form of its world-leading universities. Can we call it anything other than profound ignorance when he rejects or reverses all steps to protect the environment? Politically, he is far closer to Putin and Kim Jong-un than to America’s democratic tradition. No wonder he incited the mob against the Capitol and clearly stated that he does not think much of elections, i.e. the country’s constitution. Meanwhile, the incompetence of his administration and of the advisors he has personally chosen is being recognized even by his former voters. Decisions are made today and revoked the next day. MAGA, which he writes on his flags and caps, is increasingly becoming MASA: “I will make America small again.” We can only hope that Donald Trump will do so many stupid things in such a short time (hopefully not a big war) that a storm of outrage will drive him out of office.
The only question that remains is how such a man could get into the presidential seat of such a great nation? In my opinion, this is due to a real failure of American politics. They use to cheer for the winner, while they leave the losers behind. Hillary Clinton, after all a Democrat, publicly disparaged the globalization losers, who became opponents of globalization, as “deplorables” (pathetic losers). With such contempt, you make enemies in your own country – even more so if you represent a party that emphasizes its proximity to working people. For the American opponents of globalization, the elite sitting in Washington is indifferent to their fate. Even the highly educated “eggheads” from the country’s leading universities, who serve as advisors to the political elite, have not given these people any hope of improving their situation. To the people in the bleak rust belts of the United States, democracy or dictatorship are empty concepts of a political theory that has nothing to do with their fate. For them the deindustrialization of their country is by no means offset by the USA’s global success in the services sector. The former industrial companies employed everybody willing to work, including unskilled workers, while digital Silicon valleys require university degrees. This further deepens the gap between the top and the bottom. Donald Trump has a flair for demagoguery – the only undeniable talent of this man – and he has used it to rally all the abandoned, disappointed, frustrated and resentful to his cause.
This is a lesson that we should take to heart. American capitalism has made great achievements possible, but if a part of the population is left behind as superfluous and “deplorable”, the state must fall into the hands of radicals and incompetent populists.