Introduction
The Cold War is called the confrontation between the Soviet Union and the United States of America, which took place from March 5, 1946, to February 1, 1992. Even though this conflict is called a war, there has not been a single armed conflict between the States. It is believed that the United States won the Cold War due to its success in the arms race, which undermined the Soviet economy and became one of the reasons for the political collapse of the USSR. This was because countries have to ensure high economic growth rates for them to continue competing with each other, not only to keep up with rivals but also to get ahead of them. Even though the confrontation is considered to have ruined the basis of the American economy, it is also assumed to have been a driver that led the country to its economic prosperity.
Premises of the Cold War
After the Second World War, all the prerequisites were created for implementing the Pax Americana strategy — American-style peace. Its goal was “to realize the vocation of the United States, its capabilities as the most powerful nation, to exercise its unlimited influence in the world in the name of the goals that the Americans considered right, by the means necessary. Since the United States possessed the resources to start building a Pax Americana rather than returning to isolationism in 1945, isolationism lost its dominant place in the nation’s political life for the first time in its history.
The United States is aware of its reliance on the outside world and the need to influence it. The plan’s implementation started at this point to remove the USSR, the primary geopolitical impediment to Washington’s ascent to global leadership. This was done using various foreign policy tools and techniques, including political, economic, military, and psychological ones. The United States, therefore, reevaluated its place in the world and changed its foreign policy strategy to globalism, or active foreign expansion, due to the radical change in international politics after World War II. This policy was supported by 68% of Americans, and the isolationism that had previously been the norm was eliminated.
In 1947, the convergence of political and economic circumstances resulted in a fundamental shift in U.S. policy and a turn toward hostility with the USSR. In this light, 1947 merits special consideration in the historically significant decade of the development of American foreign policy and appears to be a turning point for the future course of global relations and the establishment of bipolar conflict. It was pivotal in shaping Washington’s foreign policy direction and launching a global strategy for all U.S. foreign policy activities and declarations. He created precise instruments that secured the Cold War’s “functioning” as a global strategy and inserted the Truman Doctrine, the strategy of “containing” communism, and the Marshall Plan into the U.S. foreign policy curriculum.
The National Security Council, the CIA, and the U.S. Department of Defense were all established in 1947. Remember that on May 5, 1947, the State Department established the Policy Planning Council, a new division whose responsibilities included creating a long-term plan for U.S. foreign policy. Since Soviet-American relations have become a key component of the State Department’s activities, J. Marshall entrusted J. Kennan with supervising the department.
Due to the massive increase in industrial production around the turn of the 20th century, owners of substantial deposits and businesses started to stand out dramatically. They might have tremendous economic control over the nation and exert political influence by frequently advocating for their interests. The stock market crash in the late 20s of the 20th century was the first significant shock to the U.S. economy.
In 1934, a rural rehabilitation program began to work, under which small farmers fell. The employed population was paid an average of $877, and almost 2.7 million people of the able-bodied population did not earn anything. Those who fell within its scope could count on small short-term loans to purchase inventory, livestock, seeds, or pay off rent arrears. However, many families of low-paid workers, whose wages were insufficient for self-sufficiency, did not get into these programs.
The economy remained in a state of distress until 1940. On the eve of the Second World War, the U.S. economy was gaining momentum, recovering from the crisis. By the beginning of World War II, the United States had just recovered from the consequences of the crisis. Before the Great Patriotic War, the U.S. economy was not recovering as quickly as desired.
Although the economy was developing rapidly, about 8 million people were out of work. The U.S. government changed the direction of the nation’s economy in the 1940s. According to the new path, the state was given control over social issues, the banking sector, and agriculture. There was the shock of the stock exchange’s collapse when the government set up a state infrastructure to regulate the shares of major corporations and the market for trading securities.
In addition, the government increased its ability to interfere in economic affairs during the Second World War, concentrating the economy on creating military goods. This required converting some industries from producing items for peaceful purposes to producing goods for armed purposes. The need for products and shelters dramatically expanded after the war. Residential buildings have increased significantly due to the military personnel who have come home. Birth rates rose as a result of the favorable dynamics of economic expansion, which also caused a bigger increase in consumer spending.
Many Americans believe that the conclusion of World War II and the drop in military spending may be to blame for the Great Depression’s hard times returning. However, after the war, the repressed demand for consumer goods led to a swift rate of economic expansion. Vehicle manufacturing increased quickly, while the aviation and electronics industries both grew strongly. The post-war boom in birthrate contributed to a rise in consumers as many Americans entered the middle class.
After the war, when the U.S. joined the Cold War, there was still a need to produce military goods. The United States’ rapid economic growth and capitalist accumulation were made possible by its foreign trade policy, which included high import taxes and duty-free entry for foreign capital. Industrial businesses have not paid taxes since 1883, and the government has subsidized business owners. These acts increased domestic market prices and allowed monopolies to use tariff policy to increase profits.
Key Theories and Assumptions
Numerous politicians presumed that the war would be beneficial for America. For example, John Gaddis estimated that the likelihood of a U.S. victory in the Cold War versus Russia peacefully is 78% based on the beginning positions of the two superpowers in 1948 and utilizing only the information that was known then. This evidence implies that the United States was predestined for triumph, precisely because of its favorable economic position at the start of the conflict and maintained throughout the entire period.
However, the two major theories of international relations, realism and liberalism, maintain opposing perspectives on how the war was fought and how the United States’ many foreign policy philosophies affected the development of peace. The liberal school of thinking supports the economic perspective. Liberals at the time of the conflict, including Francis Fukuyama, thought that the success of the liberal democratic system allowed the United States to declare victory. They contended that the system appealed to the poor and oppressed peoples of the Soviet-ruled States of Eastern Europe.
Liberals refer to a much more profitable capitalist system that produced the enormous wealth required to maintain investments in weapons, technology, and international operations that the USSR could not match. The USSR was also unable to combat the extreme poverty that many of its citizens had to endure in its attempts to remain locked in a state of conflict with the United States and finance the conflict against them.
Many liberals argue that if left to their own devices, individuals worldwide will establish ties primarily focused on trade, eventually leading to peace. They contend that the nation-state’s activities are the greatest impediment to this. Given the evidence of the failings of Cold War foreign policy, it is easy to see how this might be true. As can be seen, U.S. hostile actions in the 1940s even led to the outbreak of war, which may not have been as inevitable as it was thought to be at the time by those in power. For example, the U.S. intervention in Vietnam may have hampered the U.S. position.
The other assumption that the USSR’s poor economic standing was the primary cause of its collapse is backed up by much evidence. The Soviet economy was in a precarious position in the 1980s. The inability to modernize at the same rate as the West was caused by structural flaws in the rigid command economy that promoted gross output of goods rather than productivity and created barriers to management and product innovation. Centralized planning in industry and agriculture limited production and left the economy susceptible to stagnation, as was seen in the 1980s following a significant decrease in yields in the late 1970s and a halt in production in several important industries.
The Soviet Union’s inability to maintain its military investments and defense spending due to its poor economic standing had a significant influence. Due to economic issues, the USSR also lagged behind the U.S. in terms of weaponry technology, particularly in the crucial areas of target detection, tracking, sensors, and computer hardware and software, which were fundamental to the U.S. concept of SDI (Strategic Defense Initiative), which threatened to render many weapons obsolete. To preserve its position as a global power, the USSR would need to make significant investments in these sectors.
The neoconservative assumption became conventional politics and was much more focused on foreign policy, much like the liberal position. Neoconservatives frequently hold the belief that there are good and bad regimes, people, and philosophical systems, with communism being the latter due to its alleged persistent expansionist objectives and deprivation of human rights. According to the domino hypothesis, communism posed a real threat to the West because it might spread from one country to another.
According to orthodox theorists and politicians, the Soviet Union was an expansionist state that sought to rule the entire world by leveraging the domino effect and its own military might. This philosophy influenced the Truman Doctrine, which committed the United States to supporting anti-communist regimes to prevent them from falling under the control of communists. From this vantage point, the United States’ interventionist foreign policy to stop the rise of communism was essential to its success in the Cold War.
The doctrine has been used to justify various interventions in other states’ political affairs. These included interventions in Greece in 1947, Korea in 1950, Vietnam in 1959, and various interventions in South America because it was helpful. Peaceful economic incentives have also been used to bribe countries to adopt capitalism and to support struggling European states after World War II.
Realistic explanations of how the Cold War ended can be considered a middle ground in arguing whether economic factors or foreign policy played a larger role in bringing the conflict to a conclusion. In contrast to orthodox theories, realists saw the Soviet Union as a perilous but cautious enemy with values that ran counter to those of Western culture and an exceedingly ineffective economic system. They saw the USSR as an opportunistically expansionist state that only wants expansion when the chance presents itself, rather than a fundamentally expansionist state. Realists contend that the end of the Reagan administration’s careful use of power, which limited U.S. interventions, negotiations, and detente to situations where doing so would directly benefit the U.S., as well as the use of U.S. economic power to support and reinforce U.S. actions, contributed to the U.S. victory in the Cold War.
The idea that foreign policy played a role in the triumph also has numerous holes. Liberals cited the fact that the U.S. only once stopped its interventionist and aggressive campaign against Russia and allowed it to fall apart from the fact that the war was approaching its conclusion as evidence that the nearly endless and careless missions the U.S. undertook based on the Truman doctrine and domino theory damaged the U.S. position and may have lengthened the duration of the war. To demonstrate the flaws in the neoconservative strategy, one needs to look at the Vietnam War, which was arguably the Cold War’s most disastrously unsuccessful conflict.
Influences
Stimulation
To trace how exactly the war affected the U.S., it is vital to address the stimulating and negative influences. First, heavy industry, namely, the military-industrial complex, received powerful development during the Cold War. Armament manufacturing enterprises received many government orders, and funding for their research and development projects is increasing, thanks to which more advanced military equipment is being produced more often.
In addition, the Cold War regime gave the state additional opportunities to concentrate more money at home. These funds were then used to implement large dual–use infrastructure projects—the construction of cosmodromes, airfields, roads, railways, etc. The presence of these infrastructure facilities contributes to establishing and strengthening economic ties within the country.
The Cold War assumed the separation of one power and several allied countries, which, in fact, interacted with each other according to the “center-periphery” model. This model caused the deepening of the international division of labor. It was presumed that each country specialized in producing certain products, and then a large-scale commodity exchange occurred between them.
Inhibition
Despite these positive aspects, the Cold War negatively impacted countries’ economic development. First, the structure of the national economy was deformed. Most economic resources were accumulated in heavy industries, which received the largest capital investment. At the same time, light industries were deprived. This led to a shortage of consumer goods in the domestic market and a decrease in their quality.
The Cold War meant the cessation of interaction between several economically developed countries. The conditions of globalization of the world economy lead to an increased risk of global economic crises and aggravation of global economic problems (for example, food security problems, income differentiation between countries and population groups, pollution of the environment by industrial waste, etc.). Cooperation in the field of research was also terminated. Scientists from different countries could not share their scientific discoveries; that is, it was impossible to obtain a synergistic effect that would contribute to increasing the pace of economic development in the world.
During the Cold War, the governments of rival countries imposed restrictive economic measures (sanctions) against each other. These measures prohibited interaction between their residents or the use of each other’s economic instruments (currencies, securities, and others). Consequently, the activities of economic entities were artificially restricted, which reduced the overall economic efficiency of the world.
Consequences
High inflation resulted from the early Cold War. By the late 1970s, many Americans had begun to oppose excessive government spending and associated taxation. Ronald Reagan, a Republican running for president in 1980, advocated for large tax cuts to boost the economy. Some economists were promoting a new school of thought termed supply-side economics, as Keynesian ideas lost appeal due to the inflation that resulted from decades of high government expenditure.
Supply-siders emphasize sustaining high supply through decreased taxes and business regulations rather than maintaining high demand through increased government spending. Under both scenarios, the output of products and services increases, but as supply rises, prices fall. Reagan’s upbeat perspective helped him overcome Democratic President Jimmy Carter in November 1980. Carter’s popularity had dwindled due to the struggling economy and America’s humiliation during the Iran Hostage Crisis.
Reagan did not entirely reject the Keynesian theory; he maintained high aggregate demand by raising military spending. Reagan’s campaign slogan was “peace through strength,” meaning he would deter Soviet aggression by keeping the United States ready to fend off assaults. A large increase in deficit expenditure was made to enhance defense spending while lowering taxes. The government increased the national debt by selling bonds to spend more than was being collected in taxes. The national debt nearly tripled over Ronald Reagan’s two terms as president.
Reaganomics, sometimes called “trickle-down economics,” has effectively restarted economic expansion. Economic development started after the Federal Reserve aggressively increased interest rates to fight inflation between 1980 and 1982. Reagan won re-election in 1984 by highlighting his economic successes in his well-known political advertisement, “It’s Morning in America Again.”
Ronald Reagan’s two terms of comparative calm and prosperity, his well-liked persona as a genuine freedom warrior, and his adherence to conservative principles helped him establish himself as a long-lasting symbol of the Republican Party after several contentious presidential administrations. More globally, the total collapse of the Soviet Union’s economy, the dissolution of the USSR, and the birth of a new Russia are seen as the outcomes of the Cold War.
The result created a unipolar world in which the U.S. occupied a dominant position. Citizens of the nation increasingly emigrated to the West after the fall of the USSR because they were drawn to the capitalist lifestyle. The capitalist camp, led by the United States, announced total victory over socialism. However, subsequent years’ events revealed that the conflict had not ended but had entered a new stage.
Figure 1. American Economy During the Cold War.
The proposed figure demonstrates how the American economy changed during the years of war. It is evident that its potential was developed due to the logical actions of politicians who assessed the USSR’s military power. Despite major economic losses in the beginning, the American government cooperated with other countries to ensure financial prosperity and the loss of the state’s rival.
Conclusion
In summary, the development of U.S. foreign policy in the 20th century was both successful and impressive. By the end of the century, America had become the only superpower with the most potent and rapidly growing economy and extensive global political and economic interests, despite not being the most influential power at the start of the century. The ascent of the United States significantly influenced the emergence of a new world order in which the United States holds a dominant position.
U.S. foreign policy was frequently ineffective, and U.S. economic might alone could not guarantee victory. However, when U.S. foreign policy took advantage of this disparity in economic might, it gave the country a definite advantage over its adversary. This is precisely what happened under the Reagan administration when the U.S. could negotiate from a position of strength to compel a desperation-stricken Russia to comply with U.S. demands. In addition to the successful detente and negotiations that resulted in glasnost, perestroika, and the fall of the Eastern Bloc, the armaments race fueled by the U.S. economy’s economic superiority gave the U.S. great leverage over the USSR. These might be considered successful examples of foreign policy since they tapped into American economic might.
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