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Analogy and Strategy: U.S.-China Competition through an Edwardian Lens

Competition between the United States and China frequently trig­gers Cold War comparisons. Ideologies are contrasted, alliances are touted, and geopolitical maneuvers are proposed. These sorts of comparisons are tempting. China is no longer Maoist in orientation, but still ostensibly Communist and still autocratic. The Cold War is also still within the living memory of most senior statesmen; it has a stickiness to it. As Aaron Friedberg writes, there is a time lag phenomenon that causes strategists and policymakers to give more weight to recent experience.1

Debating whether the Cold War analogy is appropriate may sound pedantic. Yet far from just an intellectual parlor game, historical anal­ogizing can have serious strategic consequences. In his detailed study of analogies, Yuen Foong Khong contends that they can have greater influence and salience than bureaucratic maneuvering, domestic polit­ical considerations, or ideology.2 The images and allure conjured by analogies can be extremely hard to shake.3 They can deeply influence what Robert Jervis calls “reality appraisals,” creating fundamental as­sump­tions that in turn reinforce deeply held beliefs. This becomes problematic when it is precisely those beliefs that need to be rigorously tested and examined.4

Indeed, the use of such analogies can be as notorious in their formulation as they are infamous in their outcome. Richard Neustadt and Ernest May point out that McGeorge Bundy made a remarkably sloppy and ill-conceived analogy by comparing what was occurring in Vietnam in 1965 to what happened to the French at Dien Bien Phu in 1954. This was an obvious temporal error: the relevant analogy in 1965 was not France and Indochina in 1954, circa the disaster of Dien Bien Phu, but France and Indochina in 1950–51, before France had committed a massive ground force and had begun to suffer casualties—precisely the point that the United States was at in 1965.5 Khong analyzes Deng Xiaoping’s analogizing of the 1989 Tiananmen Square uprising to the 1960s Cultural Revolution. In so doing, Deng concluded that the up­rising could spiral out of control and possibly topple the regime. This led him to a set of policy prescriptions, including violent suppression, that in Deng’s mind were justified to avoid potential calamity.6

An op-ed published in July 2020 in the Washington Post illustrates the pull of the Cold War analogy, even when seeking to avoid it. The op‑ed’s authors argue that when it comes to current U.S.-China competition, “top-down questions of how to wage or avoid a Cold War” should be substituted with a “bottom-up effort to renew Amer­ican competitiveness, with more serious debates about specific issues and less nostalgia or neuralgia over past rivalries.” All well and good. But when the authors offer suggestions to “stymie the export of China’s high-tech authoritarianism,” they revert back to the language of the coldest of Cold War tropes: what is needed, they say, is a “containment-like approach” (emphasis added) to this authoritarianism. So, precisely where the stakes are the highest in the competition, the authors frame it in the very language of the conflict they seek to avoid.7

Is there a more rigorous way to do historical analogizing? A more careful approach is offered in Neustadt and May’s Thinking in Time. Published decades ago, it is still quite useful for policy practitioners. Neustadt and May specifically recommend that, when making histori­cal analogies, “likenesses and differences” should be clearly identified and articulated. This “mini-model,” as they call it, permits a certain analytical rigor that can more accurately inform policy prescriptions.8

Using such a “mini-model,” this essay will attempt to deploy another historical analogy to the case of the United States and China that breaks from the Cold War completely. Avoiding the Cold War’s magnetic pull can allow for a new set of perspectives on certain aspects of the U.S.-China competition as well as new policy solutions. That alternative analogy is the early twentieth-century competition waged between Great Britain, the foremost power in the world at the time, and the United States—more precisely, the U.S.-British competition during the reign of Victoria’s son Edward, from 1901 to 1910, when British power had reached its apex.

U.S.-British Competition in the Edwardian Era

At the time of Edward VII’s ascension to the throne, Britain reigned over an empire covering 12.7 million square miles—the largest in the history of world. No rival came close. France’s empire was one-third the size, and much of the rest of the world was part of Britain’s unofficial sphere of influence. Large portions of Latin America, such as Brazil and Argentina, for example, were major recipients of British investment. Not only did Great Britain control much of the world outright, it set the globe’s economic conditions, maintaining a capitalist order underwritten by the gold standard and overseeing a massive free trade system during the first age of globalization.9

Yet all was not what it seemed. Despite this outward appearance of power and grandeur, the latter nineteenth century was the period when other powers caught up to Britain in terms of industrial might. These “latecomers” to the second industrial revolution, often utilizing do­mestic resources that Great Britain simply did not possess, began to produce key goods on a massive scale. As just one example, pig iron output in Dortmund, Germany, the heart of the Ruhr Valley, increased some thirty-five times between 1851 and 1871.10

The supreme example of a latecomer becoming an industrial and economic powerhouse was the United States. In 1890, there were already 62.6 million Americans to 37.4 million Britons; by the advent of World War I, there would be 138.3 million to 47.6 million. Such scale was also manifested in industrial production. In 1890, the Unit­ed States was producing 9.3 million tons of iron and steel to Britain’s 8.0; by 1914, the gap had widened to 28.8 million tons in the United States to Britain’s 10.5. In 1880, Britain led the world in manufacturing output with a global share of 22.9 percent to America’s 14.7 per­cent (in second place). By 1913, the United States was far and away the world’s leader, with Britain having fallen to third place behind Germany.11

While Great Britain and the United States were both capitalist nations, America’s protectionist economic relationships with other countries contrasted sharply with Great Britain’s no-tariff, free trade system, which had begun with the repeal of the Corn Laws in 1846. It would be inaccurate to portray the United States as unified in its belief in industrial protectionism throughout its history—there was often fierce political controversy over tariffs. Nonetheless, after the American Civil War, pro-tariff Republicans usually controlled the government, and import duties were standard during much of the so-called Gilded Age. Eastern manufacturers obtained highly protectionist legislation and generally, though not always, defeated western free trade interests. Arguments for protectionist legislation were often politically infused. Justifications for such measures were typically premised on higher wages for American workmen, a sure vote-getter. On average, American workers received one-and-a-half times more than their English counterparts, and three times what was received in France, Italy, Spain, and Germany, notwithstanding differences in cost of living.12

Another salient feature of late nineteenth- and early twentieth-cen­tury American protectionism was its transactional character. America’s imposition of tariffs is sometimes viewed as representative of a deep-seated set of economic principles derived from Alexander Ham­ilton. In reality, they were fiercely debated in politics, and they were instrumentally used for economic advantage. Tariffs were not ends in themselves, but instruments of statecraft. The reciprocity clause of the McKinley Act, for example, allowed the president to restore import duties on certain commodities if the trading country engaged in unreasonable and unjust practices, with the result being a plethora of trade agreements favorably negotiated in Latin America.13 Partly as a result, protectionist policies helped to alter America’s trade balance. In 1860, imports per capita slightly exceeded exports. By 1908, exports significantly exceeded imports.14

Huge industrial output, helped by an abundance of resources and a growing population—and protectionist legislation—helped make an American economic juggernaut. It did not necessarily translate mil­itarily. Certainly, the U.S. military grew, but at nowhere near the rate of America’s economic and industrial capacity. In 1880, the total number of U.S. military and naval personnel was 34,000, barely a tenth of Britain’s forces, and not even a twentieth of Russia’s. By 1914, on the eve of World War I, the number of American military personnel had grown to 164,000. But the United States was still dead last compared to the European powers and Japan.15 To be sure, some aspects of American military power expanded more rapidly. In 1896, the U.S. Navy had five battleships in service; by 1906, it had fifteen. But it was no rival to Britain, which had 45 battleships in 1896 and 61 by 1906. France had 29, Russia 12, Germany 31, and Italy 14 battleships at that time.16 The United States was hardly winning any naval arms race. And while the American Navy certainly did expand at a greater pace than the Army, it grew largely to serve America’s expanding economic interests. With this gaping disparity between U.S. economic might and military strength, America had, in Paul Kennedy’s apt formulation, “become a Great Power but was not part of the Great Power system.”17

The British were hardly ignorant of what was happening. By the first years of the twentieth century, fears of “decline” began to seep into British consciousness. A book published in 1905, The Decline and Fall of the British Empire, set forth a dystopian vision of a dismantled em­pire, Albion’s various possessions under the control of hostile pow­ers.18 The American onslaught was certainly rec­ognized, occurring amid an array of second industrial revolution technological breakthroughs—electric current, telephones, portable cameras, phonographs, typewriters, elevators, electric street cars, elec­tric lights, skyscrapers, and global telegraphy.

In the production of so many of these things, lamented Frederick Arthur MacKenzie in his 1905 book The American Invaders: Their Plans, Tactics and Progress, “[T]he American maker is supreme.”19 Mac­Kenzie noted the flaws in the British system that the Americans exploited. In part, American dominance was simply due to product superiority: Kodaks, for example, were better than the “clumsy ma­hogany bound camera of the old type.” And such product superiority was used to hold British shopkeepers hostage—Kodak refused to sell them its cameras unless they exclusively sold Kodak film. MacKenzie faulted a deteriorating British work ethic, timidity, and excessive government regulations for sapping British entrepreneurship.20 While some of this may sound like reactionary grumbling, recent scholarship has shown that MacKenzie’s complaints had merit. Historians have demonstrated that new and potentially innovative British firms during the period were often hamstrung by an overly cautious, ossi­fied banking system.21

But what MacKenzie saw as nearly unstoppable was the sheer scale of the U.S. onslaught. English firms, for instance, simply could not produce the number of phones that Chicago’s Western Electric could, and therefore could not win British contracts. America also conducted its campaign in “Greater” Britain—especially Canada, where Amer­ican firms up set up “[e]normous mills, great canals,” and sought to decouple Canada from its special relationship with the UK. Other strengths included America’s “magnificent technical schools” that had sprung up as a result of federal land grants, its punishing tariffs, and an overall spirit of relentless, driving entrepreneurship. While Mackenzie may have noted that “The future still lies before England, if England will but have it,” it must have been difficult to remain sanguine about the prospects of British economic supremacy.22

Once again, modern scholarship confirms MacKenzie’s basic in­sights. Studies have shown that scale, in terms of domestic resource abundance, population, and industrial production, was the key reason why both the United States and Germany surpassed Britain in the late nineteenth and early twentieth centuries. Germany, and especially the United States, were simply bigger countries—with more land, resources, and people. That scale manifested itself in different ways. Germany and America’s larger physical territories, for instance, meant modern railway nets opened up major internal domestic markets, and thereby countered British nautical advantages.23 And American cor­porations benefited from huge domestic markets and abundant, accessible natural resources. They became gargantuan in size and produced an array of goods that British counterparts could not.24

Then there was the question of—and controversy surrounding—Britain’s approach to free trade. Robert Peel, the prime minister who called for the repeal of the Corn Laws in 1846, had been ostracized by his own Tory Party for doing so.25 Nonetheless, as British imperial power approached its zenith, free trade’s virtues became, in Aaron Friedberg’s words, “widely, if not universally accepted in every stra­tum of British society.” Well into the 1890s, no significant British politician dared to challenge it.26

But during the Edwardian period, opposition began to mount. By the time of Prime Minister Arthur Balfour (1902–5), there was signifi­cant concern that Britain’s adherence to free trade was actually dam­aging the Empire’s interests. Britain’s first-mover advantage dur­ing the early nineteenth century’s first industrial revolution was swiftly disappearing. Meanwhile, other countries, especially the United States, were damaging British exports with their tariffs.27 And al­though Britain would formerly strike deals with other protectionist countries (such as the 1860 Cobden-Chevalier Treaty with France), by Edward’s reign, Britain’s free trade absolutism seemingly left it with no cards to play against protectionist countries.28

While the debate raged between those wedded to complete free trade and others who wanted stronger protectionist policies, Balfour attempted to split the difference with what he thought was a reasonable compromise. Capital, to Balfour, was not so much “fluid” as it was “viscous.” He argued, for instance, that labor, a major source of capital, was not wholly mobile. Therefore “free trade,” strictly speak­ing, was an illusion, because transaction costs and national interests constantly interfered with it. Nations existed in the first place, Balfour observed, because peoples were unwilling to have a no-strings-attached approach to entry into and exit from their physical territories, something Adam Smith would hardly have denied. It stood to reason, then, that countries inclined to varieties of protectionism, countries such as the United States or Germany, had “[no] wish to relax their protectionist system.”29

And while Great Britain was not totally dependent on outsiders, it certainly was not self-sufficient. It possessed “no striking advantages” over its rivals. It lacked population, size, and natural resources. And while disaster had not yet occurred (many countries, for example, still owed Britain large amounts of capital, paid for via imports), the clock was ticking.30 Britain had to maintain an economic system that would allow for economic growth and prevent it from being overtaken by the continental powers and the United States

“Free trade requires open markets somewhere,” Balfour argued. His solution was to approach trade transactionally, in the form of inducements. If anything, Balfour’s system was similar to the nineteenth-century most-favored-nation trade system, practiced on conti­nental Europe, which made tariffs and trade part of a reciprocal negotiation process. That system had hardly stifled trade: the continent’s trade treaty system enabled international trade to grow roughly at pace with the free trade British system. Indeed, Balfour’s arguments preceded by three decades those of John Maynard Keynes, who would argue for more provisional approaches to trade for Britain when it was required. Yet Balfour’s approach did not convince; his ideas were not adopted, and he lost power in 1905.31

Another solution, proposed by Lord Joseph Chamberlain, secretary of state for the colonies in the first years of the Edwardian era, was a more commercially unified empire. Chamberlain argued that the empire needed to strengthen its internal ties and become an impregnable “autarkick commercial organism” similar to the United States, with its much larger internal territory and population.32 Great­er Britain—that vast expanse of colonies and dependencies outside the actual British borders—would supply the economic answer, in an en­closed and self-sustaining system of markets, resources, and consumers.

But the empire itself posed problems. It required a large and far-flung military force to maintain it—and there were complaints that those in the empire’s periphery benefited from naval protection at disproportionately higher costs to Great Britain itself. The empire’s existence had also helped to accelerate the scramble for arms and colonies against the other continental powers. Britain was in a naval arms race with not one, not even two, but three continental rivals: France, Germany, and Russia were all furiously improving their na­vies to contest the seas.33 And the empire was extractive. The empire’s colonies financed ever higher standards of living for Great Britain, even as those colonies became increasingly indebted to the mother country.34 How could such an “autarkic” system sustain itself? What happened when those colonies and dependencies of the empire wanted out, and out on their own terms?

In the end, neither Balfour’s transactional approach to trade nor Chamberlain’s imperial system were adopted. From a military and geo­political standpoint, the outcome of the 1905 Russo-Japanese War pro­vided temporary respite. The Russian fleet was destroyed, and Russian expansionism checked. The “Great Game” of Russian en­croach­ment into India via Afghanistan went into recess as well.35

But, as it so often does, war’s unstoppable force overwhelmed all before it. Great Britain abandoned free trade, not as the choice of an omnipotent empire, but as a result of World War I, with the imposition of the McKenna import duties in 1915. The bill came due on the empire in other ways as well: the so-called Dominions—Canada, Australia, and New Zealand—gained (essentially) full independence in the postwar years. The Great War solidified their separate national identities and their sense of self-reliance. Many within the Dominions increasingly doubted the wisdom of allowing an empire that had led their countrymen to slaughter to set their policies.36

The Historical Analogy Analyzed: Likenesses and Differences

Having outlined the historical situation of Edwardian Britain and its competition with the rising United States, it is now possible to draw an analogy to today’s rivalry between the United States and China. As suggested by Neustadt and May, specific analogical likenesses and differences should be explored.

Likeness: the fundamental competition between the current rising and declining powers (China and the United States) is economic and not military. First, there is an analogical “likeness” in that both com­petitors today are fundamentally capitalist, although with differing positions on trade. There is, furthermore, a corresponding similarity in the secondary nature of the military competition between China and the United States. Recalling a comparison that Edward Luttwak has made between today’s China and Bismarck’s Germany, he points out that Germany was simply not content to be an economic powerhouse. It had to be a global military power as well. This inevitably led, in Luttwak’s opinion, to foolish over-militarization. A “strategi­cally competent” German gov­ernment “would have recognized that only Germany’s nonmilitary abilities had any value—its banks, facto­ries, and universities,” rather than a massive army and navy, which prompted British-driven encirclement, and a series of catastrophic political choices that ended in war.37

At least at present, it does not appear that China is primarily engaged in a military competition with the United States, certainly not on the level of Germany’s military buildup at the turn of the twentieth century. By no means is China neglecting its military—China is competing militarily—but this competition must be contextualized. As far back as the 1970s, when Deng Xiaoping was still chief of the General Staff, he sought to reform the People’s Liberation Army (PLA)—but not to make it more powerful for external purposes. Rather, he did so primarily to bring discipline to its ranks, and especially to downsize it: by the end of the Mao era, the PLA was gigantic and overtaxing the Chinese budget. In order to reduce the size of the military, Deng deliberately sought distance from Mao’s statements on the inevitability of war with the West. And when Deng came to power, he pushed for a more commercialized military acqui­sition system, which marked a departure from the Soviet-in­spired system. As a result, military technology would no longer be more advanced than civilian technology.38

Like Deng, Xi Jinping continues to modernize the Chinese military. He deliberately seeks to incorporate military power into civil power—a continuation of Deng’s ideas, via what is called “military-civil fusion” (junmin ronghe). This includes, for instance, integrating military sectors into industrial strategy initiatives such as Made in China 2025.39 This Chinese civil-military integration highlights the primacy of China’s economic approach. As Elsa Kania notes, Chinese leaders still believe that economic development is the most significant imperative for China’s advancement. Much of junmin ronghe is done to advance civilian technology breakthroughs via military R&D. And as if to underscore that even an autocratic, state-capitalist nation is still deeply capitalist, high-tech Chinese companies are not as supportive of underwriting military breakthroughs as might be expected, being much more strongly motivated by profits in a ferociously competitive system.40

Regarding Xi’s widely studied reforms of the PLA, there is little doubt that he seeks to improve the operational capability of the army for military purposes. At the same time, however, what was once the primary military concern for China—the Soviet Union—has ceased to be a major land-based power.41 Furthermore, a key dilemma for China’s civil-military relations is how to “build an army strong enough to fight and win the nation’s wars that does not pose a threat to a civilian regime or social order.”42 Major political imperatives are driving much of the reform—which include ensuring that the PLA will be obedient to the CCP. The regime’s fear of various domestic threats, whether bands of outlaws, citizens’ militias, or revolutionary guerilla leaders and their followings, requires it to keep a short leash on the PLA.43 The CCP also wants to ensure that the military will not be at the forefront of any color revolution.44 Moreover, the Chinese Navy is increasingly seen to be favored over the Army—and states who wish to continue to expand their economic domains typically favor maritime forces. In that light, the Chinese Navy is seen as a “direct defender [of China’s economy], especially its maritime econo­my and foreign trade.”45

Again, this is not to suggest that external threats have no importance or that Xi is not aiming at building a more powerful and even more outward-facing military force. China participates in nu­merous international joint military exercises, trains thousands of foreign military offic­ers at its military schools, and is the third-largest seller of arms, behind the United States and Russia.46 But even these efforts have to be contextualized more as a movement into “great power status” and less as a deliberately focused arms race as seen in the Cold War. Escalation beyond this status-seeking certainly could occur, and the United States would be foolish to dismiss China’s military advancements, especially as its civil-military fusion yields technological breakthroughs. Still, it must be stressed that Chinese military reform is not exclusively or even primarily driven by external military objectives, but by political imperatives, the need for internal control, and the quest for ultimate economic dominance.

Likeness: the apex and rising powers are in a predominantly tech­nological race, though not primarily focused on military armaments. Difference: the apex power still has a technological advantage, though that advantage appears to be diminishing. Until very recently, China was thought to be a distant second to the United States when it came to research and development and technological breakthroughs. China has been labeled a “fat tech dragon”—a lot of R&D money pumped in, but a lot of wasteful output and not much else to show for it. It has been perceived as a country skilled in making knockoffs but not particularly good at cutting-edge science and innovation. Even if China is second only to the United States in patents, it was said, those patents are relatively low quality.47

But things appear to be changing very rapidly. While R&D spend­ing alone may not be sufficient to win a technological race, it is certainly necessary to participate in one. And at this point, China and the United States are essentially spending the same amount of overall GDP on it—between 2 and 3 percent each. But this does not tell the full story: the reason that R&D rates are now about equivalent is because China’s spending is accelerating far faster than America’s. China’s R&D spending has consistently been increasing by 17 percent every year for most of the twenty-first century while U.S. R&D spending has only grown by about 4 percent per annum.48 Overall, innovation outputs seem to be improving in China as well. For example, in 2018, China’s innovation output score on the Global Innovation Index (GII) actually exceeded that of South Korea, a tech innovation heavyweight, thus making China the highest GII scorer in the East Asian region.49

At the same time, U.S. technological advancement, especially in so-called generic technologies—technologies with diverse applications but which require significant upfront funding before profits can be realized—has declined. During the Cold War, defense technology efforts produced by-products and spillovers that helped propel the American economy to dominating heights. Government agencies such as darpa underwrote much of the technological breakthroughs of the IT revolution, for example. In the twenty-first century, however, federal basic R&D funding has slipped as a percentage of GDP. New government R&D initiatives, such as the Department of Homeland Security and the intelligence community’s own versions of darpa (hsarpa and iarpa, respectively), have often sacrificed longer-term strategic R&D for more immediate goals.50 In the private sector, high hurdle rates have inhibited venture capital firms from making sufficient investments in generic technologies. While overall private sector R&D may have risen in comparison to public R&D, R&D “intensi­ty”—the ratio of R&D to GDP—has steadily declined since the Cold War as U.S. firms have increasingly offshored their technological capabilities.51

Difference: whereas both Edwardian Britain and the United States afforded political agency to some (though certainly not all) of their populations, the political regime of the current rising power, China, grants little political agency to its populace. China is an autocratic regime. Its use of the Maoist-inspired “mass line” to create some semblance of popular participation notwithstanding, popular participation is still secondary. The difference can be seen in the opposing approaches to wages in early twentieth-century America versus pre­sent-day China. To gain votes and maintain power, American politicians, particularly in the eastern manufacturing states, touted higher wages achieved through national protectionist policies, and indeed this emphasis on higher wages helped create America’s consumer society. The agency of the American populace when the United States was a rising power, while certainly not universal, was significant enough to create diverse and sometimes in­tensely conflicting notions of American domestic and foreign policy. Certainly, the intense sus­picion of American involvement in foreign conflicts deeply influenced decisions to keep the country out of European affairs, especially delaying entry into World War I.

China’s modern economic growth model has been predicated on the very opposite. Although rapid growth has allowed for rising standards of living, the suppression of wages and consumption, in order to maximize high savings and investment, is central to the East Asian export-driven growth model. This system works when, in essence, the workers themselves have little to no agency.

The CCP has shown a remarkable ability for “authoritarian resilience” and to adapt and overcome a series of challenges that many critics believed would lead to the undoing of China’s autocratic re­gime. Whether this analogical difference is a strategic weakness of significant import is another question. So far, the line of thought holding that a more capitalist China would lead to a more democratic China has proved to be mistaken. The success of economic development, the pro­vision of public goods, some local political reforms, campaigns against corruption, and appeals to nationalism have bol­stered the CCP’s auto­cratic regime.52

Difference: in the Edwardian era, the rising power (the United States) had an internal scale advantage over the declining power (Great Britain); today both competing powers have the ability to scale. Of the two Edwardian Age powers, only one, the United States, had abundant, continually expanding internal scale. America’s population was exponentially increasing, its natural resources were ever abundant, and it continued to add to its sheer physical size. Britain lacked anywhere near the scale of the United States. Great Britain, according to advocates such as Joseph Chamberlain, had to rely on Greater Britain, especially India and the Dominions, to achieve scale, which ultimately became unsustainable.53

In the present day, massive scale is available—or achievable—for both China and the United States. For example, when it comes to R&D investment, both China and the United States have massive programs that no other nations can match. In 2017, China and the United States spent $444 and $483 billion, respectively, on R&D. The entire European Union, by contrast, was only able to spend $366 billion. The United States still has massive internal scale advantages, including the best agricultural and waterway networks on the globe.  It is a major producer of crude oil and petroleum products, and its largest market is still, overwhelmingly, within its own borders.54 China, likewise, has a mas­sive internal domestic market, still somewhat untapped, of 1.3 billion customers, which provides an overwhelmingly powerful lure to multi­national corporations hoping to set up shop inside China.55

Indeed, China has scaled and rocketed past its closest “big emerging market” competitors, such as Brazil and India, in the last twenty years. India’s permit policies severely curtailed the ability of Indian businesses to expand, which ceded huge areas of manufacturing—from shoes to toys—to Chinese firms that became gigantic. China’s largest state-owned enterprises increased their assets eightfold—from $360 billion to $2.9 trillion—from the start of the 2000s to the end of the decade.56 Such scale has in turn fueled huge ambitions. As Thomas Orlik notes, Xi’s Made in China 2025 plan is not simply aimed at innovation in key industrial sectors; it aims to use this innovation to reform the entire manufacturing system. China is aiming for even greater manufacturing dominance, with its firms producing no less than 70 percent of key components for many sectors by 2025, something only achievable with size.57

While both China and the United States have massive internal scale, both countries face significant challenges today. China’s one-child policy helped create a demographic problem, and whether that is sur­mountable remains to be seen. As Peter Zeihan points out, by 2030 population aging will result in four retirees for every two taxpayers and one child.58 America’s scale problems, on the other hand, seem less about demographics (though the U.S. birth rate has also declined con­siderably) and physical limits, and more about delib­erate policy choices. Debates about “protectionism” or “indus­trial policy,” about risk-averse rates of return and shareholder-primacy business models are more debates about policy choices than about the lack of resources or capabilities.59 The financialization of the American economy that began in the 1970s, after all, came about as a result of a series of policy choices, such as changes in commissions on stock transactions, the reduction of capital gains tax rates, allowing pension funds to invest in speculative alternative assets, and the SEC’s adoption of Rule 10b-18, which allowed companies to en­gage in stock buybacks.60 These were political decisions and policy choices.

The Historical Analogy and Strategy

No analogy is perfect. But by following Neustadt and May in carefully cataloguing analogical likenesses and differences, it is possible to avoid misleading analogies that can lead to bad policy choices.61 By charting likenesses and differences, we can examine the historical evidence and judge where the analogy specifically applies.

The world today, as it was in the Edwardian era, is capitalist and trade-oriented. Within this capitalist-oriented era, as in the early twentieth century, the rising power’s predominant focus is economic, rather than military, and especially technological competition. Given the out­come of the Edwardian era competition, in which the United States overtook Great Britain as the world’s foremost economic power by the First World War, it would be appropriate to focus first and foremost on the economic and technological competition with China.

At the same time, the differences between the two eras suggest ways to avoid a similar outcome—Britain’s decline and the dissolution of the British Empire. China’s own autocracy is a two-edged sword that allows for centralized decision-making, a decided advan­tage in a state-capitalist order. Yet its lack of popular political agency fosters a latent instability that causes the regime to be haunted by the specter of revolt, including the revolt of its own military. And unlike Great Britain in the Edwardian era, which had to look externally, the United States today has internal scale—in natural resource abundance, in interconnected domestic mar­kets, and in relatively favorable demographics.

Geography and demography may be destiny, but policy is mutable—as is strategy. The United States has made a conscious set of policy choices that created the financialized and stagnant economy we have today. That economy has maximized shareholder profits, off­shoring, and a shorter-term private R&D focus, while public sector R&D seems to have lost the direction it previously had.

In this case the Edwardian period may, by analogy, bring our present situation into sharper focus, and in doing so help illuminate appropriate changes in strategy. Such an analogy shows how we may repeat the past, but it also helps us understand how we might transcend it.

This article originally appeared in American Affairs Volume V, Number 3 (Fall 2021): 116–32.

The views and opinions expressed in this article are the author’s own and do not reflect those of National Defense University or the U.S. Department of Defense.

1 Aaron Friedberg, The Weary Titan: Britain and the Experience of Relative Decline, 1895–1905 (Princeton: Princeton University Press, 2010), 14–17. Friedberg’s book initially came out in 1988, amid historical literature that examined great power decline. Another version was published in 2010 with an incisive afterword by Friedberg.

2 Yuen Foong Khong, Analogies at War: Korea, Munich, Dien Bien Phu, and the Vietnam Decisions of 1965 (Princeton: Princeton University Press, 1992), 17.

3 Richard E. Neustadt and Ernest R. May, Thinking in Time: The Use of History for Decision-Makers (New York: Free Press, 1986), 48.

4 Robert Jervis, How Statesmen Think: The Psychology of International Politics (Princeton: Princeton University Press, 2017), 32–37.

5 Neustadt and May, Thinking in Time, 83.

6 Khong, Analogies at War, 21.

7 Richard Fontane and Ely Ratner, “The U.S.-China Confrontation Is Not Another Cold War. It’s Something New,” Washington Post, July 2, 2020.

8 Neustadt and May, Thinking in Time, 48.

9 See Niall Ferguson, Empire: The Rise and Demise of the British World Order and the Lessons for Global Power (New York: Basic Books, 2002), 240–42; Paul Kennedy, The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000 (New York: Vintage, 1989), 224.

10 David Landes, The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present, 2nd ed. (Cambridge: Cambridge University Press, 2003), 227.

11 Kennedy, Rise and Fall, 198, 199, 200, and 202.

12 Katherine Coman, The Industrial History of the United States (New York: MacMillan, 1919), 314. Coman’s century-old work is an outstanding, near-contemporary history of the period in question, with description and analysis still insightful and revealing today.

13 Coman, Industrial History, 317.

14 Coman, Industrial History, 327.

15 Kennedy, Rise and Fall, 203.

16 Kennedy, Rise and Fall, 153.

17 Kennedy, Rise and Fall, 248.

18 Ferguson, Empire, 287.

19 Frederick Arthur MacKenzie, The American Invaders: Their Plans, Tactics and Progress (London: Howard, Wilford, Bell, 1901), 26.

20 MacKenzie, American Invaders, 25, 42.

21 See Peter Cain, “The City of London, 1880–1914: Tradition and Innovation” in The British Industrial Decline, ed. Michael Dintenfass and Jean-Pierre Dormois (London: Routledge, 1999), 34.

22 MacKenzie, American Invaders, 32, 110, 113, 121, and 128.

23 Friedberg, Weary Titan, 213.

24 See, e.g., James Foreman-Peck, “The Balance of Technological Transfers 1870–1914,” in The British Industrial Decline, 119.

25 For a general history of the nineteenth-century European free trade era, see Rondo Cameron, A Concise Economic History of the World: From Paleolithic Times to the Present (New York: Oxford University Press, 1993), 277–80.

26 Friedberg, Weary Titan, 23, 41.

27 Friedberg, Weary Titan, 65.

28 Cameron, Concise Economic History, 278.

29 Arthur James Balfour, Economic Notes on Insular Free Trade (New York: Longmans, Green and Co., 1903), 5.

30 Balfour, Economic Notes, 12, 13, 15.

31 Balfour, Economic Notes, 30; Cameron, Concise Economic History, 278–79.

32 Friedberg, Weary Titan, 83.

33 Friedberg, Weary Titan, 117.

34 Thomas Piketty, Capital and Ideology (Cambridge: Harvard University Press, 2019), 284.

35 Friedberg, Weary Titan, 269.

36 Friedberg, Weary Titan, 355.

37 Edward N. Luttwak, The Rise of China vs. the Logic of Strategy (Cambridge: Harvard University Press, 2012), 56–64.

38 Ezra Vogel, Deng Xiaoping and the Transformation of China (Cambridge: Harvard University Press, 2011), 96, 99, 548, 550.

39 Tai Ming Cheung, “Keeping Up with the Jundui: Reforming the Chinese Defense Acquisition, Technology, and Industrial Systems,” in Chairman Xi Remakes the PLA: Assessing Chinese Military Reforms, ed. Philip Saunders, Joel Wuthow et al. (Washington, D.C.: NDU Press, 2019), 600–1.

40 See Elsa Kania, “Military-Civil Fusion, China Is Learning from the United States and Starting to Innovate,” Strategy Bridge, August 27, 2019.

41 John Chen, “Choosing the Least Bad Option: Organizational Interests and Change in the PLA Ground Forces,” in Chairman Xi Remakes the PLA, 87.

42 Philip Saunders and Joel Wuthnow, “Large and in Charge: Civil-Military Relations under Xi Jinping,” in Chairman Xi Remakes the PLA, 522 (emphasis added).

43 Sulmaan Wasif Khan, Haunted by Chaos: China’s Grand Strategy from Mao Zedong to Xi Jinping (Cambridge: Harvard University Press, 2018), 240.

44 Chen, “Choosing,” 90; David M. Finkelstein, “Breaking the Paradigm: Drivers Behind the PLA’s Current Period of Reform,” in Chairman Xi Remakes the PLA, 48, 67.

45 Ian Burns McCaslin and Andrew S. Erickson, “The Impact of Xi-Era Reforms on the Chinese Navy,” in Chairman Xi Remakes the PLA, 127.

46 Elizabeth Economy, The Third Revolution: Xi Jinping and the New Chinese State (New York: Oxford University Press, 2018) 213–14.

47 Mingda Qiu, “A Larger but Not Leaner Fat Tech Dragon,” in China’s Uneven High-Tech Drive: Implications for the United States, ed. Scott Kennedy (Washington D.C: Center for Strategic and International Studies, February 2020), 10.

48 David C. Gompert, “Spin On: How the US Can Meet China’s Technological Challenge,” Survival 62, no. 3 (2020): 117, 124.

49 Qiu, “Larger but Not Leaner,” 9.

50 See Linda Weiss, America, Inc.?: Innovation and Enterprise in the National Security State (Ithaca, N.Y.: Cornell University Press, 2014), 47–50.

51 See David Sainsbury, Windows of Opportunity: How Nations Create Wealth (London: Profile Books, 2020), 173–77.

52 See Bruce J. Dickson, The Dictator’s Dilemma: The Chinese Communist Party’s Strategy for Survival (New York: Oxford University Press, 2016), 1–31, 310–11, 319–20.

53 Friedberg, Weary Titan, 83.

54 See Peter Zeihan, Disunited Nations: The Scramble for Power in an Ungoverned World (New York: Harper, 2020), 391–95.

55 Thomas Orlik, China: The Bubble that Never Pops (New York: Oxford University Press, 2020), 141.

56 Robert D. Atkinson and Michael Lind, Big Is Beautiful: Debunking the Myth of Small Business (Cambridge: MIT Press, 2018), 129–130, 217.

57 Orlik, China, 141.

58 Zeihan, Disunited Nations, 87.

59 See Michael Lind, Land of Promise: An Economic History of the United States (New York: Harper, 2012), 362–94.

60 For a detailed critique of this “financialization,” see William Lazonick and Jang‑Sup Shin, Predatory Value Extraction: How the Looting of the Business Corporation Became the U.S. Norm and How Sustainable Prosperity Can Be Restored (New York: Oxford University Press, 2020), 49–65.

61 Neustadt and May, Thinking in Time, 235.

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