End of History and Exceptionalism: International System After 1991

This chapter focuses on the events after 1991. The withdrawal of the USSR from Eastern Europe created enormous expansion opportunities for the American and Western hegemonic interests. This period oversaw economic and territorial expansions of the European Union. The financial, trade, and military architecture of this expansion is discussed in detail. The role of the dollar as the currency that underpins this system is explored. The role of monetary policy is discussed in conjunction with trade and security policies. I show how these policies ran their course over the next three decades as diminishing returns set in. Excessive reliance on credit creation and service sector growth brought volatility and financial crisis of 2000, 2008, and beyond. The issue of offshoring jobs to China and the Asia Pacific and their subsequent impact on the American labour market and income is discussed. The cold war origins of this policy is revisited along with internal political economy factors. The chapter covers the long-term consequences of replacing income with credit in order to support consumption. In other words, it entertains the thesis how excessive reliance on the monetary policy credit channel leads to asset price bubbles. On the national security side, special attention is given to conflicts in the Middle East (Iraq, Libya, Syria, Afghanistan), and Yugoslavia. Attention is given to tensions in the South China Sea and the Korean Peninsula. Ever expanding military and security budget, growing national debt, and the stability of the national currency is analysed. “We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality—judiciously, as you will—we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors … and you, all of you, will be left to just study what we do.” Karl Rove, Senior Advisor and White House Deputy Chief of Staff, President George W. Bush Administration.