The Unraveling of American Economic Power: Why the World is Building Alternatives to the U.S.-Centric System
Over $17 trillion in sanctions have been levied against Russia since its invasion of Ukraine – a staggering figure that highlights a defining feature of 21st-century geopolitics: the weaponization of the global economy. But as Henry Farrell and Abraham Newman detail in their groundbreaking book, Underground Empire, this isn’t a new development. It’s the logical, and potentially self-destructive, culmination of decades of U.S. dominance built not on traditional power projection, but on controlling the very infrastructure of global finance and technology. The world is now actively seeking to bypass these chokepoints, and the consequences for American influence will be profound.
The Invisible Empire: How the U.S. Controls the Global Plumbing
For decades, the United States has enjoyed a unique position. It’s not simply about military strength or diplomatic prowess; it’s about owning the “pipes, wires, and code” that underpin the global economy. From the SWIFT payment system to the dominance of U.S. tech giants in cloud computing and semiconductor design, the world’s economic activity flows through American-controlled infrastructure. This control allows Washington to exert immense pressure – and increasingly, outright coercion – on other nations. As Farrell and Newman argue, this geoeconomic leverage isn’t a sign of strength, but a source of systemic instability.
From Sanctions to Systemic Risk: The Boomerang Effect
The authors meticulously document how the U.S. has evolved from ad-hoc sanctions enforcement to a sophisticated toolkit of economic warfare. Freezing central bank assets, restricting technology exports, and extraterritorial enforcement of American law are now commonplace. However, each instance of this coercion creates incentives for other countries to reduce their dependence on the U.S. system. This isn’t about a desire to confront the U.S., but a pragmatic need to protect their own economic interests. As Russia demonstrated, reliance on a system that can be weaponized against you is a strategic vulnerability.
The Rise of Parallel Systems: A Fragmenting World Order
The search for alternatives is accelerating. China’s Cross-Border Interbank Payment System (CIPS) is gaining traction as a rival to SWIFT, offering a way to bypass U.S. financial controls. BRICS nations are actively discussing a common currency to reduce their reliance on the U.S. dollar. Even U.S. allies, like France and Germany, are exploring non-dollar payment channels for energy transactions. This isn’t a coordinated effort to dismantle the U.S.-led order, but a series of independent responses to perceived risks. The result is a slow but steady fragmentation of the global economic landscape, moving away from a hub-and-spoke model towards a multipolar system.
Beyond Finance: Diversifying Tech and Supply Chains
The drive for independence extends beyond finance. The U.S. restrictions on semiconductor exports to China have spurred massive investment in domestic chip manufacturing and the development of alternative chip architectures. Countries are also diversifying their supply chains to reduce their reliance on single points of failure, particularly those controlled by the U.S. or its allies. This trend, accelerated by the COVID-19 pandemic, is further eroding U.S. economic leverage. A recent report by the Council on Foreign Relations highlights the intensifying competition in critical technologies and the need for the U.S. to adapt its strategy.
The Path Forward: Retrenchment or Recalibration?
Farrell and Newman don’t predict the imminent collapse of U.S. economic power. However, they warn that continued reliance on economic coercion without a clear strategy or multilateral legitimacy will only accelerate the erosion of American influence. The U.S. faces a critical choice: retrenchment, accepting a diminished role in the global economy, or recalibration, rebuilding trust and re-anchoring its statecraft in diplomacy. The latter requires a fundamental shift in mindset, moving away from a “weaponized” economy towards one that prioritizes cooperation and shared prosperity.
The age of unipolar economic dominance is undeniably coming to an end. The question isn’t whether the world will change, but how. Ignoring the lessons of Underground Empire – and the growing momentum behind alternative systems – would be a strategic blunder of historic proportions. What are your predictions for the future of the global economic order? Share your thoughts in the comments below!
