Secretary of State George Shultz with President Ronald Reagan in Washington, December 1986
Wikimedia Commons

Albert Einstein once observed that the advent of nuclear weapons had changed everything except our modes of thinking. If even so dramatic a development as the nuclear revolution has taken a long time to be fully understood, how much longer has it usually taken to understand the implications of the more subtle, intangible historical changes taking place around us.

The international order at the end of this century is certain to be far different from the pattern of world politics when the century began. The distribution of power and the dynamics of international relations have undergone a continuous transformation, driven by many factors—technology, economic and social changes, and the often-underestimated force of ideas. This process goes on; history never stops. As we head toward the 21st century, Einstein’s observation takes on new relevance: our ways of thinking must adapt to new realities; it is imperative that we grasp the new trends and understand their implications.

The United States of America is not just an onlooker, however. We are participants and we are engaged. America is again in a position to have a major influence over the direction of events—and the traditional goals and values of the American people have not changed. We have a duty to help shape the trends, as they evolve, in accordance with our ideals and interests, to help construct a new pattern of international stability that will ensure peace, prosperity and freedom for coming generations.

What are the forces of change? What new "modes of thinking" are required? And what are the possible elements of a new and more secure international system?

II

The U.S.-Soviet relationship, for better or worse, remains a crucial determinant of the prospects for world peace, even though the political predominance of the two superpowers is less than it was a few decades ago. How to manage this relationship as conditions change remains a major conceptual challenge for the United States.

So long as the Soviet system is driven by ideology and national ambition to seek to aggrandize its power and undermine the interests of the democracies, true friendship and cooperation will remain out of reach. The West must resist this Soviet power-drive vigorously if there is to be any hope for lasting stability. At the same time, in the thermonuclear age both sides have a common interest in survival; therefore both sides have an incentive to moderate the rivalry and to seek ways to control nuclear weapons and reduce the risks of war. We cannot know whether such a steady Western policy will, over time, lead to a mellowing of the Soviet system. Perhaps not. But the West has the same responsibility in either case: to resist Soviet encroachments firmly while holding the door open to more constructive possibilities.

Today, with the accession of Mr. Gorbachev, there may be a fresh opportunity to explore these more constructive possibilities. President Reagan is approaching this prospect in a positive spirit, as well as with a realistic appreciation that the difficulties between our countries are grounded in objective problems that we must work hard to resolve.

The democracies, unlike the Soviets, have long had difficulty maintaining consistency, coherence, discipline and a sense of strategy. Free societies are often impatient. Western attitudes have fluctuated between extremes of gloom and pessimism, on the one hand, and susceptibility to a Soviet smile on the other. Our ways of thinking have tended too often to focus either on increasing our strength or on pursuing negotiations; we have found it hard to do both simultaneously—which is clearly the most sensible course and probably the only way we can sustain either our defense programs or our ability to negotiate.

In the last four years, nevertheless, the underlying conditions that affect U.S.-Soviet relations have changed dramatically. Ten to fifteen years ago, when the United States was beset by economic difficulties, neglecting its defenses, and hesitant about its role in the world, the Soviets exploited these conditions. They relentlessly continued to build up militarily; they and their clients moved more boldly in the geopolitical arena, intervening in such places as Angola, Cambodia, Ethiopia and Afghanistan, believing that the West was incapable of resisting. They had reason for confidence that what they call the global "correlation of forces" was shifting in their favor.

Today, our key alliances are more united than ever before. The United States is restoring its military strength and economic vigor and has regained its self-assurance; we have a President with a fresh mandate from the people for an active role of leadership. The Soviets, in contrast, face profound structural economic difficulties and restless allies; their diplomacy and their clients are on the defensive in many parts of the world. We have reason to be confident that the "correlation of forces" is shifting back in our favor.

Nevertheless, history will not do our work for us. Experience suggests that the Soviets will periodically do something, somewhere, that is abhorrent or inimical to our interests, dampening hopes for an improvement in East-West relations. Witness the examples of Czechoslovakia, Afghanistan, the Korean Air Lines shootdown and Soviet human rights practices. The question is how the West should respond to such outrages. Clearly our objective should be to act in a way that could help discipline Soviet behavior; at the same time, our posture should not leave our own strategy vulnerable to periodic disruption by such shocks.

We must never let ourselves be so wedded to improving relations with the Soviets that we turn a blind eye to actions that undermine the very foundation of stable relations; symbolic responses to outrageous Soviet actions have their place, and so do penalties and sanctions. Experience also shows, however, that as a practical matter we can best deter or undo Soviet geopolitical encroachments by helping, in one way or another, those who are resisting directly on the ground. And many negotiations and endeavors we undertake with the Soviets serve mutual interests—indeed, they all should.

Thus we are left with tough choices. Whether important negotiations ought to be interrupted after some Soviet outrage will always be a complex calculation. When the Soviets shot down the Korean airliner in 1983, President Reagan made sure the world knew the full unvarnished truth about the atrocity; nevertheless, he also sent our arms control negotiators back to Geneva because he believed that a reduction in nuclear weapons was a critical priority.

In short, our "mode of thinking" must seek a sustainable strategy geared to American goals and interests, in the light of Soviet behavior but not just in reaction to it. Such a strategy requires a continuing willingness to solve problems through negotiation where this serves our interests (and presumably mutual interests). Our leverage will come from creating objective realities that give the Soviets a growing stake in better relations with us across the board: by continuing to modernize our defenses, assist our friends and confront Soviet challenges. We must learn to pursue a strategy geared to long-term thinking and based on both negotiation and strength simultaneously, if we are to build a stable U.S.-Soviet relationship for the next century.

III

The intellectual challenge of a new era faces us in a related dimension, namely arms control. The continuing revolution in technology means that the strategic balance—and the requirements of deterrence—are never static. Unfortunately, conventional modes of thinking about many of these questions continue to lag behind reality.

Standard strategic doctrine in the West has ultimately relied, for decades, on the balance of terror—the confrontation of offensive arsenals by which the two sides threaten each other with mass extermination. Deterrence has worked under these conditions, and we must not let go of what has worked until we know that something better is genuinely available. Nevertheless, for political, strategic and even moral reasons, we owe it to our people to explore the possibility that we can do better than the conventional wisdom that our defense strategy must rely on offensive threats and must leave our people unprotected against attack. The Soviets, for their part, have always attached enormous doctrinal and practical importance to strategic defense, including not only air defense and civil defense but a deployed and modernized anti-ballistic missile system around Moscow—and intensive research into new defensive technologies.

Adjusting our strategic thinking to the constant advance of technology is never an easy process. The vehemence of some of the criticism of the President’s Strategic Defense Initiative (SDI), in my view, comes less from the debate over technical feasibility—which future research will settle one way or another in an objective manner—than from the passionate defense of orthodox doctrine in the face of changing strategic realities. We are proceeding with SDI research because we see a positive, and indeed revolutionary, potential: defensive measures may become available that could badly disrupt any attack on us or our allies and thereby render obsolete the threat of an offensive first strike. A new strategic equilibrium based on defensive technologies and sharply reduced offensive deployments is likely to be the most stable and secure arrangement of all.

Our concept can be described as follows: during the next ten years, the U.S. objective is a radical reduction in the power of existing and planned offensive nuclear arms, as well as the stabilization of the relationship between offensive and defensive nuclear arms, whether on earth or in space. We are even now looking forward to a period of transition to a more stable world, with greatly reduced levels of nuclear arms and an enhanced ability to deter war based upon an increasing contribution of non-nuclear defenses against offensive nuclear arms. This period of transition could lead to the eventual elimination of all nuclear arms, both offensive and defensive. A world free of nuclear arms is an ultimate objective to which we, the Soviet Union, and all other nations can agree.

IV

As the political dominance of the superpowers began to erode in the last few decades, some saw a five-power world emerging—with the United States, the Soviet Union, Western Europe, China and Japan as the major players. After the energy crisis of the early 1970s, others emphasized the increasing importance of the North-South relationship. Some saw the U.S.-Soviet relationship as still central.

There are elements of truth in all these perceptions. Nevertheless, in the mid-1980s, in my view, the most striking trend in world politics is something else: the growing dynamism, cohesion and cooperation of like-minded nations that share an important set of positive goals.

American foreign policy is driven by positive goals—peace, democracy, liberty and human rights; racial justice; economic and social progress; the strengthening of cooperation and the rule of law. They are goals that inspire peoples and nations around the world, and they may well turn out to be the organizing principles of an international order that embraces the great majority of mankind. Already we see them reflected in new trends in many regions of the world and in many dimensions of foreign policy.

America’s closest and most lasting international relationships, of course, are its alliances with its fellow democracies. This is no accident. Our ties with our democratic friends abroad have an enduring quality precisely because they rest on a moral base, not only a base of strategic interest. When George Washington advised his countrymen to steer clear of permanent alliances, his attitude was colored by the fact that there were hardly any other fellow democracies in those days. We were among the first, and we had good reason to be wary of entanglements with countries that did not share our democratic principles. In any case, we now define our strategic interests in terms that embrace the safety and well-being of the democratic world.

Today’s conditions define the tasks of the Atlantic alliance. There is a new awareness, for example, of the importance of strengthening conventional defenses, as a way of bolstering Europe’s security while reducing NATO’s reliance on nuclear weapons. A strong Western deterrent posture is the most solid basis for engaging the East in constructive negotiations. For the short run, the allies are taking steps to improve NATO readiness and infrastructure. For the longer run, the alliance is looking to correct other critical deficiencies, as well as addressing the fundamental challenge of improving the efficiency of allied defense procurement.

The United States has always supported Western European unity, knowing that a strong Europe, while it would be a competitor in some ways, was in the overall interest of the free world. We wish the European Community well; we encourage our European friends to make further progress in developing a true Europe-wide market and in breaking down structural rigidities that impede both economic expansion and effective economic cooperation with us.

We also see, in Europe, new and creative thinking about the continuing pursuit of political unity, and about strengthening West European cooperation in the defense field. We support both these goals. The West can only benefit from a major European role in world affairs. And the peoples of Western Europe should see defense as an endeavor they undertake for their own future, not as a favor to the United States. With statesmanship on both sides of the Atlantic, this evolution will strengthen the common defense and heighten the sense of common political purpose among the democracies.

As we think about Europe’s evolution, we cannot forget Eastern Europe. Since the days of the Marshall Plan, when the West invited the East to join, we have always wanted the success of Western Europe to be a beacon to all of Europe. The present political division of the continent is wholly artificial; it exists only because it has been imposed by brute Soviet power; the United States has never recognized it as legitimate or permanent. In certain countries, there are efforts at liberalization. But all the peoples of Eastern Europe are capable of, deserve and yearn for something better. In recent years we have seen the powerful aspiration for free trade unions, for economic reform, for political and religious freedom, for true peace and security, for human rights as promised by the Helsinki accords. We hope to see the day when the Soviet Union changes its mode of thinking to consider its own security in terms compatible with the freedom, security and independence of its neighbors.

In East Asia and the Pacific, another new reality is changing our perception of the world. The economic dynamism of this region is taking on increasing importance, as a factor in America’s foreign trade, as an economic model for the developing world, and as a unique and attractive vision of the future. We see the countries of free East Asia growing at seven percent a year over the past decade; for the past five years, our trade with East Asia and the Pacific has been greater than our trade with any other region and its relative importance continues to grow. In 1984, U.S. trade with the region reached $165 billion—about 30 percent of total U.S. trade. The Association of Southeast Asian Nations has become an impressive example of economic development and regional political cooperation. The Republic of Korea is a spectacular economic success story. Japan is playing a larger role—responsibly, positively and cooperatively—commensurate with its growing strength. In the People’s Republic of China, the hopes for economic modernization have been invested—wisely—in a bold program of reform. China’s long march to the market is a truly historic event—a great nation throwing off outmoded economic doctrines and liberating the energies of its talented people.

There are, of course, problems that pose dangers to this bright economic future: the Soviet military buildup in the region; aggression by the Soviet Union and its clients in Afghanistan and Cambodia; unresolved tensions on the Korean peninsula; internal problems in various countries. East Asia has a rich heritage of civilization—and also a turbulent history of bitter conflict. The symbolism of Angkor Wat—the damage done by modern violence to a great ancient monument—is both a paradox and a warning.

Nevertheless, the most striking trend in the region today is the positive trend, especially the new movement toward wider collaboration. A sense of Pacific community is emerging among many nations with an extraordinary diversity of cultures, races and political systems. There is an expanding practice of regional consultation and a developing sense of common interest in regional security. In this sense, a decade after Vietnam, the United States has more than restored its position in Asia. We can be proud of the vitality of our alliances, friendships and productive ties in this promising region. If nations act with wisdom and statesmanship, we may well be at the threshold of a new era in international relations in the Pacific basin.

In Latin America, another kind of trend is apparent—the steady advance of democracy. Democracy is hardly a new idea, but this new development is revising some earlier assumptions in some quarters about the world’s political future. Pessimists in some quarters used to maintain that the industrial democracies were doomed to permanent minority status in the world community. Today, there is mounting evidence that the ideal of liberty is alive and well. In the Western hemisphere, over 90 percent of the population of Latin America and the Caribbean today live under governments that are democratic—in contrast to only one-third in 1979. In less than six years, popularly elected democrats have replaced dictators in Argentina, Bolivia, Ecuador, El Salvador, Honduras, Panama, Peru, Grenada, Brazil and Uruguay. Guatemala is in transition to democracy. After a long twilight of dictatorship, this hemispheric trend toward free elections and representative government is something to be applauded and supported.

The United States has always been a champion of democracy. Democratic institutions are the best guarantor of human rights, and also the best long-term guarantor of stability. On every continent, we see a trend toward democracy or else a yearning for democracy; both are vivid demonstrations that the idea of liberty is far from a culture-bound aspiration or monopoly of the industrialized West.

Today we see a significant new phenomenon. After years of guerrilla insurgencies led by communists against pro-Western governments, we now see dramatic and heartening examples of popular insurgencies against communist regimes. Today, in a variety of different circumstances—in Nicaragua, in Afghanistan, in Cambodia, in Africa—Marxist-Leninist rulers have clearly failed to suppress the aspiration for representative government. And communist systems have proved, uniformly, to be economic disasters. The American people have a long and noble tradition of supporting the struggle of other peoples for freedom, democracy and independence. In the nineteenth century we supported Simon Bolívar, Polish patriots and others seeking freedom—reciprocating, in a way, the aid given to us in our own revolution by other nations like France. If we turned our backs on this tradition, we would be conceding the Soviet notion that communist revolutions are irreversible while everything else is up for grabs; we would be, in effect, enacting the Brezhnev Doctrine into American law. So long as communist dictatorships feel free to aid and abet insurgencies in the name of "socialist internationalism," why must the democracies—the target of this threat—be inhibited from defending their own interests and the cause of democracy itself?

The future of democracy is precisely what is at stake in Central America. With Soviet and Cuban support, the Sandinistas are seeking to consolidate a totalitarian system in Nicaragua and to promote subversion throughout the region. Our policy is to promote democracy, reform and human rights; to support economic development; to help provide a security shield against those who seek to spread tyranny by force; and to support dialogue and negotiation both within and among the countries of the region. We are backing democratic governments and democratic political forces against extremists of both the left and the right. If we abandon those seeking democracy, the extremists will gain and the forces of moderation and decency will be the victims. This is why the Administration has worked so hard, and will continue to work hard, for effective negotiations, for economic and security assistance, and for the bipartisan plan that emerged from the Kissinger commission. Our nation’s vital interests and moral responsibility require us to stand by our friends in their struggle for freedom and against those who glorify violent revolution and repression.

In other parts of the world, as well, the United States is actively engaged in the search for peaceful solutions to regional conflicts. Such mediation is, of course, a traditional American role, but new conditions always call for new ways of thinking—on the part of all parties—about how to make progress.

In the Middle East, for example, we have seen signs of a new realism and a new commitment on the part of key regional actors. If pursued, this could create the conditions for progress, which will come when both sides agree to sit down together at the negotiating table. The United States remains convinced that President Reagan’s initiative of September 1, 1982, is the most promising route to a solution. We are intensively engaged this year in encouraging our Israeli and Arab friends to take further steps toward peace. We will continue to support and encourage those who seek peace against those who promote violence and try to block all progress.

In southern Africa, as well, the United States has a key role to play. We must pursue the dual objectives of racial justice and regional security. These twin challenges call for serious analysis and sober thinking, not emotional responses. We have already accomplished much, but our influence is not infinite. Today there is less cross-border violence in southern Africa than at any time in more than a decade. Progress is being made toward a Namibia settlement. We have strengthened ties with Mozambique and other regional states. And South Africa itself has developed cooperative relations with many of its neighbors.

Within South Africa, a dynamic of evolution is already at work. More positive change is occurring now than in the 1970s or 1960s or 1950s. The positive influence of the American presence—our diplomacy, our companies, our assistance programs for black South Africans—is helping to build the basis for further change. Apartheid must go. But the only course consistent with American values is to engage ourselves as a force for constructive, peaceful change while there is still a chance. It cannot be our choice to cheer on, from the sidelines, the forces of polarization that could erupt in a race war; it is not our job to exacerbate hardship, which could lead to the same result.

V

In the global economy, an important shift of another kind is taking place—an intellectual shift. Reality is intruding on some long-held notions about economic policy. Lord Keynes’ point about practical men being slaves to some defunct economist may be less true now than in the past. Or perhaps the views expressed by Adam Smith over two centuries ago on the creation of the "wealth of nations" are once again showing their practical validity. At any rate, recent experience has fueled a broad and long-overdue skepticism about statist solutions, central planning and government direction.

This intellectual shift is partly the product of the extraordinary vigor of the American recovery. The United States has revised its tax system to provide real incentives to work, to save, to invest, to take risks, to be efficient. We have reduced government regulation, intervention and control. We have opened opportunities for freer competition in transportation, finance, communication, manufacturing and distribution. Last year’s real growth in the gross national product was the sharpest increase since 1951; inflation (as measured by the GNP deflator) was the lowest since 1967. The overall result has been the extraordinary creation of over seven million new jobs in two years.

Success inspires emulation. Not only in East Asia, but on every continent—Europe, Latin America, Africa and elsewhere in Asia—we see movement to decentralize, to deregulate, to denationalize, to reduce rigidity and to enlarge the scope for individual producers and consumers to cooperate freely through markets. In Africa, the American response to the food crisis includes not only a tremendous relief effort but a longer-term aid program supporting African efforts of economic reform, particularly in agriculture.

Serious challenges to the global economy remain, but the future holds promise. A worldwide revolution in economic thought and economic policy is under way.

And it is coming just in time, because it coincides with yet another revolution—a revolution in the technological base of the global economy. This is what Walter Wriston has called "the onrushing age of information technology." The combination of microchip computers, advanced telecommunications—and a continuing process of innovation—is not only transforming communication and other aspects of daily life, but is also challenging the very concepts of national sovereignty and the role of government in society.

The very existence of these new technologies is yet another testimony to the crucial importance of entrepreneurship—and government policies that give free rein to entrepreneurship—as the wellspring of technological creativity and economic growth. The closed societies of the East are likely to fall far behind in these areas—and Western societies that maintain too many restrictions on economic activity run the same risk. Moreover, any government that attempts heavy-handedly to control or regulate or tax the flow of electronic information will find itself stifling the growth of the world economy as well as its own progress. This is one of the reasons why the United States is pressing for a new round of trade negotiations in these service fields of data processing and transfer of information. The entire free world has a stake in building a more open system, because together we can progress faster and farther than any of us can alone.

This points to another advantage the West enjoys. The free flow of information is inherently compatible with our political system and values. The communist states, in contrast, fear this information revolution perhaps even more than they fear Western military strength. We all remember the power of the Ayatollah’s message disseminated on tape cassettes in Iran; what could have a more profound impact in the Soviet bloc than similar cassettes, outside radio broadcasting, direct broadcast satellites, or photocopying machines? Totalitarian societies face a dilemma: either they try to stifle these technologies and thereby fall further behind in the new industrial revolution, or else they permit these technologies and see their totalitarian control inevitably eroded. In fact, they do not have a choice, because they will never be able entirely to block the tide of technological advance.

The revolution in global communication thus forces all nations to reconsider traditional ways of thinking about national sovereignty. We are reminded anew of the world’s interdependence, and we are reminded as well that only a world of spreading freedom is compatible with human and technological progress.

VI

These broad trends I have described are mostly positive trends. However, we can also see social dislocation arising from economic change; we see urban alienation, political turbulence, and the many potential sources and forms of disorder I have mentioned. The future evolution of the international system will follow the positive trends only if we—the United States and the free world—meet our responsibility to defend our interests and shape events in accordance with our own ideals and goals.

In at least one respect, the modern world, with its spreading technology and prosperity and democratic aspirations, is ironically becoming also more and more vulnerable. I am thinking, of course, about terrorism. Even as the world becomes more secure from the danger of major war, paradoxically the democratic world now faces an increasing threat from this new form of warfare.

Terrorism these days is becoming less an isolated phenomenon of local fanatics, and increasingly part of a new international strategy resorted to by the enemies of freedom. It is a vicious weapon used deliberately against democracies; against the interests, policies and friends of the democracies; and against completely innocent people. There are disturbing links, as well, to international drug trafficking. Terrorism is a problem that, more than many others, is forcing us into new ways of thinking about how to safeguard our future. During the year ahead we must be prepared for serious terrorist threats in Western Europe, in the Middle East and in Latin America, much of it supported or encouraged by a handful of ruthless governments.

A counterstrategy for combatting terrorism, in my view, must encompass many things. We and our allies must work still harder to improve security, share information, coordinate police efforts and collaborate in other ways. We in this country must also think hard about the moral stakes involved. If we truly believe in our democratic values and our way of life, we must be willing to defend them. Passive measures are unlikely to suffice; means of more active defense and deterrence must be considered and given the necessary political support.

Finally, while working tirelessly to deny terrorists their opportunities and their means, we can—and must—be absolutely firm in denying them their goals. They seek to blackmail us into changing our foreign policies or to drive us out of countries and regions where we have important interests. This we cannot permit; we cannot yield position or abandon friends or responsibilities under this kind of pressure. If we allow terrorists even one such victory, we embolden them further; we demoralize all who rely on us, and we make the world an even more dangerous place.

There is, of course, a broader issue here. This is the basic question of the use of American power in the defense of our interests and the relevance of our power as the backstop to our diplomacy. It is reflected, for example, in what are often called "gray-area challenges"—the kind of regional or local conflicts and crises that are likely to persist in a turbulent world, below the threshold of major war but nonetheless affecting important Western interests. Most of the major conflicts since 1945, indeed, have originated in such conflicts in the developing world. The end of the colonial order has not brought universal peace and justice; much of the developing world is torn by the continuing struggle between the forces of moderation and the forces of radicalism—a struggle actively exploited and exacerbated by the Soviet Union.

It is absurd to think that America can walk away from such challenges. This is a world of great potential instability and many potential dangers. It is commonly observed that we live on a shrinking planet and in a world of increasing interdependence. It follows that the United States, as the world’s strongest democracy, must meet its responsibility as a defender of freedom, democratic values and international peace, and as a nation upon whom many others rely for their security. Americans have always deeply believed in a world in which disputes were settled peacefully—a world of law, international harmony and human rights. But we have learned through hard experience that such a world cannot be created by good will and idealism alone. We have learned that to maintain peace and preserve freedom we have to be strong, and, more than that, we have to be willing to use our strength. We would not seek confrontation, but we learned the lesson of the 1930s—that appeasement of an aggressor only invites aggression and increases the danger of war.

Americans have sometimes tended to think that power and diplomacy are two distinct alternatives. The truth is, power and diplomacy must always go together, or we will accomplish very little in this world. Power must always be guided by purpose. At the same time, the hard reality is that diplomacy not backed by strength will always be ineffectual at best, dangerous at worst. Americans will always be reluctant to use our military strength; this is the mark of our decency. And clearly, the use of force must always be a last resort, when other means of influence have proven inadequate. But a great power cannot free itself so easily from the burden of choice. It must bear responsibility for the consequences of its inaction as well as for the consequences of its action. In either case, its decision will affect the fate of many other human beings in many parts of the world.

We must be wise and prudent in deciding how and where to use our power; the United States will always seek political solutions to problems. Such solutions will never succeed, however, unless aggression is resisted and diplomacy is backed by strength. We are reasonably well prepared to deter all-out Soviet nuclear aggression—provided we continue with our strategic modernization—but we must be sure we are as well prepared, physically and psychologically, for the intermediate range of challenges that we will inevitably confront.

VII

I have touched on a wide variety of topics, but two very important, and very basic, conclusions can be drawn from them.

First, the agenda for the immediate future seems to me to be an agenda on which the American people are essentially united. These are goals that are widely shared and tasks that are likely to reinforce another important trend: namely, the reemergence of a national consensus on the main elements of our foreign policy. This, indeed, may be the most important positive trend of all, because so many of our difficulties in recent decades have been very much the product of our own domestic divisions.

Second, all the diverse topics I have touched upon are, in the end, closely interrelated. The United States seeks peace and security; we seek economic progress; we seek to promote freedom, democracy and human rights. The conventional mode of thinking is to treat these as discrete categories of activity. In fact, as we have seen, it is now more and more widely recognized that there is a crucial connection among them.

As I have already discussed, it is more and more understood that economic progress is related to a political environment of openness and freedom. It used to be thought in some quarters that socialism was the appropriate model for developing countries because central planning was better able to mobilize and allocate resources in conditions of scarcity. The historical experience of Western Europe and North America, which industrialized in an era of limited government, was not thought to be relevant. Yet the more recent experience of the Third World shows that a dominant government role in developing economies has often stifled the natural forces of production and productivity and distorted the efficient allocation of resources. The real engine of growth, in developing as well as industrialized countries, turns out to be the natural dynamism of societies that minimize central planning, open themselves to trade with the world, and give free rein to the talents and efforts and risk-taking and investment decisions of individuals.

Similarly, there is almost certainly also a relationship among economic progress, freedom and world peace. Andrei Sakharov declared in his Nobel lecture:

I am convinced that international trust, mutual understanding, disarmament, and international security are inconceivable without an open society with freedom of information, freedom of conscience, the right to publish, and the right to travel and choose the country in which one wishes to live. I am also convinced that freedom of conscience, together with other civic rights, provides both the basis for scientific progress and a guarantee against its misuse to harm mankind.

The implication of all this is profound: it is that the Western values of liberty and democracy, which some have been quick to write off as culture-bound or irrelevant or passé, are not to be so easily dismissed. These values are the source of our strength, economic as well as moral, and they turn out to be more central to the world’s future than many may have realized. After more than a century of fashionable Marxist mythology about economic determinism and the "crisis of capitalism," the key to human progress turns out to be those very Western concepts of political and economic freedom that Marxists claimed were obsolete. They were wrong. Today—in a supreme irony—it is the communist system that looks bankrupt, morally as well as economically. The West is resilient and resurgent.

And so, in the end, the most important new way of thinking that is called for in this decade is our way of thinking about ourselves. Civilizations thrive when they believe in themselves; they decline when they lose this faith. All civilizations confront massive problems, but a society is more likely to master its challenges, rather than be overwhelmed by them, if it retains this bedrock self-confidence that its values are worth defending. This is the essence of the Reagan revolution and of the leadership the President has sought to provide in America.

The West has been through a difficult period in the last decade or more. But now we see a new turn. The next phase of the industrial revolution—like all previous phases—comes from the democratic world, where innovation and creativity are allowed to spring from the unfettered human spirit. And on every continent—from Nicaragua to Cambodia, from Poland to South Africa to Afghanistan—we see that the yearning for freedom is the most powerful political force all across the planet.

So, as we head toward the 21st century, it is time for the democracies to celebrate their system, their beliefs and their success. We face challenges, but we are well poised to master them. Opinions are being revised about which system is the wave of the future. The free nations, if they maintain their unity and their faith in themselves, have the advantage—economically, technologically, morally.

History is on freedom’s side.

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