The Bear’s Lair: Is Cold War optimal on a crowded planet?

Back in the days of sailing ships, when it took months to get to India, there was no question of a global government – communications were not good enough. Thus, countries preserved their freedom independently, worrying little about the ideology and governance of any but their near neighbors. The world is now much smaller, and co-existence more difficult. Since large wars are unimaginably horrible, and a single global government almost equally so, the optimal outcome may be a bipolar Cold War, as we enjoyed in 1945-91.

Before 1914, the world was multi-polar. The pre-1914 situation immortalized in the game “Diplomacy” for example, where Britain, France, Russia, Germany, Austria-Hungary, Italy and Turkey competed for dominance was typical of the world for several previous millennia. The struggle between the major powers affected only Europe; the United States was not fully involved and nor were powers such as China that were neither part of Europe nor colonized by it. The situation only became unstable when Britain formed the Triple Entente with France and Russia, thus allying all major power centers into two mutually hostile blocs. Once that happened, with no proper communication between the blocs (the Holy Alliance of 1815-22 having long since been abandoned) a spark into conflagration was inevitable.

There have been several technological changes that have made a multipolar world impossible. Both modern transportation and modern communications have played a part. One can imagine a world with air travel, albeit at high cost, but with no communications technology beyond the radio – roughly like the 1930s, but with jet engines. Although such a world might have modern modes of mass destruction, the level of contact between distant countries would be modest – just a few elite business travelers. In such a world, multiple ideologies could in principle co-exist, since the leakage between them would be limited.

Consider alternatively a world with the Internet and Zoom, but with no transportation technology beyond sailing ships. Such a world would have instant communication between civilizations, with only the difficulties of language separating them. However, in such a world, even if you really hated, say, Australians, it would take months if not years to mount a military expedition against them – plenty of time for tempers to cool. Again, a multi-polar world would be possible. It is only with the combination of modern transportation technologies and modern communication technologies that mutual hatreds can express themselves with complete efficiency, so that a world of multiple different civilizational power centers is unstable.

We saw this in 1990-2010. After the Soviet Union fell apart and Eastern Europe was liberated, it at first appeared that we had entered a unipolar world, in which the United States was dominant, and no other country or group of countries was important enough to challenge it. That immediately generated a deep insecurity among the other countries of the world, which felt themselves existentially threatened when one country was so much more powerful than all others. It was the principal force behind the “political” European Union, which was put together and given a common currency precisely to act as a counterweight to U.S. global domination.

In the event, the EU was assembled very badly, with a central bureaucracy entirely impervious to democratic control, a currency that did not contain all the EU’s major economies, and no effective means of achieving fiscal balance between the member states. Consequently, not only was it a wholly inadequate counterbalance to U.S. dominance, but its economic performance was far inferior to what might have been expected and its governance was both inadequate to achieve central control and deeply disliked by the majority of its citizens.

Hence the U.S. remained predominant for longer than it should have, until it lost itself in the morass of the Middle East and entered serious decline. At that point, it became clear that the U.S. was no longer hegemonic, and that a second superpower, China, had entered the equation (Russia has pretensions to being a superpower, but economically and demographically is far too small to become one). That superpower was initially non-hostile, but its own internal logic caused it to throw up a leader Xi Jin-ping, whose dream was not merely parity but dominance over what he saw as a decadent and inexorably declining United States. Hence the position in which the world now finds itself, of two roughly equivalent superpowers, in a Cold War that has not yet settled down into long-term stability.

This situation is probably potentially stable. Each of the two major Cold War powers will attempt to pick up allies, whether in the EU, Russia, Africa, India or Latin America, and thereby tilt the global balance of power their way. Each country that is not one of the two hegemons has a complex calculation to make: will it improve its prospects by adding to the power of the weaker of the two contenders, so stabilizing the global balance, or has the position become so unbalanced that it makes sense to try to curry favor with the now dominant world power.

This position could well be stable for several decades, or even centuries. So long as neither of the two superpowers achieves such strength as to threaten total domination, it will be in the interest of other countries to restore balance. Each country will maximize its own freedom of action by ensuring that neither of the two superpowers achieves total dominance. We saw this in 1945-91, when Afro-Asian countries such as India tilted towards the Soviet Union because the United States, with its firm European allies and enormous economic strength, was close to becoming a true hegemon.

From the point of view of third countries not closely allied to a hegemon (for example Britain to the United States) the Cold War is far more attractive than either side achieving total domination. Going into this equilibrium, it appeared that the United States was much stronger than China, thus producing an almost instinctive tilt towards China by the EU, for example. At this point, if the U.S. goes into recession under the weak Biden administration, it will probably see the EU tilting more towards the United States, although such a tilt requires the Biden foreign policy team to be fully aware of what game it is playing. Should Biden and his team show signs of surrendering to China, then the tilt towards the United States may reverse into an extreme tilt towards China, as the rest of the world realigns itself towards the new global overlord.

This new Cold War may seem unattractive, but it is greatly preferable to the alternative that seemed possible from 1991-2008: the creation of a global government. Such a government, being elected by 7.5 billion people with no ability to combine in common groupings, would have all the faults of the EU, only more so. It would be wholly dominated by the “woke” globalist consensus of the world’s transnational bureaucrats and would thus be thoroughly oppressive to the vast majority of humanity who did not believe in that consensus. Without either democratic control or a countervailing power to check its excesses, such a global government would lead to both tyranny and decline, as it pursued will-of-the-wisps dictated by the ESG lobbies and destroyed the solid pluralistic and competitive private-enterprise economic basis on which civilization is built.

We may not welcome a new Cold War, but we should. The important thing is to realize we are in one, and to cultivate relations with “floating voters” such as Russia and India, who in the worst case could tip the global competition towards our opponents. For example, whether or not Vladimir Putin is a “killer” he is a useful potential ally against an overmighty China and should be treated with appropriate respect and consideration.

Provided we do not lose it, a Cold War can provide a maximum of both stability and freedom, far more attractive than any tyrannical global government of international bureaucrats.


(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)