A persistent theme posits that societies can maintain social cohesion despite vast wealth inequality, as long as total wealth continues to grow. This growth allows for wealth distribution, even to those with the smallest shares, provided their portions increase—albeit modestly. The wealthiest can amass the largest portions, but so long as the poorer classes receive some share of the expanding pie, social stability can be maintained. This theory has driven modern capitalism’s emphasis on economic growth, reflecting the critical role of wealth generation in preserving social order.
This “growing pie” analogy underpins the social compact in capitalist societies. As long as the overall economy expands, wealth distribution can increase across all strata, albeit unevenly. Those at the top amass more, while those at the bottom see some improvement. As long as the population accepts these unequal shares, a sense of cohesion can persist. The rising tide lifts all boats, even if some boats rise more than others.
The historical preference for economic growth, particularly in capitalist economies, has consistently reinforced this social theory. In a society that prioritizes growth, disparities in wealth distribution are tolerated because all segments see some benefits. However, a shift occurs if societal priorities move away from economic expansion toward reducing inequality or addressing climate change. Under these conditions, the pursuit of growth becomes less essential.
The past 40 years of U.S. capitalism provide a clear example of these dynamics. From 1820 to 1980, the U.S. experienced substantial economic growth. Both wages and capital shares increased, though capital shares often outpaced wages. Despite conflicts between labor and capital, the overall economy expanded, enabling most people—especially white Americans—to experience rising incomes and standards of living. The growing pie allowed for broad-based wealth increases, fostering social cohesion despite underlying inequality.
However, the period from 1980 to 2020 represents a significant inflection point. Total wealth growth slowed, while corporations and the wealthiest individuals captured an increasingly larger share of the pie. The middle class and the poor saw stagnation or minimal growth in their wealth, contributing to a growing sense of disillusionment and social instability.
Several factors contributed to the slowdown in U.S. wealth growth, most notably the shifting dynamics of global capitalism. The rise of emerging markets like China, India, and Brazil shifted the centers of industrial production away from Western Europe, North America, and Japan. This process of globalization redistributed the engines of growth toward developing nations, leaving the U.S. and other Western economies to grapple with financialization—a shift in focus from industrial production to financial markets.
China, in particular, has emerged as a formidable competitor to the U.S. and its G7 allies. With rapid industrialization, technological innovation, and a burgeoning foreign trade apparatus, China and its BRICS partners (Brazil, Russia, India, China, and South Africa) have effectively challenged the dominance of the U.S. in global markets. This rise in competition has triggered a response from the U.S., marked by protectionist measures such as tariffs, trade wars, and sanctions. However, these actions have led to increased retaliation, further deteriorating the U.S.’s position.
The decline of the U.S. dollar’s global dominance is another symptom of this shift. As emerging economies grow, the global role of the U.S. dollar diminishes, eroding the economic and geopolitical clout that the U.S. once enjoyed. Meanwhile, former U.S. allies, such as Brazil, India, and Egypt, have begun to reorient their loyalties toward China or adopt more neutral stances, further weakening U.S. influence.
The combination of slowing wealth growth and increasing wealth inequality has strained the United States’ social fabric. Political and cultural divisions, once simmering beneath the surface, have exploded into public view. The contentious 2020 election, pitting Donald Trump against Kamala Harris, epitomized the deepening social and political hostilities within the country. The once implicit social contract, built on the promise of shared economic growth, has frayed as middle- and lower-income Americans increasingly feel left behind.
This weakening social cohesion has manifested in various forms, from the resurgence of white supremacy to increasing regionalism and deepening divides over issues of race, gender, and sexuality. The scapegoating of immigrants, including false accusations of criminality and even bizarre claims—such as that Haitian immigrants are eating pets—illustrates how societal unrest often leads to the targeting of vulnerable populations. This phenomenon mirrors historical examples where declining empires, facing internal divisions, turn to exclusionary and divisive rhetoric to maintain control.
In the U.S., these divisions have only exacerbated the country’s global decline. As internal social cohesion unravels, the U.S.’s ability to project power on the world stage weakens. History suggests that the internal conflicts of declining empires often hasten their fall, as they become less capable of addressing external challenges while grappling with domestic strife.
In contrast, China has charted a markedly different course. Over the past several decades, China’s economic growth has far outpaced that of the U.S., with its GDP growing at two to three times the rate of the American economy. The increase in real wages for Chinese workers has been even more dramatic, with wages rising at rates several multiples higher than in the U.S. These disparities have persisted for a generation, solidifying China’s position as a global economic powerhouse.
The Chinese government, led by the Communist Party, has effectively harnessed this rapid economic growth to strengthen social cohesion. By implementing policies that raised real wages and facilitated the transition of hundreds of millions of people from rural, agricultural areas to urban, industrialized regions, China has lifted vast segments of its population out of poverty and into the middle class. This historic transformation has bolstered China’s internal stability, even as it faces external competition from the U.S. and its allies.
China’s growth, coupled with the rise of its BRICS partners, has created a formidable competitor to the U.S. and the G7. Both blocs are now locked in a global race for resources, markets, and technological dominance. The U.S. and China dominate cutting-edge technological advancements, sidelining traditional players like Europe and Japan. Both countries seek secure access to food, raw materials, energy, and markets, while ensuring friendly governments and stable supply chains. This competition is reshaping the global order.
As China’s global influence has grown, so too has the rhetoric surrounding a potential U.S.-China conflict. U.S. policymakers often portray China’s global ambitions as aggressive, threatening the U.S.’s economic and political hegemony. Chinese leaders, in turn, view U.S. policies—such as tariffs, trade restrictions, and military maneuvers in the South China Sea—as deliberate attempts to stifle China’s growth and reassert U.S. dominance. Both sides are increasingly gripped by national security anxieties, with predictions of imminent military conflict and even the possibility of another world war growing more common.
At a time when the world is grappling with ongoing conflicts in Ukraine and the Middle East, there are urgent calls for ceasefires and negotiated settlements. Might these calls for diplomacy extend to the U.S.-China rivalry? Historical precedents offer some hope. Britain, for example, attempted twice—in 1776 and 1812—to use military force to suppress the independence and growth of its North American colony. After these failures, Britain ultimately shifted its approach, negotiating new trade agreements and focusing on other parts of its empire. This pragmatism allowed both Britain and the U.S. to grow and prosper through mutual economic development.
Could a similar diplomatic solution be reached between the U.S. and China? The prospect of a negotiated settlement that involves not only the U.S. and China but also the G7, BRICS, and the broader Global South offers an intriguing possibility. Such a deal could mark the end of the era of empires and usher in a new, multipolar world order. The very real dangers facing the world today—both ecological and geopolitical—underscore the need for cooperation rather than confrontation.
After the devastation of World War I, the League of Nations was established with the hope of preventing future conflicts. Following World War II, the United Nations was founded with a similar goal. While these institutions have faced their share of challenges, their underlying vision remains relevant. In a world threatened by climate change, nuclear proliferation, and economic inequality, the pursuit of a cooperative global order is more important than ever.
