The Nobel Prize winning Columbia University economist Edward Phelps maintains that innovation is the key to economic growth, prosperity and human happiness. He has argued that China has “out-innovated” the West. What may shock many is his view that the West has ceased to be a land of innovation. Europe’s political, economic, military and technological power may have diminished, its soft power remains formidable.

However, it is also true that the old continent has been largely basking in reflected glory by transferring technology from the US. The Economist magazine goes a step further arguing that “the values that made the West great have been sold on to the rest of the world.” From the early 19th century to the early decades of the 20th century, the Western world benefited from discoveries of scientists and navigators. The decline in the pace of innovation, Phelps maintains, “threatens prosperity” in the West. He attributes the main cause of the decline to “corporatism” and the tendency of businesses “to band together what they have.”

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The Columbia economist says that France lost almost all its innovation by 1980, Italy by 1990, Germany by the 1970s and the UK by the 1980s and 1990s. Lithuaniaborn economist Zvi Griliches of Harvard University explains how Europe escapes the costs of its indigenous innovation. They “let the Americans take the risks of innovation, then they copy each year the new products that were successful.” This is not to say, the US is not without problems. Wealth inequality is widening by the day.

Many experts contend that the 2020s mark the Second Gilded Age. Like the first Gilded Age, the second Gilded Age has similar features: more prosperity and growth but also the rise of corrupt and greedy industrialists, bankers and politicians. The US is a declining country, facing deindustrialization and the emergence of the gig economy. Should we be surprised if the US is retreating into ignorance, culture wars, and performative outrage, the typical constituencies of Donald Trump? As the Guardian put it editorially during Trump’s first term, “America is already split Trump Nation has seceded.”

The US is a land of extreme corporate concentration. Global industries are controlled by just a few giant firms ~ big banks, big pharma, and big tech. America’s decline is the “curse of bigness.” Gone are the days when Harry S Truman boasted in 1945, “we must relentlessly preserve our superiority on land, sea and in the air.” American writer Walter Lippmann claimed in 1939, “what Rome was to the ancient world, what Great Britain has been to the modern world, America is to the world of tomorrow.” Today, Trump may boast of making America great again, but he prefers to praise Putin, Xi Jinping and Kim Jung Un. American political scientist Joseph Nye believes there will be no second American century though the US will remain a preeminent country for a long time to come.

He says Trump will destroy its soft power. The world is no longer what Samuel Huntington called a ‘unimultipolar world’ in which resolution of key international issues required action by the single superpower plus some combination of other major states. Zbigniew Brezezinski explains in his book, The Grand Chessboard, how the US acquired that power to dominate the world for that long. No other nation still possesses “comparable military and economic power or has interests that bestride the globe.” That enabled the US to become “the sole political arbiter in Eurasian lands and to prevent the emergence of any rival power threatening its material and diplomatic interests”, Brezezinski said.

The American advantages were, and to some extent still continue to be, its economic dynamism, global military reach, lead in cutting-edge technologies and appeal of its mass culture. Europe benefited from US unchallenged global power and technological advantage and military protection. Europe has its own advantages but also limitations. It projects itself as a normative power whose influence emanates not from its military strength but its capacity to set behavioural norms that have an international outreach. However, the old continent is losing some of its traditional strengths. As Kamil Zwolski of University of Southampton argues, Europe has “clearly reached its limits.” Some scholars view Europe as an efficient global actor following a model worth emulating, others view it as a “self-serving hypocrite.” British political scientist Mark Leonard has advice for Europe. He contends that Europe needs to embrace a “sovereignty-friendly” idea of soft power. Europe’s internal culture war has undermined its soft power.

The EU projects itself as a great champion of democracy. However, the world’s largest democracies ~ India, Brazil, Indonesia, and South Africa ~ are not on the same page on Ukraine. As Judy Dempsey of Carnegie Europe argues, “Europe’s record in making soft power the cornerstone of its security strategy has been patchy. It has been working incredibly well in Eastern Europe.” Its influence in spheres like business and trade, governance, culture, education, media is also considerable.

The test of a great power’s status and influence depends on what it does rather than what it is. Undeniably, Europe is a cosmopolitan power with global influence. The EU won the Nobel Prize in 2012 for the promotion of peaceful relations between its member states. Individual member states too have been successful in projecting a positive image through public diplomacy. Norway’s diplomacy of peace has been a global exemplar. Its foreign policy is based on negotiation and has been involved in the resolution of 40 countries across the world. The only instance to date where Norway’s impartiality has proven chimerical is with Ukraine.

Norwegian diplomats admit that they can’t facilitate talks because Norway has a border with Russia. Spanish diplomats too are known for their quiet initiatives and behind-the-scenes diplomatic brinkmanship. They are good at nurturing closed personal relationships with key stakeholders. Europeans have long believed that soft power is their best instrument to promote their values and their security. But their strong sense of moral superiority is questionable. The rise of the ultra -right and the treatment of the migrants have created a gulf between Europe’s self-perception and external perception. Is Europe too soft and not enough power?

(The writer is director, Institute of Social sciences,New Delhi)