What Does Winning Look Like?
Most Americans alive today have only known a world in which freedom is the destiny of each nation, democracy rather than autocracy provides the best model to organize societies, and technological innovation is intended to improve rather than reduce human welfare. In our 2022 report on the Mid-Decade Challenges to National Competitiveness, we outlined how all three of these propositions could be compromised.[1] Specifically, we described what losing the technology competition to the People’s Republic of China would look like. In this scenario, China dominates the economy of the future and captures the trillions of dollars in value generated by the next wave of technologies; China’s tech sphere of influence spans the globe; authoritarianism emerges as the dominant ideology, with democracy in retreat; the Internet is fractured, with digital oppression replacing digital freedom; each nation’s digital infrastructure is compromised; the U.S. military’s technological overmatch is lost; and our nation’s access to microelectronics and critical tech inputs is jeopardized. In sum, we would witness the unraveling of the order that the United States and the free world painstakingly built after World War II and protected throughout the existential challenge of the Cold War.
In this report, we seek to outline what winning looks like and, specifically, why prevailing in the technological competition is the sine qua non of victory. First, we maintain that the road to winning begins with restoring our strategic confidence. Handwringing, risk aversion, and self-doubt will neither inspire our friends nor intimidate our adversaries. We are the nation that split the atom and sent the first human to the Moon. We connected the world with the Internet, enabled humanity to exit the COVID-19 pandemic, and are now ushering in the age of artificial intelligence. We can surely be the country that leads in biotechnology to cure terminal diseases, in developing new sources of energy that both power and protect our planet, in designing and deploying new compute and networking paradigms that protect the flow of data and enable future discoveries, and in modernizing manufacturing to eliminate supply chain risks and rebuild the arsenal of democracies.
Second, we must adapt to the changing nature of power. Military, diplomatic, economic, and soft power have been essential to our past successes. But as our primacy is contested, there is an opportunity and a necessity to master a new form of power: innovation power.[2] For it is innovation power that plays to our greatest strengths — the freedom to think, to research, to experiment, and to associate — and it is innovation power that will determine our resilience and provide the decisive edge in the competition.
Third, we need to unabashedly stand up for, rebuild, and defend a global order characterized by freedom, openness, democracy, and the rule of law. This order gave humanity its longest stretch of peace, security, and prosperity. There are more democracies than autocracies, and more who cherish freedom than the yoke of tyranny. While not everyone may embrace this order, those who seek to weaken it should be decisively contained, their autocratic visions publicly discredited, and their asymmetric access to the current order curtailed.
So, what does success look like? If we are to prevail, democracies would be home to the greatest prosperity and incubators of economies of the future. They would be free of supply chain vulnerabilities, both physical and digital. The relentless pursuit of technological innovation would offset adversaries’ military investments, deterring them from aggression and greyzone attacks. The digital domain would be open, free, and resilient, with malicious cyber and disinformation attacks relegated to the dark corners of the Internet. Data flows would facilitate the exchange of knowledge and insight, instead of enabling repression. In sum, we would witness a resumption in the building of the order that is at peace with itself, while effectively isolating the existential challenges to its stability, prosperity, and way of life.
What Courses of Action are Plausible?
At the most general level, there are three plausible courses of action that the United States can follow today. They are:
- Continuation of the Present Course;
- Disengagement and Isolation; and
- Mobilization of the Technological, Economic, and Military Strength of the Free World.
Course of Action 1: Continuation of the Present Course
This section analyzes the present course that began in 2017 and has persisted across two different U.S. presidential administrations, and discusses actions already taken, the outcomes thereof, and the potential risks associated with continuing upon this path. This is the policy that identified and, for the most part, treated China as the pacing threat and Russia as the most erratic disruptor.
Political Aspects. Since the strategic realignment toward great power competition in 2017, the United States has secured a number of important foreign policy advantages. Through the efforts of two successive administrations, the United States has demonstrably strengthened its network of international alliances and partnerships. This is evidenced by the establishment of the Quadrilateral Security Dialogue (the Quad), the AUKUS agreement, the enhanced trilateral partnership with Japan and the Republic of Korea, and the expansion and investment in the North Atlantic Treaty Organization (NATO). Yet despite these accomplishments, they have proven insufficient to stem the rise of tension and conflict throughout the world. Russia ultimately was not deterred from attacking Ukraine. It aggressively targets the United States and other democracies with malign influence activities, including continued attempts to interfere in elections. More recently, Iran became the first state to directly attack Israel in over three decades, while its proxy forces in Yemen have succeeded in imperiling maritime activity in the Red Sea.
The continuation of current policies in an increasingly unstable security environment — and the associated failure to re-establish deterrence — would risk greater geopolitical tension and undermine existing alliances. An emboldened China would continue to attempt to redefine the status quo on Taiwan to its liking, harass the Philippines, and undermine global rules and norms. Iran and North Korea would continue to expand their nuclear and missile activities, raising the risks of confrontation with the United States and its allies. Iran would continue to leverage its proxies throughout the Middle East to attack the United States, Israel, and the freedom of navigation, and plot to assassinate U.S. officials and Iranian dissidents. North Korea would continue its policy shifts toward the South, including framing their ties as those between two belligerent states. And Russia would continue to attack Ukraine and attempt to turn it into a failed state, while setting its sights on undermining the overall security architecture of Europe.
Economic Aspects. America’s economic realignment has also been significant. China’s malign trade practices no longer go unnoticed and are increasingly challenged. Chinese investments in strategic sectors of the U.S. economy are more diligently scrutinized, and nascent efforts to similarly screen outbound investments are underway. Our allies are also taking steps to address Chinese malign trade practices. Domestically, the administration and Congress have pivoted to emphasizing industrial policy, with investments in America’s infrastructure, manufacturing base, clean energy, and semiconductors. There is significant support for re-shoring, and greater acknowledgment of the importance of manufacturing for the American economy. While this realignment has been beneficial to U.S. national competitiveness, present policies could leave it unfinished. The weakened architecture of global economic interdependence has not been replaced with a new order that ties the United States more tightly to safer sources of imports — our allies and partners. The continuation of current policies would see the further displacement of Chinese inputs without a corresponding willingness to embrace deeper economic partnership with our allies. As a result, the United States could face higher prices, lower growth, and weaker economic performance.
Military Aspects. The United States has moved to modernize its forces and alliances, despite its readiness coming under pressure due to active hostilities in Ukraine and the Middle East. The end of budget sequestration, which had seriously constrained the Department of Defense’s ability to appropriately plan for its missions, was an important step in this regard. Ensuing budgetary expansions have helped, though inflationary pressures on the U.S. economy continue to reduce the impact of larger budgets. The Department of Defense is developing new warfighting concepts that reflect the changes in the character of war and growing Chinese military capabilities. The awakening among allies in Europe and Asia, particularly after the Russian invasion of Ukraine, has bolstered their defense spending and increased their desire for closer partnership with the United States. That being said, the power of American deterrence has eroded in each of the three most consequential theaters of operation: Asia, Europe, and the Middle East. The DoD is still insufficiently resourced to face future great power challenges, and especially simultaneous challenges. While adversaries around the globe engage in unprecedented military-technological modernization, the United States continues to invest in its armed forces as if it were a time of peace. In the event of a multi-theater war, U.S. forces would run the risk of being overpowered. If faced with serious attacks against our homeland, the seams between defense and homeland security would leave us exposed. The war in Ukraine has laid bare the significant challenges of the U.S. defense industrial base when forced to sustain a prolonged conflict, and our inability to supply forces with novel capabilities at scale, such as drones. Deficiencies in U.S. shipbuilding and hypersonic missiles and missile defenses, and the rapid expansion of Chinese nuclear, submarine, digital, and space forces, mean that United States military primacy may well come under severe pressure in the near future.
Technological Aspects. The United States has taken important steps to ensure its primacy and contend with the unprecedented technology competition that it faces from the PRC. Recent policy momentum has increased federal research and development funding, though current levels still fall short of Cold War-levels.[3] Fortunately, the American innovation ecosystem has repeatedly demonstrated its resiliency and ability to drive global innovation: unique public-private partnerships enabled the United States to rapidly produce the most effective COVID-19 vaccines and end the pandemic. American companies developed the chips and the algorithms that ushered in the generative AI revolution. They are poised to lead the world toward artificial general intelligence and beyond. Lawrence Livermore National Laboratory achieved the first ever demonstration of nuclear fusion ignition, and a number of U.S. private companies are leading the efforts toward commercializing fusion energy among other next-generation energy technologies. America’s companies, universities, and labs remain world-class environments for cutting-edge innovators. At the same time, the United States has also found itself on the losing end of some technological advances — such as 5G, electric vehicle batteries, hypersonic missiles, and commercial drones. Most of these losses have not been due to a lack of imagination or invention, but instead the result of a lack of resources, organization, and proactive policy-making. While they have not necessarily relegated the United States to a permanent follower of technological trends, they have highlighted the necessity of mobilizing our efforts, dedicating resources, and re-thinking the geometry of innovation.
Conclusion. The continuation of current policies presents two primary risks. First, the current approach continues to insufficiently forestall the rise of the Axis of Disruptors and its destabilization of global security. In fact, recent years have witnessed a decay of U.S. deterrence, with a range of states showing increasing willingness to flout global norms. Future failures of deterrence are understandably hard to foresee, but recent global events force us to conclude that current U.S. policies are unable to take us off this trajectory. Indeed, the present course could lead the four disruptors to further deepen their ties and coordinate cascading destabilizations. Second, the current approach — as it continues to fall short — could inadvertently strengthen isolationist and defeatist sentiments in the United States. In doing so, it risks triggering a self-reinforcing loop of withdrawal, destabilization, and retrenchment. As resource demands across the three theaters rise, and as simultaneous crises expose years of underinvestment by our allies, one cannot rule out that the American reaction would be to retreat — which would usher in an era of uncertainty not seen since the 1930s.
Course of Action 2: Disengagement and Isolation
This section analyzes the potential consequences of a shift in U.S. foreign policy toward isolationism. It highlights the anticipated results of U.S. retrenchment across several key aspects: foreign policy, economy, military, and technology.
Political Aspects. A shift in U.S. foreign policy toward isolationism and retrenchment would be severely detrimental to the free world. America’s alliance system underpins the security of Europe and East Asia – two regions of greatest consequence to American prosperity. Absent United States support, a revanchist Russia would certainly test NATO’s eastern and southern flanks. Moreover, South Korea and Japan — who are heavily reliant on the American nuclear umbrella — would be tempted to develop their own deterrent capabilities. A free and democratic Taiwan without American support is nearly inconceivable. Withdrawing from international agreements and alliances would directly undermine the United States’ ability to shape global events and protect its near-term security interests. A United States retreat from world affairs would not just embolden the Axis of Disruptors — it would create a power vacuum that would invite states around the globe to settle disputes by force. It would risk a return to expansionist wars and destroy international norms. Recent events — the conflict between Azerbaijan and Armenia, Venezuela’s spurious claims on Guyanese land, and Russia’s invasion of Ukraine — show that modern civilization is not immune to such wars. Finally, isolationism erodes the trust and goodwill shared among allies. This jeopardizes cooperation on critical issues like counterterrorism, climate change, and global health, leaving the United States to address these challenges alone.
Economic Aspects. American retrenchment abroad would directly undermine material prosperity at home. Our allies are not only our ideological friends, but also our major economic partners. Imports accounted for 14% of U.S. GDP in 2022, much of which were goods the United States could not easily substitute. Weakening international institutions and diminished trust would herald the return of widespread trade tensions. Unfocused protectionist policies in the United States would lead to retaliation from erstwhile allies, slowing growth and raising prices for American consumers. Geopolitical crises, triggered by a United States withdrawal and an ensuing global economic downturn, could spiral into a much larger economic and political cataclysm. Economic integration with our allies is crucial to the technology leadership that underpins the outcome of the strategic competition. Economic partnerships abroad provide American firms with cheaper inputs and greater demand with which to finance innovation. Lastly, even in the best case, a policy of isolationism would forfeit the United States’ role in setting global economic rules and standards, leading to a less favorable environment for American businesses and an overall decline in U.S. economic power.
Military Aspects. The ramifications of isolationism on America’s ability to defend itself and project power abroad would be severe. Currently, U.S. security relies on a forward military posture and strong alliances; isolationism would erode this advantageous position, giving adversaries greater leverage to engage in aggression or coercion — and directly threaten American security. Isolationism would cede key spheres of influence, global choke points, and vital maritime lines of communication that enable the free flow of goods and commerce that underpin U.S. economic power. It would undermine the United States’ ability to rapidly identify and eliminate security threats as they emerge. It would damage foreign trust in U.S. guarantees and partnerships. And, as recent years have shown, the emergence of adversaries filling the power vacuum would force the United States to return at a much higher financial and human cost. America’s best defense has long been its offense — our influence abroad, network of allies and partners, and unifying message of freedom and democracy greatly complement the effects of our armed forces. Under isolationism, the United States would likely face more imposing military threats with fewer resources to address them. In the long run, it would either lead to our defeat — with the United States acquiescing to a global order dictated by its adversaries — or to a costly about-face that demands an unprecedented increase in defense spending to compensate for fewer allies, stronger adversaries, and lost opportunities.
Technological Aspects. Isolationism would most certainly slow down U.S. technological progress. International collaboration fuels scientific and technological advancement. Global instability and declining international cooperation could reduce the flow of foreign capital to the United States, limit the access to foreign talent, and jeopardize supply chains of critical components for technological advances. Just as importantly, withdrawing from global collaboration would inevitably create a vacuum that could allow adversaries and rivals alike to surpass the United States in critical technologies, and consequently undermine our national security, economic competitiveness, and soft power. Without sustained international engagement and presence, the United States would miss critical opportunities to negotiate issues of technological interoperability and standards, and even integration, among trusted allies and partners necessary to bolster our collective security and ensure a strong, free digital ecosystem.
Conclusion. If the United States embraced a full-blown isolationist policy, it would lead to major political, security, and economic shocks to our country and the world. U.S. retrenchment would create a void that China, Russia, Iran, and North Korea would readily exploit. Without the alliance system, the security of both Europe and Asia would quickly become endangered, undermining freedom around the globe and prosperity at home. As importantly, without U.S. leadership, international norms would decay — further destabilizing the world. To retreat from global leadership would be to weaken the United States’ ability to shape international institutions and rulemaking, giving adversaries greater power to promote policies that benefit them at the expense of U.S. interests. Without American leadership, dictators would tout the presumed superiority of their authoritarian regimes with ease, jeopardizing the causes of democracy and human rights — core commitments underlying U.S. national security.
Course of Action 3: Mobilization of the Technological, Economic, and Military Strength of the Free World
Continuing on the present course or retrenching into an isolationist posture could have dire consequences for the United States, its allies and partners, and the world. At the same time, it is clear that we operate in a fiscally and politically constrained environment. Therefore, a successful strategy must construct a path that effectively rebuilds deterrence against the Axis of Disruptors, strengthens the existing economic, diplomatic, and military prowess of the United States and its partners, and harnesses the power of future technology as a new offset.
Fortunately, the United States stands at the dawn of a new era defined by rapid technological innovation and in particular the potential of artificial intelligence. The immense promise of these systems and dangers posed by our adversaries mean that this is not a moment for trepidation, but for bold vision and decisive action. The United States can and must adopt a strategic framework that seizes this moment, using it to ensure America’s continued prosperity and global stability. Such a framework should feature three key pillars.
Pillar 1: Reimagine the Endless Frontier. American global leadership will stand or fall on its innovation power. Our leaders must position the nation to spearhead efforts to explore the frontiers of AI and emerging technologies. This requires creating and executing national programs for U.S. leadership, supporting and funding an expansive innovation ecosystem, building a new form of public-private partnership around an ambitious national technology strategy, and modernizing our governing institutions for the innovation age.
Furthermore, by articulating a united vision and by presenting a concrete and coherent strategy that allows us to lead in fields like next-generation AI (including AGI), biotechnology, advanced networks, advanced computing, next-generation energy, and advanced manufacturing, we can supercharge our economy and ensure that these transformative technologies are harnessed for the cause of freedom.
Pillar 2: Restore Peace and Security through AI and Emerging Technologies. With adversaries increasingly intent on upending the world order, the United States has a vital role to play in upholding peace, security, and democratic principles. AI and other emerging technologies will offer powerful tools to enhance our capabilities across the board. But relying on technology alone will not be enough. In order to meet our objectives, we must also fortify our alliances, strengthen and fund our military, revamp our intelligence services, build new partnerships, and create international forums to address the complex challenges posed by emerging technologies. Modernizing our military and diplomatic capabilities will ensure America maintains its global leadership role.
Pillar 3: Catalyze Enduring Economic Advantage in the AI Era. Economic performance is the bedrock of our national strength and global influence. The AI era presents unprecedented opportunities for economic growth, job creation, and societal advancement. By leveraging our innovation ecosystem, entrepreneurial spirit, and skilled workforce, we can secure a competitive edge in strategic technology sectors and create new sources of prosperity for all Americans.
Revitalizing our techno-industrial base and advanced manufacturing capabilities is essential to this vision. We will also need to invest in research and development, incentivize domestic production, and strengthen critical supply chains. By doing so, we will not only create jobs and bolster our economy, but also give America the resources and independence needed to meet the threat of PRC and other disruptors.
We need to embrace the future with confidence and determination. By adopting a techno-industrial strategy, we can ensure that the United States has the means to remain at the forefront of the 21st century.
[1] Mid-Decade Challenges to National Competitiveness, Special Competitive Studies Project (2022).
[2] Eric Schmidt, Innovation Power: Why Technology Will Define the Future of Geopolitics, Foreign Affairs (2023)
[3] Michael E. O’Hanlon & James N. Miller, Focusing on Quality Over Quantity in the US Military Budget, Brookings (2019) (“Relative to the size of the economy, [U.S. defense spending] is down to about 3.5 percent of GDP… During the Cold War, it varied roughly between 5 percent and 10 percent of GDP.”).