and other previously held areas within the mainland but was left without Hong Kong (though with an agreement
from 1898 to get large portions of it back after 99 years) and Formosa (now Taiwan). China had an initially
cooperative relationship with the Soviet Union that didn’t last long. In the other direction, going west of the US
into the Pacific, the US-controlled areas extended all the way to the southern half of Korea. The British Empire’s
areas of control or influence remained largely the same right at the end of the war, except for some minor
additions. As for geopolitical institutions, the United Nations was created in 1945, and it was located in the US
(New York), reflecting the US being the leading world power.
Ideologically, the US-led world was capitalist and democratic while the Soviet-led world was communist and
autocratic. The US-led monetary system for the US-led countries linked the dollar to gold and most other
countries’ currencies were tied to the dollar. This system was followed by over 40 countries. Because the US
had around two-thirds of the world’s gold then and because the US was much more powerful economically and
militarily than any other country, this monetary system has worked best and carried on until now. The Soviet
Union and those countries that were brought into the Soviet Union’s bloc were much less rich and were built on a
much weaker foundation.
The split was clear from the outset. President Truman summarized it outlining what is now referred to as the
“Truman Doctrine” in a March 1947 speech:
“At the present moment in world history nearly every nation must choose between alternative ways of life. The
choice is too often not a free one. One way of life is based upon the will of the majority, and is distinguished by
free institutions, representative government, free elections, guarantees of individual liberty, freedom of speech and
religion, and freedom from political oppression. The second way of life is based upon the will of a minority
forcibly imposed upon the majority. It relies upon terror and oppression, a controlled press and radio, fixed
elections, and the suppression of personal freedoms. I believe that it must be the policy of the United States to
support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures.”1
Governance between countries is very different from governance within countries. That is because within
countries there are laws and standards of behavior that govern, whereas between countries raw power matters
most, and laws, rules, and even mutually agreed treaties and organizations for arbitration such as the League of
Nations, the United Nations, and the World Trade Organization don’t matter much. Operating internationally is
like operating in a jungle in which there is survival of the fittest and most anything goes. That is what makes
having a strong military so important.
Military alliances were built along the same ideological and geopolitical lines. In 1949 a military alliance of 12
countries (with more joining later) that were in the US camp formed the North Atlantic Treaty Organization
(NATO), and in 1954 the Southeast Asia Treaty Organization was established among the US, UK, Australia,
France, New Zealand, the Philippines, Thailand, and Pakistan to prevent the spread of communism in Southeast
Asia. In 1955, a military alliance of seven countries that were in the Soviet camp formed the Warsaw Pact.
As shown in the chart below the Americans and Soviets invested massively in building up their nuclear
weapons and a number of other countries followed. These weapons were never used because of the
deterrence of mutually assured destruction. Still there were a couple of times it came close (e.g., Cuban
Missile Crisis of 1962). Today, in varying amounts and degrees of capabilities, 11 countries have nuclear weapons
or are on the brink of having them. Having nuclear weapons obviously gives one a big negotiating chip in the
world power game so it’s understandable why some countries would want to have them and other countries would
not want other countries to have them. Of course, in addition to building nuclear capabilities, various new other
weapons systems were created, and though there were no nuclear wars, there were a number of wars to counter
communism and other geopolitical US adversaries, most notably the Korean War in the 1950s, the Vietnam War in
the 1960s, the two Gulf Wars in 1990 and 2003, and the War in Afghanistan from 2001 until now. These were
costly in terms of money, lives, and public support for the United States. Were they worth it? That’s for others to
decide. For the Soviet Union, which had a much smaller and weaker economy than the US, spending enough to
compete with the US militarily and to maintain its empire was bankrupting.