By Jianyong Yue - 11 August 2026

The Cold War did not end because one ideology proved superior to another. It ended because one system proved more capable of breaking its own promises. As the historian Fritz Bartel has argued, the Cold War can be understood as a competition over the capacity of states to manage—and ultimately break—their own economic and social commitments.

For decades, both the United States and the Soviet Union competed by offering their citizens ever greater guarantees—of security, welfare, and stability. Each system tied its legitimacy to an expanding social contract. In the West, this took the form of the welfare state; in the Soviet bloc, it was expressed through universal employment and comprehensive provision.

Yet by the 1970s, both models were under severe strain. Economic stagnation collided with rising social expectations, producing a shared structural dilemma: neither system could sustain its commitments without undermining economic performance.

Importantly, this crisis was not confined to the socialist world. Western economies also faced stagflation, rising unemployment, and mounting fiscal pressures that called into question the sustainability of the welfare state. The sense of systemic uncertainty was widespread. As Bartel emphasizes, Western confidence in the superiority of its system did not fully take shape until the 1980s, when economic stabilization and renewed growth made it possible to present the crisis as resolved. What later appeared as an inevitable victory was, at the time, far from assured.

The West's decisive achievement was to make abandoning its commitments politically viable.

In the late twentieth century, leaders such as Margaret Thatcher and Ronald Reagan did more than liberalize markets. They reshaped the political meaning of economic adjustment. Policies that would once have been seen as breaches of social obligation—cutting welfare, weakening labor protections, and prioritizing fiscal discipline—were reframed as necessary responses to structural economic constraints.

This transformation rested on institutional conditions specific to democratic capitalism. Competitive electoral systems, pluralistic media environments, and flexible policy frameworks allowed governments to shift responsibility onto impersonal market forces. In doing so, they diffused accountability and reduced the immediate political costs of retrenchment.

By presenting retrenchment as necessity rather than choice, Western governments were able to scale back commitments without triggering systemic breakdown. The legitimacy of the system was preserved, even as the substance of its promises was reduced. This capacity—to break promises while retaining institutional credibility—proved to be the decisive advantage in the Cold War.

The Soviet Union failed precisely where the West succeeded. Its crisis was not simply the result of economic inefficiency, nor of an unwillingness to reform. Rather, it stemmed from an inability to manage the political consequences of adjustment.

Under Mikhail Gorbachev, attempts to introduce market mechanisms weakened the ideological foundations of the system without establishing a credible alternative. At the same time, the state apparatus that might have stabilized the transition was progressively eroded.

Moreover, the Soviet system lacked mechanisms for distributing the social costs of adjustment. Without market signals or political competition to absorb discontent, the burden of reform was concentrated and highly visible. This made any attempt at retrenchment politically explosive.

Reform thus removed both the legitimacy of the old system and the institutional capacity to build a new one. Unlike Western governments, Soviet leaders could not recast the erosion of commitments as necessary adaptation. Instead, it appeared as systemic breakdown. The system failed because it could not change in a way that preserved its own legitimacy.

Bartel's account, however, ends with the Cold War. Extending this logic to a case he does not address, we can ask an obvious question: does China's apparent success in sustaining radical reform without collapse represent a successful exception to this logic?

The answer lies in the specific political conditions under which China’s reforms unfolded. In contrast to both Western democracies and the late Soviet system, China’s post-1989 trajectory was shaped by the coercive stabilization that followed the Tiananmen crackdown. The suppression of mass political mobilization removed the primary channel through which the social costs of reform might have been contested.

This enabled a decisive shift from the more tentative “market socialism” of the 1980s toward a far more radical form of market Leninism—one in which economic liberalization was pursued under tightened authoritarian control, and the political risks of retrenchment were sharply contained.

In this sense, China did not overcome the politics of broken promises; it suspended them. 

But this suspension came at a structural cost. By foreclosing the channels through which citizens might contest the terms of adjustment, the regime also weakened the institutional pressure to build redistributive institutions—leaving compressed welfare and suppressed domestic demand as permanent features of the growth model rather than temporary costs of transition. As a transitional and late-developing economy, China has consequently relied on external markets to absorb what domestic demand could not, producing growth without development—an outcome that complicates any claim to sustained convergence or long-term stability.

China, therefore, represents a historically contingent variation rather than a successful exception—one whose internal contradictions are increasingly difficult to contain.

The logic of broken promises did not end with the Cold War. It has since been extended and globalized. In the era of hyperglobalization, the tension between economic integration and political legitimacy has intensified. As international economic rules increasingly shape domestic policymaking, governments face growing difficulty in reconciling external commitments with internal demands.

The result is a widening imbalance. In advanced economies, this tension has fueled populist backlash and institutional distrust. In developing countries, it has constrained the policy space necessary for structural transformation. Across both contexts, the same dilemma persists: how to sustain economic efficiency without eroding the social foundations of political order.

What has changed is not the underlying tension, but the mechanism that once resolved it. Cold War retrenchment could be legitimated as national necessity, bounded within domestic politics and validated by the comparative failure of a rival system. Hyperglobalization has dissolved both conditions: there is no longer a discredited alternative against which adjustment can be measured, while transnational economic rules increasingly constrain the policy space through which governments might credibly renew their social commitments.

This suggests that the central challenge of our time has shifted from abandoning commitments to rebuilding them. If the Cold War was won by those who could break promises without losing legitimacy, the next phase of global competition will be shaped by those who can reconstruct credible social contracts while maintaining economic dynamism.

What is required is a new equilibrium between states and markets. Economic openness must be embedded within institutional arrangements capable of sustaining it. Far from being merely a distributive concern, social protection is a precondition for long-term stability and development.

Ultimately, the next global equilibrium will hinge less on which system can extract the most efficiency than on which can forge a resilient social contract—one where economic openness reinforces, rather than undermines social protection. The durability of any post-neoliberal order rests on this simple test: whether it can restore the institutional credibility eroded by decades of hyperglobalization. Those that succeed will endure; those that do not will face the same fate as the systems that came before them.

Jianyong Yue holds a PhD in Political Science from the London School of Economics. He has taught Chinese politics and development at King’s College London and the LSE. He is the author of China’s Rise in the Age of Globalization: Myth or Reality (Palgrave Macmillan, 2018) and Crony Comprador Capitalism: The Institutional Origins of China’s Rise and Decline (Palgrave Macmillan, 2024).

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