The Rise and Potential Fall of Western Power: Lessons from the Roman Empire

The decline of Western economic and political dominance in the 21st century has sparked comparisons to the fall of ancient Rome. Historically, empires follow a cycle of rise, peak, and eventual decline, marked by the expansion and later weakening of influence. For the modern Western world, parallels with Rome reveal important insights, especially as new global powers emerge. This article explores these concepts, examining how economic shifts, structural vulnerabilities, and social contract breakdowns may foreshadow a trajectory similar to that of the ancient Roman Empire.

The height of Western dominance is widely believed to have occurred at the close of the 20th century. In 1999, Western economies contributed to about 80% of global output, largely through industrial production and innovation. However, since the early 2000s, the share of Western output has shrunk, with emerging economies in Asia, Africa, and Latin America experiencing rapid growth. This shift indicates not just a relative decline in the West’s global economic share but signals a trend that is accelerating each year.

For context, while the West has seen slower growth, countries like China and India have experienced double-digit economic expansion, reshaping the global balance. The Western world’s approach to globalization, in which industrial jobs were increasingly outsourced to regions with cheaper labor costs, played a significant role in this shift. The West saw short-term benefits through lower costs and higher profits, but the long-term impact has been a gradual erosion of its industrial and economic supremacy.

The Roman Empire reached its peak when it was well-integrated, with trade and influence stretching from Britain to the Middle East. However, over time, Rome’s interactions with neighboring societies (the “periphery”) transformed these societies economically and militarily. Through trade, cultural exchange, and sometimes direct conflict, these peripheral groups became more organized and powerful, eventually becoming a threat to Rome itself.

Similarly, in the modern world, the Western core has stimulated economic and technological advancement in the periphery. Trade relationships, outsourcing, and foreign investment have provided non-Western countries with the resources to strengthen their economies. This mutual transformation has resulted in increased self-sufficiency in peripheral economies, making them less dependent on Western markets and creating a more competitive global economy. As in Rome, this shift has changed the strategic balance, challenging Western dominance.

One critical aspect of the Western world’s decline is the fraying of the social contract. In Rome, this contract was an unspoken agreement in which the Roman government protected citizens’ property and livelihoods in exchange for their allegiance. However, as the Empire weakened, its ability to provide security waned, leading local elites to form new alliances with Barbarian tribes. These shifting allegiances ultimately dissolved Roman unity, contributing to the Empire’s fragmentation.

In the contemporary West, the social contract is also under strain, with many citizens feeling that the state no longer guarantees economic stability, affordable housing, and upward mobility. Rising costs, stagnant wages, and reduced job opportunities have left younger generations frustrated. For example, housing costs have soared, making homeownership increasingly unattainable, especially for younger people. Additionally, high student debt and uncertain career prospects have created disillusionment. In this climate, more young people are turning to extremist political ideologies as they seek radical solutions to structural problems.

Western nations also face significant fiscal pressures, largely due to aging populations and increasing healthcare costs. The Roman Empire’s financial woes were partly due to the high costs of maintaining its borders and military, which strained its tax base. Today, Western governments grapple with a growing demand for healthcare and social services as their populations age, further straining public resources.

Debt levels have skyrocketed, with many Western countries now borrowing heavily to fund public services. As interest rates rise, these governments find it increasingly challenging to service their debts while meeting domestic demands. The result is a mounting fiscal burden that limits government flexibility in addressing other societal needs. For instance, recent austerity measures in countries like the UK have led to cuts in services, leaving essential areas like policing, education, and healthcare underfunded. This situation creates dissatisfaction and erodes trust in government institutions, weakening societal cohesion.

While relative decline in global influence is manageable, the West now faces the risk of an absolute decline. Relative decline, as discussed, refers to a reduction in the West’s share of global output as emerging economies grow more rapidly. Absolute decline, however, would mean a reduction in living standards, economic output, and quality of life within Western countries themselves.

Some Western nations have already experienced absolute declines in per capita income, such as the United Kingdom and Germany, where economic growth has stagnated. This decline is partly fueled by domestic policies that prioritize short-term gains over long-term stability. If this trajectory continues, more Western countries may experience significant economic challenges, putting further strain on public services, healthcare, and social cohesion.

Despite these challenges, absolute decline is not inevitable. To avoid it, Western societies need to enact policies that address both immediate needs and long-term sustainability. A key starting point is fostering economic growth that benefits all citizens, not just the wealthiest. This approach would require a reallocation of resources toward sectors that can create sustainable jobs and generate income from international trade, such as technology, renewable energy, and education.

Moreover, policymakers need to address structural issues that have inflated housing costs and increased inequality. Measures such as improved access to affordable housing, education, and healthcare can help rebuild the social contract and reduce the disillusionment that has taken root among younger generations. Immigration policies should also be considered carefully; with aging populations, Western countries will need a stable, skilled workforce to support their economies. Implementing a balanced and transparent immigration strategy could alleviate labor shortages without alienating citizens.

Additionally, recognizing the need for resilience in global diplomacy is crucial. Just as Rome’s decline was hastened by external pressures, Western nations today must engage in diplomacy that respects the growing influence of non-Western countries. Cooperation with emerging economies could foster mutual growth and stability, reducing the adversarial dynamics that often characterize modern international relations.

But how did shift from an agrarian economy to an industrial economy contribute to this? 

This shift is a transformative process that has historically marked the development and dominance of powerful societies, and it also reveals insights into both the rise and decline of empires. In ancient times, Rome’s economy was primarily agrarian, relying on agricultural productivity to sustain its population and support its expansive military. This reliance on agriculture created limits to rapid economic growth, as land and agricultural output only expanded incrementally. For centuries, Rome’s economy was rooted in a stable, land-based system that relied heavily on the countryside’s productivity. While this agricultural model helped maintain the Empire’s power, it could not adapt quickly to the rising pressures from increasingly organized societies on its borders. Rome’s inability to industrialize or mechanize its production made it vulnerable as neighboring societies grew stronger and more resourceful.

So what about inflation and interest rates?

Inflation and interest rates are pivotal economic forces that can determine an empire's stability and prosperity, as seen in both ancient and modern contexts. Inflation occurs when prices rise, diminishing the purchasing power of currency, which can lead to economic strain, especially for those on fixed incomes or in lower-income brackets. In Western economies today, inflation has been influenced by various factors, including global supply chain disruptions and rising housing costs. High inflation impacts daily living costs and contributes to economic discontent, which can strain the social contract between citizens and the state.

Interest rates, on the other hand, are the tool most commonly used by central banks to control inflation. By raising interest rates, central banks make borrowing more expensive, reducing spending and investment and thus slowing inflation. However, high interest rates also increase the cost of servicing national debt, which, for many Western countries, has grown to unprecedented levels. This creates a fiscal burden on governments, which must allocate more of their budget to paying interest rather than investing in social services or infrastructure. This situation mirrors challenges faced by ancient Rome, which struggled to sustain its military and administrative expenses as its economy faltered. Just as Rome faced resource constraints in maintaining its empire, modern Western nations must carefully manage inflation and interest rates to avoid economic contraction, social unrest, and the erosion of public trust in government institutions. Managing these forces effectively is crucial to sustaining economic stability and avoiding the potential decline seen in historical empires.

Western powers in the modern era transitioned into industrial economies, characterized by mass production, technological innovation, and urbanization, which allowed for accelerated growth and global influence. Industrial economies benefit from rapid scaling capabilities and diverse production sectors, creating more resilience against external pressures. Western industrialization gave rise to unprecedented economic dominance in the 19th and 20th centuries, as factories, mechanized agriculture, and advanced infrastructure created prosperity that helped the West maintain global influence. However, the very mobility of capital in industrial economies has also created vulnerabilities, as many industries have moved to emerging markets with lower labor costs. This relocation of production has left Western countries reliant on service sectors and high-tech industries, reducing their industrial base. The parallels between Rome’s agrarian limitations and the West’s offshoring of industry reveal that without a balanced economy, empires may find themselves weakened and unable to adapt when global dynamics shift.

The fall of the Roman Empire was paradoxically influenced by the prosperity it fostered around its borders, a phenomenon that ultimately empowered neighboring societies and contributed to Rome’s decline. Through trade, diplomacy, and conflict, Rome inadvertently strengthened the political and economic structures of neighboring groups, transforming these smaller, fragmented societies into organized, powerful entities. These external groups, like the Goths and Vandals, began to develop more sophisticated economies, armies, and political alliances, which allowed them to challenge Roman power. Rome’s prosperity effectively stimulated growth and cohesion among its neighbors, creating new rivals that could exploit the Empire’s vulnerabilities. When Rome could no longer provide protection and stability to its citizens, many local elites aligned with these emerging powers instead of the weakened Roman center, accelerating the Empire’s fragmentation.

In contrast, the modern West is not primarily falling due to external threats from rising economies but rather due to internal structural issues, including economic inequality, high debt levels, and an eroding social contract. Western countries have experienced an unprecedented offshoring of industry to emerging markets, resulting in economic stagnation for the working and middle classes, alongside rising costs of living. Additionally, as fiscal pressures mount due to aging populations and increasing healthcare costs, Western governments struggle to allocate resources efficiently, leading to dissatisfaction among citizens. Unlike Rome, which faced a direct external threat from organized societies on its borders, the West’s decline is driven by internal economic policies and structural imbalances that inhibit growth and weaken social cohesion. This unique internal erosion threatens to undermine the West’s stability from within, making it a fundamentally different type of decline than that of the Roman Empire.

National debt plays a critical role in funding the social contract in modern Western economies, which promises citizens access to public services like healthcare, education, pensions, and infrastructure. Over recent decades, many Western governments have increasingly relied on debt to maintain this contract as economic pressures mount. Aging populations, rising healthcare costs, and economic slowdowns as mentioned before have made it challenging to support these commitments through tax revenues alone. Consequently, governments have turned to borrowing to bridge the gap, with debt levels reaching record highs in many Western countries.

However, while national debt has helped sustain the social contract, it also introduces significant risks. As debt levels rise, so do the costs associated with servicing that debt, especially when interest rates increase. Higher interest payments consume a larger portion of national budgets, leaving less for essential services and public investments. This can strain the social contract, as citizens may experience cuts to social programs and declining quality of public services. The situation mirrors some aspects of the later Roman Empire, where the state struggled to fund both military defense and social stability as resources became increasingly constrained.

If debt continues to grow unchecked, Western countries may face difficult choices in maintaining social commitments, as the burden of servicing debt competes with the need to invest in critical areas like healthcare, education, and infrastructure. Managing national debt carefully is therefore essential not only for economic stability but for upholding the foundational promises of the social contract that keep societies cohesive and resilient.

Pension funds and the privatization of aspects of the social contract are hotly debated topics in Western economies, particularly regarding their roles in supporting — or undermining — societal stability. Pension funds have become powerful financial forces, as they are massive pools of capital invested across global markets to generate returns for retirees. However, this quest for returns often leads pension funds to invest in high-yield opportunities overseas, or in private equity ventures within the domestic economy that prioritize profit over community well-being. For example, investments in real estate by pension funds have driven up housing costs, contributing to a housing affordability crisis that directly impacts younger generations. This dynamic reveals an underlying conflict: while pension funds provide security for current retirees, their profit-seeking investments can create economic challenges for the broader society.

The privatization of elements within the social contract further complicates this issue. Traditionally, core aspects of the social contract — such as healthcare, education, and affordable housing — were provided or heavily subsidized by the government. However, in recent decades, there has been a shift toward privatizing these services, allowing private entities to take over management and delivery. This shift often leads to a model where access to essential services is determined by market forces, making them less accessible or more expensive. For instance, rising housing costs and privatized health or education services leave citizens bearing a larger financial burden for essentials that were once publicly funded.

This privatization trend, driven in part by the pursuit of returns for large institutional investors like pension funds, has resulted in a social contract that appears increasingly divided along generational lines. Older generations with defined-benefit pensions experience relative financial security, while younger people face higher costs and fewer guarantees of affordable housing, healthcare, or retirement support. This tension raises significant questions about equity and sustainability within the social contract, as younger generations grow increasingly disillusioned with an economic structure that seems to prioritize private profits over public good.

That disillusionment somewhat contributed to the rise of far-right ideologies in Western societies. This  is a concerning trend often linked to the erosion of the social contract, economic insecurity, and disillusionment with mainstream politics. In many Western countries, younger generations are finding it increasingly difficult to access affordable housing, secure stable employment, and build financial security, which leads to widespread frustration and resentment. This disillusionment with existing structures has, in some cases, fueled support for far-right movements, which promise swift, often populist solutions to complex socioeconomic problems. The appeal of these movements lies in their rhetoric around national sovereignty, strong borders, and a return to "traditional" values, providing a sense of stability and identity that some feel is lacking in the current political landscape.

Historically, far-right movements gained traction during times of economic hardship or perceived social instability, as seen in pre-World War II Europe. Today, these groups have found a new foothold by capitalizing on the struggles of those who feel left behind by globalization, technological change, and government policies. Far-right ideologies are particularly appealing to segments of the population who feel that immigration, trade, and multiculturalism dilute their economic prospects and cultural identity. The rising cost of living, stagnant wages, and fears around job security further amplify these anxieties, as people look for groups or issues to blame for their worsening conditions.

As the social contract becomes more fragmented, with visible disparities in wealth and opportunities, far-right movements exploit these divisions, creating a narrative that pits native-born citizens against immigrants, and working-class citizens against elites. This polarization, fueled by economic and social grievances, threatens to destabilize democratic institutions, making it harder for societies to address the underlying issues. The growing support for far-right ideologies underscores a broader crisis of trust in traditional political systems, revealing an urgent need for policies that address economic inequality, restore faith in institutions, and rebuild a sense of collective identity in diverse, modern societies.

While the West faces unprecedented challenges, these obstacles also present an opportunity for growth and adaptation. The Roman Empire serves as both a cautionary tale and a valuable historical case study, illustrating the consequences of overextension, unaddressed social fragmentation, and resistance to change. Learning from Rome’s decline, the Western world can recalibrate its strategies, prioritize sustainable growth, and reinforce social contracts to ensure a future that does not mirror Rome’s fate. Immigration plays a crucial role in the economic health of Western nations, and its management is closely tied to the rise and stability of empires throughout history. Like ancient Rome, which integrated foreign populations to bolster its workforce and military, modern Western economies rely on immigrants to fill labor shortages, particularly in aging societies. Immigrants often bring skills that support industries such as healthcare, technology, and agriculture, driving growth and sustaining essential services. However, the West’s approach to immigration is complex, balancing economic needs with public sentiment. In recent years, anti-immigration rhetoric has intensified, despite evidence showing that Western economies benefit significantly from a stable influx of skilled and unskilled immigrants. If Western countries limit immigration, they risk constricting economic growth and weakening industries that are heavily dependent on a diverse labor pool. Thus, just as Rome depended on “barbarian” populations to maintain its territorial and economic strength, modern Western nations require thoughtful immigration policies to avoid labor shortages, sustain economic vitality, and maintain their global influence.

In taking decisive, forward-looking actions, Western societies can mitigate their risks and navigate the shifting global landscape, securing a future that values resilience and inclusivity over unsustainable dominance.