The United States is the largest economy and the only remaining superpower in the world. It has military bases all over the world and engages in covert and open military operations in several places simultaneously. Who could have imagined that the US could be faced with a looming fiscal cliff like the one it is faced with today?

To avoid disastrous short-term impacts on the US economy, the White House and Congress have engaged in fierce negotiations in the last few weeks to reach a deal that would avert the cliff. The last minute compromise produced a deal that would postpone the fiscal cliff for two more months. However, the long-term fiscal crisis still looms large down the road.

Most people in the world mistake the US economic system as capitalist. But few people know that the system contains significant socialist elements as a result of fierce class struggle following the Great Depression of the 1930s.

Faced with steep economic decline, the US government introduced socialist elements in the form of the New Deal into its economic system to pacify the working class. The Social Security Act, unemployment benefits, disability benefits and other welfare benefits were all parts of FDR's New Deal. These socialist benefits were introduced as a result of fierce class struggle during the time, not the charity of the capitalist elite.

The Great Depression wasn't the only reason the New Deal came about. The former Soviet Union, considered a "workers' paradise" at the time, created an international climate that forced the capitalist elite to make concessions to the working classes in order to avert a socialist revolution. After World War II, the emergence of socialist China, which in turn gave rise to independence movements in Africa and Asia, resulted in the establishment of more socialist regimes across the world.  

The Chinese "cultural revolution" (1966-76), an unprecedented political experiment in human history, created a huge ripple effect across the world, giving rise to anti-war demonstrations in the US and student movements in the US and Europe.   

It was in this international social climate that US President Lyndon B. Johnson proposed his Great Society program. It was also in this social climate that African-Americans were finally able to win equal rights. Support from people all over the world, particularly the 700 million Chinese, was especially helpful to the cause.  

I still remember when I, as a teenager in primary school, demonstrated with my classmates in the streets for several days in support of the African-American struggle for equal rights. At that time, China was known as a supporter of human rights in the world.

It seemed that the world was in the sway of socialism back then. In the words of Chinese Communist Party leader Mao Zedong, "The east wind was bearing down the west wind". However, the world's social climate would sway in the opposite direction as the result of one incident in one major country. The death of Chinese Communist Party leader Mao Zedong, and the ensuing economic reform and opening-up of China, breathed new life into capitalism. New investment opportunities and a new moral high ground was established as China resorted to market reforms to inspire its development efforts.

China's economic reform posed a huge challenge to the former Soviet Union. Mikhail Gorbachev was forced to introduce reform measures of his own in the Soviet Union that proved fatal in the end. In 1991, the Soviet Union, the other world superpower, suddenly disintegrated, surprising both scholars and politicians around the world.

The collapse of the Soviet Union was hailed as a great victory for the US at the time. Francis Fukuyama, the famous US historian, called it "the end of history". The Cold War was over; democracy had won and communism was defeated. There was no more history. 

The end of history mentality demonstrated the arrogance of the US elite at the time. President H.W. Bush, who was credited for bringing down the former Soviet Union, became increasingly ambitious. The Soviet Union was no more, and the US could use its unprecedented military power to remake the world in its own image, a "new world order" as it was then called.

The irony of history was that the seemingly unbeatable Bush lost his bid for a second term to his younger challenger, the Democratic Party candidate Bill Clinton, governor of Arkansas.  

Bill Clinton, the Democrat president, took full advantage of the collapse of the Soviet Union and the East Asian financial crisis of 1997-1998 to push the US economy to a new high. The US began to have a surplus that enabled it to pay back some of its debt accumulated over three Republican administrations. Besides the economic prosperity, Bill Clinton also fascinated the world with his human rights rhetoric, which resonated with youth across the globe.