“Understandably proud of this preeminence we yet realize that America’s leadership and prestige depend, not merely upon our unmatched material progress, riches and military strength, but on how we use our power in the interests of world peace and human betterment.”
His argument is that in order America’s leadership and prestige in the future, depends not only on its economic and military strength, but also on its foreign policy. At the time, the US was clearly the mightiest of the two ‘superpowers’, in terms of economic and military clout. However, in terms of political influence -the most important factor in winning the Cold War- the capitalist sphere of influence was more or less rivaled by its communist counterpart.
By the time of Eisenhower’s farewell address, the Cold War had developed from a simple clash of ideologies into a full-fledged war of ideologies that had claimed millions of lives. Eisenhower had already witnessed all this: In his presidency he saw the end of the Korean War, the beginning of the Second Indochina War and the erection of the Berlin Wall. In this regard, he undoubtedly acquired a certain level of wisdom in relation to how US foreign policy affects its world position.