Sylvester J. Kowalski, July 12, 2018
David Harvey in his book The New Imperialism (OUP Oxford, Kindle Edition) importantly explains the economic complexity of the United States. The following quotation introduces us to this complexity.
“Imperialism is a word that trips easily off the tongue. But it has such different meanings that it is difficult to use it without clarification as an analytic rather than a polemical term. I here define that special brand of it called ‘capitalist imperialism’ as a contradictory fusion of ‘the politics of state and empire’ (imperialism as a distinctively political project on the part of actors whose power is based in command of a territory and a capacity to mobilize its human and natural resources towards political, economic, and military ends) and ‘the molecular processes of capital accumulation in space and time’ (imperialism as a diffuse political-economic process in space and time in which command over and use of capital takes primacy). With the former I want to stress the political, diplomatic, and military strategies invoked and used by a state (or some collection of states operating as a political power bloc) as it struggles to assert its interests and achieve its goals in the world at large. With the latter, I focus on the ways in which economic power flows across and through continuous space, towards or away from territorial entities (such as states or regional power blocs) through the daily practices of production, trade, commerce, capital flows, money transfers, transfers, labour migration, technology transfer, currency speculation, flows of information, cultural impulses, and the like.”
In the following quotation, Mr. Harvey introduces us to a concept that is foreign thinking to most of us – “….. recognizing the compelling need felt on the part of business interests in the United States to keep as much of the world as possible open to capital accumulation through the expansion of trade, commerce, and opportunities for foreign investment.”
“It would be hard to make sense of the Vietnam War or the invasion of Iraq, for example, solely in terms of the immediate requirements of capital accumulation. Indeed, a plausible case can be made that such ventures inhibit rather than enhance the fortunes of capital. But, by the same token, it is hard to make sense of the general territorial strategy of containment of Soviet Power by the United States after the Second World War—the strategy that set the stage for US intervention in Vietnam—without recognizing the
compelling need felt on the part of business interests in the United States to keep as much of the world as possible open to capital accumulation through the expansion of trade, commerce, and opportunities for foreign investment.“
“With these insights, we can more readily understand the 21st century imperialism of the United States. A sovereign country is a barrier to this “open” imperialism, and we can begin to understand the U.S. aggression to independent countries, such as, Cuba, Iraq, Syria, Libya, Venezuela, Turkey, Iran, Russia, and China. These countries are, or had been before U.S. aggression, sovereign countries.”
A contradiction arose between bourgeois nationalism and imperialism – no outlets for surplus capital. As Mr. Harvey states:
“The underlying contradiction between bourgeois nationalism and imperialism could not be resolved, while the rising need to find geographical outlets for surplus capitals put all manner of pressures on political power within each imperialist state to expand geographical control. The overall result, as Lenin so accurately predicted, was fifty years of inter-imperialist rivalry and war in which rival nationalisms featured large. Its essential features involved the carving up of the globe into distinctive terrains of colonial possession or exclusionary influence (most dramatically in the grab for Africa of 1885 and the Versailles settlement after the First World War, including its partitioning of the Middle East between French and British protectorates); the pillaging of much of the world’s resources by the imperial powers; and the widespread deployment of virulent doctrines of racial superiority; all matched by a total and predictable failure to deal with the surplus capital problem within closed imperial domains, as seen in the great depression of the 1930s. Then came the ultimate global conflagration of 1939–45.”
After 1945, the global economy became stabilized. Mr. Harvey states:
“The period from 1945 to 1970 was, then, the second stage in the political rule of the bourgeoisie operating under global US dominance and hegemony. It brought a period of remarkably strong economic growth to the advanced capitalist countries. A tacit global compact was established among all the major capitalist powers, with the US in a clear leadership role, to avoid internecine wars and to share in the benefits of an intensification of an integrated capitalism in the core regions.”
The stable period ended about 1970. The U.S. excess of “guns and butter” was the cause.
“This second stage in global rule of the bourgeoisie came to an end around 1970 or so. The problems were multiple. First there was the classic problem of all imperial regimes—overreach. The containment of (and attempt to subvert) communism proved rather more costly than expected for the United States. The rising costs of the military conflict in Vietnam, when coupled with the golden rule of never-ending domestic consumerism—a policy of guns and butter—proved impossible to sustain, since military expenditures provide only short-run outlets for surplus capital and generate little in the way of long-term relief to the internal contradictions of capital accumulation. The result was a fiscal crisis of the developmental state within the United States. The immediate response was to use the right of seigniorage and print more
“This system has now run into serious difficulties. As in 1973–5, the causes are multiple, though this time the volatility and chaotic fragmentation of power conflicts within political-economic life make it hard to discern what is happening behind all the smoke and mirrors (particularly those of the financial sector).”
“Either new arenas of profitable capital accumulation (such as China) must be opened up, or, failing that, there will have to be a new round of devaluation of capital. The question becomes: who will bear the brunt of a new round of that devaluation? Where will the axe fall? The trend towards ‘regionalization’ within the global economy then appears more worrying. Echoes of the geopolitical competition that became so destructive in the 1930s begin to be heard. US abandonment of the spirit if not the letter of the WTO rules against protectionism by the imposition of tariffs on steel imports in 2002 was a particularly ominous sign.”
“A major faultline of instability lies in the rapid deterioration in the balance of payments situation of the United States.”
Mr. Harvey explains the ramifications (or, better yet: the consequences) of the past financialization of the U.S. economy.
“But the hegemony and dominance of the United States is, once more, under threat, and this time the danger seems more acute. Its roots lie in the unbalanced reliance upon finance capital as a means to assert hegemony. Historically, Arrighi (following Braudel) points out, financial expansions indicate ‘not just the maturity of a particular stage of development of the capitalist world-economy, but also the beginning of a new stage’. If financialization is a likely prelude to a transfer of dominant power from one hegemon to another (as has historically been the case) then the US turn towards financialization in the 1970s would appear to have been a peculiarly self-destructive move. The deficits (both internal and external) cannot continue to spiral out of control indefinitely, and the ability and willingness of others (primarily in Asia) to fund them is not inexhaustible.”
Rather than attack the root cause of the problem, the U.S. embarked on a program of manipulation in order to maintain hegemony.
“As Gowan remarks: ‘Washington’s capacity to manipulate the dollar price and to exploit Wall Street’s international financial dominance enabled the US authorities to avoid doing what other states have had to do: watch the balance of payments; adjust the domestic economy to ensure high levels of domestic savings and investment; watch levels of public and private indebtedness; ensure an effective domestic system of financial intermediation to ensure the strong development of the domestic productive
sector.’ The US economy has had ‘an escape route from all these tasks’ and ‘by all normal yardsticks of capitalist national accounting’ has become ‘deeply distorted and unstable’ as a result.”
All that the manipulation succeeded in doing was to prolong the agony (or, “kick the can down the road”). The U.S. first had a recession in 2001, and, then, a financial crisis in 2008. To solve the 2008 crisis, the Federal Reserve drove interest rates to near zero and embarked on a massive Qualitative Easing – a euphemism for infinite printing of money.
And, an economic hegemon did come forward – China. First, China’s economy on a Purchasing Parity basis exceeded that of the U.S. Then, China began the Belt and Road Initiative which will allow China to be the global economic leader. Further, it started China 2025 whose goal is to be the global technological leader in ten technological areas. All of this terrifies the U.S., and we now see some very amateurish actions by the Trump administration to somehow contain China’s economic rise. It has started a global trade war which somehow is to reverse the past U.S. economic blunders.
The mistake that U.S. made was to de-industrialize after 1970. Now, the only solution, and a very painful solution, is to re-industrialize. The U.S. consumes more than it produces. Economically, a successful country produces more than it consumes. Re-industrialization is the only answer for the U.S. As of today, the U.S. economically is in a much lower position than China.
Today, the U.S. is, militarily, in second place to Russia (see Andrei Martyanov’s brilliant analysis in Losing Military Supremacy The Myopia of American Strategic Planning. Clarity Press. Kindle Edition.), and, economically, it is it least in second place to China. This is the consequence of the U.S. political elite’s incompetence ever since 1945.
The U.S. Empire is in shambles, and we can hear it’s death-rattle.