Review by Paul Hampton of John Bellamy Foster and Robert W. McChesney eds. Pox Americana: Exposing the American Empire (Pluto) and Leo Panitch and Colin Leys eds. The Empire Reloaded: Socialist Register 2005 (Merlin)
There is sharp disagreement about the nature and meaning of imperialism on the left, with two broad schools of thought emerging. These two books sum up the differences very clearly.
The first view is largely a fable and is expressed lucidly by Immanuel Wallerstein in Pox Americana. He argues that after 1945 the United States became hegemonic, meaning that the US state was dominant economically, militarily and culturally.
This lasted for about twenty-five years, when the US ran into difficulty because of the rise of economic rivals Germany and Japan and the Vietnam War.
Wallerstein says the US handled its “loss of hegemony” from Nixon to Clinton through “a variant of the velvet glove hiding the mailed fist”. He says the US appeared to offer other big powers “an alliance of semi-equals” while actually aiming to stop the European Union. It also imposed the Washington Consensus, globalisation, neo-liberalism etc on the rest of the world.
Wallerstein argues that this approach failed. He says the collapse of the Soviet Union was a disaster for the United States because “it removed the most important political weapon they had in relation to Western Europe and East Asia”. Saddam Hussein challenged the United States by invading Kuwait in 1990, losing only what he had gained. The US economic revival in the 1990s turned out to be a bubble rather than a boom. Finally, 9/11 showed that the United States was vulnerable.
Hence Wallerstein believes that the accession of George W. Bush marked a break with the previous mode of handling decline. He says Bush “did not go to war on Iraq even for oil” but rather to intimidate states that want nuclear weapons and European rivals. For Wallerstein, the Iraq war was “an attack on Europe, and that is why Europe responded the way it did.”
Wallerstein believes that the rivals to US power will grow in strength. In particular he highlights what he calls the “Paris/Berlin/Moscow alliance”. He says: “Europe will construct itself. It will be very difficult, but they will construct themselves and they will construct an army. Maybe not all of Europe, but the core. The United States is really worried about it, and that army will sooner or later link up with the Russian army.”
Secondly, he thinks an Asian rival will emerge. Wallerstein says: “China, a reunited Korea, and Japan will begin to move together politically and economically.”
His conclusion is that “The United States has lost legitimacy, and that is why you cannot call it hegemonic anymore.” Instead the world situation is “chaotic” and likely to remain so for “the next twenty or thirty years”.
By contrast, the main essays in the Socialist Register 2005 explain both the inadequacies of the “US decline” arguments and set out the basis for an alternative theory of imperialism. The key essay is by Leo Panitch and Sam Gindin, who also wrote an important contribution in the Socialist Register 2004.
Panitch and Gindin conceptualise the nature of US hegemony established after World War II differently than Wallerstein. They argue that a “new type of imperial order” emerged after 1945, one “very different from the one that had been characterized by the ties between the imperial states and their colonies in the pre-World War I era.”
This new order successfully overcame the fragmentation of capitalist states into rival empires, which had led to two world wars. This unique “informal empire” was characterized by “the US state’s economic penetration of, and close institutional linkages with, the other advanced capitalist states.”
The advanced capitalist states became more integrated and interpenetrated, largely because of the foreign direct investment and trade by US multinational corporations in Europe and Asia.
So even though economic competition among the advanced capitalist states continued “any revival of inter-imperial rivalry was foreclosed”. For example US investment in Germany affected the nature of German capital, both directly (GM, Ford, IBM) and also via suppliers, banks, and customers. “This was reinforced by German firms’ consequent need to establish a countervailing presence in the US, all of which tended to create cross-border networks of finance and integrated production.”
Thus the unity and cooperation of the big powers was more than simply a result of the Cold War. As Bacevich has argued: “US grand strategy during the Cold War required not only containing communism but also taking active measures to open up the world politically, culturally, and, above all, economically - which is precisely what policymakers said they intended to do.”
Although the US did suffer set backs in the 1960s and 1970s, far from mechanically leading to decline, this period saw a resurgence of US finance capitalism.
The ending of convertibility of the dollar by the Nixon administration in 1971 “restored the American state’s economic autonomy in the face of a threatened rush to gold” and the devaluation of the dollar corrected the US balance of trade deficit, at least temporarily.
Panitch and Gindin argue that the US’s ability to re-finance its debt is not a sign of weakness but evidence of its “great structural power in financial relations”.
The liberalisation of finance enormously strengthened Wall Street through the 1970s. In 1979 the ‘Volcker shock’ - the American state’s self-imposed structural adjustment programme – demonstrated the power of US finance capital to its own working class and to the rest of the world.
The US proportion of world production did not decline after the 1970s and it continues to account for around a quarter of total world GDP into the twenty-first century. Far from catching the US, its “rivals” Germany and Japan stagnated by the 1990s and it was the US economy that was resurgent.
As Panitch and Gindin put it: “While American foreign direct investment continued to expand through the 1990s, manufacturing at home in that decade actually grew faster – much faster – than in any of the other developed countries. Furthermore, the US led the rest of the G7 in the growth of exports right through the 1980s and 1990s.”
The US state has also reforged its political ties with other big powers. The G8 became a forum to control macroeconomic problems such as exchange rate adjustments and to discuss wider political issues. The Bank for International Settlements re-emerged as a major international coordinating agency. The IMF shifted from dealing with balance of payments problems to imposing structural adjustment on third world countries. The World Bank supported this and also focused on capitalist state-building - what it called “effective states”.
The idea of Europe and Asia as immediate rivals to US hegemony is therefore “fanciful”. The evolution of the European Union was encouraged from the beginning by the American state and “its recent development through economic and monetary union, the launching of the Euro and the European Central Bank, has never been opposed by American capital within Europe, or by the American state”.
The steps towards an independent European military posture have been halting and were put in perspective by US-led NATO action over Kosova. Given the costs involved (in the context of slow growth) Europe is likely to remain dependent on US military technology for years to come.
Nor is there any evidence that the Euro is about to replace the U$ dollar as the dominant world currency. As Panitch and Gindin put it: “As of 2002, 65% of central bank foreign exchange reserves were in dollars, as compared with only 15% in Euros; the dollar was used in over 90% of transactions in foreign exchange trading, as compared with under 38% in which the Euro was used; almost 90% of over-the-counter derivatives transactions globally involved the dollar, compared with only 42% involving the Euro.”
Nor do European governments seem to have the will to make the Euro a challenger to the dollar. And given the interdependence between the two blocs, a dollar crisis would not be exclusively American, but a crisis of the system as a whole.
Neither do its “rivals” in Asia pose a greater threat. Japan remains dependent on American markets and on the security of its investments within the US. Its central bank buys dollars to prevent the appreciation of the Yen. And US economic power was rudely underlined by the intervention of the American Treasury in the East Asian crisis of 1997-98.
China may emerge eventually as a pole of inter-imperial power, but it is very far from reaching such a status. The Chinese economy is far smaller than the US and its substantial land army remains far behind US military technology. China’s economic growth has aggravated internal social contradictions, along fault lines of class and region – which may lead to huge unrest in the coming period. Chinese exports to the US make it hugely dependent on the US market. As Zhao explains, US foreign investment in China suggests that China is a growing regional power being integrated into the US informal empire rather than a rival.
This framework leads to a more sober evaluation of the disagreements over the war on Iraq. Panitch and Gindin argue that: “These tensions pertain very little to economic ‘rivalries’. The tensions pertain rather more to a preference on the part of these states themselves (in good part reflective of their relative lack of autonomous military capacity) for the use of international financial institutions, the WTO and the UN to try to fashion the ‘effective states’ around the world that global capitalism needs. But the bourgeoisies of the other capitalist states are even less inclined to challenge American hegemony than they were in the 1970s. Indeed many capitalists in the other states inside the empire were visibly troubled by - and increasingly complained about - their states not singing from the same page as the Americans.”
The US Treasury and Federal Reserve, which worked closely with their counterparts in the other core capitalist states during the war on Iraq, whatever their governments’ disagreements over that war. And subsequent G8 summits have managed to paper over the disagreements, at least for now.
Overall, the account given by Panitch and Gindin is a far more adequate explanation of the nature of imperialism today than Wallerstein’s apocalyptic fantasies.