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David
Harvey
THE NEW IMPERIALISM
Afterword to Foreign Language Editions
It is now nine months since I finished writing The
New Imperialism. My aim was to identify the underlying
forces impelling fast moving events. That required some
sort of interpretive account of those events and at
the time of writing there was much that was uncertain.
While many uncertainties remain, some things have been
clarified. The weapons of mass destruction (the primary
reason given for a pre-emptive strike against Iraq)
have not been found and the supposed connection of Saddam
to Al Quaeda and 9/11 is admitted as spurious (even
though most US citizens still apparently believe it).
The idea that we went to war solely on the basis of
a catastrophic failure of intelligence has little credibility.
President Bush’s claim in his State of the Union
Address that Iraq was trying to buy nuclear materials
from Niger was known to be false at the time and the
Hutton Enquiry (the evidence rather than the conclusions)
in Britain shows how raw and unverified intelligence
was massaged to justify a decision to go to war that
had been made long before. Plainly, there were problems
with that intelligence and we are now promised extensive
enquiries (to last at least a year or more) as to what
went wrong (with the intelligence but not, of course,
with the political decision making). Pointing the finger
at the intelligence services may backfire as senior
professional analysts reveal more and more about how
the caveats they sought to insert were ignored and how
“probabilities” were converted into certainties
in publicized dossiers to justify the war.1 The broader
claim, put forward by Bush, that the aim has been to
democratize the whole region and that past favors extended
to undemocratic regimes will cease, is plainly contradicted
by US support (backed by military presence) for violently
oppressive regimes in Uzbekistan and Krygistan. Defense
Secretary Donald Rumsfeld even travelled to Baku to
shake the hand (a gesture reminiscent of his notorious
congratulatory handshake to Saddam in 1984) of the son
of a brutal dictator in Azerbaijan, elevated to power
by the death of his father. Bush and Blair have therefore
in practice largely fallen back on the general argument
that ridding the world of a brutal dictator by force
was a morally correct thing to do, that “history”
will judge them to have been right, no matter what may
be thought of the immediate reasons for their pre-emptive
invasion of a sovereign state.
Bush, furthermore, repeatedly asserts the virtues of
having delivered “freedom” to the Iraqi
people without minding Matthew Arnold’s dictum
that “freedom is a very good horse to ride, but
to ride somewhere.”2 The direction was actually
defined in February 2003 (the time of vast global protests
in an attempt to stop the war) when various contracts
were negotiated and some even signed by the US Government
with Bechtel, Halliburton and others to engage with
the post-war reconstruction of Iraq. Discussions then
involved a company called BearingPoint concerning the
“the full transition of Iraq from a state- to
a market-controlled economy in just 18 months.”
Their contract was signed in July and the first phase
of the plan was implemented on September 19, 2003 when
Paul Bremer, head of the Coalition Provisional Authority,
promulgated four orders which included:
“The full privatization of public enterprises,
full ownership rights by foreign firms of Iraqi businesses,
full repatriation of foreign profits, the Flat Tax (a
regressive system of equal taxation of all incomes -
both rich and poor - favored by the American Right),
the opening of Iraq’s banks to foreign control,
national treatment for foreign companies (which means,
for example, that Iraq cannot require that local firms
able to do reconstruction work should be hired instead
of foreign ones), and…the elimination of nearly
all trade barriers.”3
The orders were to apply to all arenas of the economy,
including public services, the media, manufacturing,
services, transportation, finance, and construction.
Only oil was exempt (presumably because of its special
status and geopolitical significance as a weapon of
distinctively US control). These orders in effect mandate
the construction of a neo-liberal state in Iraq. It
is useful to remember here that the first great experiment
with neo-liberal state construction was Chile after
Pinochet’s violent US-backed coup of 1973 (when
US economists, known as “the Chicago boys,”
because of their attachment to the theories of Milton
Friedman, helped reconstruct the economy along free-market
lines). National assets are, in effect, auctioned off
at firesale prices. The orders in the Iraq case are,
as Naomi Klein points out, in violation of the Geneva
Convention as to the proper role to be assumed by any
occupying power.4 Oil states, of course, tend to be
immune to the typical financial pressures that have
been used over the past twenty years to force other
nations into the neo-liberal mold. Bremer’s orders
in effect do by main force what the US has been trying
to do globally (with the aid of the IMF and its structural
adjustment programs as well as through the WTO) and
tally exactly with the requirements the Bush Administration
has placed on foreign aid disbursements through its
Millennium Challenge Grants.5
There is, however, considerable resistance to the imposition
of what the London Economist calls a “capitalist
dream” upon Iraq. Even Iraq’s interim trade
minister, appointed by the CPA, has attacked the forced
imposition of “free market fundamentalism,”
describing it as “a flawed logic that ignores
history.” The widespread perception that the US
is out to “loot Iraq” (a vicious case of
accumulation by dispossession if ever there was one)
gains credibility as “The Iraq Reconstruction
Bonanza” (as The New York Times calls it) gets
under way to the great benefit of US corporations. Almost
certainly, as Klein also points out, the US resistance
to direct elections in Iraq stems from its desire to
work with appointed representatives who will be as pliant
as possible in locking in these free-market reforms
before direct democracy (which would almost certainly
reject them) can be established in perhaps two years
time. The struggle over electoral democracy in Iraq
thus dovetails with the struggle to protect Iraqi assets
from foreign predators.6
While regime change in Iraq has been welcomed by most,
many outside the US now believe that Bush is the main
threat to world peace and that regime change in Washington
is imperative. That view is incomprehensible to most
people in the US and the gap in vision and understanding
between the US and the rest of the world - in part a
product of media bias and the peculiar belief system
of moral goodness in the US - continues to widen.
One of the big question marks was whether the invasion
of Iraq would be understood as liberation or occupation.
The weight of the evidence now strongly supports the
latter view and the only remaining question is where
and when resistance comes to be interpreted (as it already
is throughout much of the Arab world) as “insurgency”
rather than “terrorism.” Far more US soldiers
have died since Bush landed on an aircraft carrier last
May 1st under the banner sign of “mission accomplished”
and this has produced a certain willingness in the US
to question the motives as well as the appalling lack
of planning for post-war reconstruction of Iraqi economy
and civil society.7 One positive consequence is that
all talk of moving on militarily to Damascus and Tehran
has subsided. The US turn to more brutal tactics of
repression in Iraq (tactics which echo those of the
Israelis against the Palestinians) seems likely to backfire
and spawn ever larger swaths of resistance. The recent
statement by a US commander on the ground that “with
a heavy dose of fear and violence, and a lot of money
for projects, I think we can convince these people that
we are here to help them” captures the spirit
of the US occupation.8 There is little or no understanding
on the US side that occupations of this sort breed forms
of resistance, such as suicide bombing, that are almost
impossible to control.
Pressure on the US, both internally and externally,
to find a rapid exit strategy is growing. But on this
point there are some awkward dilemmas. A too-rapid withdrawal
of US forces could well plunge Iraq into a bloody civil
war. This is exactly what the CIA is now reported to
predict.9 It then becomes all too easy even for those
who may have been critical of the US-led invasion to
insist that the US forces stay until the work of stabilizing
Iraq is done (if ever). This rationale rests on the
idea that the fundamental divisions in Iraq are ethnic
and religious and that secular divisions, such as those
represented by a nascent movement of the unemployed,
are of no import (one Saddam law that the CPA is happy
to keep on the books bans workers in the public sector
from creating or joining unions). The US has undoubtedly
promoted ethnic and religious divisions as one way to
divide and rule (ignoring the fact that Shi’ites
can, like Catholics, be conservative, liberal or even
socialist in their political orientation). Religious
and ethnic cleavages are significant, of course, and
conflict between them is entirely possible. One outcome
could be the partitioning of Iraq into Sunni, Kurdish
and Shi’ite states. Plans for such a partition
are already rumored but surrounding states (Turkey in
particular) are unlikely to stand by and not intervene.
And it is very unlikely that the US would leave the
oilfields unprotected even if it withdraws from the
rest of the country. The only other options are for
the US to stay in Iraq in the long-term (a decision
that is becoming increasingly unpopular in the US but
which appears more consistent with administration objectives)
or internationalize the occupation under the auspices
of the UN. The reluctance of the US to contemplate the
latter course (even presuming the UN would go along)
could arise out of mixture of false pride and the inability
of the main institutions within the US ship of state
to change course (these factors, we now know, played
an important role in keeping the US engaged in Vietnam
long after everyone recognized that US war policy was
not viable there). But the apparent resolve within the
US administration to keep France, Germany and Russia
out from US-funded reconstruction work in Iraq while
begging them for assistance in and debt forgiveness
(the Iraq debt is now fixed at $100 billion plus $100
billion claims for reparations from Kuwait) can be explained
only by the strategic significance the US attaches to
control over global oil supplies. This is the unmentionable
subject that the US government refuses ever to invoke
and which most mainstream commentators within the US
studiously avoid raising.
The question of the exact state of global oil supplies
and reserves remains as murky as ever. In my initial
text, I stated, for example, that oil reserves in Canada
are running down. If, however, the difficult-to-extract
oil in the tar sands is included then Canada’s
oil reserves are very substantial. Russia has stepped
into the world oil market in a very big way in the last
year or so (and is beginning to acquire the status of
an oil-exporting economy with all the attendant dangers
and difficulties that attach thereto). And the sudden
interest of the Bush Administration for military bases
in Africa (particularly West Africa and Angola) almost
certainly has far more to do with the substantial oil
reserves there than with the ritual excuse of the war
against terrorism or the ostensible embrace of humanitarian
concerns and the need to confront the AIDS epidemic.10
As a footnote we now know from recently released British
intelligence records that the US was prepared to occupy
the oilfields of Saudi Arabia. Kuwait and Abu Dhabi
in the crisis of 1973.11 The inference that the reason
the Saudis agreed to recycle petrodollars through US
banks was to stave off such a threat looks entirely
plausible. With respect to the oil situation more generally,
the best that anyone can do is to recognize the volatility
of the oil picture but also accept that no matter what
happens the Middle East is a crucial region in relation
to the global economy and that the US presence in the
region, which has been steadily escalating since 1945,
will not diminish in the near future. Whoever wins the
next US presidential election is unlikely to reverse
the US drive to control the region and its oil reserves.
This raises the interesting question as to how the US
can justify its perpetual presence in the region. The
primary justification is the chronic state of insecurity
there. It seems at times as if the US welcomes and even
deliberately cultivates the latter in order to justify
the former. The tepid support it has given to a weak
“road map” towards a settlement of the Israeli-Palestinian
conflict and its support of Sharon’s brutality
as well as its general opposition to Islamic interests
not only betokens a lop-sided engagement that satisfies
certain key domestic interests in the US, but it also
has the effect of promoting terrorism, militancy and
insurgency within the region and beyond. A permanent
state of insecurity (including the threat of civil war
in Iraq) and perpetuation of a climate of fear must
seem for Bush and his advisors the easiest path towards
re-election and consolidation of global political power
around a powerful military apparatus and a permanent
war economy. In the same way the US benefited from the
financial volatility it helped create in the 1980s and
1990s, so it can hope to benefit from the security volatility
its own policies are now partially fomenting.
Perhaps the most controversial aspect of my argument
is that the US is operating more from a stance of economic
and political weakness than of strength and that the
Iraq venture may well signal the end of US hegemony
rather than the beginning of a phase of total US global
domination. This is a matter deserving serious discussion
and debate. Only time will tell whether I am right on
this but it is vital that everyone consider the possibility
and potential consequences of imminent US decline as
a hegemonic power. While I still stand by the general
thrust of my argument I probably did, however, underestimate
certain sources of US strength and my abbreviated account
of loss of US dominance in other areas needs substantiating
and refining.
I begin with the fact that half the world’s research
and development is done in the US. This gives the US
a sustained technological advantage and biases the global
paths of technological change towards its own interests
(particularly those centered in the military-industrial
complex). It generates a flow of technological rents
from the rest of the world into the US economy. The
US insistence on international protection of intellectual
property rights is designed to secure this “rentier”
status on a relatively long-term basis. The relative
strength of the East and Southeast Asian economies does
not, by and large, lie with their ability to innovate
(Japan, Taiwan and to a lesser extent Korea are partial
exceptions). These economies specialize in taking innovations
emanating from the US and using their labor resources
and organizational skills to put the new systems into
production at a far lower cost and at a far higher level
of efficiency. Much of the world is, therefore, dependent
upon the US for technological innovation. The US may
reasonably aspire (and there are several advocates for
this within the US these days) to define major new sources
of innovation (much as it did with the high-tech industries
of the much-touted “new economy” of the
1980s and 1990s) and so lead the world once more on
a merry dance of new technological wizardry. This is
not so easy a task.12 To begin with, it is not clear
from whence such new sectors will arise (bio- and medical-technology
are, however, leading candidates) and not clear either
whether the new paths taken, such as genetically modified
foods, will be acceptable to the rest of the world.
And while the US lead in technological innovation still
remains a substantial source of its influence and power
(thanks in large part to its research universities)
there are many signs that it is by no means unassailable.
European competition in commercial airliners (Airbus
versus Boeing) is very fierce, countries like Brazil
now have a substantial presence in smaller aircraft
production and China threatens to compete in the field
of commercial satellites (a threat that makes the US
sufficiently nervous to return to the idea of lunar
colonization as a long-term goal in space). On balance,
it is still probably the case that technological advantage
is an important source of US power in the world.
Questions have been posed as to how serious the loss
of manufacturing dominance actually is for US power.
The relative quantitative decline is undeniable. Sixty
percent of the world’s manufacturing production
was located in the US in 1950 but by the end of the
century it was less than a quarter. But what if much
of the world’s production is controlled by US
corporations operating overseas and the profits are
repatriated back into the US? To some degree this indeed
does happen. And there is evidence that the rate of
profit on their overseas investments is far higher than
domestic rates of return. But non-US companies now dominate
many major industries “accounting for nine of
the ten largest electronics and electrical equipment
manufacturers; eight of the ten largest motor vehicle
makers and electric and gas utilities; seven of the
largest ten petroleum refiners; six of ten telecommunications
companies; five of ten pharmaceutical firms; four of
six chemical producers….” Furthermore only
twenty-three of the “top one hundred corporations
in 2000 ranked by foreign-held assets…were American”
and “only twenty-one percent of the world’s
foreign direct investment in other countries was American
in 2001, compared with 47 percent in 1960.”13
US-based manufacturing corporations simply do not rule
the roost in the way they once did. They do, however,
repatriate substantial profits from their overseas ventures
and thereby benefit financially from moving jobs overseas.
But foreign corporations operating in the US likewise
repatriate profits out of the US and this partially
offsets the inflow. Are the job-losses within the US
compensated for by the return flow of high profits to
US-based corporations? Possibly. But the return flow
of repatriated profits goes to the already wealthy and
does little or nothing for the rest of the population.
This exacerbates the incredible class biases already
built into the US social structure. Much of the US population
is increasingly dependent upon the consumption habits
of the upper income brackets. The effect is to generate
a lot of low-paying service jobs, a kind of servant
class for the upper classes who rule economically and
dominate government through their campaign contributions.
The 2 million or so manufacturing jobs lost in the US
in the last three years paid more than $17 and hour
while the service jobs that partially compensated for
that loss paid only $14 an hour. Even some of these
service jobs are now moving offshore. India (which I
did not pay sufficient attention to in my original presentation)
is rapidly usurping US service jobs in everything from
software production and computer servicing to airline
ticketing and corporate and government billing services.
Dangers and risks attach to relying on offshore manufacturing
(and servicing) because it presumes a general condition
of geopolitical stability or that the US can always
itself deal with foreign disruptions militarily. If,
for example, military conflict breaks out between China
and Taiwan, what would happen to the supply of manufactured
goods into the US market? Even the US military-industrial
complex relies for computer chips from East and Southeast
Asia. In addition, the twin forces of technological
change and transfer of jobs overseas has had a terrible
impact upon employment prospects in the US. Roughly
forty per cent of the 2 million manufacturing job losses
experienced in the US during the last three years was
due to rising productivity at home.14 Technologically
induced unemployment and job insecurity has long been
rampant within the US economy (this was true of the
1990s more generally15). The loss of jobs overseas accounted
for only thirty per cent of the job losses (the remaining
job losses being simply due to recessionary conditions).
These forces continue to play out and account for the
“jobless recovery” now occurring within
the US. The relative loss of manufacturing capacity
constitutes, I conclude, a serious erosion of relative
US global power in the world and a serious loss of well-being
for the mass of the US population.
The role of relentless US consumerism is an equally
tricky question. It gives a substantial advantage to
the US in cutting bilateral trade deals because privileged
access to the huge US market means a great deal particularly
to smaller states (like Chile or Taiwan). The US has
assiduously used this power rather than the WTO to achieve
its goals (my guess is that a few more judgments of
the steel tariff sort against the US may well lead the
US to abandon the WTO just as it abandoned the Kyoto
agreement on climate change in favor of bilateral bargaining).
The dependency of the rest of the world on the US consumer
market is certainly an important feature in global power
relations. But the recent bout of US consumerism has
been almost entirely debt-financed. It has brought the
internal net savings rate down close to zero (perhaps
even negative when we take into account the way in which
recent consumerism has been underpinned by refinancing
mortgage debt on inflated housing prices). It has also
been class-biased since US consumerism rests more and
more on the consumption habits of the top ten percent
of the US population since that is where wealth and
income is hugely concentrated. The habit of spending
beyond one’s means played a key role in keeping
the US economy afloat during the recent recession and
it continues to feature as a boost to the US recovery.16
While much of this consumerism can be attributed to
a legendary and seemingly insatiable appetite for consumer
goods, more and more of it is powered by necessity.
Many of those who cashed in their mortgages to augment
their incomes did so to confront the rising costs of
health care and the loss of medical insurance or found
themselves forced to resort to the private sector to
compensate for the rapidly declining qualities of public
education. The profligate tax cuts that augmented consumer
power in the summer of 2003 were almost instantaneously
spent, thus producing a strong economic stimulus that
the administration hopes will last through the election
in the fall of 2004. But how long can this debt-financed
consumerism last?
It is the free-fall into indebtedness that lies at the
heart of the US problem. The financial picture in the
US continues to deteriorate a-pace. Even Robert Rubin,
the former Treasury Secretary in the Clinton Administration
as well as IMF economists, in a most unusual move, have
openly criticised US fiscal policies as a serious threat
to global stability.17 Personal indebtedness is escalating,
government budgets at all levels are suffering such
that services and public investments are under assault
and the private sector, as always, cherry-picks the
lucrative parts cast off by government and leaves the
rest to fall apart. The Federal Government is resorting
to unheard of levels of fiscal irresponsibility and
even with a modicum of economic recovery the prospect
of avoiding fiscal shipwreck in the next decade given
current policies is negligible. To top it all, the occupation
of Iraq is costing around $4 billion a month. The Bush
Administration’s fiscal policies seem incomprehensible
unless understood as a deliberate drive on the part
of neo-conservative ideologues to deliberately force
the whole structure of public financing into such a
huge crisis that the government is forced to renege
on all of its social obligations (such as Social Security
and Medicare). This will complete their long-standing
project (David Stockman, budget director in the early
1980s, details how it worked in the early years of the
Reagan administration) of shrinking government power
(except with respect to the military) to the point where
it “can be drowned in a bath-tub.”18 As
many commentators have pointed out, the spiraling deficits
in the US cannot be sustained without either default
or falling into a chronic state of dependency upon foreign
largesse. Already some forty percent of US treasuries
and one fifth of Wall Street assets are foreign owned.
I erroneously put the daily inflow of capital to cover
the current account deficit at $2 billion: it is actually
a mere $1.5 billion and rising! When the US Treasury
Secretary, John Snow, visited China in the fall of 2003,
it was ostensibly to try to persuade the Chinese to
revalue their currency and so reduce their competitive
advantage in global trade but in reality, many commentators
suspected, it was to extend a begging bowl to the Chinese
to use their surpluses to keep on funding the US deficit.
The only other solution would be to use the US power
of seignorage to pay back the debt in devalued dollars:
but that would mean a radical bout of inflation at home
and a collapse of the dollar in international markets
far beyond its current loss of value against the euro.
In this arena the collapse of US power seems imminent
unless there is some radical change of course away from
the current suicidal path the US government seems bent
on taking. Regime change in Washington could, at least
on this point, make a substantial difference.
Finally, there is a dangerously complacent view that
says the global economy is reviving because of the US-based
recovery of consumerism. But economies as diverse as
Chile, Japan, Australia, Germany and even India are
reviving in strong measure because of the vast demand
emanating from the infrastructural investments in China
(fixed capital investment increased at the rate of 25
percent in 2003). Even US manufacturing has benefited
from the Chinese demand for earth-moving equipment.
China’s current account surplus (invested increasingly
in US Treasuries and hence partially financing the US
military machine) goes from strength to strength (the
trade surplus to the US rose from under $10 billion
in 1990 to over $100 billion in 2002). Its astonishing
pace of economic growth (officially underestimated,
according to most private analysts, at 9.1 percent in
2003) and transformation, accompanied by extraordinary
internal stresses and strains, has been fundamental
to global growth for at least ten years now and China
now dominates the whole of East and South East Asia
as a regional hegemon with enormous global influence.
Asian exports to China have been growing at a startling
rates and many Asian economies have doubled the proportion
of their total exports going to China in the last two
years. China is now the primary export destination for
South Korea, Taiwan and rivals the US in Japan’s
export market.19 And it is not only investment that
is involved here because China’s consumer market
is also expanding at an astonishing rate (it is already
one of the largest global markets for mobile phones).
Its vast thirst for oil is also much in evidence. At
current rates of growth, China’s oil consumption
will equal that of the US by 2020. The consequences
for global climate change (as well as for oil prices)
are potentially catastrophic. China is already the second
largest importer of oil after the US. The geopolitical
struggle to control the Middle Eastern oil fields (which
explains the US reluctance to surrender control of the
Iraq mess to the UN) then looms large. Whose long-term
energy security are we talking about? The US or China?
On the significance of this last point, at least, everyone
should be clear.
The situation in China, however, is fraught with danger.
It comes as a surprise to learn that there has actually
been a net loss of manufacturing jobs in China since
1995 - more than 15 million (or 15 per cent of the total)
according to recent estimates - due to the bankruptcy
of many of the township and village enterprises in the
“rust-belts” around Beijing and Shanghai.20
The new production systems coming on line are less labor
intensive. Power shortages are frequent, however, and
labor relations are highly unstable. Regional inequalities
appear to be increasing in spite of official policies
to counteract them. The effects overseas are no less
contradictory. China has displaced more manufacturing
jobs from Japan, South Korea, Mexico and elsewhere than
it has from the US. Nearly 200,000 jobs have been lost
in the last two years in the maquilla-manufacturing
belt along the northern border of Mexico and all those
jobs have gone to China. But the massive infrastructural
investments under way in China are certainly entraining
much of the global economy and since it is a well-documented
proposition from economics that investments of this
sort, even though debt-financed (and therefore speculative
to some degree) do far more to stimulate aggregate growth
than resort to consumerism,21 then it should be clear
who is leading the global recovery, such as it is, right
now. And the answer is not the US. The power shift towards
China and Asia more generally (with India now emerging
as a much stronger player) is accelerating rather than
diminishing and the only question is whether and how
the pace of Chinese growth can be sustained.
This last question has no easy answer. Much of the development
in China, both private and public, is of a highly speculative
sort and it could easily surpass the “boom and
the bubble” of the 1990s in the US with equally
catastrophic outcomes if and when the bubble bursts.
China’s banking system is widely recognized as
unstable. Official estimates suggest that nearly a quarter
of the loans outstanding are non-performing but most
private analysts put the figure at around 45 per cent.
Remarkably, in late 2003 the Chinese authorities took
$45 billion of the nation’s current account surplus
and placed it in the two leading banks in order to bring
their assets into closer alignment with their liabilities.
Most analysts consider this helpful but too little to
guarantee against a future banking crisis.22 And China
is just as vulnerable as the US to external shifts.
A wave of protectionism from the US or a collapse of
US consumerism would pose clear dangers for the Chinese
economy. This limits the power of China vis-à-vis
the US and goes a long way to explain why it is that
the Chinese are so willing to finance the US debt. To
accept that China is a rising power does not mean that
it is autonomous in relation to the US: the bond between
the two economies is increasingly one of reciprocal
but tense dependency.
Meanwhile, the geopolitical picture is exhibiting considerable
volatility. Rapidly shifting alliances have yet to settle
(if they ever will) into some stable post cold-war configuration.
The loosely networked arrangement in East and South
East Asia seems to be consolidating (albeit reluctantly
in some instances) around China.23 Significantly, when
Bush toured the region late in 2003, his visit was entirely
overshadowed by the presence of the Chinese Premier,
Wen Jiabow. Divisions within Europe continue to fester
though there are some signs of concordance around economic
and even military policy. The appreciation of the euro
versus the dollar (now around 25 per cent) suggests
a nascent challenge to the role of the dollar as the
sole global reserve currency. The grouping of France,
Germany and Russia, with tacit support from China is
still in evidence. The emergence of a tactical coalition
led by China, India, South Africa and Brazil at the
Cancun conference insisting against Europe, the US and
Japan on greater openness in trade particularly in agricultural
products opens a new front in geopolitical bargaining
and the rapprochement between China and India that seems
to be underway also augurs a major shift in power balances
within the world. The US, though it still wields substantial
influence, cannot claim the overwhelming power it once
had to shape global alliances to its own purposes. Unpredictable
disruptions in unstable states - such as Pakistan or
Saudi Arabia - could easily spill over into major global
dislocations. Where the US once could casually rule,
it now has to work hard to maintain its slipping influence.
This is particularly evident in Latin America where
Lula in Brazil now supported by Kirchner in Argentina
leads a reconfiguration of politics towards the left
and a street revolution in Bolivia throws out a president
who was seeking higher levels of global economic integration.
And while Lula may be a disappointment to his followers
at home, his international activism is marked. In signing
a significant bilateral trade agreement on behalf of
the southern Latin American trade group Mercosul with
India, he confidently asserted that India, Brazil, Russia
and China could together re-write the economic geography
of the world along much fairer lines in the 21st century.24
This could well signal the emergence of an “anti-neo-liberal”
power bloc in the world.
But it is very important to emphasize the volatility.
Historically we have seen phases of relative stability
(e.g. during much of the Cold War) but then phases of
huge uncertainty in which all manner of rapid reconfigurations
and re-alignments can occur. During such phases it is
very difficult to predict outcomes. Who would have predicted
an inter-capitalist war in 1928? Who would have predicted
the sudden (and, in the event, the largely peaceful)
break-up of the Soviet Union in 1985? Who would have
predicted four years ago that war with Iraq was imminent?
There is a joke about weather forecasting that says
if we say the weather tomorrow will be roughly the same
as today then we would be right most of the time. The
landscape also adapts to predictable seasonal rhythms.
But then comes a hurricane and everything changes. This
is hurricane season in global geopolitical relations.
And the US is highly vulnerable. Even its vaunted military
power is in question. The US may dominate in remote-controlled
destructive power but it simply has not the will or
the resources to sustain a long-term military occupation
without calling upon reserves who are increasingly reluctant
to go to Iraq (particularly since those who get mobilized
take very serious pay cuts and in some instances don’t
get paid for months on end). The other tack is to privatize
military activity or to construct, in effect, a mercenary
army such as the motley assortment of nations (led by
Poland) that are being paid to participate within the
US-led coalition. But this is where the permanent state
of insecurity comes in. If peace broke out all over,
then the US would not be able to persuade anyone, either
internally or externally, that its military presence
was needed anywhere. Of course, there are enough tensions
and bitter rivalries and conflicts in the world for
such an outbreak of peace to be unlikely. But the big
question we need to ask is whether US interference is
now part of the solution or the heart of the problem.
Notes
1. The most spectacular example to date comes from
Britain with the revelations of Brian Jones, “We
were overruled, says former intelligence chief, and
the result was a dossier that was misleading about Iraqi
WMD,” The Independent, February 4, 2004.
2. The Matthew Arnold quote is cited in R.Williams,
Culture and Society, 1780-1850 (London, Chatto and Windus,
1958), 118.
3. A Juhasz, “Ambitions of Empire: the Bush Administration
economic plan for Iraq (and Beyond),” LeftTurn
Magazine, No.12 Feb/March 2004.
4. N.Klein, “Of course the White House fears
free elections in Iraq,” The Guardian, January
24, 2004, 18.
5 S.Soederberg, “American Empire and ‘excluded
states’: The Millennium Challenge Account and
the shift to pre-emptive development,” unpublished
ms, Dept of Political Science, University of Alberta,
2003.
6 N.Klein, op.cit.; T.Crampton, “Iraqi official
urges caution on imposing free market,” New York
Times, October 14, 2003, C5.
7. D.Rieff, “Blueprint for a mess: how the Bush
administration’s pre-war planners bungled postwar
Iraq,” New York Times Sunday Magazine, November
2, 2003, 28-78; M.Ignatieff, “Why are we in Iraq?
(And Liberia? And Afghanistan?),” New York Times
Sunday Magazine, September 7, 2003, 38-85.
8. D.Filkins, “Tough new tactics by U.S. tighten
grip on Iraq towns,” New York Times, December
7, 2003, A18.
9 This report first surfaced in a report from Press
Trust of India, Washington, January 23. See http://www.hindustantimes.com.news/181_544354,00050001.htm
10 E.Schmitt, “Pentagon seeking new access pacts
for Africa bases,” New York Times, July 5, 2003,
A1, A7.
11 L.Alvarez, “Britain says U.S. planned to seize
oil in ’73 crisis,” New York Times, January
4, 2004.
12. D.Henwood, After the New Economy, (New York, New
Press, 2003).
13. R. Du Boff, “U.S.Empire: Continuing Decline,
Enduring Danger,” Monthly Review, Vol 55, No.2
(2003), 1-15.
14. E.L.Andrews, “Imports don’t deserve
all that blame,” New York Times, December 7, 2003,
Business Section, 4.
15. R.Pollin, Contours of Descent, (London, Verso,
2003).
16. Extremely interesting data on several of these
points are assembled in G. Duménil and H.Levy,
Economie Marxiste du Capitalisme, (Paris, La Découverte,
2003). See also L.Uchitelle, “Why Americans must
keep spending,” New York Times, December 1, 2003,
C1-C2.
17. M. Muhleisen and C.Towe, (eds) “U.S. Fiscal
Policies and Priorities for Long-Run Sustainability.”
Occasional Paper No 227, International Monetary Fund,
Washington, D.C., 2004; and P. Krugman, “Rubin
Gets Shrill,” New York Times, January 6, 2004,
A23.
18. D.Stockman, The Triumph of Politics: Why the Reagan
Revolution Failed, (New York, Harper-Collins, 1986);
P.Krugman, “The tax-cut con,” New York Times
Sunday Magazine, Sept 14, 2003, 54-62. More generally
see Krugman’s The Great Unravelling, (New York,
Norton, 2003).
19 It is hard to keep up with the pace of change in
China. Reports from the Asian Development Bank, the
Asian Monitor coupled with reports in the financial
press allow some rough assessments to be made. See H.McRae,
“Working for the Yangtze dollar,” The Independent
Review, November 18, 2003, 2-3; K.Bradsher, “Is
China the next bubble?” New York Times, January
18, 2004, Section 3, 1 and 9; T.Crampton, “Asia’s
rally defies most expectations,” International
Herald Tribune, January 21, 17; Uchitelle, L. “When
the Chinese consumer is king,” New York Times,
December 14, 2003, Week in Review, 5; K.Bradsher, “Consumerism
grows in China, with Beijing’s blessing,”
New York Times, December 1, 2003, C15; J.Khan, “China’s
leaders manage class conflict carefully,” New
York Times, Janury 25, Week in Review, 5; J.Kahn, “China
seen ready to conciliate U.S. on trade and jobs,”
New York Times, September 2, 2003, A1 and C2; K.Bradsher,
“China’s boom adds to global warming problem,”
New York Times, October 22, 2003, A1 and A8.
20 A.Cassell, “The Economy: Study undermines
charge China is stealing U.S. factory jobs,” Philadelphia
Inquirer, October 22, 2003 (posted).
21 See the summary of the evidence for this argument
by J.Madrick, “Economic Scene,” New York
Times, July 10, 2003, C2.
22 K.Bradsher, “China announces new bailout of
big banks,” New York Times, January 7, 2004, C1;
K.Bradsher, “China’s strange hybrid economy,”
New York Times, November 21, 2003, C4
23 J.Perlez, “China is Romping with the Neighbors
(US is distracted),” New York Times, December
3, 2003, A1-A4.
24 Lula’s speech is summarized at http://www.bahraintribune.com/ArticleDetail.asp?CategoryId=5&ArticleId=20676
New York
February 4, 2004
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