The Geopolitics and Political Economy of U.S. Imperialism

excerpted from the book

Pox Americana

Exposing the American Empire

Edited by John Bellamy Foster and Robert W. McChesney

Monthly Review Press, 2004, paper

The New Geopolitics
Michael Klare

Dick Cheney and some prominent neoconservatives especially, but also Democrats such as Zbigniew Brzezinski, speak in this manner. They openly It state that the United States is engaged in a struggle to maintain its power vis-a-vis other contending great powers and that America must prevail.

Now, you might ask, what contending great powers? It might seem far from obvious that any exist. But if you read what these folks write and hear what they say, you will find that they are absolutely obsessed by the potential emergence of rival great powers: Russia, China, a European combination of some sort, Japan, and even India.

This is the essence of the Wolfowitz Doctrine, first articulated in the Pentagon's Defense Planning Guidance document for 1994-1999, first leaked to the press in February 1992. This document calls for proactive U.S. military intervention to deter and prevent the rise of a contending competitor and asserts that the United States must use any and all means necessary to prevent that from happening....

... the doctrine lingered in the think-tank writings of the 1990s, reemerging as the official global military policy of the Bush II administration. It has now been incorporated as the core principle of the document known as the National Security Strategy of the United States of America (September 2002), available for download from the White House website. This document states explicitly that the ultimate purpose of American power is to prevent the rise of a competing great power, and that the United States shall use any means necessary to prevent that from happening, including preventive military force when needed, but also through spending so much money on defense that no peer competitor can ever arise.

Against this background, it can hardly be questioned that the purpose of the war in Iraq is to redraw the geopolitical map of Eurasia to insure and embed U.S. power and dominance in the region vis-a-vis these other potential competitors.

... U.S. elites have concluded that the European and East Asian rimlands of Eurasia are securely in American hands or less important, or both. The new center of geopolitical competition, as they see it, is south-central Eurasia, encompassing the Persian Gulf area, which possesses two-thirds of the world's oil, the Caspian Sea basin, which has a large chunk of what's left, and the surrounding countries of Central Asia. This is the new center of world struggle and conflict, and the Bush administration is determined that the United States shall dominate and control this critical area.

Until now, the contested rimlands of Eurasia were the base of U.S. power, while in the south-central region there was but a very modest presence of U.S. forces. Since the end of the Cold War, however, the primary U.S. military realignment has entailed the drawdown of American forces in East Asia and Europe along with the buildup of forces in the south-central region. U.S. bases in Europe are being closed, while new military bases are being established in the Persian Gulf area and in Central Asia.

It is important to note that this is a process that began before 9/11. September ii quickened the process and gave it a popular mandate, but this was entirely serendipitous from the point of view of U.S. strategists. It was President Clinton who initiated U.S. military ties with Kazakhstan, Uzbekistan, Georgia, and Azerbaijan, and who built up the U.S. capacity to intervene in the Persian Gulf-Caspian Sea area. The U.S. invasion of Iraq was not a victory of Wolfowitz and Rumsfeld; it was Clinton's work that made this victory possible.

The war against Iraq was intended to provide the United States with a dominant position in the Persian Gulf region and to serve as a springboard for further conquests and assertion of power in the region. It was aimed as much, if not more, at China, Russia, and Europe as at Syria or Iran. It is part of a larger process of asserting dominant U.S. power in south-central Eurasia, in the very heartland of this mega-continent.

But why specifically the Persian Gulf/Caspian Sea area, and why now? In part, because this is where most of the world's remaining oil is located - approximately 70 percent of known petroleum reserves. And you have to think of oil not just as a source of fuel - although that's very important-but as a source of power. As U.S. strategists see it, whoever controls Persian Gulf oil controls the world's economy and, therefore, has the ultimate lever over all competing powers.


U.S. Hegemony Today

... the United States never really had a free trade approach to international economics, nor a multilateralist approach. The basic tradition was to open others' markets to whatever sectors U.S. business was strongest in, while protecting U.S. sectors which faced superior competitors. The U.S. principle was reciprocity rather than most-favored-nation multilateralism. And this tradition persisted throughout the postwar period.

Very important in ensuring leadership in new growth sectors is American industrial policy, and not least the role of the military budget in such policy. This can fund research and development which can generate new growth technologies. It can also prime the pump with large military-related investments in relevant infrastructure and with the U.S. state acting as an initial market for the products. No other core capitalist country has an equivalent set of instruments for launching new growth sector technologies.

Some believe that these gigantic swings in exchange rates are steered not by governments but by financial markets and foreign exchange markets. This is ' superficially true but actually false. These markets are situated principally in New York and its London satellite. The biggest players in these markets take their cue in exchange rate issues from every word and gesture of the Treasury Department's authorities and every move by the authorities of the Federal Reserve Bank of New York. And since the two sides share fundamentally common interests, the U.S. Treasury Department can use the main financial market operators precisely as instruments and multipliers of public policy.

The full force of this power to swing the dollar's value in great arcs can be appreciated when we remember the consequences of the dollar's role as the main monetary unit of account and as the main means of payment for oil and many other international products. However much the dollar swings one way or the other, prices do not change for these products for those operating in the dollar zone. Furthermore, because of the dollar's dominance as a means of payment, the United States can run up huge current account deficits and enormous external debts without facing the kind of monetary payments constraints facing other states.

The dominance of the dollar is not simply the result of the size of the U.S. economy. It is also and importantly the result of two other things: politics and finance. A state that protects regimes and trade routes all over the world can, as Britain showed with its sterling area, gain the privileges of having a world money. So can the United States. A state that controls the sources of world oil politically can ensure that oil is priced and largely paid for in its currency-in this case, in dollars-and thus can defend its international dominance. And a state which is the most politically secure in the world is a very safe place for storing financial property, thus ensuring huge inflows of funds into financial capital-in this case, New York and its London (offshore) satellite. And a state with the largest, most liquid financial market in the world is the least risky place to store wealth since you can swiftly move your wealth out for other purposes in such large, liquid markets.

Changes were also sought in the institutional structure of capitalism to ensure that industrial companies were dependent on securities markets and to ensure that hostile takeovers were permitted, with the intent that productive assets across the capitalist world would fall into American ownership and a vast transnational centralization of capital would be possible. And in conditions of generalized capitalist stagnation and crisis in much of the world, paradoxically governments and banks and industrial companies were desperate for American finance to tide them over, giving American finance capitalism ever widening circles of control over international capitalism. International monetary instability greatly enhanced these possibilities.

The drive to transform capitalism across the capitalist world into a new private-finance-centered social system increasingly integrated into an international capitalism dominated by the DWSR [Dollar Wall Street Regime] has continued for twenty years. It is widely assumed that the entire capitalist core has accepted this drive and changed accordingly. The idea of a globalized economy governed by neoliberalism expresses this assumption. Yet in reality we have seen relations between capitalist centers become much more tension-ridden, despite the fact that in all centers there has been a drive to shift social power from labor to capital. The concept of neoliberalism captures the generalized drive against the social power of labor. But it does not capture the parallel tension-ridden relations between the three main centers of capitalism.

Although the West European states and Japan have liberalized financial systems, scrapped capital controls, and accepted the forcing open of other financial systems and service sectors through the Word Trade Organization (WTO) and other mechanisms, neither the West Europeans nor the East Asians have fully embraced the U.S. model and the U.S. program for the world economy. The West Europeans built a regional monetary shield against the dollar system and combined an adaptive deal with the United States on the WTO with efforts greatly to strengthen their own economic and regulatory integration through the European Union (EU). And in East Asia there have been strong reactive tendencies towards regional networks.

Neither in Western Europe nor in East Asia have these defensive reactions been taken on behalf of labor. Far from it. The West European regionalist defense mechanisms have also been mechanisms for eroding the social power of labor, most obviously in the policy framework for the euro, which is patently geared toward driving through a qualitative weakening of the rights and bargaining strength of labor, particularly in Germany.

No other capitalist center has advanced an alternative program for international capital accumulation or proclaimed its own capitalism as an alternative model to that of the United States. Only through the emergence of such an alternative can the advance of the U.S. model be checked or defeated. And indeed, the risks of advancing such an alternative would be very great. It could after all stimulate labor to join the challenge. It could split the capitalist core's approach to the South in political economy matters, opening the way toward resistance to common transatlantic economic interests in the South. And above all it could delegitimize the American model even within the United States itself. These possible consequences ensure that any important center offering an alternative would face ferocious resistance from the United States and its transnational supporters.

The fact that neither the German nor the Japanese capitalist classes and states have embraced the new American system is extremely important and it is all the more remarkable given the gigantic pressures from the 1995-2000 American boom. But the boom has now turned out to have been a bubble, and the American bubble has turned out to have involved a great deal of parasitic and predatory activity, undermining the American productive base, as in the paradigmatic case of Enron. This marks a substantial setback for the drive to reorganize American and international capitalism to assure U.S. capitalist dominance through the first half of the twenty-first century.

Critically, the EU was the main instrument for transforming social relations within its member states in a "neoliberal" direction. The basic idea was to use European social democratic enthusiasm for European unity against European social democratic commitment to labor rights. But in the 1990s, the European economies were stagnating with high unemployment and the EU lacked any genuine democratic legitimacy. Therefore, to enhance the authority of the EU in pursuit of neoliberalism, new policy areas and activities were sought which would appeal to the European center-left. Many of these were in the international political field: campaigns on human rights, environmentalism, arms control, aid, and a host of other such causes. No longer legitimating the EU as a social model for the world, the EU states sought to legitimate it as the supreme global champion of the pacification of the world through international law rather than through power politics.

The ideological basis for the projection of American military power during the Cold War had been the supposed massive military threat from the Soviet bloc and Communism. This was largely accepted as legitimating the aggressive use of military coercion against pro-Soviet forces and regimes. But with the end of the Cold War, the aggressive use of U.S. military power faced serious legitimation problems. Many voices were raised for military aggression to be outlawed unless it was expressly sanctioned by the Security Council, as laid down in the U.N. Charter. And West European governments supported this line. Attempts by the Clinton administration to identify a new string of enemies-the so-called rogue states, dubbed such in 1994-were branded by many, including European governments, as exaggerated and inappropriate, and efforts by the U.S. government to enforce sanctions against Iran and Libya as well as Cuba were flouted by U.S. allies in Western Europe while the blockade against Iraq was also challenged.

This West European effort to place political-legal constraints on the U.S. use of its major political instrument-its capacity for military aggression-contained the seeds of a new-world- order concept which was potentially very attractive to other capitalist states but thoroughly subversive of the entire way in which the American state is configured. The West European idea, expressed most cogently by German policy elites, is that the Atlantic world should dominate the rest of the world by means of international public law. The Atlantic states, following the example of West European integration, should voluntarily subordinate themselves to international legal rules constraining their sovereign autonomy. They should then ask others wishing access to their markets and close political relations to subordinate themselves to the same rules. And states which egregiously flout the norms supposedly underlying the rules of the international system should then be subject to coercive sanctions, including, but only as a final resort approved by the Security Council, military force. The imperial secret of the whole concept lies in who writes the rules. If they are written by the Atlantic states, they can dress them up as being universalist- liberal, norm-based rules, while in reality they are simply "positive law" rules serving the interests of the Atlantic states. The model here is, of course, the European-inspired WTO which presents its rules as rooted in universalist-liberal free trade norms while in fact they are a concoction of positive-law rules serving Atlantic capitalist interests. Under this world-order concept, military coercive power operates not in opposition to international law but as its enforcer.

Yet the United States has no tradition of subordinating itself to international treaty-based law, and it has no interest in a world order in which military force becomes operational only as a last resort.

While the U.S. capitalist class and its political leaders were overwhelmingly committed to maintaining and extending U.S. political dominance and the continued expansion of U.S. capitals on a global scale, the end of the Cold War raised the threat of the U.S. electorate demanding that U.S. government reallocate resources from the military field and overseas expansion to tackling problems at home. Though committed to rebuilding U.S. global political dominance, the Clinton administration did not attempt to mobilize a broad popular constituency for power projection abroad.

A final consequence of the Soviet bloc collapse for American political leverage was the following paradox: America was the purest of symbols of capitalism and thus the defeat of Communism should have greatly enhanced, and in many ways did enhance, the attractive power of the American capitalist model. Yet at the same time, the deepest source of American political power during the postwar period lay in the fact that capitalist classes throughout the world knew that they could rely upon the United States to help crush labor or socialist challenges to their power.

The Bush administration came into office determined to crack the Europeanist nut. September 11, 2001, gave it the opportunity. It announced a new strategic doctrine which utterly repudiated the entire Europeanist position on world order. The new strategic doctrine focused on the legitimate use of force, rogue states, and the politics of the Middle East. The Bush administration then called for war against Iraq as an operationalization of this strategic doctrine. It turned to the West European states and asked them if they wished to get on the bandwagon this time, adding that they faced only two choices: being for the United States or against it.

Senator Joseph Lieberman and all the other leading Democrats either supported this line or went along with it. Bush was acting firmly within the programmatic and strategic consensus of the American capitalist class since 1990. Cheney is not a marginal figure; he is a central figure among American class political leaders.

The American attack on Iraq had a number of objectives, in the region and on a global scale (including U.S. control of world oil). But among the global targets, ending the growing cohesion and influence of Western Europe was central.

The war has split Western Europe as intended ...


The Global Minotaur
Joseph Halevi and Yanis Varoufakis

A ... silver lining for the United States, following the uncontrollable rise of oil prices in the 1970s, was the massive rise in interest rates spearheaded by spiraling inflation. As central banks struggled to keep the lid on prices, interest rates went through the roof. Setting aside for the moment the worldwide, overwhelming recessionary effects of this development, the rise of interest rates was more effective in destroying the enemies of U.S. foreign policy around the globe than any military operation the United States could ever imagine. Arguably, the chain of events that led to the implosion of Communism in Poland and Yugoslavia began in the 1970s with the sharp rise in interest rates soon after these countries had accepted offers of substantial loans from Western financial institutions. A similar impact occurred in third world countries, where national liberation movements had gained power despite the best efforts of the United States and had borrowed on the international market for the purpose of underwriting much- needed new infrastructure. These economies were to be plunged in a crippling debt crisis following the rise of interest rates from 3 percent to 30 percent in a few short years. In fact, they have never quite recovered since.

As with rising oil prices, so it was with burgeoning interest rates: the U.S. economy (although hit hard by the recession brought on by the rising prices of oil and money) improved its relative financial position, compared not only with Europe and Japan but also with the third world and the Communist nations. By the early 1980s, under the Reagan administration, U.S. policy fully endorsed this new reality and a consensus emerged that the balance of payments ought not to be the focus of attention anymore; that what mattered was the strength of U.S. finance, founded on the strength of its multinationals, particularly in the energy sector, and on the ability to make the dollar accepted internationally (without any form of concrete payment behind it).

In simpler, albeit more emotive, terms, the era that began in the early 1980s is marked by the transformation of the world economy into a periphery from which the United States imports huge quantities of goods with little concern for its balance of payments.

The United States pays for its deficit to the rest of the world by issuing bonds and treasury bills or by attracting capital through its stock exchanges. Low U.S. inflation is pivotal to this strategy. For unless inflation is kept at close to 1 or 2 percent, the capacity of the U.S. economy to attract capital would be undermined. This is because, if there is relatively high inflation, the asset values and financial assets purchased by incoming capital will decline in value. So from the early 1980s onwards, the main game in Washington was reinforcing U.S. financial capital through the creation of a highly deflationary international environment.

By extension, the rest of the world supplies the United States with commodities at noninflationary prices and, meanwhile, the United States (unlike every other country, including Europe and Japan) does not have to deal with its deficit. This is very similar to the situation that Britain established in relation to India. From the end of the nineteenth century until the Great War, Britain ran a huge balance-of-payments deficit. It managed to maintain it by having India export to the rest of the world and by taxing away, in one way or another, the surplus that India generated through its exports. These capital flows and taxes made it back to the City of London, thus clearing the deficit. This is the model that the United States has been emulating in the last twenty years. Instead, however, of using a single country (as Britain had Lone), the United States has applied it to the rest of the world.

The drive to dollarize whole foreign economies, especially in Latin America, is to be understood as part of the same mind set. Dollarization means that the U.S. dollar becomes the country's de facto local currency. The main effect of this move, from the U.S. perspective, is that the demand for dollars then depends not only on the international transactions of other countries but on the domestic transactions of the dollarized economies as well. This gives the United States added political leverage and reduces further the preoccupation with external debt. The reason is simple: as the demand for dollars by foreigners for their own domestic purposes increases, the U.S. balance of payments plays a decreasing role in shaping the dollar's value in the international money markets.

The capacity of the United States to pursue its post-Vietnam global design depends on its capacity to maintain a steady flow of capital from the rest of the world. This capacity, in turn, hinges crucially on its political dominance over the rest of the world. Two analysts foreshadowed this when they wrote in 1986, "Even as military assistance and arms sales rocketed upward in the 1970s, many American business figures pressed for an enhanced American capacity for direct intervention abroad."

Anyone who read Bush administration adviser Richard Perle's 1996 report to Israel's then prime minister-elect Netanyahu, "A Clean Break: A New Strategy for Securing the Realm," will immediately recognize the author's emphasis on the nexus between geostrategic concerns and the imperative to secure privileged access to oil. Even if the United States did not need a monopoly over Middle Eastern and Central Asian oil for itself, it would wish to control it in order to guarantee its financial centers a steady flow of petrodollars.

In an ironic sense, the latest war in Iraq might not be about the oil per se. It is about ensuring that whoever controls it buys and sells it in U.S. dollars through the New York commodities exchange. For it is this flow of finance, and to a much lesser extent the ownership of oil, which enables the United States to continue its policy of world dominance through an unbounded balance of payments. Of course, the fact that the oil would be taken over in the post-Saddam era by Bush and his Texan friends does not reduce the administration's enthusiasm.

In November 2000, Richard N. Haass, then director of policy planning in the State Department, strengthened our argument by writing an essay advocating that the United States adopt an "imperial" foreign policy. He defined this as "a foreign policy that attempts to organize the world along certain principles affecting relations between states and conditions within them." This would not be achieved through colonies but through what he termed "informal control," using military might if necessary. Global mechanisms such as international financial markets, the WTO, and the IMF were essential devices for ensuring the dominance of U.S. interests, with the military iron fist backing up the invisible hand of the market.

For the last year or so, circles in Washington have been promoting the view that global warming might be bad for most parts of the world but not necessarily bad for the United States. There is, indeed, speculation that U.S. agribusiness will benefit from an increase in global temperatures because, according to estimates based on large-scale computer simulations, the productivity of American agriculture will rise as long as genetically modified seeds are utilized extensively. Meanwhile, with a declining world food production, U.S. "comparative advantage" is predicted to strengthen. Once more, the United States appears to the rest of the world as completely obsessed with the project of remaining unimpeded by its balance-of-trade deficit, even at the planet's expense.

The New Design seems to revolve around the axis of control over energy sources, as well as environmental change, with an explicit view to enhancing the U.S. capacity to draw capital flows from the rest of the world and thus avoid domestic crises due to the growing indebtedness of U.S. families arid businesses. If the New Design requires global military campaigns and the alienation of world opinion on matters of global importance (e.g., the environment, world peace), this is deemed a small price to pay for a huge and steady windfall.

... there is a rapidly growing division in the U.S. economy between a sector connected to the aeronautic-computer-electronics (ACE) military-industrial complex and the rest of the U.S. economy. Interestingly, although the comparative productivity and competitiveness of the ACE-linked sector is rising vis-à-vis the European and Japanese economies, the rest of the U.S. economy is falling behind. Moreover, the ACE sector is severing its links with the latter, increasing the inequality in jobs, incomes, and opportunities. Put simply, the latest U.S. economic miracle has nothing to do with the flexibility of its labor markets and the entrepreneurship of the average American; it is a direct product of industries that grew out of its global geostrategic hegemony... the beneficiaries of this strategy? One thing we know for sure is that the beneficiaries are not average Americans. In fact, never before have so few Americans had so much while J e many had to survive on so little. ... the beneficiaries are three sectors of the U.S. economy: energy multinationals (mostly oil companies), the financial institutions handling the capital flows from the rest of the world, and the ACE industries hooked into the U.S. military.

... the United States re-created a nation with a political apparatus entirely new to it. The loose two-party state imposed by the United States, and effectively written into Japan's constitution, was designed to prevent politicians from having any significant influence on policy. The Japanese bureaucracy is powerful, largely efficient, and autonomous. Thus the people of Japan have become the last Japanese colony, ruled over by a class of bureaucratic entrepreneurs without political ambitions. Though this model provides stability and conformity and is conducive to speedy economic development at times when demand from the United States is high, it is utterly incapable of initiating change, of giving voice to the political aspirations of the Japanese masses, or even ~f mapping out an autonomous Japanese trade or finance policy.

Examples of Japan's lack of autonomy abound. The United States ha ensured that, following the rise of the Southeast Asian tigers, Japan would be selling technological or capital goods to Korea, Malaysia, and Thailand, usually through the transfer of superseded production lines. Interestingly, most regional trade was bilateral (as opposed to trilateral): Southeast Asia was trading directly with the United States and so was Japan. By contrast, the flow of final goods between Southeast Asia and Japan was minuscule. In other words, the United States prevented Japan from establishing an economic zone around it similar to that enjoyed by Germany in the euro zone.

When, following the 1997 crises, Japanese officials realized the benefits lost due to their failure properly to integrate Southeast Asia into the Japanese economy, they tried to make amends. Alas, the United States denied Japan the instruments as well as the opportunities to alter the situation substantially. With the world economy, excluding the United States, in permanent deflation, Japanese factories have no means of making use of their huge capacity, and thus the Japanese economy finds it impossible to transcend a state of perpetual recession.

This makes Japan even more dependent on exporting to the United States. U.S. officials allow Japanese firms access to American consumers but at a hefty price: Japan must forego any plans of becoming a foreign capital importer in competition with the United States. In practical terms, it is forbidden from developing its own international financial policy or from establishing new international bodies for the minimization of financial volatility-especially in Southeast Asia. It is therefore wholly unsurprising that Japanese politicians are not speak out against U.S. policy at any significant level.

European policy makers in Brussels, and their Japanese counterparts in Tokyo, waste countless trees writing and distributing research papers on entrepreneurship and competitiveness, desperately seeking ways of playing catch up with the United States. The most recent such literature from Brussels seems to assume that the U.S. economy is more energetic than those of Europe and Japan because of the superiority of the Protestant ethic, the debilitating effects on incentives caused by overgenerous safety nets, and overly regulated labor markets. The problem with this assumption is that it is at odds with any logically coherent analysis of the global political economy.

... The only sectors in which the Americans have overtaken the Europeans and Japanese are those which are intimately linked to the U.S. defense budget-a whopping powerhouse that makes European alleged statism seem like a children's fancy dress party.

U.S. growth in the 1990s was financed by borrowing, so much borrowing from overseas that in the last few years, if all Americans were to sell everything they own, they would still not be able to repay their loans.

Pox Americana

Home Page