Date: Sat, 19 Jul 2003 13:17:54 +0100 From: Mervyn Hartwig <mh-AT-jaspere.demon.co.uk> Subject: BHA: Bello on Crisis of the Globalist Project (II) THE NEW ECONOMICS OF THE GEORGE W. BUSH The interlocking crises of globalization, neoliberalism, capitalist legitimacy, and overproduction provide the context for understanding the economic policies of the Bush administration, notably its unilateralist thrust. The globalist corporate project expressed the common interest of the global capitalist elites in expanding the world economy and their fundamental dependence on one another. However, globalization did not eliminate competition among the national elites. In fact, the ruling elites of the US and Europe had factions that were more nationalist in character as well as more tied for their survival and prosperity to the state, such as the military-industrial complex in the US. Indeed, since the eighties there has been a sharp struggle between the more globalist fraction of ruling elite stressing common interest of global capitalist class in a growing world economy and the more nationalist, hegemonist faction that wanted to ensure the supremacy of US corporate interests. As Robert Brenner has pointed out, the policies of Bill Clinton and his Treasury Secretary Robert Rubin put prime emphasis on the expansion of the world economy as the basis of the prosperity of the global capitalist class. For instance, in the mid-1990s, they pushed a strong dollar policy meant to stimulate the recovery of the Japanese and German economies, so they could serve as markets for US goods and services. The earlier, more nationalist Reagan administration, on the other hand, had employed a weak dollar policy to regain competitiveness for the US economy at the expense of the Japanese and German economies. With the George W. Bush administration, we are back to economic policies, including a weak dollar policy, that are meant to revive the US economy at the expense of the other center economies and push primarily the interests of the US corporate elite instead of that of global capitalist class under conditions of a global downturn. Several features of this approach are worth stressing: - Bushs political economy is very wary of a process of globalization that is not managed by a US state that ensures that the process does not diffuse the economic power of the US. Allowing the market solely to drive globalization could result in key US corporations becoming the victims of globalization and thus compromising US economic interests. Thus, despite the free market rhetoric, we have a group that is very protectionist when it comes to trade, investment, and the management of government contracts. It seems that the motto of the Bushites is protectionism for the US and free trade for the rest of us. - The Bush approach includes a strong skepticism about multilateralism as a way of global economic governance since while multilateralism may promote the interests of the global capitalist class in general, it may, in many in stances, contradict particular US corporate interests. The Bush coteries growing ambivalence towards the WTO stems from the fact that the US has lost a number of rulings there, rulings that may hurt US capital but serve the interests of global capitalism as a whole. - For the Bush people, strategic power is the ultimate modality of power. Economic power is a means to achieve strategic power. This is related to the fact that under Bush, the dominant faction of the ruling elite is the military-industrial establishment that won the Cold War. The conflict between globalists and unilateralists or nationalists along this axis is shown in the approach toward China. The globalist approach put the emphasis on engagement with China, seeing its importance primarily as an investment area and market for US capital. The nationalists, on the other hand, see China mainly as a strategic enemy, and they would rather contain it than assist its growth. - Needless to say, the Bush paradigm has no room for environmental management, seeing this to be a problem that others have to worry about, not the United States. There is, in fact, a strong corporate lobby that believes that environmental concerns such as that surrounding GMOs is a European conspiracy to deprive the US of its high tech edge in global competition. If these are seen as the premises for action, then the following prominent elements of recent US economic policy make sense: - Achieving control over Middle East oil. While it did not exhaust the war aims of the administration in invading Iraq, it was certainly high on the list. With competition with Europe becoming the prime aspect of the trans-Atlantic relationship, this was clearly aimed partly at Europe. But perhaps the more strategic goal was to pre-empt the regions resources in order to control access to them by energy-poor China, which is seen as the US strategic enemy. - Aggressive protectionism in trade and investment matters. The US has piled up one protectionist act after another, one of the most brazen being to stall any movement at the WTO negotiations by defying the Doha Declarations upholding of public health issues over intellectual property claims by limiting the loosening of patent rights to just three diseases in response to its powerful pharmaceutical lobby. While it seems perfectly willing to see the WTO negotiations unravel, Washington has put most of its efforts in signing up countries into bilateral or multilateral trade deals such as the Free Trade of the Americas (FTAA) before the EU gets them into similar deals. Indeed the term free trade agreements is a misnomer since these are actually preferential trade deals. - Incorporating strategic considerations into trade agreements. In a recent speech, US Trade Representative Robert Zoellick stated explicitly that countries that seek free-trade agreements with the United States must pass muster on more than trade and economic criteria in order to be eligible. At a minimum, these countries must cooperate with the United States on its foreign policy and national security goals, as part of 13 criteria that will guide the US selection of potential FTA partners. New Zealand, perhaps one of the most doctrinally favourable governments to free trade, has never the less not been offered a free trade deal because it has a policy that prevents nuclear ship visits, which the US feels is directed at it. - Manipulation of the dollars value to stick the costs of economic crisis on rivals among the center economies and regain competitiveness for the US economy. A slow depreciation of the dollar vis-a-vis the euro can be interpreted as market-based adjustments, but the 25 per cent fall in value cannot but be seen as, at the least, a policy of benign neglect. While the Bush administration has issued denials that this is a beggar-thy-neighbor policy, the US business press has seen it for what it is: an effort to revive the US economy at the expense of the European Union and other center economies. - Aggressive manipulation of multilateral agencies to push the interests of US capital. While this might not be too easy to achieve in the WTO owing to the weight of the European Union, it can be more readily done at the World Bank and the IMF, where US dominance is more effectively institutionalized. For instance, despite support for the proposal from many European governments, the US Treasury recently torpedoed the IMF managements proposal for a Sovereign Debt Restructuring Mechanism (SDRM) to enable developing countries to restructure their debt while giving them a measure of protection from creditors. Already a very weak mechanism, the SDRM was vetoed by US Treasury in the interest of US banks. - Finally, and especially relevant to our coming discussions, making the other center economies as well as developing countries bear the burden of adjusting to the environmental crisis. While some of the Bush people do not believe there is an environmental crisis, others know that the current rate of global greenhouse emissions is unsustainable. However, they want others to bear the brunt of adjustment since that would mean not only exempting environmentally inefficient US industry from the costs of adjustment, but hobbling other economies with even greater costs than if the US participated in an equitable adjustment process, thus giving the US economy a strong edge in global competition. Raw economic realpolitik, not fundamentalist blindness, lies at the root of the Washington's decision not to sign the Kyoto Protocol on Climate Change. THE ECONOMICS AND POLITICS OF OVEREXTENSION Being harnessed very closely to strategic ends, any discussion of the likely outcomes of the Bush administrations economic policies must take into account both the state of the US economy and the global economy and the broader strategic picture. A key base for successful imperial management are expanding national and global economies, something precluded by the extended period of deflation and stagnation ahead, which is more likely to spur inter-capitalist rivalries. Moreover, resources include not only economic and political resources but political and ideological ones as well. For without legitimacy, without what Gramsci called the consensus of the dominated, that a system of rule is just imperial management cannot be stable. Faced with a similar problem of securing the long-term stability of its rule, the ancient Romans came up with the solution that created what was till then the most far-reaching case of collective mass loyalty ever achieved till then and prolonged the empire for 700 years. The Roman solution was not just or even principally military in character. The Romans realized that an important component of successful imperial domination was consensus among the dominated of the "rightness" of the Roman order. As sociologist Michael Mann notes in his classic Sources of Social Power, the "decisive edge" was not so much military as political. "The Romans," he writes, "gradually stumbled on the invention of extensive territorial citizenship. The extension of Roman citizenship to ruling groups and non-slave peoples throughout the empire was the political breakthrough that produced "was probably the widest extent of collective commitment yet mobilized." Political citizenship combined with the vision of the empire providing peace and prosperity for all to create that intangible but essential moral element called legitimacy. Needless to say, extension of citizenship plays no role in the US imperial order. In fact, US citizenship is jealously reserved for a very tiny minority of the world's population, entry into whose territory is tightly controlled. Subordinate populations are not to be integrated but kept in check either by force or the threat of the use of force or by a system of global or regional rules and institutions--the World Trade Organization, the Bretton Woods system, NATO--that are increasingly blatantly manipulated to serve the interests of the imperial center. Though extension of universal citizenship was never a tool in the American imperial arsenal, during its struggle with communism in the post-World War II period Washington did come up with a political formula to legitimize its global reach. The two elements of this formula were multilateralism as a system of global governance and liberal democracy. In the immediate aftermath of the Cold War, there were, in fact, widespread expectations of a modern-day version of Pax Romana. There was hope in liberal circles that the US would use its sole superpower status to buttress a multilateral order that would institutionalize its hegemony but assure an Augustan peace globally. That was the path of economic globalization and multilateral governance. That was the path eliminated by George W. Bush's unilateralism. As Frances Fitzgerald observed in Fire in the Lake, the promise of extending liberal democracy was a very powerful ideal that accompanied American arms during the Cold War. Today, however, Washington or Westminster-type liberal democracy is in trouble throughout the developing world, where it has be en reduced to providing a facade for oligarchic rule, as in the Philippines, pre-Musharraf Pakistan, and throughout Latin America. In fact, liberal democracy in America has become both less democratic and less liberal. Certainly, few in the developing world see a system fueled and corrupted by corporate money as a model. Recovery of the moral vision needed to create consensus for US hegemony will be extremely difficult. Indeed, the thinking in Washington these days is that the most effective consensus builder is the threat of the use of force . Moreover, despite their talk about imposing democracy in the Arab world, the main aim of influential neoconservative writers like Robert Kagan and Charles Krauthammer is transparent: the manipulation of liberal democratic mechanisms to create pluralistic competition that would destroy Arab unity. Bringing democracy to the Arabs is not so much an afterthought as a slogan that is uttered tongue in cheek. The Bush people are not interested in creating a new Pax Romana. What they want is a Pax Americana where most of the subordinate populations like the Arabs are kept in check by a healthy respect for lethal American power, while the loyalty of other groups such as the Philippine government is purchased with the promise of cash. With no moral vision to bind the global majority to the imperial center, this mode of imperial management can only inspire one thing: resistance. The great problem for unilateralism is overextension, or a mismatch between the goals of the United States and the resources needed to accomplish these goals. Overextension is relative. That is, it is to a great degree a function of resistance. An overextended power may, in fact, be in a worse condition even with a significant increase in its military power if resistance to its power increases by an even greater degree. Among the key indicators of US overextension are the following: - Washingtons continuing inability to create a new political order in Iraq that would serve as a secure foundation for colonial rule - its failure to consolidate a pro-US regime in Afghanistan outside of Kabul - the inability of a key ally, Israel, to quell, even with Washington's unrestricted support, the Palestinian peoples uprising - the inflaming of Arab and Muslim sentiment in the Middle East, South Asia , and Southeast Asia, resulting in massive ideological gains for Islamic fundamentalists which was what Osama bin Laden had been hoping for in the first place - the collapse of the Cold War Atlantic Alliance and the emergence of a new countervailing alliance, with Germany and France at the center of it - the forging of a powerful global civil society movement against US unilateralism, militarism, and economic hegemony, the most recent significant expression is the global anti-war movement; - the coming to power of anti-neoliberal, anti-US movements in Washington's own backyard --Brazil, Venezuela, and Ecuador -- as the Bush administration is preoccupied with the Middle East - an increasingly negative impact of militarism on the US economy, as military spending becomes dependent on deficit spending, and deficit spending becomes more and more dependent on financing from foreign sources, creating more stresses and strains within an economy that is already in the throes of stagnation. In conclusion, the globalist project is in crisis. Whether it can make a come back via a Democratic or Liberal Republican presidency should not be ruled out, especially since there are influential globalist voices in the US business community among them George Soros, that are expressing opposition to the unilateralist thrust of the Bush administration. In our view, however, this is unlikely, and unilateralism will reign for sometime to co me. We have, in short, entered a historical maelstrom marked by prolonged economic crisis, the spread of global resistance, the reappearance of the balance of power among center states, and the re-emergence of acute inter-imperialist contradictions. We must have a healthy respect for US power, but neither must we overestimate it. The signs are there that the US is seriously overextended and what appear to be manifestations of strength might in fact signal weakness strategically. 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