[A-List] US imperialism: Doug Dowd's analysis

["Michael Keaney" <michael.keaney@xxxxxx>]

Globalization:  The USA shoots itself in the foot; or worse.
By Doug Dowd

If you are reading this you don't need to be told of globalization's always
greater harm to U.S. industrial workers, nor about the sweating of workers
in the poorer countries or the environmental damage to their countries.
Etc. Such matters are not matters for worry on the part of the giant
companies that brought them about.   But there is something else going on
that should worry them; it very much resembles what happened to Britain --
the USA of the 19th century -- as that century drew to its close.  As of
now, the signs are only those of a rumbling undersea volcano; pretty much
where Britain was in the 1880s.  But things move faster these days, and go
deeper.

History never does nor can it ever repeat itself in particulars; the always
changing multidimensional social context makes even close repetitions
impossible.  But certain patterns do recur; among them is that where
socioeconomic domination produces conditions leading to its own downfall.

In the capitalist era, there have been two such instances of the decline of
once unchallengeable strength:  the Dutch in the 18th century, and the
British in the 19th.  Now it is increasingly likely that the USA will be the
third.   The Dutch and the British did themselves in by their successes;
what follows argues that, in our own ways and time, we do likewise.  It goes
with the capitalist territory, so to speak.

Capitalism has always been and must always be "global" in order to survive
and flourish, as it needs also to have a dominating power over the globe.
The "degrees" of the globality and the associated degrees of benefits and
harm have been set by the technology of the time.   The capitalist era was
born with the Dutch in the 17th-18th centuries, the most economically
advanced society.  Their advanced status was dependent upon trade and
finance, not industry; and, in comparison with what would come with
industrial capitalist Britain, the power of the Dutch was limited:  the
Dutch could reach out; the British could reach out further and had to.  As
the Dutch spread over the world, they did so within the framework of
colonialism; the British, because they were industrial, became the bearers
of modern imperialism.  The globalization created and dominated by the USA
is imperialism in today's dress of jazzed-up communications, production, and
transportation -- which, in givng us the ability to do what we have done,
also give the others the ability to take us down.  As happened to the Dutch
and the Brits.

The differences between the three forms of global domination are enormous:
Colonialism essentially stopped at the coastlines of exploited territories;
imperialism could and had to penetrate deeply into the affected societies --
geographically, socially, and politically.  Its consequent quantitative and
qualitative destruction therefore went well beyond that of colonialism.
And, in the past half century, the destructive powers of globalization have
once more produced a quantum leap; we have succeeded in wiping out the past
and foreclosing the future of most of the peoples of the world.  They are no
longer citizens of their societies, but captives of  capitalism; with the
same capivity spreading through the peoples of the leading countries.  It is
commonly said now that the entire world is being "americanized":  it is more
accurate to say that it is being "capitalized." .  Of which more in a
moment.

First a very brief discussion of Britain's rise and fall, as a basis for
understanding capitalism's self-destructive tendencies and, at the same,
time to illustrate the differences between their past and our present.
Britain's great power in the 19th century arose from its having been the
first country to industrialize.   When that was well underway, Britain
enhanced its strength and its wealth by massive lending abroad, most
importantly to Germany and the USA .  But the latters'  industrialization,
able to take advantage of rapidly evolving new technologies within their
more conducive (and contrasting) institutional frameworks, made Britain a
second-rate industrial power already by 1900.   Veblen saw this as "the
penalty of taking the lead and the advantages of borrowing."  As the 20th
century opened, Britain's wealth and prosperity depended increasingly upon
its financial gains from abroad, and less and less upon its once great
industrial strength and its exports.  Still, as of 1900, and despite that it
was importing considerably more than it was exporting, Britain's levels of
average real income were high and rising.  It was still exploiting the rest
of the world, but in ways that would come back to haunt it. By World War
I -- although the Brits didn't know it -- they were on their way down.
Indeed, "they didn't know it" as late as 1926, when a leading British
economist described the USA as an "agricultural economy."  .Overwhelming
strength breeds not only arrogance but ignorance; everywhere.

The world over which we preside is VERY different from that of Britain's;
but along with the differences are some underlying similarities and probable
consequences which, although different from the earlier period, are not
likely to be less serious.  Look again at the main points of the previous
paragraph and the differences between then and now:

1.  Britain was the world's largest creditor; the USA is the world's largest
debtor.  2.  Britain loaned to what became its main competitors;  the USA
has invested in and built U.S.-owned factories, abroad (where     the labor
is cheap and there are  no environmental constraints), as levels of real
income for an already substantial and always rising percentage of its once
best-off workers are consigned to the garbage heap.  3.  Britain's exports
and the enormous income from its foreign loans were the source of its
prosperity; the "health" of the U.S. economy has increasingly come to depend
upon its service sector (especially its financial core) not its
manufacturing sector, with the latter's profits dwindling from exports and
dependent upon domestic consumption; in turn, that domestic consumption is
critically dependent upon dangerously bloated household debt -- now well in
excess of monthly  household income.  Equally bloated is the debt of both
non-financial and financial companies, and our foreign, state and national
debts --  all contributing to an an ever-higher and already perilous
fragility.

The great strength and powers of the USA arose first and foremost from its
manufacturing industries.  They were prominent already in the late 19th
century and exploded in the 20th century.  Now that sector is imploding..
Globalization, so essential and so beneficial for the profits of a few
hundred of the top U.S. corporations, has been a disaster for manufacturing
jobs in the USA:  the news has finally come through to the mainstream media
(see below).  Those losses began to be serious in the 1980s, becayse of what
was called "downsizing and outsourcing." Since then, for example, the U.S.
workers in steel and in autos -- those with the highest wages and
benefits -- have gone down by about half, with worse on its way for all blue
collar workers..  .

Those processes were prodded into existence by both need and possibility:
the need was to cut costs in order to meet already strong competition from
the other industrial powers.  The latters' strength came in critical part
from the interactions of the political economy of the Cold War with our
external loans and grants.  The principal beneficiaries among the leading
countries were Japan and Germany; they also became our principal
competitors.    But our attention and our carrots and sticks were also meted
out to the "emerging economies," where labor was sickeningly cheap,
corruption was rampant, and as the always more powerful transnational
companies could have their way with the easily corruptible governments there
and at home: no holds barred.

But, as in earlier epochs, something went awry.  The main difficulties of
19th century imperialism arose from the conflicts between the imperializing
countries competing to gain contolling power over the resources, markets,
and strategic locations of weak societies; in our time, now, what once were
colonies are politically independent.  To make or keep them economically
dependent the main powers must deal with substantially different and always
changing stresses and strains with the newly-independent nations and amongst
themselves.

Already in the 1950s an important group of the ex-colonies had dubbed
themselves "the third world (the other two "worlds" being the
capitalist/communist combatants of the Cold War).   The world of the weaker
countries was wildly diverse:  tiny to large countries in size and
populations, desperately to mildly poor, tending toward (or having achieved
or thrust upon them) one degree or another of fascist, communist, or mildly
socialist governments.  Nor, unlike the earlier imperialist era, were the
major capitalist nations not the only players in the game; the USSR and Red
China were also involved.   For better and for worse, this required
different strategies and yielded unpredictable results for the entire global
system; one unexpected and usually intractable surprise after another from
all quarters, none of them welcome.

Some of them:  Those who designed and executed the joined-at-the-hip
policies of cold war and globalization had not the slightest inkling that
our suppression of the Soviet Union would lead to its current "mafia
capitalism," or that our encircling of Red China would lead to -- what to
call it? -- China's variation on the horrors of the industrial revolution;
its effectively slave labor is presided over by Communists just as devoted
to the bottom line as the 19th century British "Messrs. Moneybags" (as Marx
called them).. Nor was it anticipated that our use of Japan and Germany as
key military outposts would, given its essential economic accompaniments,
create our two most potent competitors -- or that our installation of the
fascist Syngman Rhee in South Korea and our effectively occupying army
would, taken together, lead to a modern and competitive Korean economy and,
at the same time,  anti-capitalist and anti-American politics.  Least of all
was it expected that our "outsourcing" to cheap labor places like China and
India would lead them to move toward dominance in, among other unimportant
and important industries, computer hardware, with more to come..

So it is that, once again, companies' pursuit of profits through global
expansion act to pull the rug out from under the very economy upon whose
strength the wellbeing of the companies utlimately depends; once again, what
is very sensible from each participating company's point of view spits back
in its face.  Such short-sightedness is not a defect of the business
mentality, it is a necessity for what are seen as their successes:  It is
capitalism's middle name.

It is against that background that current economic processes must be placed
if they are to be judged intelligently.  Financial columnists, mainstream
economistsm and the White House do what they can to spin each and every
economic factoid to show that -- as the saying went -- prosperity is just
around the corner. We are expected to give at least two cheers when we are
told that productivity in manufacturing is climbing the heights; however, in
the small print we find that a good chunk of that advance is due to fewer
workers putting in more hours without overtime pay (while paying a higher
percentage of their health care benefits.  Rarely is it noted that the
increased revenues from that productivity -- naturally -- go mostly to
profits and dividends (as with Bush's tax cuts); nor is it often noted that
in addition to not paying overtime manufacturers are also not investing in
equipment for expansion.  For two years we have been told that recovery is
underway, but that it is a "jobless recovery"; in fact it has been a
"jobloss" non-recovery:  almost 3 million jobs have been lost since 2001.
Moreover, the new jobs are almost entirely in the service sector at much
lower levels of skill and wages, with no benefits;

Since the 1950s union membership has gone down by two-thirds; their
political clout has gone down even more.  In partial consequence, social
reforms have been crushed or reduced.  The average family continues to
increase its household indebtedness, is less and less for buying
manufactured goods and more and more to pay for education, higher rents and
indirect taxes, and higher health care and prescriptions prices -- while
workers' coverage declines and co-payments go up: As a headline in the
financial news put it recently, "Necessities, not luxuries, are driving
Americans into debt."  (NYTimes, 9-4-03)  From the point of view of a
particular company, business is business; from the standpoint of the economy
and the demand for its manufactures, it is a disaster waiting to heppen..

Meanwhile, what is happening around the globe is also sending warning
signals. If there is any truly "emerging economy" in the world today it is
China's:  It will surely be among the top 2-3 economies in aggregate
strength within 10 years; as things go with the the Top Three these days
(USA, Japan, Germany, in that order), China could damn well be Number One;
and as for Japan, the present Number Two, what would be better for the USA
(remembering that Japan holds the largest part of our debt), to have Japan
regain its strength, or lose more of it?  Add to that the growing uneasiness
of "Europe" with the USA:   As U.S. arrogance and non-cooperation have risen
(Kyoto on the environment, WTO on tariffs, and World Court and UN defiance),
it is not only France and Germany that have been nay-saying, and not only
about Iraq; no less than the Romano Prodi, Commssioner of the European
Union, has been openly pressing for Europe to distance itself from the USA,
make itself less dependent. Of such dilemmas  hath the mighty fallen.

Another part of the larger picture has to do with the impact of ongoing U.S.
domestic policies as they interact with the world economy.   The combination
of extraordinary tax cuts for the rich (and peanuts for two-thirds of us)
and rapidly rising expenditures on the Middle East and on weaponry, not only
mean that social expenditures at the federal, state, and local levels are
decreasing (and do so as their federal grants go down), but that the taxes
of the lowest 90 percent will rise while at the same time social programs
(in education, housing, medical care, especially) decline.  There's lots
wrong with that; making it wronger is that it will further weaken our
manufacturing sector:  the beating heart of the U.S. economy, remember.  But
we must remember this, too:
Since the 1980s, the USA has become "the consumer of last resort"; all the
countries in the rest of the world economy have been dependent upon the USA
importing more than we export. In the old expression, "when the USA gets a
cold, the rest of the world gets pneumonia."

That old expression was coined before we were running our enormous trade
deficit (now at a rate of half a trillion dollars a year).  You don't have
to know economics -- in fact you're better off not knowing it -- to
understand that as we continue along present paths, the rest of the world
will be dragged along with us.  As they begin their roll over the cliff, not
only will they buy even less from us, it might occur to them to try to get
back some of those trillions we owe them.   U.S.A. could make Argentina's
defaults look like kid stuff.

Ominous as all of that seems,  and even though it leaves out a lot that
would also feed that volcano, does it signify anything in particular around
any corner soon to be reached?  Who knows?  Predictability on such matters
is impossible, whether for next year or the next decade.  All that can be
said is that present tendencies point to an already serious and a continuing
decline in U.S. manufacturing strength and therefore in its overall
strength.  To the degree that is so, the future of the entire globe becomes
even rockier than it would otherwise be; and it portends all too much of
that even with continuing U.S. strength.  It needs repeating that whatever
its defects, a global economy must have a controlling or guiding central
power; we are losing our ability to be that power.  It is more likely that
chaos than that any other identifiable power will take our place -- for
better or for worse.

To which it needs adding that -- as the politics of the U.S. stand today and
for the foreseeable future -- if and when we loose the power to dominate
economically, we will remain the dominating military power until -- to put
it bluntly -- death do us part.  We are unbeatable military, if and when we
use all of our "weapons of mass destruction."

The conclusion to all this is that we had better get our political act
together, fast and well.  Many might think, hey! great, the biggies are
gonna get their asses kicked, finally!  Maybe so; what is absolutely certain
is that most of the people, in and out of the USA, will take the greatest
hit economically and, maybe, all of us, "nuclearly."  We may have as much a
decade to get going effectively, maybe much less.  No matter; the time to
get off our political asses is NOW.