[OPE-L:6035] hidden hand of american hegemony

[Rakesh Bhandari <rakeshb@xxxxxxxxxxxx>]

In grossman's reconstruction of marx's theory of accumulation and crisis, the
capitalist system comes to suffer from a break-down in international
cooperation. spiro's findings are consistent with marxian theory here.

>From the review by Michael Anderson in Business History Review, Summer 2000:

[Spiro's] argument focuses on America's declining hegemony. It turns on teh
common assumption that a hegemonic power is required for the sommoth
functioning of intl capital markets--known in the IPE literature as the 'the
theory of hegemonic stability' (THS). According to the THS, the hegemonic
nation provides the public goods of confidence, liquidity, and a payments-
adjustment mechanism. From 1945 to 1971, American supposedly played that role,
much as Britain was thought to have done prior to 1914. In the early 1970s, the
collapse of the Bretton Woods regime, the ascedancy of the Japenese and Western
German economies, and the stagnation of its own economy threatened America's
hegemonic status. Then OPEC shocked the world. As the acknowledged hegemonic
power, America was expected to adopt the legitimate course of cooperating
within the system to address OPEC's challenge.

"S marshalls a plethora of public statements by US officials to show that hey
paid lip service to this notion of legitimacy. yet as his data and numerous
interviews show, US officials acted otherwise. Fearing the consequences of a
market regulated outcome, they instead used the power of the state to direct
OPEC surpluses into US govt securities. Among other activities treasury sectys
Simon and Blumenthal cut secret deals with Saudi monetary authorities s that
Arab kingdom could purchase T bonds outside the usual auction. Moreover, they
convinced the Saudis to continue to price oil in dollars and not to diversify
their portfolios into securities and deposits denominated in competing
currencies.

"US officials also failed to abide by agreements with OECD partners. they
competed for capial rather cooperating in its distribution. (europeans and
Japan did so as well, but their actions seemed more acceptable because they
were not the hegemonic power.) indeed officials of the Nixon, Ford and Carter
administrations activiely discouraged any coordiation of intl policy. They felt
that private capital markets were not up to the task of handling increased
flows. Moreover, the feared the consequences for America's budget deficits and
payments position. Yet in their statements to the press and to Congress, they
justified their actions in the shared language of accepted norms. That is, they
insisted that markets were working to allocate capital and were cooperating
with their counterparts in the OECD and at the IMF.

"Spiro concludes that the 'American response was therefore exploitative of its
hegemonic position...the revised theory predicts that cooperation after
hegemonic decline is unlikely. Rather Spiro expects stability and cooperation
in such circumstances to break down.

"Spiro's book fits into the recent IPE literature challenging the popular idea
that the state has grown increasingly powerless in the face of globalization."

rb