Author: IPE
IPE LECTURE 7
August 1914: implosion of global liberal economy. 18th and 19th century wars of British empire v. European and Asian rivals = opening up foreign markets to British goods and investment. Imperialism of free trade: British industrial products traded for raw materials and luxuries from agricultural nations. Political independence = economic dependency.
1776 American Revolution = Whigs v. Tories in Britain. The fatal flaw of American liberalism: George Washington, Thomas Jefferson and James Madison are Southern slave-owners. “The heroes of Africa persecuted by the rubbish of the jails of Europe.” (Adam Smith) South = free trade, agriculture and slave labour. North = protectionism, industry and free labour.
Charles Beard, An Economic Interpretation of the Constitution of the United States (1913).
Jeffersonian democracy -> Andrew Jackson’s Democratic Party: agricultural interest alliance of Southern slave-owners and Western farmers. Manifest Destiny: ethnic cleansing of indigenous population -> cheap land for family farms and slave plantations. American continental expansion: 1803 Louisiana Purchase -> 1832-7 Seminole War -> 1836 Texas secession -> 1846-8 American-Mexican War. The American Dream: individualist, pious and self-sufficient Western pioneers.
Frederick Jackson Turner, The Significance of the Frontier in American History (1893).
1861-5 American Civil War: North/free labour v. South/slave labour over who controls the Western frontier. “A house divided against itself cannot stand” Abraham Lincoln (1858). Abolitionist movement -> 1854-8 Kansas land war -> John Brown’s 1859 Harper’s Ferry raid -> 1860 US presidential election -> 1860-1 secession of slave-owning states -> 1862 Emancipation Proclamation -> 1865 13th Amendment.
Gilded Age 1870s-1900s. Closing of Western frontier in 1890. Reconstruction = Jim Crow laws for South and economic protectionism for the North. Second Industrial Revolution: armaments, chemicals, steel, electrification, telephones and petrol engines. The “robber barons”, Wall Street bankers and the 200 families: John D. Rockefeller, Andrew Carnegie, J.P. Morgan and Henry Ford. Poverty of immigrant urban masses v. conspicuous consumption of WASP business elite.
Thorstein Veblen, The Theory of the Leisure Class (1899).
US economy as pioneer of Fordism: finance capital, bureaucratic corporation, horizontal & vertical integration, time & motion studies, semi-skilled labour, assembly line production, scientific research, mass marketing and franchise operations. Thomas Edison/Menlo Park and AT&T/Bell Labs.
Frederick Winslow Taylor, The Principles of Scientific Management (1911).
Adolf Berle and Gardiner Means, The Modern Corporation and Private Property (1932).
Yankee imperialism: 1823 Monroe Doctrine -> 1898 Spanish-American War: conquest of Cuba, Philippines and Puerto Rico -> 1902-14 construction of Panama Canal -> 1912 occupation of Nicaragua.
“Speak softly and wield a big stick” US President Theodore Roosevelt (1901).
The First War of the British Succession (Immanuel Wallerstein). 1914: British empire = No. 1 global producer -> 1918: USA = No. 1 global producer. House of Morgan = monopoly of British war bonds in USA. Woodrow Wilson: 1916 peace candidate -> 1917 declaration of war -> 1918 Treaty of Versailles -> 1919 League of Nations. Wilsonian idealism = dollar diplomacy.
Woodrow Wilson and 14 Points = US-led global liberalism v. V.I. Lenin and 3rd International = Russian-inspired revolutionary nationalism.
Wilson’s failure to rebuild world market: American elite rejects League of Nations and war reparations destabilise Germany.
John Maynard Keynes, Economic Consequences of the Peace (1919).
Roaring Twenties in USA: liberalism at home and isolationism abroad. The 1st consumer society: automobiles, movies, fridges and wireless. 1924-9 mass speculation in bubble stocks.
“The chief business of the American people is business” US President Calvin Coolidge (1925).
1929 Wall Street Crash -> 1930s Great Depression. Fordist crisis of overproduction & underconsumption: collapse in stock prices -> monetary deflation -> falling sales -> lower prices -> decline in tax receipts -> government spending cuts -> increase in business bankruptcies -> rising unemployment -> bank failures -> breakdown of world market -> mass poverty -> social unrest -> fascism, war and genocide.
1933-45 US President Franklin D. Roosevelt. 1933-7 New Deal = rising working class living standards as creation of “effective demand” through welfare Keynesianism: deficit spending, banking regulation, price controls, public infrastructure investment, job creation schemes, social security, import tariffs and trade union recognition. Tennessee Valley Authority builds Hoover dam: nationalised industry as hi-tech economic icon.
The Second War of the British Succession = warfare as creation of “effective demand” through military Keynesianism. 1939-40 Armed Neutrality -> 1941 Lend Lease Act -> 1941 Pearl Harbour -> 1941-5 USA & Britain & Russia & China v. Japan & Germany & Italy. American lorries, aluminium and canned food speed up Russian victory over Nazi Germany. 1941 Manhattan Project -> 1945 nuclear bombing of Hiroshima and Nagasaki: nationalised industry as hi-tech military icon.
1944 Yalta Agreement: fall of British empire -> condominium of American and Russian empires. 1945 United Nations -> 1948-9 Berlin blockade -> 1949 NATO -> 1949 formal division of Germany into BDR and DDR -> 1955 Warsaw Pact -> 1961 Berlin Wall.
“I like Germany so much that I’m glad that there’s two of them.”
1944 Bretton Woods Conference: collapse of British world market -> construction of US-led world market. Rejection of Keynes’ proposal for World Central Bank and Bancor as global currency -> US insistence on dollar supremacy: IMF (International Monetary Fund), International Bank for Reconstruction and Development (World Bank) and GATT (General Agreement on Tariffs and Trade). 1947 Marshall Aid -> 1948 WEU (Western European Union) -> 1951 European Coal and Steel Community -> 1957 Treaty of Rome sets up European Economic Community.
Jean-Jacques Servan-Schreiber, The American Challenge (1967).
American liberalism: planned capitalism at home and free trade abroad. Big government and big business = rational and efficient management of “technostructure” (J.K. Galbraith). Econometrics, cost-benefit analysis and computer modelling: US economy as programmable machine. The Affluent Society = welfare Keynesianism and warfare Keynesianism.
“History is likely to impose a larger version of [American] continental politics as a working basis for international life.” W.W. Rostow (1960).
Cold War: peace in Europe = conflict in South. 1949 Chinese Revolution: nationalist peasant revolution v. US-led world market. CIA ‘dirty tricks’: 1948 Italian and French elections -> 1953 Iran -> 1954 Guatemala -> 1960 Congo. Extending NATO across the South: Rio Pact, ANZUS, SEATO, CENTO and Baghdad Pact. Walt Rostow, Peace Corps and MIT modernisation theory: Communism = “disease of the transition to industrialism”. South must follow American path of economic development. USA v. 1959 Cuban Revolution: 1961 Bay of Pigs -> 1964 military coup in Brazil -> 1967 execution of Che Guevara -> 1973 military coup in Chile -> 1976 military coup in Argentina.
“I don’t see why we need to stand by and watch a country go Communist due to the irresponsibility of its people.” Henry Kissinger (1973)
Vietnam: 1954 Geneva Agreement -> 1965 American invasion -> 1968 Tet Offensive -> 1975 liberation of Saigon. The electronic battlefield: search & destroy, body counts and mass bombing. Loss of US government’s ‘credibility’: military defeat in Vietnam -> political and economic crisis at home. New Left, black power & hippie counterculture v. military-industrial complex. The crisis of global Fordism: inflation -> social discontent -> dollar crisis -> 1971 collapse of Bretton Woods -> 1974 Oil Shock. The commodity cartels: OPEC (Organisation of Petroleum Exporting Countries) -> UN New World Economic Order. Worker-student rebellion: May ‘68 Revolution in France, 1972/4 miners’ strikes in Britain and 1977 ‘Hot Autumn’ in Italy.
The Empire Strikes Back: 1976 Angola -> 1979 Afghanistan -> 1981 Nicaragua -> 1981 Iraq invades Iran. Thatcher in Britain and Gladio/P2 in Italy: “there is no alternative”. The Second Cold War: Cruise missiles, Star Wars, Mujahideen and Contras. The End of History: 1989-91 collapse of Stalinism in Russia and Eastern Europe -> reunification of the world market. The Washington Consensus: Arab oil rents -> US banks -> loans to South and East -> 1982 monetarist shock -> IMF intervention -> privatisation, deregulation and free trade. Brazilianisation of South = First World elite and Third World masses. 1980s and 1990s = “lost decades” in Latin America.
Francis_Fukuyama, The End of History and the Last Man (1992).
John Perkins, Confessions of an Economic Hit Man (2004).
NICs (Newly Industrialising Countries): 1960s Japan -> 1970s Taiwan -> 1980s South Korea -> 1990s China -> 2000s India. State-directed export-orientated industrialisation within the world market. Fordism in South: authoritarian government, national planning, industrial/financial cartels, capital controls, anti-union laws, technical education and scientific research. EPZs (Export Processing Zones): “Bloody Taylorism” -> local manufacturers -> multinational corporations.
Reaganomics: public deficits, tax reductions, welfare cuts and military spending. Industrialisation in East Asia = deindustrialisation in the USA. American working class incomes stagnate 1974-96. Rustbelt industrial companies (steel, cars and clothing) -> Silicon Valley post-industrial companies (computing, media and finance). Brand labels: subcontracting of manufacture to South -> management, research, design and marketing in North. Wall Street: USA as rentier nation within global economy. Seniorage: dollar as world currency -> US consumer debt and public deficits = effective demand for Asian and European exporters.
Neo-liberal globalisation: 1994 TRIPS (intellectual property) -> 1995 WTO (World Trade Organisation) -> 1995-8 MAI (Multinational Agreement on Investment). Multinational corporations and financial institutions = crony capitalism, corporate welfare and tax avoidance. 1999 Battle of Seattle: ‘Turtles and Teamsters’ v. WTO -> World Social Forum and global justice movement.
Alain Lipietz, Miracles and Mirages: the crises of global Fordism (1987).
Naomi Klein, No Logo (2000).
1995-2001 dotcom bubble: the new paradigm, IPOs (Initial Public Offering) and the weightless economy. US financial markets = prototype of worldwide on-line marketplace. Bay Area start-ups = digital perfection of free market capitalism. Neo-liberal ideology founded upon US military budget.
“Promoted in magazines, books, TV programmes, websites, newsgroups and Net conferences, the Californian Ideology promiscuously combines the free-wheeling spirit of the hippies and the entrepreneurial zeal of the yuppies. This amalgamation of opposites has been achieved through a profound faith in the emancipatory potential of the new information technologies.” Richard Barbrook and Andy Cameron (1995).
John Cassidy, dot.con: the greatest story ever sold, (2002).
2001 dotcom crash -> 9/11 Al-Qaeda attacks v. USA -> US invasion of Afghanistan -> 2003 US invasion of Iraq. War on Terror = military Keynesianism at home and show of force abroad. Axis of Evil = rogue states (Iraq, Iran and North Korea) v. the international community (USA and its allies). Neo-conservative lobby = American imperial unilateralism: hi-tech weaponry -> military invincibility -> pro-US Middle East. Portents of the new Time of Troubles: defeat in Iraq, Chinese industrialisation, ‘pink tide’ in Latin America, creation of euro, New Orleans flood, sub-prime mortgage debts, falling dollar, trade deficits, healthcare costs and anti-Americanism.
Relative decline of US manufacturing compared to Europe and East Asia: 1945 = 50% of world industry -> 45% in 1955 -> 30% in 1980 -> 20% in 2005. Conservative Keynesianism: diversion of public spending into warfare rather than welfare. USA = 50% of global military spending. Imperial overstretch: American empire in early-21st century = British empire in early-20th century. Asian savings finance American deficits. The US credit crunch as the crisis of rentier capitalism: “The bankruptcy of Lehman Brothers is to the American empire what the fall of the Berlin Wall was to the Soviet Union.”
Paul Kennedy, The Rise and Fall of Great Powers (1987)
Samuel Huntington, The Clash of Civlisations (1996)
November 2008 = election of Barack Obama as US president and G20 meeting to plan for a reformed world financial system. “The Asian creditor nations – China, Japan and India – will write the new rules of the game for their American and European borrowers.” – Meghnad Desai
In the 21st century, does the world system still need a Universal State to rule over it?
Within this MySpace version of the electronic agora, cybernetic communism was mainstream and unexceptional. What had once been a revolutionary dream was now an enjoyable part of everyday life.