A discussion with Michael Hudson

over his book

Super Imperialism

during June 2003 on the a-list:

http://lists.econ.utah.edu/mailman/listinfo/a-list

Starting with the Counterpuch interview April 23rd, 2003

----- Original Message -----

From: Michael Keaney

To: a-list@lists.econ.utah.edu

Sent: Thursday, April 24, 2003 12:34 PM

Subject: [A-List] US imperialism: Michael Hudson interview

 

Thanks to Lou Proyect for bringing this to light. I've just got hold of a
copy, and plan to get started on it soon. Maybe we could have some kind of
list discussion based around it, if enough people agree to join in.

-----

Duck, Duck, Goose:
Financing the War, Financing the World

By STANDARD SHAEFER
Counterpunch, April 23 2003
(Interview with Michael Hudson, author of Super Imperialism, Pluto Press,
2003)

Now that even the LA Times has begun to show a modicum of willingness to
discuss US foreign policy in terms of a potential imperialism, it has become
clear that those on the right have avoided this debate so far only by
sticking to the strictest, most out-dated notion of empire. The left,
however, for too long has been satisfied with talking about cultural
imperialism and corporate exploitation, both of which are serious problems.
Recently, however, the left has often clumsily explained the economic
motives for the war in terms of big oil, sheer greed and more ephemerally as
a desire to weaken the euro. This is all likely, but it also reveals the
degree to which the left's understanding of finance is outdated. This is not
their fault, however. Not only do university economics departments remain
dominated by the ersatz laissez faire notions of the Chicago School, but so
are US Government, the World Bank, the IMF, the WTO and the European central
banks. The result has been the censorship of those few economists willing to
point out that the US is very much the center of imperialism, unwilling to
engage in the "free trade" or laissez faire that it promotes abroad.

Only recently, when World Bank head and Nobel Prize winner Joseph Stiglitz
resigned in order to speak out against the sister institution of the IMF did
this get serious attention. But Stiglitz remains defensive of the World Bank
itself and continues to believe its goals despite no evidence that anything
good has come from it, overlooking its complicity in promoting structural
adjustments that have proved ecologically destructive and
<http://www.counterpunch.org/SUPERIMPERIAL.jpg> entirely in the American
financial interests. The real expose was published over thirty years earlier
despite an active campaign to keep the story out of the press, out of the
university and out of the government.

Shortly after the US was forced off the gold standard, a young economist by
the name of Michael Hudson received a grant to study the effect of the
demonetarization of gold. His report was made not only to the US government,
but also to Wall Street firms such as his former employers, the Chase
Manhattan Bank and Arthur Andersen. The problem was that despite his
phrasing the situation in the most critical terms, his report revealed that
the US was on inadvertently on the verge of the greatest boondoggle of all
times.

Hudson himself describes resistance to his message in a new preface to the
recently reprinted ground-breaking book Super Imperialism: The Origin and
Fundamentals of US World Dominance. Hudson's is an infuriating story, only
partially available in this volume, involving at least two incidents where
university board members and economic professors threatened to resign if his
books on trade policy were published. The US Treasury Department even went
so far as to alter the way it reports statistic on the balance of payments
impact of the u.s. government to prevent further study into how the US
government actually made money on its "aid" programs. More important, prof.
Hudson explains how the US managed to use its debtor status to exploit the
world.

By going off the gold standard at precise moment that it did, the United
States obliged the world's central banks to finance the U.S.
balance-of-payments deficit by using their surplus dollars to buy U.S.
Treasury bonds, whose volume quickly exceeded America's ability or intention
to pay. All the dollars that end up in European, Asian, and Eastern central
banks as result of American's excessive import-imbalance, have no place to
go but the U.S. Treasury. Because of the restrictions placed on the central
banks_ there is no place else for this money to go_these countries were
forced to buy US treasuries or else accept the worthlessness of the dollars
received through trade.

Like most people, I understood economic imperialism as an open game. Any
corporation could invest in another country and extract profits, but
apparently this is only one level. 'Super' imperialism occurs and can only
occur between the U. S. government and the foreign central banks. To
understand this further, I decided to speak to Michael Hudson directly.

Standard Schaefer: How aware was the Nixon administration of the balance of
payments issue? Did they realize that it would actually increase US economic
dominance?

Michael Hudson: The Nixon people didn't realize. I got an $80,000 grant from
the Hudson Institute to explain it to them. The Nixon people said, "Oh gee.
That's great". Then they turned my analysis of imperialism into a "How To"
book. I had written it as a "How Not To" book, but the nation doing the
exploitation was more interested in learning how the system worked than were
the countries being exploited. I started to consult for Canada, Mexico and
other countries. Canada had been accommodating toward the World Bank and
IMF, but when they realized the extent to which these organizations were
rigged to further the balance of payments problem, they felt exploited.

SS: Do you believe the neo-conservatives advising Bush at the moment are
more aware of "benefits" of this balance of payments issue, what you call
the US treasury standard?

MH: They know it's a rip off, yes. And they absolutely want it to continue.
Being Chicago School monetarists, they think that America's financial free
ride should be built into the world economy as if it were perfectly natural
for the rest of the world to adjust its economies to help the U.S. economy.
But among sovereign regional blocs this kind of subservience can only be
transitory.

SS: What is the role of militarism at this stage? Can perpetual war be seen
as a sort of imperial Works Progress Administration that jumpstarts the
domestic economy? At what point does the cycle collapse and can it do so
internally_or as you've suggested, does it only stop when Asia, Europe, and
the East finally refuse to buy US treasuries?

MH: The US Treasury-bill standard finances the military, but doesn't need
imperial war to succeed. So far it's being accepted voluntarily, as other
countries have not yet figured out how to extricate themselves from a system
that is bleeding them more and more.

To date they haven't tried very hard to create an alternative, but now the
system could backfire, as Bush's aggressive diplomacy is prompting Europe,
Russia and China to stand up for their own self-interest. And that's what
they need to do. They didn't stand up for their self-interest when the World
Bank and IMF were formed, but now they have to do so.

People are now beginning to raise the question of whether countries really
need their central banks, which are essentially lobbyists for the Washington
Consensus, as are the World Bank and the IMF. They follow the Chicago School
in lobbying for high rates and a large cushion of unemployed so as to
maximize financial power relative to labor and the products it produces.
Financial exploitation now exceeds the old-fashioned exploitation of labor
by actually employing it, albeit for low wages.

Central banks are staffed by Chicago School monetarists, and are allowed to
take only a 3% deficit whereas in the US it is limitless. Europe and Asia
should abandon the false start with their central banks and should rely on
their Treasuries, which are Keynesian or could be Keynesian. The national
Treasuries should set up a credit system with bonds and IOUs based on euros
and other currencies.

SS: Okay, but isn't it most likely that the whole thing ends in a crisis,
one more devastating to the US than the "Asian Flu"? What would this crisis
look like?

MH: There will be a crisis when Europe, Asia and Latin America finally break
away. The U.S. has said it can't pay back its dollar debts and doesn't
intend to. As an alternative, it has proposed "funding the US dollar
overhang" into the world monetary system. Other countries would get IMF
credit equal to their dollar holdings, but these holdings no longer would be
US Treasury obligations. The US would wipe its debt to foreign central banks
off the hook. This would mean that it would have got all the
balance-of-payments deficits for the past 32 years for free, with no quid
pro quo.

The US has been proposing this for 30 years whenever Europe raises the issue
of payment for its dollar holdings. American diplomats have said that they
won't allow central banks to use their dollars to buy US corporations, for
instance. When OPEC countries proposed this after 1973, the US Treasury
reportedly informed them that this would be considered an act of war. As for
Europe, it never has pushed its own self-interest in the World Bank or the
IMF.

SS: How does is this related to the economic bubble?

MH: Since Europe and Asia have financed most of the US Treasury's budget
deficits in recent decades, Americans haven't had to do this. As a result,
their bond market has been freed from government bond issues, so US
investors have been able to put their money into the stock market and real
estate, for better or worse. As these markets rose during the 1980s and
'90s, they attracted foreign private-sector dollars into the US market. This
helped finance the bubble.

Meanwhile, America's federal budget deficits can go on without limit,
precisely because of the balance of payment deficit. The larger the payments
deficit, the more dollars end up in the hands of foreign central banks, to
be recycled into the purchase of US Treasury securities. This means that the
US government's deficit - including the military spending in Iraq, by the
way - is financed by foreign governments. This will continue despite the
fact the debt already has grown greater than the ability to pay, until these
countries finally break away from the system.

As for the bubble economy, pensions and Social Security will go first. The
US can't afford to bail them out and still plan the giveaways to the
wealthiest 10 percent of the population who are the net creditors to the
bottom 90 percent. Pension obligations were expected to absorb only 5 or 10
percent of production costs, but now they are absorbing nearly all the
reported profits, and threaten to eat into the money available to repay the
banks and bondholders. The big investors want to be paid, and this means
taking money that was earmarked for employees.

The only question is whether the US government will bail out the individual
wealthy investors. The working motto in such cases is that big fish always
eat little fish. Breughel had a great etching on this topic.

The states and the municipalities will go next. They are among the little
fish. Bush's tax cuts have slashed their tax receipts. Cutting taxes for New
York City and most other localities is causing layoffs and widening
unemployment, just the opposite from what Bush's economists claim to be the
case. Today's mode of supply side economics will lead to shrinking markets,
shrinking employment and intensify the financial squeeze on California and
other states, as well as cities throughout the country.

SS: Are there people in Washington who recognize this inter-relation?

MH: There are people in Washington that see this. But they tend not to speak
up, because most economists or others who see what's happening - and write
about it or otherwise draw attention to it - are fired or blacklisted for
not being team players. There's a kind of censorship that happens if you're
not a Chicago monetarist. When the University of Toronto accepted one my
books for publication and the economics department there heard about it,
there were threats that faculty members would resign if they published my
book and that the editor of the University of Toronto press would be fired
if he went ahead with it.

SS: You're kidding.

MH: No. The Chicago School's monetarists are intolerant and censorial. About
the only alternative is the University of Missouri at Kansas City which has
a heterodox economics department that teaches an alternative to monetarism.
That's where I have my current professorship.

SS: They're not Marxists?

MH: Marxists are not so much concerned with finance these days. You have to
work for some of the large financial institutions to get a working knowledge
of the balance of payments deficit and the flow of funds. Their principles
are counter-intuitive. Even when one reads and understands the words that
describe them, it's necessary to wire up the brain to think in terms of how
international financial markets actually operate.

The recent investigations and prosecutions of New York Attorney General
Eliot Spitzer have shown that the largest financial institutions have
operated much like criminal enterprises, from Citibank/Travellers and
Merrill-Lynch on down. They've come under indictment, but when the problem
is so widespread they've decided that the only reasonable response is to
begin enforcing a new set of rules, and let bygones be bygones. The bygones
in this case have netted them billions of dollars, which they will be
allowed to keep. The small investors who've been cheated will not get much
after attorney's fees are paid.

All this seems to be the result of repealing the Glass-Steagall Act. It was
forecast to occur just in the way it has, but the political campaign
contributions by the large financial institutions won the day, backed up by
the Junk Economics being turned out by the Chicago Boys.

The reason why Harvey Pitt was forced out as the head of the <S.E.C>. was
that his inaction led to the state prosecutors as the only people willing to
take the lead in dealing with insider dealing, fixed markets, crony
capitalism and similar corruption. The best writer to expose this type of
operation is Tom Naylor, who wrote Wages of Crime and Hot Money.

But reformers are up against Chicago School economists who have been
endorsed because their anti-government theories are so self-serving to
economic groups that don't want to be regulated at all. The important thing
is that "free enterprise" has only been able to be imposed at gunpoint. In
fact, as Milton Friedman himself observed, only a socialist government can
impose his kind of economics, without sunk costs, with "pure" markets. To
work properly, everyone who doesn't believe in free enterprise has to be
isolated, which means in practice that free enterprise only works in a
police state.

Take the case of Arnold Harberger, the University of Chicago professor who
was brought down to Chile right after the military junta overthrew its
elected president. The first thing that the Chicago Boys did upon
overthrowing the government was to close every economics department in the
country, except for the Catholic University where the Chicago Boys had a
stranglehold of true believers. In the late 1980s, a decade later when
Harvard brought Harberger over with the thought of installing him as head of
the HIID (Harvard Institute for International Development), the students
rioted, accusing Harberger (who is married to a Chilean) of sitting in his
hotel room with a list of academic economists opposing the Chicago Boys and
their free enterprise evangelism fingering the ones who should be murdered.
Harberger denied that he ever fingered anyone to get killed, but what is
known is that there followed a wave of arrests, killings and disappearances.
The Chicago Boys held up Pinochet's Chile as a model - one to be emulated,
not shunned. Yet their first wave of privatizations collapsed in a wave of
corruption, and their privatization of social security became a new way of
exploiting labor, via forced savings that were channeled into the stock
market. Insiders gained and the middle class, which had been stronger in
Chile than in any other Latin American country, lost out.

The moral is that free enterprise economics only works when you have
authoritarian control to suppress opposition seeking to place economic
relations in a broader social context.

The point I want to make is that the economists who call themselves free
enterprise actually are defenders of the financial industry and the
sacrifice of economies to pay their debts, regardless of how wastefully
these have been entered into. Their idea of the market means that the
"market" should adjust itself to debt claims growing exponentially, in
excess of the economy's ability to pay. The consequence is a transfer of
property. This is how privatization should be seen. To the Chicago Boys, it
is all part of the adjustment process.

SS: Am I correct in thinking that the US Treasury-bill standard you describe
in Super Imperialism and the sequel Global Fracture victimizes the taxpayers
IN the EU, Japan, etc., more than older forms of imperialism? Is what makes
this imperialism "super" the fact that it exploits not just workers in poor
countries, but all workers everywhere?

MH: That's true, but my point is somewhat different. The older theories of
imperialism saw private corporations running the system to profit, so that
profits by global companies were the measure of how much imperialism was
occurring. My point is that the largest form of exploitation, quantitatively
speaking, now occurs among governments. Another word for Super Imperialism
would be Inter-Governmental imperialism. The United States exploits the rest
of the world above all via foreign central banks accumulating dollars.

As for your other points, imperialism always has exploited mainly the rich
countries, for the same reason that Willy Sutton is said to have robbed
banks: That's where the money is. The richest nations are the ones with the
most economic surplus to appropriate. That is done not via the repatriation
of profits, but by the Treasury-bill standard and the free ride that it
gives the United States.


 

---------------------------------

 

Michael Hudson is the Distinguished Professor of Economics at the University
of Missouri (Kansas City) and has published widely on U.S. financial
dominance. He also consults with various foreign governments regarding the
need to set up an alternative center of finance to the U.S. Treasury. He
first attracted my attention during the recent war with Iraq when he was on
KPFK in Los Angeles explaining how this system has forced other governments,
in effect, to pay for our wars since Vietnam.

Whether or not there are more U.S. military adventures in the Middle East,
it seems crucial to expose to the world not only the lives lost, not only
the private profits being made, but also how the U.S. Government has managed
to fund these wars at everyone else's expense. At the moment, it seems these
wars only send more dollars abroad_both in IMF, World Bank loans, but also
in U.S. humanitarian "aid" and military personnel expenditures. Thus, the
dollar surplus abroad only creates more demand for U.S. Treasuries and more
foreign dependence on the continuing existence of the U.S. Empire.

 

 

----- Original Message -----

From: jenyang

To: a-list@lists.econ.utah.edu

Sent: Monday, June 02, 2003 12:18 PM

Subject: [A-List] Michael Hudson: Super imperialism

 

At the begining of what I hope will be an informative and useful
debate on the underpinnings of U.S. hegemony, I'd like to thank Michael
and Sabri for providing the opportunity to be part of this discussion on
the A-List.

In this first post in the discussion of Michael Hudson's `Super
Imperialism: the origins and fundamentals of U.S. global dominance,' I
will try to give a brief synopsis Hudson's thesis, highlighting its
strengths as well as those points where I differ with Hudsons, largely
over matters of emphasis and interpretation.

In the second week, I'd like to begin the more detailed discussion of
the book on a chapter-by-chapter basis, begining with Chapter 1, the
Origins of Intergovernmental Debt, 1917-21.

I look forward to a productive exchange on the A-List over the coming
summer.

J.Enyang

*********

In his preface to the second edition of `Super Imperialism' Michael
Hudson reminds us that the US economy currently faces a growing
balance-of-payments deficit, amounting at the time of writing to some
3-400 billion USD and that the U.S. currency is depreciating
significantly in value, particularly against the Euro. The
U.S. Treasury Secretary at the time Hudson was writing the preface to
his second edition in 2002, far from seeing this ballooning deficit
and falling currency as a problem, declared that he was not concerned
and that the situation `did not not call for any action, least of all
on the part of the US.'

Economists tell us that nations and states which -- in conventional
terms -- live beyond their means by running up unsustainable trade and
fiscal deficits will eventually be forced to `adjust', a process that
involves restricting domestic consumption by raising interest rates,
reducing (non-military) spending and currency devaluations -- the
theory being that these measures allow them to rebuild their economies
and finances on the `secure foundations' of export led growth and
their comparative advantages as opposed to the debt financed growth
and consumption which, as the theorists would have it, led to the
unsustainable deficits in the first place.

While the consequences of adjustment are open to debate, there is
little question that most states in the global system do in fact operate
under the perpetual threat of some degree of externally enforced
adjustment. On the weakest actors in the global system, adjustment
is enforced by some more or less brutal combination of capital flight,
pressure by international creditors, usually through the Bretton Woods
institutions or the governments of the Europe, North America and Japan,
through such bodies as the Paris Club
( http://www.clubdeparis.org/en/index.php ).

On more powerful states in Asia and for the larger members of the
European Union, pressure to adjust traditionally comes by such means
as `reviews' by credit agencies, whose hallowed decisions, the
credit ratings, are based on supposedly neutral technical criteria.
That the techocrats and institutions responsible for drawing up and
selecting the criteria are usually based in North America and more or
less embedded in its financial structures, is not generally considered
sufficiently important to be remarked upon.

Given the near universal pressure on states to adjust their
domestic economies the demands of international creditors, financial
institutions and speculators, or face capital flight, precipitous
devaluation and financial crises, we might well ask what lies behind
the nonchalance of the US Treasury faced with the its own ballooning
balance-of-payments  and fiscal deficits. This question becomes
especially sticky if we consider that the US Treasury and Wall Street
rarely miss an opportunity to impose adjustment, whether through the
Bretton Woods institutions, credit agencies, speculators, political
pressure or some combination of each, on any other state deemed to
have violated the strictures of the Washington Consensus.

Some economists, like Stephen Roach of Morgan Stanley have issued
increasingly dire warnings about the `ever-widening disparities in the
world's external accounts,' stating that the US  which `squandering
its already depleted national saving' will not only be `unable to
continue to finance an ever-widening expansion of its military
superiority' but will probably face an adjustment process of sorts
when `prices of dollar-denominated assets compared to those of
non-dollar-denominated assets' fall drastically, as they inevitably
will soon. Roach anticipates `a 20%  drop in real exchange rates and
nearly double that in nominal terms, higher real interest rates, reduced
growth in domestic demand, and faster growth overseas.' These
conclusions of Roach are quoted with approval by Immanuel Wallerstein
who uses them to support his thesis that the chronic fiscal and trade
deficits are  a sign that US hegemony is in irreversible relative
decline: `the market is not all-powerful, but it is not helpless
either. When the dollar collapses, and it will collapse, everything
will change geopolitically. . . . [America] will be a vastly different
U.S. once the dollar collapses. The U.S. will no  longer be able to
live far beyond its means, to consume at the rest of the world's
expense. Americans may begin to feel what countries in the Third World
feel when faced by IMF-imposed structural readjustment - a sharp
downward thrust of their standard of living.'
(http://fbc.binghamton.edu/113en.htm ) Wallerstein adds that the
fiscal recklesness and the `macho militarism' of the present
U.S. administration, far from strengthening the U.S. position, will
further undermine it economically, exacerbating its
balance-of-payments problem and accelerating its as from its position
as the dominant power in the global system.

Michael Hudson's thesis on the other hand is that far from being an an
aberration which might be subject to the normal technical corrective
measures anticipated by writers like Roach and Wallerstein, US trade
and fiscal defits are been built into the very system of international
trade and finance since the late 1960's: `Rather than the American
debtor position being an element of weakness, Americas seeming
weakness has become the foundation of the world's monetary and
financial system' and `to change this system in a way adverse to the
United States would bring down the system's creditors to America,' the
largest of whom are Europe, Japan and China. Against its creditors,
`the US has learned to apply a new, unprecedented form of coercion. It
dared the rest of the world to call its bluff and plunge the
international economy into monetary crisis.'

Since the early 1970's the US debtor strategy of financial domination
has operated  according to the following brief sketch: since most
international transactions are denominated in U.S. dollars, the
chronic U.S. trade deficit necessitates a flood of U.S. dollars into
Europe and Asia, the regions with the largest balance-of-payments
surpluses. The central banks in these regions are obliged to purchase
these dollars, as `failure to absorb these dollars would lead the
dollar's value to fall vis-a-vis foreign currencies, as the supply of
dollars greatly exceeded the demand.' The hands of the European and
Asian central banks ar forced by the fact that `a depreciating dollar
would have provided U.S. exporters with a competive devaluation, and
and also would have reduced the domestic currency value of foreign
dollar holdings.' The foreign hoards of U.S. dollars are then recycled
by the respective central banks who invest them in U.S. treasury
securities, thereby `financing simultaneously the U.S. balance of
payments deficit and the domestic federal budget deficit.'

Thus, where nations had historically been obliged `to raise interest
rates to attract foreign capital to finance their deficits, in
America's case it was the balance-of-payments deficit that supplied
the `foreign' capital, as foreign central banks recycled their dollar
outflows -- that is, their own dollar inflows -- into U.S. treasury
securities.' The virtuous spiral (virtuous from the point of the
U.S. that is) continued as lower interest rates spurred yet further
capital outflows to Europe and Asia. Part of this outflow is
attributable to the dollars spent as `investment' by U.S. corporations
in the process of acquiring key productive sectors of the Asian and
European economies.

Since 1972, the U.S. payments deficit has been `wielded as an
increasingly conscious and deliberately exploitative financial lever.'
Hudson calls this U.S. strategy a `new state capitalist form of
imperialism,' distinguished by the fact that `it is the state itself
that is syphoning off economic surpluses' and that `central banks
are the vehicle for balance-of-payments exploitation via today's
currency standard, not private firms.' Under this system, the central
bank which issues the key-currency (that is U.S. dollars today) has
the unique ability to create its own credit to buy up the assets and
exports of foreign financial satellites.

Hudson shows that the sustainability of U.S. hegemony and its
financial aspects like the function of the U.S. dollar as
international key-currency through which the U.S. finances
simultaneously its balance-of-payments and fiscal deficits, cannot be
regarded as technical questions in the sphere of `pure economics' and
its `corrective measures' in the sense that Roach and, to a lesser
degree, Wallerstein seem to argue. The political dimension to this
reality, exposed by Hudson, is that the industrial powers in
Europe and Asia nor the third  world bloc have barely made the
`feeblest of attempts'  to break out of their subservience to
Washington or their dependency on the trade and financial structures
through which the U.S. appropriates their respective surpluses.
However, while Hudson attributes this to a political failure on the
part of the Europeans and the Japanese particularly, one might also
hightlight the success of the U.S. strategy in building after WWII a
deep and enduring network of international class alliances with
capitalist elites in the defeated Axis powers and with the comprador
classes and clients in the periphery. Indeed, as Hudson notes in his
2002 preface to the second edition, `no serious alternative is now
being proposed to the the American-centred financial sysetm and the
debt deflation its monetarist policies are imposing on debtor
economies outside of the United States'.

Hudson makes a contrast between the modern `state capitalist form of
imperialism' represented by U.S. hegemony and the forms of imperialism
analysed by John Hobson and Vladimir Lenin during the belle epoque of
European capitalism prior to WWI. While the earlier European model of
imperialism was `characterised by the drives  of private finance
capital,' the forms of domination and exploitation that have been
perfected under the Washington consensus cannot be seen as simply an
extension of the drives of U.S. private capital since U.S. policy `has
been shaped by overriding concerns for world power (euphemised as
national security) and economic advantage quite apart from the profit
motives of private investors.' According to Hudson, the U.S. sits atop
a pyramidal exploitative structure whose imperatives are not those of
U.S. private capital so much as those of the U.S. state.

Expanding on these differences, Hudson states that `the early system
[described by Lenin and Hobson] was supposed to grow stronger and
stronger until it culminated in armed conflict, [it] economically
developed the periphery in the process.' In contrast, the windfall of
America's free financial ride have not been invested in productive
capital that yields future profits; the U.S. has `pursued the less
productive policy of maintaining an imperial military and bureaucratic
superstructure that imposes dependency rather than self sufficiency on
its client countries' and the fruits of U.S. exploitation, rather than
being invested in new capital formation are being `dissipated in
military and civilian consumption and in a financial and real estate
bubble.'

While I find Hudson's analysis of the curcuits of international
finance to be sound, and his description of the manipulation of these
circuits as a pillar of U.S. global hegemony to be convincing, there
is reason to take issue with his description of the Washington
consensus as a `new state capitalist form of imperialism' that marks
an historic break with the older European forms of imperialism driven
by the imperatives of private capital as described by Lenin and
Hobson. Further, while Hudson's observation that U.S. hegemony imposes
economic dependency on its clients is well supported, one might take
issue with the view that either European imperialism was historically
more benign in the sense  that it `developed the peripheries'.

Hudson is undoubtedly correct to see the U.S. state and its
institutions as playing a central part in the global political
economy. It is questionable however whether the political and economic
imperialism in which the U.S. state has played such a key role in
building, can be separated from the interests of U.S. private capital
to the degree which Hudson suggests. Indeed, from my own reading of
Hudson it seems that U.S. private capital finds itself singularly
advantaged by the privileged position of the U.S. state in the global
system. To cite but one example: `When Truman insisted in March 1946
that ``World trade must be restored -- and it must be restored to
private enterprise,'' this was a way of saying that its regulation must
be taken away from foreign governments that might be tempted to try to
recover their prewar power at the expense of U.S. exporters and
investors' (Hudson, p.10); thus where Hudson argues that `the
intrusion of the U.S. government into the global marketplace
was often aimed at promoting the interests of U.S. corporations, the
underlying motive was the perception that the regulated activities of
these companies promoted U.S. national interests, above all the
geopolitical interests of Cold War diplomacy with regard to the
balance of payments,' one could again note that the Cold War
diplomacy of the U.S. government  was in large part aimed at ensuring
-- in the words of Truman -- that foreign governments did not `try to
recover their prewar power at the expense of U.S. exporters and
investors.' To make this more immediate, nobody is surprised today
when the contracts for Iraqi `reconstruction' are granted to
U.S. corporations like Brechtel and Halliburton or that these
corporations have representatives at the highest levels in the
U.S. state. Nor was anyone particularly surprised that the Secretary
of the Treasury (and de-facto head of the World Bank and IMF) in the
1990's was a Goldman-Sachs banker.

It is my view, in otherwords, the central role of the U.S. state
notwithstanding, the relationship between the imperatives of
U.S. capital and the policies of the U.S. is probably far more
symbiotic than Hudson makes allows in his book.

Turning to the historic role of European imperialism, Hudson writes:
`In the nineteenth century Britain took on the position of world
banker in no small measure to provide its colonies and dependencies
with the credit necessary to sustian the specialisation of production
by British industry' (Hudson p. 4) and `Britiain governed its empire
not only through its position as world banker, but because as world
banker it took responsibility for insuring an equitable payments
mechanism that worked on long-understood lines that were deemed to be
equitable to its users' (Hudson, p. 386).  How well is Hudson's rather
benign view of the British state as world banker borne out?

Giovanni Arrighi (New Left Review, Mar-Apr 2003) draws a close
connection between Britain's adherence to the gold standard and its
extraction of tribute from the Indian Subcontinent:

   Britain's Indian empire was crucial in two main respects. First,
   militarily: in Lord Salisbury's words, `India was an English barrack
   in the Oriental seas from which we may draw any number of troops
   without paying for them.' Funded entirely by the Indian taxpayer,
   these forces were organised in an European-style colonial army and
   used regularly in the endless series of wars through which Britain
   opened up Asia and Africa to Western trade, investment and
   influence. They were `the iron fist in the velvet glove of Victorian
   expansionism . . . . the major coercive force behind the
   internationalisation of industrial capitalism.'

   Second, and equally important, the infamous Home Charges and the
   bank of England's control over India's foreign-exchange reserves
   jointly turned india into the `pivot' of Britain's financial and
   commercial supremacy. India's balance-of-payments deficit with
   Britain, and surplus with all other countries, enabled Britain to
   settle its deficit on the current account with the rest of the
   world. Without India's forcible contribution to the balance of
   payments of imperial Britain, it would have been impossible for the
   latter `to use the income from her overseas investment abroad, and
   to give back to the international monetary system the liquidity she
   absorbed as investment income.' Moreover, Indian monetary reserves
   `provided a large masse de manoeuvre which British monetary
   authorities could use to supplement their own reserves and to keep
   London the centre of the international monetary system'.
   (Arrighi, p.45).

On the a similar theme, Hudson criticises the U.S. government for its
shortsighted and rigid administration of intergovermental debts owed
to it by Europe as result of arms purchases and reconstruction loans
during and after WWI.

   An enlightened imperialism would have sought to turn other
   countries into economic satellites of the United States. But the
   United States did not want European exports, nor were its investors
   particularly interested in Europe after its own stock markets
   out-performed those of Europe. (Hudson p.5)

Instead, of acting as ursurer to Europe in the inter-war period,
destabilising the European economies, Hudson implies that it might
have chosen to act as it did after WWII when it gave reconstruction
loans to Europe and Japan while allowing them to re-pay these loans
through exports of manufactures to the U.S. The problem with this
scenario, is that Hudson does not make clear the contradictory nature
and effects of U.S. strategy post WWII and during the cold war; by
successfuly rebuilding European and Japanes industrial bases, in large
measure to avert foment and revolution these regions, the U.S. was at
the same time building economic rivals, contributing to the twin
problems of global overcapacity that began to plague the capitalist
economies in the late 1960's and of the U.S. balance-of-payments
deficits that forced the U.S. into choice of abandoning either its
preeminent global position or the gold standard (see Brenner, The Boom
and the Bubble, and Peter Gowan, The Global Gamble).

Differences like the above, over matters of emphasis and
interpretation like this aside, Hudson's book is an exemplary piece of
detailed scholarship and an invaluable resource adding greatly to our
understanding of the historical evolution and current juncture of
U.S. imperialism and world capitialism.

\end{document}

 

 

----- Original Message -----

From: bon moun

To: a-list@lists.econ.utah.edu

Sent: Monday, June 02, 2003 1:43 PM

Subject: RE: [A-List] Michael Hudson: Super imperialism

 

"Hudson is undoubtedly correct to see the U.S. state and its
institutions as playing a central part in the global political economy.
It is questionable however whether the political and economic
imperialism in which the U.S. state has played such a key role in
building, can be separated from the interests of U.S. private capital to
the degree which Hudson suggests."

[Though it seems certain that the current trajectory of US policy is one
that is counter-intuitive to even the medium-term interests of US
capital.  There is little doubt that private capital and the state must
exist in a dialectical relation to one another, even as they did during
the Hitlerian build-up prior to WWII, but still one where the interests
of the state, insofar as they existed in tension with the interests of
private capital, were privileged.  The character of an ever more
directly-parasitic form of US capital accumulation has been one that
simultaneously privileged the financial pole of US capital, at the
direct expense of its productive pole (with the exception of
combined-defense/energy industries that are now effectively part of the
state apparatus in a new form of military Keynesianism), which has
accelerated the parasitic-character growth of US capital and
fundamentally weakened it. -SG]

 

 

----- Original Message -----

From: Michael Keaney

To: a-list@lists.econ.utah.edu

Sent: Monday, June 02, 2003 4:21 PM

Subject: Re: [A-List] Michael Hudson: Super imperialism

 

John Enyang writes:

Michael Hudson's thesis on the other hand is that far from being an an
aberration which might be subject to the normal technical corrective
measures anticipated by writers like Roach and Wallerstein, US trade
and fiscal defits are been built into the very system of international
trade and finance since the late 1960's: `Rather than the American
debtor position being an element of weakness, Americas seeming
weakness has become the foundation of the world's monetary and
financial system' and `to change this system in a way adverse to the
United States would bring down the system's creditors to America,' the
largest of whom are Europe, Japan and China. Against its creditors,
`the US has learned to apply a new, unprecedented form of coercion. It
dared the rest of the world to call its bluff and plunge the
international economy into monetary crisis.'

------

"If you owe the bank $100, that's your problem. If you owe the bank $100
million, that's the bank's problem." - J. Paul Getty

------

According to Hudson, the U.S. sits atop
a pyramidal exploitative structure whose imperatives are not those of
U.S. private capital so much as those of the U.S. state.

-----

MK: Is it not because of the unparalleled concentration of capital in the US
that the regulatory powers of the US state are, consequently, enhanced to
such an extent that they are likewise unparalleled? I think Stan is right on
this -- whatever jockeying for position there might be between Washington
and Wall Street, both also benefit from the other in terms of international
leverage. Leonard Seabrooke, in "US Power in International Finance: The
Victory of Dividends" (Palgrave 2001) describes this relationship as one of
"interactive embeddedness", combining competition and cooperation, and
thereby determining state capacity. Seabrooke describes the US state's
regulatory policies as combining "international passivity and national
activism" -- not a very elegant or transparent way of highlighting the US
state's active promotion of laissez faire finance globally in terms of
rhetoric and ideology whilst imposing more and more of the US regulatory
framework upon other states whether through persuasion, threat of capital
flight, IMF pressure or ratings agencies' reviews.

Additionally, another book tackling a similar theme but going further back
in the evolution of US imperialism is Cyrus Veeser's "A World Safe for
Capitalism: Dollar Diplomacy and America's Rise to Global Power" (Columbia
UP, 2002) which details the US intervention in the Dominican Republic in
1904 and Theodore Roosevelt's corollary to the Monroe Doctrine which was the
rationalisation of that intervention. Dominican President Ulises Heureaux,
in attempting to "modernise" (i.e. capitalistically develop) the economy
turned to US financiers in effort to unseat prior European domination. The
"San Domingo Improvement Company", founded by a bunch of political fixers
within the New York establishment and with close ties to especially the
administration of Grover Cleveland, was tasked with the job of securing a
favourable development path amenable to Heureaux and especially the US. In
addition, the SDIC acted as the US state's official representative in
Dominica right up until the 1904 invasion, when the internal situation had
deteriorated so badly and US interests were no longer being served
adequately. In other words, it is because of the failure of a US private
sector venture that the US state intervenes, to reorder the situation and
put in place circumstances amenable to future private sector investors. That
the state extracts rents from the supposed beneficiaries of its security
measures can also be read as an indication of the purpose of such security,
i.e., that it is not somehow separate from the interests of private sector
interests, but is in fact intrinsic to them. The private sector interests
doubly benefit because not only do they get a safer investment environment,
but those to be exploited are the ones who get to pay for it.

This is illuminated by Hudson in his reference to the post-WW2 debates
within the US involving laissez faire ideologues like Jacob Viner, who
opposed "state intervention" in principle, but who could countenance an
internationally interventionist US state on the assumption that it would be
acting to ensure that other states followed laissez faire policies. This was
exactly the sort of rationalisation employed by the likes of William Simon
and Arthur Burns 30 years later when dictating terms to the Callaghan
government in Britain. According to Burns the British government was
"profligate", quite unlike that of the US (obviously!). Of course Hudson
blows that myth clean away. Nevertheless, the power of the "American"
ideology is acute in this respect, given the self-endowed mission that
successive generations of sincere, well-meaning racist imperialists have
sought to impose upon the rest of the world in the name of "freedom",
conceptualised, conveniently enough, in accordance with the interests of US
private capital. And the beauty of a "globalised " world in which finance
capital is freer to roam than ever before is that most of it gravitates
towards the metropolis, and in particular the heart of the metropolis, i.e.,
the US, whose global regulatory powers are thereby enhanced further as
larger proportions of capital dispersed throughout the world seek to enjoy
the same "advantages" as their competitors in the US. Thus national and
regional regulatory frameworks are altered or simply dispensed with in
favour of locally applied US analogues.

John goes on the highlight points which find echoes in the writings of other
contemporary commentators like Chalmers Johnson, whose "Blowback" thesis
includes the point, reiterated by Hudson, that US Cold War policies included
the building up of eventual economic rivals which contributed to the
hollowing out of US manufacturing alongside those of US finance capital.

While there is much more to comment on, and hopefully others will step in to
contribute on this, there is a small inaccuracy I would like to correct.

According to Hudson, US entry into the First World War was opposed by
Republican intellectuals with a closer affinity to Germany as a rising
industrial power eager to supplant the pre-eminent Britain, rather than with
a pre-eminent Britain looking to maintain its global hegemony. Whatever
"Republican intellectuals" (p. 3) that might have taken this position
(Robert LaFollette might be more accurately characterised in this way)
Thorstein Veblen and Charles Beard most certainly did not. Beard supported
US entry into the war on the grounds that it would pave the way for the
downfall of the Hohenzollern monarchy and therefore bring about the rise of
a workers' republic in Germany. Beard himself later recognised the
misguidedness of this early form of "humanitarian intervention" (for more
details see Clyde W. Barrow, "More than a Historian: The Political and
Economic Thought of Charles A. Beard" (Transaction Publishers, 2000).
Meanwhile Veblen, contrary to Hamiltonian protectionists concerned to
support US economic development behind tariff walls, was an advocate of free
trade inasmuch as it defused the threat of inter-imperialist war (not unlike
Viner's position 25 years later) with the proviso that the US was just as
prone to warmongering as any other "predatory, dynastic state".
Additionally, Veblen took up a position within the Wilson administration, in
the Food Administration, in February 1918 until the end of the war, advising
on food prices. He had already published "Imperial Germany and the
Industrial Revolution" in 1915, where he analysed German economic and
political development as leading inexorably to a militaristic conclusion. It
should be remembered also that this was published at a time when there was
no indication of US entry into the war -- Wilson had yet to win the 1916
election on the slogan, "He kept us out of war". Thus Veblen's analysis was
dispassionate, in contrast to other progressive intellectuals' agitation for
US entry -- another notable alongside Beard was John Dewey, who also lived
to regret his enthusiasm for war, despite deploring the German state
ideology which elevated the state to the highest expression of human
achievement. Both Beard and Dewey opposed US intervention in WW2 as a result
of having felt duped the first time around.

Thanks to John for getting the discussion started.

Michael Keaney

 

 

----- Original Message -----

From: jenyang

To: a-list@lists.econ.utah.edu

Sent: Tuesday, June 03, 2003 10:31 AM

Subject: Re: [A-List] Michael Hudson: Super imperialism

 

On Mon, 2 Jun 2003, Michael Keaney wrote:
>
> John goes on the highlight points which find echoes in the writings of other
> contemporary commentators like Chalmers Johnson, whose "Blowback" thesis
> includes the point, reiterated by Hudson, that US Cold War policies included
> the building up of eventual economic rivals which contributed to the
> hollowing out of US manufacturing alongside those of US finance capital.
>

Michael,
My understanding is that Chalmers Johnson's "blowback" thesis revolves
around critique of particular matters of policy and what Johnson regards
as bad or wrong decisions by various U.S. administrations.

The contradictions highlighted by Hudson and Brenner on the other hand
seem to me to refer to somewhat deeper and more fundamental processes.
Here's a crude summary of my own.

In as much as the second world war gave the U.S. economy a huge boost and
was the main factor in overcoming the depression of the 1930's, the end of
the war threatened if not a return to the depression and social strife
round the world, then at least greatly reduced for U.S. capital at home
and abroad:

     One aim common to all groups in the United States was to avoid a
     postwar depression caused by a reduction in public spending. The
     consensus in 1945 was that 60 million jobs were needed for full
     employment. In the absence of effective demand sufficient to create
     these jobs, and of finaces to underwrite their related corporate
     investment, a leftward shift might occur in American politics. This
     explains the national interest in full employment, despite its
     effects on unit labour costs and competitive pricing of U.S.
     products.

     It was agreed that American access to foreign markets was a
     precondition for full employment in the United States. The most
     obvious market was devastated Europe in its reconstruction phase.
     (Hudson, p142)

So while America would depend on its exports to European and Asian states
to avoid another prolonged slump, Europe and Asia were in no condition to
finance these exports on their own (and were threatening to go red
besides). The only solution available to American policy makers at the
time was to finance simultaneously the reconstruction of Asian and
European capitalism and the prosperity of the domestic U.S. economy
through dollar loans to these nations, which (unlike the inter ally war
debts from WWI) were to be repaid by exports of European and Japanese
manufactures to the U.S.

Along with the stimulus provided by military Keynsianism (the Korean war
provided a big boost to Japanese industry in particular), this U.S. policy
of "enlightened imperialism" towards Europe and Japan, was largely
responsible for the long expansion that lasted to the mid 1960's. However,
the very conditions which made for the success of this strategy created
the foundations for the stagnation of capitalism in the 1970's and 1980's:

    U.S. multinational corporations and international bank, aiming to
    expand overseas, needed profitable outlets for their foreign direct
    investment. Domestically based manufacturers, needing to increase
    exports, required fast-growing overseas demand for their goods. An
    imperial U.S. state, bent on "containing communism" and keeping the
    world safe for free enterprise, sought economic success for its allies
    and competitors as the foundation for the political consolidation of
    the post-war capitalist order . . . All these forces thus depended
    upon the economic dynamism of Europe and Japan for the realisation of
    their own goals. (Brenner, The Boom and the Bubble pp 14-15).


In Brenner's words, up to the 1960's, uneven development (his term for the
process where laggards in capitalist development seek to and eventually
succeed in catching up with the economic leaders) provided "a symbiosis,
if a highly conflictual one, of leader and followers, . . .  of hegemon
and hegemonised." (Brenner p. 15).

This positive sum game turned into a zero or even negative sum game as
soon as the laggards Germany and Japan overtook the leader in the key
non-military industries (Arrighi, New Left Review Apr-May 03). The very
success of U.S. post-war strategy in other words, presaged increased
competition and reduced rates of profitability not only for American
capitalism (which ended being hollowed out in the 1980's) but also for
its European and Asian competitors begining around 1968. Coincidentally or
not, this period also marked the begining of the transition from the U.S.
"enlightened imperialism" to the more brazen and parasitic forms that
begun to take form with Nixon's abandonment of the gold standard and his
imposition of the treasury bill standard on U.S. competitors/allies.

One might would say the U.S. enlightened imperialism could only end up
hoised on the petard of its own success.

Anyway, the difference with the "blowback" thesis of Johnson is that the
U.S. could well have chosen not to fund the Hekmatyar and bin Ladens in
the 1980's. The decision eventually taken to fund these groups reflected
in otherwords, a policy choice (albeit one that had unintended and mixed
consequences) rather than an imperative forced on the U.S. government and
capital by objective conditions. On the other hand, the juncture in 1945
threatened a return to a global economic slump with unknown consequences
for the future of capitalism, virtually forcing upon the U.S. the adoption
of some form of "enlightened imperialism" towards Europe and Japan (as
Hudson notes).

Incidentally, my apologies for typos and strange syntax which appear too
often in my posts. Part (not all) of the problem is that i have to use
here a UNIX based text editor -- adequate for programming or mathematical
typesetting but not much else.

J.Enyang

 

 

----- Original Message -----

From: Michael Keaney

To: a-list@lists.econ.utah.edu

Sent: Tuesday, June 03, 2003 4:38 PM

Subject: Re: [A-List] Michael Hudson: Super imperialism

 

John writes:

My understanding is that Chalmers Johnson's "blowback" thesis revolves
around critique of particular matters of policy and what Johnson regards
as bad or wrong decisions by various U.S. administrations.

The contradictions highlighted by Hudson and Brenner on the other hand
seem to me to refer to somewhat deeper and more fundamental processes.

------

That's my reading of Johnson, John, and precisely why his very good
empirical analysis needs the sort of theoretical framework that is capable
of handling the deeper and more fundamental processes that are the subject
of "Super Imperialism".

You continue:

Anyway, the difference with the "blowback" thesis of Johnson is that the
U.S. could well have chosen not to fund the Hekmatyar and bin Ladens in
the 1980's. The decision eventually taken to fund these groups reflected
in otherwords, a policy choice (albeit one that had unintended and mixed
consequences) rather than an imperative forced on the U.S. government and
capital by objective conditions. On the other hand, the juncture in 1945
threatened a return to a global economic slump with unknown consequences
for the future of capitalism, virtually forcing upon the U.S. the adoption
of some form of "enlightened imperialism" towards Europe and Japan (as
Hudson notes).

------

Hudson himself notes that the construction of the military-industrial
complex during the 1950s, while useful as a means of consolidating and
building on the US economic lead, had the unintended consequence of creating
a monster that required incessant feeding and was, as Hudson puts it,
responsible for the US balance of payments deficit that enables the US to
exercise economic leverage over all other countries unfortunate enough to
have been "integrated into the global economy", as Stanley Fischer so
neutrally puts it.

"The United States, the only nation capable of financing a worldwide
military program, began to sink into the mire that had bankrupted every
European power that experimented with colonialism. America's Cold War
strategists failed to perceive that whereas private investment tends to be
flexible in cutting its losses, being committed to relatively autonomous
projects on the basis of securing a satisfactory rate of return year after
year, this is not the case with government spending programs, especially in
the case of national security programs that create vested interests. Such
programs are by no means as readily reversible as those of private industry,
for military spending abroad, once initiated, tends to take on a momentum of
its own. The government cannot simply say that national security programs
have become economically disadvantageous and therefore must be curtailed.
That would imply they were pursued in the first place only because they were
economically remunerative -- something involving the sacrifice of human
lives for the narrow motives of economic gain, even if national gain. What
began as pretense became a new reality." (Hudson, p. 14)

In a way this is a variant of the blowback thesis, in that certain decisions
have unintended consequences which blow back on those who originated the
decision. But the above, like Johnson, is focused on the state as an
autonomous actor rather than as a semi-autonomous agent of key elements of
private capital. If Hudson is correct, then the funding of the anti-Soviet
Afghan opposition was simply foreign policy. However, if a more conventional
Marxist explanation is correct, then it is incumbent upon those proferring
such an explanation to identify the economic reasons for that funding.

Michael Keaney

 

 

 

----- Original Message -----

From: jenyang

To: a-list@lists.econ.utah.edu

Sent: Saturday, June 07, 2003 2:19 PM

Subject: Re: [A-List] Michael Hudson: Super imperialism

 

Michael,

As I said before, I feel that Michael H. in Superimperialism gave too much
weight to the state as an autonomous actor. For example, in the passage
you cite above, the contrast between the "flexibility of business in
cutting its losses, being committed to . . . . projects on the basis of of
securing a satisfactory rate of return year after year" with the
inflexible government spending programs, especially military related ones,
which, "once initiated take on  a momentum of their own" is correct, but
in my view, understates the extent to which these government spending
programs have been relied upon by both the government and private capital
to insulate the U.S. economy from the traditional business cycle -- that
is to help secure for capital a "satisfactory rate of return year after
year." Indeed, seen this way, point of view of most sectors of capital,
the very "inflexibility" of the the state subsided military programs are
regarded as positive boon.

In any event, empirical evidence would seem to support the case that a
military keynsianism (unlike universal health insurance, say) and the
pursuit by the state of full spectrum dominance etc over potential rivals
and the semi-colonial countries are something that all sectors of U.S.
capital -- not just the immediate beneficiaries, like military contractors
-- are agreed upon. (When did we last hear personifications of capital
demanding austerity at the department of defence?)

Of the U.S. efforts to undermine and destroy attempts by third world or
other states to delink from the U.S. centred global economy, we can say
they express more than policy -- rather they reflect the fact that that
economic development in the south must be directed, not towards domestic
needs but towards the those of of northern capital accumulation (something
for which Michael H. provides ample evidence). In this sense, the U.S.
efforts to destroy states like Afghanistan, and the Soviet Union (along
with the associated military buildups) are the result of deeply entrenched
tendencies within capitalism -- not of crude dollar and cents calculations
by bureaucrats and corporations (which would be more of a caricature than
an explanation).

But, without questioning the objective of destroying the PDPA or turning
Afghanistan into a "failed state," it would have been possible in theory
for the U.S. policy makers to have chosen a different means to the end
from the one they eventually settled on (see for example the article
posted by James Daly on Soros' activities in Eastern Europe). Seen in this
way, the funding of the Mujahedin came down to policy.

J.Enyang

 

 

----- Original Message -----

From: Michael Keaney

To: a-list@lists.econ.utah.edu

Sent: Wednesday, June 04, 2003 12:35 PM

Subject: Re: [A-List] Michael Hudson: Super imperialism

 

I wrote:

If Hudson is correct, then the funding of the anti-Soviet
Afghan opposition was simply foreign policy. However, if a more conventional
Marxist explanation is correct, then it is incumbent upon those proferring
such an explanation to identify the economic reasons for that funding.

-----

I was called away before I could get to the punchline, although I was hoping
someone else might add their own.

While there are always tendencies within states for policies and agendas to
develop autonomously, i.e., independently of any specific capital fraction's
programme, there are constraints beyond which such developments are
structurally unsustainable. A good example of this would be Jacques Delors'
efforts to institutionalise social democracy within the European Commission
and thereby the EU state apparatus. This failed because there was no social
base capable of supporting such an effort, given that most labour
aristocracies were (and still are) firmly embedded within national
structures/mindsets and, in the case of Britain, still wedded to an
antiquated social chauvinism that wilfully refuses to recognise the reality
of US imperialism as the key influence on a Britain nominally independent
(of Europe, as the "debate" is crassly framed in the UK by key British
opinion-formers like Rupert Murdoch and Conrad Black). Similarly, Gerhard
Schröder's failure to construct a more robust defence of German independence
against neo-liberalism is as much a reflection of the failure of the German
left to exert sufficient pressure to enable the opportunist Schröder to take
a more progressive nationalist line. Instead he has begun, finally, to
capitulate to the demands of the formidable forces arrayed against him, and
which will hound him out of office very likely within the next year.

Re US imperialism and the quasi-autonomy of the state, can the US state
follow policies indefinitely without the support of key fractions of US
capital? This is the implication of Hudson's argument and it is one that I
have difficulty supporting. Sure there is a gigantic military-industrial
complex that must be fed, and, more generally, an ever greater behemoth
state apparatus; but that behemoth feeds what Hudson correctly calls (in
Veblenian fashion) "vested interests" but which are mostly private. The
military itself is an exception, although the revolving door between the
Pentagon and the private sector is another factor that should be considered.
As is an aspect of privatisation highlighted by Chalmers Johnson in
"Blowback", where he discusses the increasing use of private security
contractors by the Pentagon in the name of circumventing Freedom of
Information legislation thereby enabling greater secrecy of operations in
the name of commercial confidentiality, and representing the further
expansion of the sphere of capital.

Capitalist fractions, with a few minor exceptions, could be expected to
support a general opposition to social systems predicated on the eradication
of capitalist social relations, like the Soviet one. Supporting the Afghan
rebels was a part of that policy, and promised to roll back Soviet influence
whilst opening up a new frontier of capitalist expansion. The US state was
the instrument of this and under the guise of "national security"
quasi-autonomously developed the strategies geared to achieving this end --
but if sufficiently influential fractions of capital had been able to profit
from dealing with the Soviet Union, how long would such a policy have
lasted? Sure, the American ideology is important and is another aspect of
the superstructure developing a life of its own, within constraints. But
sooner or later these constraints assert themselves and, at bottom, we are
back to the interests of capital.

So far, in reading this very interesting and informative book, I concur with
Hudson's indictment of the US as imperialist and applaud his analysis of the
financial means by which its hegemony has evolved over the last century;
however, the Weberian approach of Leonard Seabrooke is nearer the truth in
its identification of the simultaneously cooperative and competitive
relationship of Washington and Wall Street. However, Seabrooke gets plenty
else wrong and is useful largely for empirical data rather than
theoretically-grounded exposition.

Michael Keaney

 

 

 

----- Original Message -----

From: James Daly

To: a-list@lists.econ.utah.edu

Sent: Wednesday, June 04, 2003 2:25 PM

Subject: Re: [A-List] Michael Hudson: Super imperialism

 

Thanks to Michael, Sabri and John for what promises to be a very
important seminar. Could I ask a novice's question? Many sources seem
to have taken up the theme of euro-dollar rivalry as alternative
oil-currencies as a reason for the invasion of Iraq. Some of them
seemed to be alluding to Michael Hudson's thesis. It does seem to
promise an explanation for the staggering difference between the US's
attitude to its own debt and to that of other states. What is the
standing of Michael's thesis among bourgeois academic economists? John
points out that Wallerstein's position is radically different -- are
there many left intellectuals who agree with Hudson? Has he made much
headway among political journalists?

I am a non-economist, but have a philosophical background, so I was
interested when Michael wrote (he later added to it) "If Hudson is
correct, then the funding of the anti-Soviet Afghan opposition was
simply foreign policy. However, if a more conventional Marxist
explanation is correct, then it is incumbent upon those proferring
such an explanation to identify the economic reasons for that
funding".

I thought that philosophically the ("conventional") interpretation of
Marxism as economic (or as technological) determinism with a base/
superstructure forces/ relations paradigm was totally outdated, its
last gasp being Gerry Cohen (* Karl Marx's Theory of History: a
Defence *), who received the coup de grace from Derek Sayer (* The
Violence of Abstraction *). I thought Marxists had long (for as much
as three decades) felt free to say unproblematically that the US was
not in Vietnam for economic reasons, as the French rubber planters
were originally, but for the defence of the capitalist system and the
defeat of communism in the region -- and ultimately globally (losing
the battle, but eventually winning the "war"). Does the first dualism
need to be replaced with a second -- Economy and State? Isn't
imperialism inextricably politicoeconomic/ military?

Michael's additional paragraphs seem to be making the point of the
mutual interdependence of state and economy, but does he think talk of
"the simultaneously cooperative and competitive relationship of
Washington and Wall Street" poses a problem for Marxism?

James Daly

 

 

 

----- Original Message -----

From: James Daly

To: a-list@lists.econ.utah.edu

Sent: Wednesday, June 04, 2003 2:40 PM

Subject: Re: [A-List] Michael Hudson: Super imperialism

 

Make that sociopoliticoeconomic/ military (!) -- JD

----- Original Message -----
From: "James Daly" <james.irldaly@ntlworld.com>

 

 

 

----- Original Message -----

From: Michael Keaney

To: a-list@lists.econ.utah.edu

Sent: Wednesday, June 04, 2003 3:29 PM

Subject: Re: [A-List] Michael Hudson: Super imperialism

 

James writes:

Michael's additional paragraphs seem to be making the point of the mutual
interdependence of state and economy, but does he think talk of "the
simultaneously cooperative and competitive relationship of Washington and
Wall Street" poses a problem for Marxism?

------

I don't think so, because the state itself is a product of the
contradictions of capitalism, having to legislate between competing capitals
whilst ensuring the maintenance of a capitalist hegemonic order over the
working class (to use the basic Marxist class demarcation). It gets more
complicated when, as many began to during the 1970s, you incorporate new
classes or social strata, usually filed under "petty bourgeoisie". My main
influence here is Nicos Poulantzas's "Classes in Contemporary Capitalism",
published in English in 1975, so probably a little out of date but
nevertheless exemplary in approach (imho).

With respect to Wall Street, right now we are seeing in graphic terms the
simultaneously competitive/cooperative relationship between Wall St and
Washington, as the former tries to atone for the drastic loss of legitimacy
and credibility resulting from the excesses of the 1990s, where investors
were evidently ripped off in a gigantic, systemic scam. The capitalists need
their legitimation and that of the system as a whole restored in order to
function as capitalists, hence the general, sudden acceptance of the "need"
for regulation, a sharp about-turn following the triumph of Phil Gramm et al
in their repeal of the Glass-Steagall Act as late as 1999, for example. Of
course Sarbanes-Oxley went too far for some, but such was the damage done to
the credibility of the system as a whole that, in the competition between
state and capital, the state had the upper hand simply because capital had
so disgraced itself. But in "having the upper hand" that meant that the
state's efforts to legislate for capital, in keeping with its dual role as a
facilitator and legitimator of accumulation, prevailed over the strong
desire of capital for unfettered accumulation. It does not mean that the
state was, in the fashion of Weberian-style theorists of civil society,
acting as a neutral or even anti-capitalist arbiter of the law. The state
was saving the system, not junking it.

This accords with my general view of state-capital relations, that usually
the state's interventions are the result of failed strategies on the part of
capital. Hudson argues implicitly and explicitly (with respect to theories
of imperialism) that the US state operates with a far greater degree of
autonomy than I would have considered likely prior to reading his book.
Which is to say that I may yet be convinced by the argument of the book and
the resultant discussion here on the list, but for now I remain more
convinced about the state's ultimately subordinate role to the prerogatives
of capital. Fusing the two, as Hudson does, as part of a theory of a "new
kind of state capitalism/imperialism" is unsatisfactory because it elevates
the state to a status typical of the mistaken (in my view) classical liberal
dichotomy of state versus capital/civil society, a view peddled over the
years by the likes of Herbert Spencer, William Graham Sumner, Friedrich von
Hayek and more recently the legion of advisers/apologists for the looting
and destruction that has accompanied the demise of the Soviet bloc. There
you get the deeply ironic spectacle of Vaclav Havel doing all that he can to
dismantle state power only to replace a local monolith with a much greater,
global one, via his enthusiastic integration of the Czech Republic into all
the anti-Warsaw Pact institutions that are now part of the architecture of
the "Super Imperialism" that Hudson exposes in his book. And while Hudson is
himself correct to point out the overweening nature of US state power, I
would argue that this power is itself *ultimately* subservient to the
dictates of US capital, which relies on that power to achieve those ends
otherwise unachievable (e.g. Haim Saban's efforts to break into the German
television market with the help of the US State Dept). I have been careful
to qualify this view by agreeing that states do possess a degree of
autonomy -- but this is subject to ever changing constraints which reassert
themselves, sometimes violently, when, to use another old metaphor, the
superstructure becomes too disconnected from the base. Hudson, on the other
hand, appears to share with the classical liberal alarmists the view that it
is the state, ultimately, which is the enemy of liberty, and that, together
with capital, we ought to unite against it. Throughout my reading of this
book so far I've thought over and over just how much in common the book's
arguments have with the sort of position represented here by Anne W.,
because it is the state that has been elevated to the status of chief bogey,
rather than the system itself that Marxists believe is responsible
ultimately for the state's purpose and function.

Michael Keaney

 

 

 

----- Original Message -----

From: Hudsonmi@aol.com

To: a-list@lists.econ.utah.edu

Sent: Wednesday, June 04, 2003 3:36 PM

Subject: Re: [A-List] Michael Hudson: Super imperialism

 

Dear discussants,
I am grateful for your discussion, partly because it shows how I might have made my points clearer.
I should make it clear at the outset that I believe that the old private-enterprise imperialism is alive and kicking. It never went away. When I emphasized the imperialism of inter-governmental capital my point was to show that QUANTITATIVELY, this new QUALITATIVE form of U.S. exploitation is even larger, as measured statistically in dollar terms, than the more familiar corporate imperialism.
I also am glad to agree that the private-sector imperialism does indeed underdevelop its victims. When I spoke about the "old" Hobson-Lenin imperialism being well understood, I was referring to the theory of imperialism as it stood prior to World War I. Marx himself, in his (1846?) speech to the Chartists, said that he believed that free trade at least would break down the barriers that kept precapitalist economies in rural idiocy. The initial idea was that foreign investment would replicate industrial capitalism abroad, not create a new, hybrid kind of "combined development" that would warp "capital recipients."
So I don't really see any argument with the points being made so far on this list. There is indeed a symbiosis, which has grown stronger rather than weaker between the government and the leading corporations, especially now that they have used campaign contributions to gain control of the electoral process. The Cheney-Halliburton and Bush-Enron connections are only the most recent glaring examples. ITT in Chile and other examples could be added.
What I tried to do in Super Imperialism was to trace America's exploitation via the dollar standard as a distinct line of development, not claim that it had replaced private-enterprise imperialism.
By the way, the Republican intellectuals I referred to as opposing US entry into World War I and who emphasized the German approach to economics were headed by the protectionist Simon Patten at the Wharton School in Philadelphia. He was soon isolated there, along with his student Scott Nearing. (I describe this trend in my 1976 book on Economics and Technology in 19th-century American Thought: The Neglected American Economists.)
Regarding the query by James Daly about whether my ideas are accepted in the mainstream, I can only say that they WERE accepted on Wall Street. Immediately as a result of Super-Imperialism I became the highest-priced economist of the 1970s, going from $3,500 to $6,500 per day over a two-year period, and being hired by Herman Kahn at the Hudson Institute specifically to explain to the government just how monetary imperialism worked and just how America was getting a free ride. I was brought to the White House for discussions with the Treasury, to the military college in Pennsylvania, and had many meetings with major CEOs. I was hired by the Canadian Government to advise it on how to extricate it from the system, and published Canada in the New Monetary Order in 1978. I then became chief economic consultant for UNITAR, advisor to a number of governments. So from that point of view the thesis was accepted.
The left was another matter - at least if you consider people like Robert Heilbroner to be the left simply because he proclaimed himself to be a Marxist. He forbade me to discuss debt cancellation or financial issues or rent theory in the curriculum, saying that this was "confusing" students at the Graduate Faculty of the New School for Social Research, into thinking that there was "more than one kind of exploitation." I left the New School in 1972, just before Super Imperialism was published, when some friends of mine at Drexel Burnham introduced me to Herman Kahn and suggested to both of us that I should go to work there.
The Monthly Review crowd also never really accepted my approach, and most of the left ignored my writings. However, the Russians quoted the book quite widely, in almost every report on international finance, and I was the first American invited down to Granada after its revolution.  A former KGB visited me in 1992 and said that he was indeed sorry that Stalin had killed Trotsky and not behaved very well to my father and me, and invited me back for an annual speech before the Duma, which we dubbed the "Leon Trotsky memorial speech" on how Russia might stay free of World Bank-IMF pressures. (Obviously, not successfully.) On one occasion I brought my colleague Ramsey Clark along.
Regarding the euro-dollar rivalry, this is difficult without a euro-denominated VEHICLE to exist, in the form of budget deficits - which are blocked by the essentially monetarist character of the Euro, which cripples it a priori from rivaling the dollar. I have recently published my critique of this in "The Cartalist/Monetarist Debate in Historical Perspective," in Edward Nell and Stephanie Bell eds., The State, The Market and The Euro (Edward Elgar, 2003).

Michael Hudson

 

 

----- Original Message -----

From: jenyang

To: a-list@lists.econ.utah.edu

Sent: Saturday, June 07, 2003 2:19 PM

Subject: Re: [A-List] Michael Hudson: Super imperialism

 

Michael,

As I said before, I feel that Michael H. in Superimperialism gave too much
weight to the state as an autonomous actor. For example, in the passage
you cite above, the contrast between the "flexibility of business in
cutting its losses, being committed to . . . . projects on the basis of of
securing a satisfactory rate of return year after year" with the
inflexible government spending programs, especially military related ones,
which, "once initiated take on  a momentum of their own" is correct, but
in my view, understates the extent to which these government spending
programs have been relied upon by both the government and private capital
to insulate the U.S. economy from the traditional business cycle -- that
is to help secure for capital a "satisfactory rate of return year after
year." Indeed, seen this way, point of view of most sectors of capital,
the very "inflexibility" of the the state subsided military programs are
regarded as positive boon.

In any event, empirical evidence would seem to support the case that a
military keynsianism (unlike universal health insurance, say) and the
pursuit by the state of full spectrum dominance etc over potential rivals
and the semi-colonial countries are something that all sectors of U.S.
capital -- not just the immediate beneficiaries, like military contractors
-- are agreed upon. (When did we last hear personifications of capital
demanding austerity at the department of defence?)

Of the U.S. efforts to undermine and destroy attempts by third world or
other states to delink from the U.S. centred global economy, we can say
they express more than policy -- rather they reflect the fact that that
economic development in the south must be directed, not towards domestic
needs but towards the those of of northern capital accumulation (something
for which Michael H. provides ample evidence). In this sense, the U.S.
efforts to destroy states like Afghanistan, and the Soviet Union (along
with the associated military buildups) are the result of deeply entrenched
tendencies within capitalism -- not of crude dollar and cents calculations
by bureaucrats and corporations (which would be more of a caricature than
an explanation).

But, without questioning the objective of destroying the PDPA or turning
Afghanistan into a "failed state," it would have been possible in theory
for the U.S. policy makers to have chosen a different means to the end
from the one they eventually settled on (see for example the article
posted by James Daly on Soros' activities in Eastern Europe). Seen in this
way, the funding of the Mujahedin came down to policy.

J.Enyang

 

 

----- Original Message -----

From: enyang@math.uic.edu

To: a-list@lists.econ.utah.edu

Sent: Friday, June 13, 2003 5:58 AM

Subject: Re: [A-List] Michael Hudson: Super imperialism

 

Dear All,
Sorry this is running behind schedule.
John Enyang

****************

Michael Hudson's chapter on the origins of intergovernmental debt traces the
rise of the U.S. Treasury as the dominant force in international finance in
the aftermath of the First World War and examines the ways in which the U.S.
Treasury used thus newly acquired financial leverage to the detriment of its
former partners in war.

The origins of U.S. financial claims against the European Allies are traced by
Michael Hudson to the depletion of the financial resources of the European
allies by the war effort,  a financial diminution which became increasingly
serious immediately before the U.S. became a partner to Britain and France in
1917. Prior to the U.S entry to the war, Europe had financed its purchases
arms from U.S. suppliers through  government obligations held by private U.S.
lenders and by liquidating the American holdings of European investors. But
by1917, Europe could barely continue to pay for further purchases of American
arms in cash, or to provide the collateral to secure further commercial loans
from American banks (p.40).  Indeed, the U.S. was finally forced to became an
active belligerent in the European war when it became apparent that by staying
out longer, "the U.S. risked a possible financial collapse as American bankers
and exporters found themselves holding uncollectible loans to Britain and its
allies" (p.2).

When the U.S. did declare war on Germany, one of the first acts of Congress
was to provide European allies with USD 3 billion in government funds allowing
them to finance further purchases of U.S. arms. It being nearly a full year
before the American forces would be ready to be deployed on French
battlefields,  these loans, one Treasury bulletin reasoned "were being made to
the Allies to enable them to do the fighting which otherwise the American army
would have to do at much expense, not only of men, but of money - money that
would never be returned to America, and lives that could never be restored."
(p.40).

Where earlier wars, like the U.S. war of independence, supported by France,
had hitherto been conducted on a subsidy basis, there were initially mixed
signals sent to the European Allies and to France in particular, about the
obligations they would be entering into in accepting material support from the
United States. U.S. politicians made references to support that France had
provided the American colonies in their war against the British and couched
the U.S. support for the French in terms of repayment for the earlier French
support. Where President Wilson stated in address to Congress in 1917, "We
have no selfish ends to serve, we desire no conquest, no dominion, we seek no
indemnities for ourselves, no material compensation for the sacrifices we
shall freely make," (p. 52)  U.S. Government representatives initially
suggested that their European partners need "not to worry about the conditions
of repayment, which would be settled after victory was won, implicitly on
nominal terms" (p. 43). The U.S. "also encouraged France to carry out its arms
financing through U.S. Government channels, implying that this support would
ultimately be equivalent to a gift" (p. 43).

To the extent that the European war had created new outlets for American
industrial and farm produce, not just its armaments, victory and the end of
the war left Europe neither willing nor able to buy American agricultural
produce at their previous inflated wartime prices and created a potential
crisis for U.S producers. Faced with a potential collapse in prices and
demand, the U.S. government which "was already scrapping thousands of
automobiles and motor trucks in order not to bring the automobile industry
into ruin," provided Europe with a further series of post-armistice "relief
and reconstruction" loans, thereby allowing it to continue to function as an
outlet for U.S. producers, saving them from the looming crisis: "Our
manufacturers have enormous stocks . . . in hand ready for delivery. While we
can protect our assurances given producers in many commodities, the most acute
situation is in products which are perishable and must be exported . . . If
there should be no remedy to this situation we shall have a debacle in the
American markets and with the advances of several hundred million dollars now
outstanding from the banks to the the pork industry, we shall not only be
precipitated into a financial crisis but shall betray the American farmer who
has engaged himself to these ends. The surplus is so large that there can be
no absorption of it in the United States, and, being perishable, it shall go
to waste" (U.S. food administration to President Wilson, p. 45.)

In the years immediately following war, the European allies found themselves
in hock to the U.S. Government whose claims included arms debts to the tune of
some USD 28 billion. The claims against the Allies had their mirror image in
the German reparations which stood at USD 60 billion in 1923 (p. 40).  These
debts "were to finance the war's destruction of resources, not their creation"
and had "no counterpart in productive resources or in visibly expanding taxing
capacity". Unlike "private investments, [the intergovernmental claims] were
not secured by productive assets as collateral, nor was their size at all
related to the the Allies' or Germany's ability to pay out of current national
income and foreign trade". (p. 40). As Hudson shows, the unprecedented scale
of the support the U.S. provided its partners during and immediately following
the war, and the manner in which the U.S. would come to treat these claims,
effectively using them as financial leverage against the European states,
would become a defining feature of the inter-war years.

By making a distinction between itself as an Associate "without territorial or
colonialist ambitions" on the one hand, and the European Allies on the other, 
the U.S. was able in first instance to justify providing support to its
European parters in war on the basis of loans rather than of subsidies. In the
second instance this distinction would leave the door open to the U.S.
Government's subsequent shift from the earlier ambiguous statements made about
the nature of the financial support the Europeans would be receive when the
U.S. first entered the war, to the later uncompromising demands for full
repayment which U.S. would present European negotiators after the end of the
war. Foreign Affairs expressed the connection between the U.S. status as an
Associate rather than a full Ally and the decision to provide Europe with
loans rather than subsidies in these terms: "If her loans had had a relation
to subsidy, she would naturally have been interested in the apportionment of
the spoils of victory,  it is of the essence of subsidy that the subsidiser
shall be the principal artificer of the rearrangement . . . . America's
interest in the war was to secure her sovereign position from an aggressor,
and these secured, the apportionment of the spoils became a matter for the
Allies to settle, while the United States negotiated a separate treaty of
peace with Germany. The Treaty of Berlin is the final evidence of the lack of
alliance of the United States with her former associates in war". (p.44).

By 1921, U.S. policy on its claims against Europe had hardened to the point
where Congress, in setting down terms of reference for the Foreign War Debt
Commission, made two stipulation: "first that debts should be refunded with
twenty-five years and that 4.5 per cent should be the lowest limit of the rate
of interest; and secondly . . . that no connection with any debts arising out
of the war could possibly be created by the agreements which were to be
concluded between America and her debtors" (p. 47). The latter clauses were
designed to reject the implication that the onerous demands for reparations
made on Germany by the European allies were themselves a reflection of the
U.S. claims against the allies. Further, President Wilson treated the Anglo-
French suggestions that the U.S. claims against Europe be forgiven
as "amounting to a proposal that the United States surrender its claims in
order that their net collection from Germany might be greater" (p. 47). In a
letter to the British Prime Minister, Wilson declared that "The United States
fails to perceive the logic in a suggestion in effect either that the United
States shall pay part of Germany's reparations or that it shall make a
gratuity to the Allied Governments to induce them to fix such obligations at
an amount within Germany's capacity to pay" (p. 47).

While adopting a hardline towards the debts owed by its former European
partners in war, the U.S. simultaneously denied Europe the opportunity to meet
the claims against them by opening its domestic markets to their exports.
Rather, it raised protective tariffs against European exports, when American
economists all along upbraided the Allies for their refusal to enable Germany
to make its reparations payments by exporting products to the allied powers
(p. 48).  The end result of these seemingly contradictory U.S. policies was
that "Germany was bled white after all, because European Allies fixed its
reparations at far above the sum that it could conceivably pay" (p. 49).

The British economists Keynes correctly foresaw the eventual outcome of U.S.
handling of its claims against the European Allies: "The debt system is
fragile and it has only survived because this burden is represented by real
assets and is bound up with the property system generally, and because the
sums already lent are not unduly large in relation to those which it is still
hoped to borrow" (p. 44). Keynes saw that neither Germany nor the Allied
powers would meet their obligations out of their current output and incomes
and the result "would be a breakdown of world investment and trade" and "a new
era of world hostility aggravated by defaults on international investments,
specifically on intergovernmental claims" (p. 44).

According to Hudson, besides the destabilisation of the hitherto European and
British centred world economy, the most significant outcome of U.S. policy
toward Europe was the supplanting in the international arena of private
capital  by governmental capital. Hudson makes the case that private finance 
capital which was the driving force behind the "old" forms of European
imperialism and its national rivalries as analysed by Lenin and Hobson, was
effectively crowded out by the massive growth of U.S. Government finance in
the form of Inter-Ally War Debt. "The emergence of the United States as the
overwhelming wold creditor was at its very origin a governmental function. It
was not the product of private investment abroad of surpluses earned through
foreign trade, nor the result of the self-expansion of private overseas
investment through reemployment in foreign ventures of earnings and internally
generated cash flow." Though such reinvestment did occur, it remained "small
in comparison with the advances made by the U.S. Government during the war to
its allies and, after the war, for relief and reconstruction" (p. 53). In the
classical form of European imperialism, "governments either seized territory
[in underdeveloped areas rich in natural resources] to secure the expansion of
private interests of their nationals . . . . and to exclude the capitalists of
other nations from them, or entered into special agreements with the rulers of
such areas to produce identical results" actions by the state could be seen as
an expression of the goals of private capital. On the other hand, the "great
surge of U.S. investments overseas was by government, not private investors"
(p. 53) and "private industrial and financial interests in the United States
would have been best served by government non-intervention in the European war
and in European reconstruction" since an "exhausted Europe, prostrated by an
indefinitely prolonged war, would have exposed the whole continent to
domination by U.S. finance capital, whose resources would have been generated
in part by continued sales of arms on a commercial basis to the belligerents."
Hudson therefore regards the intervention of the U.S. Government in the war as
a positive hindrance to the potential expansion of U.S. private capital, where
government inaction would have greatly enlarged the areas open to private U.S.
finance capital, both in Europe and the colonial areas.

Furthermore, U.S. private finance capital during the 1920's, found itself
operating under a number of "voluntary regulations" imposed on it by the U.S.
Treasury as it sought to subordinate the international  activities of Wall
Street to the government's own goals, these being primarily to secure full
repayment of the enormous Arms and Reconstruction loans owed by Europe.

According to Hudson, the subordination by the U.S. government, of private
capital and the national bourgeoisie to a national political purpose defined
by the government prefigured, in a far more benign form, the relations between
capital and state that would arise under European fascism in the 1930's. Faced
with this "usurpation of power" by the U.S. government, domestic and
international finance capital offered no resistance - on the contrary,
the "world financial order came to rest on the dominant role in world finance,
not only able to be played but actually played by the government of the United
States."

Hudson is undoubtedly correct in his observation that the inter-war years were
marked by the rise of the U.S. Government to the dominant place in world
financial affairs, a preponderance which still exists today, albeit on
somewhat more unstable foundations. U.S. handling of its European debts during
the inter-war years greatly weakened the financial and trade structures of the
hitherto European and British centred world economy, and aggravated the social
and political crises which led to the rise of European fascism. The U.S.
policies during the inter war years thus effectively accelerated the decline
of Europe and hastened the shift of power to North America. It seems moot
however whether Hudson is correct to state that the interests of U.S. private
capital were hindered or damaged by U.S. Government policy. One weakness in
his argument here is the reliance on various assumptions about the course of
events had the U.S. Government not in fact intervened in the European war. It
is not clear that a Europe exhausted by an indefinitely prolonged war would
have in fact been open to domination by U.S. capital. For one thing, Hudson
does not factor into his argument the observation that U.S. interests in the
early decades of the twentieth century lay in a weakened and diminished
Europe, not a Europe thrown into social chaos and revolutionary turmoil by
war -- as Tsarist Russia was. Beyond the financial measures which it did use
to prop up Britain, France and Germany, America at this point probably lacked
both the military means and the political will to singlehandedly guarantee
against a total breakdown of the political and social structures that might
have occurred in the case of an "indefinitely prolonged war".  As things did
turn out however, there is little doubt that U.S. policies greatly
strengthened its own position to the detriment of the European states and
capital, and laid the foundation of the subsequent U.S. global dominance.

-------------------------------------------------
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----- Original Message -----

From: Michael Keaney

To: a-list@lists.econ.utah.edu

Sent: Monday, June 23, 2003 11:44 AM

Subject: Re: [A-List] Michael Hudson: Super imperialism

 

John Enyang wrote:

Dear All,
Sorry this is running behind schedule.

****************

Thanks to John for his splendid efforts in keeping this very important
online seminar running. Perhaps the timing is a little unfortunate -- the
academics among us are swamped with exam papers and the like, while the rest
of us are away or preparing to be so. Also, some of you might be
experiencing difficulty in securing a copy of the book, which seems to have
sold out in paperback form at one time or another in most of the online
stores over the past few weeks. If so, then, today at least, there are
copies available at the following outlets:

Pluto Press's own online store:
https://secure.metronet.co.uk/pluto/cgi-bin/web_store/web_store.cgi?sc_query
_subject=Economics

Amazon UK's site:
http://www.amazon.co.uk/exec/obidos/ASIN/0745319890/qid=1056360343/sr=1-1/re
f=sr_1_0_1/202-3415859-0147020
(in addition there are linked sites offering the book at lower than list
price)