It is a sign of the times when the US Treasury Secretary Timothy Geithner admits publicly that the US is no longer assured of its premier position among global economies. This is a very different portrayal of the US whose economic might (it produced nearly half the world output at the end of the war) through the use of Marshall Plan aid, almost single-handedly rebuilt in its own image, several major European economies from the devastation caused by the Second World War. It also ensured that none of these countries fell under the potential economic, political and military influence of the USSR. Since this period, most Western government have looked to the US economy as an indicator to the overall health of the global economy.
Geithner's comments mark a clearly defined and measured shift away from this assumption. Indeed, the prevalence and dominance of 'globalisation' theories largely accepted that this would always continue to be the case. The US economy would provide the driver for smaller economies either through trade or investment opportunities. It was a variant on the 'trickle down' thesis popular among Reaganites and Thatcherites in the 1980s and largely discredited by the global recessions of the early 1990s. What it ignored however was the fundamental drivers within capitalism: those of accumulation and competition.
The world as seen by the boosters of 'globalisation' theories saw the global economy as being constituted by winners and lesser winners - but all winners nevertheless. What they conveniently ignored was the devastation that globalisation - adherence to neoliberalism or the idea that the free market should determine growth and consumption patterns globally - wreaked around the world. They ignored the collapse and pillaging of the previously state-run Russian economy in the wake of the overthrow of Soviet 'communism'. It was here that Paul Volcker's 'shock therapy' was played out to its most perverse conclusion, with tens of millions thrown into penury almost overnight. It ignored the pillaging of sub-Saharan Africa by western banks, a process that continues today. It ignored the wide devastation of economies in Latin America, with the economy of Argentina collapsing brought about by the Asian Crisis of 1997 and exasperated by a reliance on neoliberalpolicies promoted by the US. It also conveniently ignored the fact that when push came to shove, the nation-state would do anything within its power to protect its own national capitalist concerns as witnessed by the state bail-outs of major financial institutions and corporations.
But neoliberalism and the opening up of economies to the free markets was always something the US were prepared to push on smaller economies rather than adopt themselves. The 'golden age' of capitalism from 1945-1973 was marked by huge levels of US government military spending that as a consequence, ensured that vast amounts of accumulated surplus value (profits) and a concomitant rise in the organic composition of capital did not drive down the overall rate of profit and in turn lead to a global slump*. It also allowed the US to extend its sphere' of influence' globally, securing vital natural resources and outlets for its consumer goods. The centrality of the nation-state to capitalist expansion was most aptly summed up by Thomas Friedman in 1999 when he wrote:
"For globalisation to work, America can't be afraid to act like the almighty superpower that it is... The hidden hand of the market will never work without a hidden fist - McDonald's cannot flourish without McDonnell Douglas, the designer of the F-15. And the hidden fist that keeps the world safe for Silicon Valley's technologies is called the United States Army, Air Force, Navy and Marine Corps." (The New York Times, 1999)
Less imperialism - more imperialism
The military debacle of Iraq and Afghanistan presents a scenario of a never ending but unwinnable war for the US and its NATO allies. It also threatens to undermine further the ability of the US to continue to act as the world's policeman. Clearly, the ghost of another Vietnam looms behind US foreign policy makers. However, an economically and militarily weakened US does not necessarily mean a less aggressive US as this hegemon strains at the leash in its drive to protect its own 'national interests' - its national capitalist interests - at all costs.
Geithner's comments, in suggesting that other economies will have to grow to ensure that the global economy prospers, may be suggestive that the US government is embarking upon a paradigmatic shift, away from the idea of 'total globalisation' towards a more nuanced and contingent version. It may even herald a reconsideration of the possibility of economic retrenchment towards good old fashioned protectionism, something the US has been accused of recently by leading members of the former British Labour government and China's Ministry of Commerce
The worry is that a deepening of global economic precarity or indeed another worldwide economic slump like that of 1929 may force the hand of the Obama administrations and its successors in shifting towards economic isolationism. And history provides us with a sobering example of what the consequences of this policy might be.
For an excellent analysis of the role of the military-industrial complex in offsetting the tendency to boom and slump, and very accessible critique of capitalism to boot, see Zombie Capitalism: Global Crisis and the Relevance of Marx, C Harman, Bookmarks Publications, London 2009