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5 SUPER CAPITALISM, SUPER
IMPERIALISM PART 1: A Structural
Link By Henry C K Liu
Robert B Reich, former US Secretary of
Labor and resident neo-liberal in the Clinton
administration from 1993 to 1997, wrote in the
September 14, 2007 edition of The Wall Street
Journal an opinion piece, "CEOs Deserve Their
Pay", as part of an orchestrated campaign to
promote his new book: Supercapitalism: The
Transformation of Business, Democracy, and
Everyday Life (Afred A Knopf).
Reich
is a former Harvard professor and the former
Maurice B
Hexter
Professor of Social and Economic Policy at the
Heller School for Social Policy and Management at
Brandeis University. He is currently a professor
at the Goldman School of Public Policy at the
University of California (Berkley) and a regular
liberal gadfly in the unabashed supply-side Larry
Kudlow TV show that celebrates the merits of
capitalism.
Reich's Supercapitalism
brings to mind Michael Hudson's Super
Imperialism: The Economic Strategy of American
Empire (1972-2003). While Reich, a liberal
turned neo-liberal, sees "supercapitalism" as the
natural evolution of insatiable shareholder
appetite for gain, a polite euphemism for greed,
that cannot or should not be reined in by
regulation, Hudson, a Marxist heterodox economist,
sees "super imperialism" as the structural outcome
of post-World War II superpower geopolitics, with
state interests overwhelming free market forces,
making regulation irrelevant. While Hudson is
critical of "super imperialism" and thinks that it
should be resisted by the weaker trading partners
of the US, Reich gives the impression of being
ambivalent about the inevitability, if not the
benignity, of "supercapitalism".
The
structural link between capitalism and imperialism
was first observed by John Atkinson Hobson
(1858-1940), an English economist, who wrote in
1902 an insightful analysis of the economic basis
of imperialism. Hobson provided a humanist
critique of neoclassical economics, rejecting
exclusively materialistic definitions of value.
With Albert Frederick Mummery (1855-1895), the
great British mountaineer who was killed in 1895
by an avalanche while reconnoitering Nanga Parbat,
an 8,000-meter Himalayan peak, Hobson wrote The
Physiology of Industry (1889), which argued
that an industrial economy requires government
intervention to maintain stability, and developed
the theory of over-saving that was given a glowing
tribute by John Maynard Keynes three decades
later.
The need for governmental
intervention to stabilize an expanding national
industrial economy was the rationale for political
imperialism. On the other side of the coin,
protectionism was a governmental
counter-intervention on the part of weak trading
partners for resisting imperialist expansion of
the dominant power. Historically, the processes of
globalization have always been the result of
active state policy and action, as opposed to the
mere passive surrender of state sovereignty to
market forces. Market forces cannot operate in a
vacuum. They are governed by man-made rules.
Globalized markets require the acceptance by local
authorities of established rules of the dominant
economy. Currency monopoly of course is the most
fundamental trade restraint by one single dominant
government.
Adam Smith published Wealth
of Nations in 1776, the year of US
independence. By the time the constitution was
framed 11 years later, the US founding fathers
were deeply influenced by Smith's ideas, which
constituted a reasoned abhorrence of trade
monopoly and government policy in restricting
trade. What Smith abhorred most was a policy known
as mercantilism, which was practiced by all the
major powers of the time. It is necessary to bear
in mind that Smith's notion of the limitation of
government action was exclusively related to
mercantilist issues of trade restraint. Smith
never advocated government tolerance of trade
restraint, whether by big business monopolies or
by other governments in the name of open markets.
A central aim of mercantilism was to
ensure that a nation's exports remained higher in
value than its imports, the surplus in that era
being paid only in specie money (gold-backed as
opposed to fiat money). This trade surplus in gold
permitted the surplus country, such as England, to
invest in more factories at home to manufacture
more for export, thus bringing home more gold. The
importing regions, such as the American colonies,
not only found the gold reserves backing their
currency depleted, causing free-fall devaluation
(not unlike that faced today by many
emerging-economy currencies), but also wanting in
surplus capital for building factories to produce
for domestic consumption and export. So despite
plentiful iron ore in America, only pig iron was
exported to England in return for English finished
iron goods. The situation was similar to today's
oil producing countries where despite plentiful
crude oil, refined petrochemical products such as
gasoline and heating oil have to be imported.
In 1795, when the newly independent
Americans began finally to wake up to their
disadvantaged trade relationship and began to
raise European (mostly French and Dutch) capital
to start a manufacturing industry, England decreed
the Iron Act, forbidding the manufacture of iron
goods in its American colonies, which caused great
dissatisfaction among the prospering colonials.
Smith favored an opposite government policy toward
promoting domestic economic production and free
foreign trade for the weaker traders, a policy
that came to be known as "laissez faire" (because
the English, having nothing to do with such
heretical ideas, refuse to give it an English
name). Laissez faire, notwithstanding its literal
meaning of "leave alone", meant nothing of the
sort. It meant an activist government policy to
counteract mercantilism. Neo-liberal free-market
economists are just bad historians, among their
other defective characteristics, when they
propagandize "laissez faire" as no government
interference in trade affairs.
Friedrich
List, in his National System of Political
Economy (1841), asserts that political economy
as espoused in England, far from being a valid
science universally, was merely British national
opinion, suited only to English historical
conditions. List's institutional school of
economics asserts that the doctrine of free trade
was devised to keep England rich and powerful at
the expense of its trading partners and it must be
fought with protective tariffs and other
protective devices of economic nationalism by the
weaker countries.
Henry Clay's "American
system" was a national system of political
economy. US neo-imperialism in the post WWII
period disingenuously promotes neo-liberal
free-trade against governmental protectionism to
keep the US rich and powerful at the expense of
its trading partners. Before the October
Revolution of 1917, many national liberation
movements in European colonies and semi-colonies
around the world were influenced by List's
economic nationalism. The 1911 Nationalist
Revolution in China, led by Sun Yat-sen, was
heavily influenced by Lincoln's political ideas -
government of the people, by the people and for
the people - and the economic nationalism of List,
until after the October Revolution when Sun
realized that the Soviet model was the correct
path to national revival.
Hobson's magnum
opus, Imperialism, (1902), argues that
imperialistic expansion is driven not by state
hubris, known in US history as "manifest destiny",
but by an innate quest for new markets and
investment opportunities overseas for excess
capital formed by over-saving at home for the
benefit of the home state. Over-saving during the
industrial age came from Richardo's theory of the
iron law of wages, according to which wages were
kept perpetually at subsistence levels as a result
of uneven market power between capital and labor.
Today, job outsourcing that returns as low-price
imports contributes to the iron law of wages in
the US domestic economy. (See my article Organization of Labor Exporting
Countries [OLEC]).
Hobson's
analysis of the phenology (study of life cycles)
of capitalism was drawn upon by Lenin to formulate
a theory of imperialism as an advanced stage of
capitalism: "Imperialism is capitalism at that
stage of development at which the dominance of
monopolies and finance capitalism is established;
in which the export of capital has acquired
pronounced importance; in which the division of
the world among the international trusts has
begun, in which the division of all territories of
the globe among the biggest capitalist powers has
been completed." (Vladimir Ilyich Lenin, 1916,
Imperialism, the Highest Stage of
Capitalism, Chapter 7).
Lenin was also influenced by
Rosa Luxemberg, who three year earlier had written
her major work, The Accumulation of Capital: A
Contribution to an Economic Explanation of
Imperialism (Die Akkumulation des Kapitals: Ein
Beitrag zur ökonomischen Erklärung des
Imperialismus),
1913). Luxemberg, together with Karl Liebknecht a
founding leader of the Spartacist League
(Spartakusbund), a radical Marxist revolutionary
movement that later renamed itself the Communist
Party of Germany (Kommunistische Partei
Deutschlands, or KPD), was murdered on January 15,
1919 by members of the Freikorps, rightwing
militarists who were the forerunners of the Nazi
Sturmabteilung (SA) led by Ernst Rohm.
The
congenital association between capitalism and
imperialism requires practically all truly
anti-imperialist movements the world over to be
also anti-capitalist. To this day, most
nationalist capitalists in emerging economies are
unwitting neo-compradors for super imperialism.
Neo-liberalism, in its attempts to break down all
national boundaries to facilitate global trade
denominated in fiat dollars, is the ideology of
super imperialism.
Hudson, the American
heterodox economist, historian of ancient
economies and post-WW II international
balance-of-payments specialist, advanced in his
1972 book the notion of 20th century super
imperialism. Hudson updated Hobson's idea of 19th
century imperialism of state industrial policy
seeking new markets to invest home-grown excess
capital. To Hudson, super imperialism is a state
financial strategy to export debt denominated in
the state's fiat currency as capital to the new
financial colonies to finance the global expansion
of a superpower empire. No necessity, or even
intention, was entertained by the superpower of
ever having to pay off these paper debts after the
US dollar was taken off gold in 1971.
Monetary Imperialism and Dollar
Hegemony Super imperialism transformed into
monetary imperialism after the 1973 Middle East
oil crisis with the creation of the petrodollar
and two decades later emerged as dollar hegemony
through financial globalization after 1993. As
described in my 2002 AToL article, Dollar hegemony has to
go, a geopolitical phenomenon emerged
after the 1973 oil crisis in which the US dollar,
a fiat currency since 1971, continues to serve as
the primary reserve currency for
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