[translated from GegenStandpunkt: PolitischeVierteljahrzeitschrift 3-97, Gegenstandpunkt Verlag, Munich]
Every day at the opening bell, the world's stock exchanges "look to New York," reacting to every "mood swing on Wall Street." Every day, merchants all around the globe wait in suspense for their currency's dollar exchange rate because they use it to calculate their revenues, costs and competitive chances, their gained and lost profits. Central bank managers, finance officials and politicians in every country take note of every tenth of a percent change in the interest rate on U.S. government bonds and other American securities, because this immediately affects their assets and liabilities, their latitude for borrowing and their interest rate policies. Although international traders and politicians concerned about trade need commercial attachés in each of their country's foreign consulates, what they need above all else is informants and a lobby in Washington, because the decisions on trade and monetary matters made there are crucial for their competitive prospects.
Every important company in the world, certainly every financial capitalist and definitely every national budget office outside the United States starts out from the fact that the success of their economic operations depends on America. They all reckon with the business conditions prevailing in America as important if not crucial means and barriers for their own activities, each in his own way:
-For the worldwide sale of goods, the American economy is crucial in two ways: as an indispensable market and as a supplier competing practically everywhere, in every industry and in every region of the world.
-Purchase prices for all kinds of goods from no matter where, whether of airplanes or of petroleum, as well as the really definitive sales proceeds from all exports, no matter to what country, depend on the U.S. dollar, namely on its relation to the particular national currency. The same applies to the real, that is to say, international size of any capital, and to the true amount of its return.
-When evaluating the credit and money of a nation, this being the most important of all conditions for capitalistic business, and the most important of all parameters for the financial policies of companies and states, the international money and credit market always measures on the basis of conditions in America. All financial investments, including the debts of the various national states, constitute a promise of the equality of credit and capital, a promise begging to be believed and crowned with a good exchange rate. The crucial question of all capitalistic economy based on credit is: how much of an equality is it, compared internationally? Stock exchanges all over the world revolve around nothing but this question, bringing it to a head: in this absolutely crucial respect the United States is the most reliable. When the credit business booms in New York it-perhaps-pulls up stock exchanges in the world's other important financial centers. When it falls apart and stock prices drop, that-definitely-pulls down the trade in global securities all over the world.
Every newscast testifies to this orientation toward America, and how much it is taken for granted when the current dollar rate is announced before the weather forecast. It makes sense to everyone that the biggest of companies can report losses or lost profits in the billions merely because they made a wrong prediction on the rise or fall of the dollar rate. It makes sense that Airbus, the big European aircraft multinational and America's only rival in this area, can "fly into the profit zone" only at a certain ratio of dollars to Deutsche marks. The "national oil bill" also depends on the level of the U.S. dollar, even if the stuff is imported from the North Sea or from America's enemies, Libya or Iran. And so on. The German finance minister is not telling anybody any news when he campaigns for the project of a common European currency by citing how dependent the European economy is, despite its internal market, on the dollar. As the representative of a rival not yet equal to America's economic power, he suffers, not from any specific, quantifiable economic disadvantages, but simply from the fact that the essential terms of business for his European Union are still "determined from outside" by the American economy.
The pros who create credit and accumulate capital, no matter where they call home, thus regard and handle their business and financial transactions as parts of a world economy which has its own main arena and focus in the American national economy, and whose prospects of success are determined by American business cycles.
The managers of the American economy see the situation the same way but calculate and act in a way corresponding to their side of things.
-They use the whole world as a market: for buying, as dollar owners whose money gives them immediate, unhindered access everywhere; and for earning dollars, whose procurement is a worry only for foreign customers. American businessmen and the politicians who watch over them have never known the problem of first having to get hold of foreign exchange for their activities abroad.
-With the same matter-of-factness and freedom of calculation, they use the world's financial centers as a market for dollar-denominated bonds and investments. Commercial and political financial jugglers claim the whole world's credit without having to heed foreign credit needs or the effects of their borrowing on conditions of business elsewhere. Conversely, they obligate entire national economies to service the credit they place on their "emerging market."
-The American government serves its business world with the guarantee that all countries will acknowledge the American right to the free buying and selling of goods and securities. Discrimination is not tolerated, not even for the most minor commodities.
-American politicians are also very quick to cry "discrimination" whenever a deal passes by American businessmen who would have liked to make it. They would never acknowledge such vicissitudes of competition to be simply the natural risks of free trade, as they require other nations to do in the reverse case. When American firms lose out, someone has definitely violated the rules of international fairness and must be made to stop.
-And if a big financial deal falls through, e.g., when "Wall Street" drops a borrower of the caliber of the state of Mexico after having used it, the government lets its rich capitalistic partners provide multilateral government loans to make sure the speculators in New York suffer no great loss from the manifest ruin of this sphere of investment.
So wherever there is any kind of capitalistic business life going on in the world, the United States of America stakes its claim, with both the conduct of its business and its foreign economic policy, to participate in and thereby profit from it as it pleases. It simply takes for granted that the whole world economy acts as its source of wealth. And the way things look, the "international community" of businessmen and politicians do not dispute this claim. They know their business conditions, know who sets them, and make the necessary adjustments.
In view of this clear situation, which Americans by no means deny, it is remarkable how virtually the whole world agrees, when the principles of today's world economy are at issue, that there is no (longer) such a thing as global economic domination by the United States, much less anything ugly like "dollar imperialism." People prefer to see a peculiarly subjectless subject called "globalization" at work and responsible for everything, in particular for all the "real constraints" which erode the "living standards" of "ordinary people." But at the same time everybody knows that this "phenomenon" is just the current version of competition between nations. It is no secret who is behind that either. The mobility and lack of national ties of the masses of financial capital give rise to the "hypothesis" that national states have been deprived of power while "big money" runs the world. But, as their national proper name (i.e., $US) says, these masses of financial capital are America's work, the product of the creators of its public and private credit. And their movement around the globe at lightning speed, supposedly beyond all political control, is the domain of the same nation, i.e., of its finance officials and a banking sector dependent on a whole lot of national force. And as far as the leaders of the other nations are concerned, whose power is so horribly diminished and whose best intentions are thwarted by "globalization" while fate apparently forces them to make "reforms," it is not terribly plausible when they conjure up some anonymous process dictating how they must act. In Europe of all places, where the globalizing thing is given the greatest attention, they are busy building a common currency to better face the tribulations and opportunities this "situation" brings them. It can hardly be a mystery to them that their project of a jointly supervised currency is aimed at competing against a currency whose power is based on its being created and looked after by American state power. They know who they are up against all right, but it is not a question of planning a rebellion against America. That is why they like to go on about a subjectless "challenge" brought on by the adjective "global" turned into a noun. America's interests, its globalized money-making, its power over global business: that is what all nations have to deal with; and they are all familiar with it as a condition they must always take into account.
How the United States has come this far, and what it does to make sure its own national benefit continues to be the most important condition for all international business, will be dealt with in the following chapters.
The terribly simple reason for America's special position in the world economy is to be found in this nation's economic power: an enormous amount of capitalistic wealth is accumulated there. This national achievement is not based on any special American secret of success-contrary to all bourgeois ideologies which consider success in competition to be technically producible, a question of virtue, vigor or strategy. The mass and growth rates of capitalistic property even in America are merely due to good old unpaid work, i.e., wage labor.
The historical reason why this mass became so large is that its owners were lucky enough to have the accumulation of their capital go hand in hand with the expansion of their state. Plenty of land teaming with all kinds of useful resources and at the same time (to the Occidental mind) having no owner, was there for the conquering. Usually this did not even require real, elaborate wars but only a few depopulation campaigns. The proper quantity of citizens was normally provided by the immigration of suitable people: people arriving without property and with no chance of survival other than to make themselves useful by doing wage labor or acquiring new land, people both able and willing to perform such services and even equipped with the proper morale. When at the beginning there was nevertheless a lack of cheap and sufficiently willing labor, slaves were imported. In this way, capitalistic proprietors were at first able to compete against each other without coming up against any barriers in the national sphere of business. Before any such barriers could become obstacles to accumulation they were pushed back-an exceptionally favorable condition for growth.
Of course the capitalists were not the ones to bring about this expansion. But they earned money on it, even on the war between the Union and the Confederacy, which clearly announced and guaranteed that only one sort of wealth was to expand in the expanding country, namely the one arising from the capitalistic use of free wage labor. They earned money on the forward defense of the open western frontier as far as the Pacific, which offered capital ever new and greater opportunities for investment, from railroad construction to the establishment of commercial centers along the railway lines. The blessing was multiplied when gold, among other things, was found on the new territory. In their untiring "pursuit of happiness" people became-or remained- mobile, moving about whenever needed. The government acquired a treasury which was to pay off later in the world economy in an undreamed-of way. The considerable unproductive expenses which capitalistic business life had in that phase due to the need for a real commodity money (i.e., gold) became a roaring business and, in exportation, a source of national wealth. So the equation of conquering and making a profit came out exceedingly well.
This stroke of luck that nation and capital accumulated at the same time laid the basis for those customs of competition, wage labor and state supervision which used to be eyed skeptically by Western Christendom as being "typically American," but are now deemed an indispensable and unbeatable recipe for success in the "age of globalization." State power was able to leave a lot of what is imperative for a nation's "infrastructure"-from a comprehensive transport network to a complete education system-to competing businessmen and thus make it directly subject to the basic rule of all gainful occupation in capitalism, namely that everything must pay off in the form of a balance-sheet profit. This may even have reduced some of the expenses of capitalistic development. In any event it turned into business right away. The other side of that: wage-earners, the national proletariat, were made accustomed to having nothing else to expect from their state but the cynical reference to their God-given opportunity and their "American dream" to make something of it.
Of course one day the expansion of the national sphere of business on the North American continent was finished. The closing of the frontier therefore marked the end of the close agreement between accumulation of capital and expansion of the state. But by then the biggest, financially strongest, and therefore most productive capitalistic companies had long since arisen on American soil. These companies were valued and supported as a national achievement by a state power that was hardly restrained by any kind of "isolationism." World trade was opened up to them as an opportunity to continue combining their accumulation with an expansion of their sphere of business. This worked out exceedingly well, because they went abroad solely according to the needs of business expansion. For example, importation was a free business decision, never a necessity to remedy a domestic lack. "Technical progress" took place in the plants at home, and thanks to the country's capitalistically exploited natural resources there was no shortage of anything else either. Foreign offers were viewed and utilized with the greatest of freedom, or even created if they were profitable enough in comparison with the alternatives at home. Similarly, exports were never subject to the need to earn foreign currency. Rather, sales markets were opened up abroad with superior competitive means, wherever profitable. In addition to superior American products, American relations of production were themselves exported over all the world, i.e., capital accumulating at the American pace according to American standards. American capital did not first have to conquer a place for itself in competition with other like capital, but customarily stepped in as a superior and reorganizing force, making extensive use of existing capitalistic resources, from raw material to labor, from the domestic market to the particular nation's "savings rate."
However, this forceful use of the outside world as a means for American growth also meant that the expansion of world trade became a condition for successful capital accumulation inside America-i.e., a matter of existence, because capital without accumulation is not capital. The first great "world economic crisis" was practical proof that the United States had to step up its gain from world trade in order to remain a nation with capitalistic companies of superior size and competitive power. For one whole decade of the twentieth century this went so wrong that even the capitalistically redundant American proletariat had to be maintained and made useful by the state, e.g., by being put to work on the infrastructure neglected by capital in the most depressed areas.[note 2]
In and through the Second World War the American state got better jobs for its masses again, namely by opening up new opportunities for accumulation to those firms operating in its domain. This world power's wartime requirements, along with those of its allies, were satisfied using the means of accumulation of capitalistic wealth (i.e., capitalistically organized material and labor) and thereby made useful for this accumulation. Afterwards America made sure that the people actively pursuing the economic success of the nation, i.e., the nation's entrepreneurs, again had the full benefit of the unique equation between the need for accumulation and the opportunity for expansion that had made the country great. The result is as desired: in all lines of business in the United States, from agribusiness to airplane construction, the masses of capital are so big that they are content with nothing short of the whole world as their market. Their accumulation has long since involved globalization in an entirely nonideological sense: making money out of all the rest of the world of states. They are big enough to be successful everywhere, which at the same time means they are so big that their existence depends on their being able to manage that feat.
To reach that level the American state had to do a bit more than just stand up for free trade and the unhindered movement of capital. It especially has to do more than that to maintain the superior competitive power of its national capital, the great national achievement on which its own economic power depends. As America's need for foreign sources of wealth grows, so grows its rights in and to the world. Enforcing these rights requires continuous action.
By winning the Second World War the American state settled the question of power on a worldwide scale (albeit only half in its favor, so that it had to mobilize its own half for a Cold War against the obstreperous co-winner and its deviant economic system). At the same time it settled competitive relations in the world economy: there was no capitalistic power left which was able to escape from the interests of American wealth. The winner's capitalism, America's fully intact national economy, was faced in the newly opened Free World by the ruined economies of both its defeated fascist enemies and its heavily indebted allies. None of them were serious rivals any longer-but they were most willing to reestablish capitalistic conditions at home and therefore willing to cooperate with the superior victorious nation on its own terms. For the most part, the United States had already settled these terms with its capitalistic allies before the end of the war. After the war they were established without any alternative outside the communist "Eastern Bloc." These terms concerned the principles of business between states according to the two sides of business: commodities and money.
In the rules of the General Agreement on Tariffs and Trade (GATT, founded 1947) the United States codified its claims to the worldwide commodity trade that was to be reactivated, the essential principle being general most- favored-nation treatment. This means that all contracting parties automatically benefit from the lowest customs duties and all other advantages which any one of them grants another for bilateral commodity trade. With this regulation America forced all other states to refrain from practicing trade discrimination against particular nations under pain of being excluded from world-wide trade and systematically discriminated against themselves. It thereby gave its own capitalists-and anyone else it might concern-general protection against having a possibly worse trading position, solely because of their domicile, than competing companies doing business under different flags.
It was obvious, and in fact intended by the authors, that this general ban on discrimination, this compulsory equality of rights for all participating nations, would create anything but equal opportunities, let alone equal gain, for all. Rather, it had to inevitably produce partly varying, partly antagonistic effects depending on the nations' capitalistic potential. The most potent capitalistic nation was out to open up the world as a purchasing and sales market for its exporters and importers, insuring that nothing else prevail on this global market but the power of capital. It was far more than a matter of diplomatic form that the United States realized its national interest in this way, not through multilateral trade agreements but by the instrument of placing a general condition on access to free and equal commerce between nations. As a nation with an overriding interest in successful trading all over the world, it practiced the point of view of world trade as such, getting it accepted over the other point of view consisting of the bilateral negotiation of special mutual advantages in foreign trade and the perpetual freedom to decide to continue or alter trade relations. Not that the United States devoted itself to just any binding supranationalism or submitted to any collective decisions itself. It was out of concern for America's autonomy in matters of foreign trade that the U.S. Congress had already rejected the original plan of an International Trade Organization (ITO), a plan which certainly would not have forced Americans to do anything against their interests either. The principle of general most-favored-nation treatment finally approved by Congress contained the general proviso that each party to the agreement could refuse to grant new members or candidates most-favored-nation treatment, or to grant it conditionally and temporarily. However, what was involved was more than the mere ideal of a capitalistic competition free from national discrimination. The United States set up the rules for a general system of world trade as the premise for every nation's particular calculations of advantages and disadvantages, at the same time also acknowledging this system to be binding on itself.
Of course it only did so because it was sure of its ground, i.e., sure of the global superiority of capital based in America-this being quite clear as things stood toward the end of the war. Under the given material conditions, the rule of equal rights for all nations in world trade had to turn out in America's favor. Its authors therefore regarded it as an infallible and everlasting guarantee of success for American commodity producers. But that was never the economic truth. The truth is more like the other way around: establishing a world trade regime with equal rights for all and no special bilateral privileges could only be a means for national success in the intended sense because, and only as long as, America's commodity traders were unchallenged in their superior competitive position. The difference between the "fair" competitive conditions stipulated by GATT and America's competitive success intended by GATT had not disappeared merely because the United States negated it as a matter of course. But it was a while until the world trade forced on the world by America made this difference clear to America in practice.
Logically, even before arranging for a discrimination-free movement of goods, the United States engineered the Bretton Woods agreements (founded 1944) to take care of the most important thing in capitalistic world trade: the money which trade earns. It was to be the U.S. dollar, binding for both the active capitalists of all nations and for their sovereign states. Other currencies were out of the question anyway, being ruined by war and war economy. Conversely, all functioning capitalism was already taking place in dollars and accumulating assets in dollars. Also, the holdings of precious metal that nations had previously used to back the international validity and utility of the money earned on their own territory, and to settle foreign trade balances among one another, had meanwhile been substantially transferred to the American state, so that the agreement came easy to all those involved. The dollar, legally equated with a unit weight of gold and guaranteeing exchange for gold, henceforth replaced the multilateral passing around of local currencies, as well as gold, as the internationally recognized measure and accepted material for abstract wealth, that is, for the money everything revolves around in a capitalistic economy. Through a system of fixed exchange rates it acted as the measure of all other standards of value that were binding merely within nations. It was used for all international payments, both for purposes of calculation and for actual transfer, acting exclusively and universally as the only true means of business. Consequently, the U.S. currency was also world money in the following sense: only by assuming the form of dollars could the private and the public wealth of all other nations be acknowledged as wealth by the whole world.
Naturally the only source of these precious notes was the U.S. central bank. But since the other participants in the system were to have some access to international "liquidity" of their own, the exclusively valid and universal world money had a certain semblance of supranationalism. Through the International Monetary Fund (IMF, founded 1947) the member states could make deposits in their own currency to procure a basic stock of means of payment for their international business activity, namely for "bridging short-term payment problems." In addition, using the same model as the IMF, states were given a basic supply of international credit (apparently something quite different from "liquidity" to the financial capitalist mind), formally independent of the United States, through the International Bank for Reconstruction and Development (IBRD, founded 1945), the "World Bank." The member states acted as a collective credit-creating agency, each having a claim to an amount of world money credit depending on its deposit. Thus the capitalistic states, whose monetary sovereignty was limited to currencies of merely local importance, i.e., money unfit for international business, at least contributed to producing a minimum amount and a maximum semblance of autonomous global solvency in the form of dollars.
The whole ingenious setup says something about its inventor's simple concern. American capitalists were to earn dollars, i.e., increase the nation's wealth in dollars, even in foreign countries where none were circulating, facing just as few barriers abroad as at home. One barrier in urgent need of elimination was seen to be the constant lack of international liquidity, i.e., the fact that earning money abroad was restricted most inconveniently by the means needed to move abstract wealth out of one country and into another. This problem was solved, and quite thoroughly at that-at least, and first and foremost on the crucial, American side, of course. The dollar could immediately buy anything, the living and dead inventory, the manpower and goods of the entire Free World. The power of American capitalists to act anywhere in the world was now fundamentally free from the amount of gold and foreign currency a country had, but rather depended solely on the size of their own capital and resulting creditworthiness. And what they earned abroad had dollar value directly, without some foreign monetary sovereign being able to interfere with the calculation by holding insufficient national reserves. Of course the capitalistic nations that were supposed to be business partners were still not terribly solvent, i.e., not able to comply with such calculations by making real dollar payments, even with the help of the IMF and World Bank. But they were shown a clear and feasible way of procuring an internationally recognized means of business for their own domestic companies and solvency for themselves. There were plenty of dollars around; they only had to go get them. And if they were lacking the means to earn them-as was generally the case after the war-the unshakable relation between the dollar and their national wealth (that either still existed or was yet to be produced) gave them the crucial precondition for solving the problem. Even if they were not yet solvent, nations were already creditworthy as parts of the global dollar economy. Whatever their national economies would produce, they would inevitably produce dollar values. America was thus willing to create "liquidity" itself and lend it to its future world business partners.[note 3] Private dollar investments followed soon after. The capitalistic world was set up as a world for dollars, enabling dollar owners to use it as a sphere of investment, thereby gradually making it more and more solvent.
However, what America achieved here is not fully captured by the technical catchword "international liquidity." It is important to see that one national credit money, the dollar, was raised to the rank of something close to real world money that was exclusively and directly valid for the whole capitalistic world. A capitalistic state is always doing something like that when it gives the notes of its national bank the quality of being binding means of payment and really-existing assets. This bank's promise of payment then no longer acts in the manner of a credit note of a private bank, passed on to the next holder by reason of the debtor's proven solvency to settle outstanding accounts until redemption in real payment is due, but on the contrary, replaces real payment itself. This equating of banknotes to the nation's real capitalistically produced abstract wealth is valid because the state orders its subjects by law to take the official note for the thing it stands for.[note 4] However, at the same time that is why the equating of a modern paper currency with money ends at a nation's borders. Between sovereign states a means of payment is needed whose power to command wealth in the form of goods is not merely decreed by a state but acknowledged by all. This need had been taken care of quite nicely by that first-class capitalistic "fetish," gold. The Bretton Woods agreement fundamentally eliminated this difference between internal and external validity exclusively for the U.S. dollar. It decreed that all sovereigns have unconditional respect for this one national note money, as if it were the supranational incarnation of capitalistic value pure and simple. To strengthen this claim to recognition, the United States guaranteed gold convertibility for its currency, thereby demonstrating to the world that it was the only nation that still had an unquestionable treasury, i.e., more or less the combined treasuries of all the other states, and that it was therefore the only power able to guarantee real world money at all. After all, only American money was based, not "merely" on a decree, but on that fabulous, nonviolent, gleaming yellow product of nature which makes abstract wealth so nice and easy to grasp in the minds of its owners, both public and private. Nevertheless, the U.S. banknote was never a mere voucher for precious metal. The promise that it could be redeemed for real gold was no admission that the dollar was just a temporary substitute for world money but, on the contrary, the demonstration that there was no alternative to it, that it was the definitive money of the world. The shared belief that all capitalistic nations had in the natural monetary qualities of gold was thus replaced-for the first time-by a real global monetary sovereignty. It belonged to the United States and coincided with America's sole right to print dollars and put them into circulation.
Conversely, all other nations' currencies-although in principle of like nature and like origin as the dollar, being national credit moneys themselves- now had a novel second-class status. They were not fundamentally each a national money per se and comparable with one other through gold as the common ultimate measure and convertible into gold if required. Instead, they had their quality as money merely as derivatives of America's monetary sovereignty, in their (also quantitatively fixed) relation to American credit money and its units of measurement. And because in capitalism everything revolves around money, the national economies of America's partners were themselves redefined, namely as parts of the global accumulation of dollars. A nation's capacity to act was still based on the accumulation of its own capital, but the actual starting point for this accumulation was credit in dollars and its actual endpoint was dollars earned. The acquisition of American world money was consequently the means, the goal and the measure for national wealth. National capitalism was henceforth synonymous with earning money on the global dollar market.
America's capitalistic partner states more or less had to submit to this new purpose due to strategic and economic power relations just after the war. Bent on getting their capitalism going again, they had no alternative. The fascist wartime enemies had had not only their power but also their sovereignty broken. America's allies, which had maintained or regained their sovereignty, owed their power to the United States so completely (with the exception of the Soviet Union, which therefore became America's archenemy) that it was impossible for them to withdraw from the world economic system arranged by the capitalistic victorious nation. The situation was just as clear economically. It would have been hard to restore functioning market economies without money and credit from America, and this would have been absolutely impossible against American interests-especially since Communist parties were fairly daring in those days due to the Soviet victory. It was only logical to establish a bloc of capitalistic states with restricted sovereignty, in money matters as well, facing a supreme leading power which also commanded the money-form of abstract wealth.
This overriding monetary sovereignty of the United States was henceforth to hold without conditions and restrictions-but without replacing that of its partners. Paradoxically, it was thereby to call their monetary sovereignties into being. The world money regime established by the United States in its own interest was specifically and skillfully arranged in this supranational way because the capitalistic allies were actually each going to be responsible for their own national credit money and to ensure its business efficiency themselves. Although they were to do so on condition that the dollar was the sole world money, this did not mean they were only seemingly independent while actually managing subdivisions of America's national economy. They were supposed to bring about functioning capitalistic economies of their own, and to create currencies which would prove to be a means of doing good business in these economies, i.e., currencies which represented an assuredly-progressing national accumulation. That is what the United States wanted to let its own dollar owners participate in, freely and unhindered. But there were to be no restrictions by foreign states: no reserving the right to check foreign money, to demand solid guarantees for its validity, i.e., to raise the problem of recognition out of concern for their own money.
There is no doubt that this double task the United States set for its sovereign vassals was actually followed, but also that it involves a contradiction. Those taking part in the global dollar economy were empowered and required to produce genuine national currencies and make them valid representatives of accumulating capital, but on the premise that these currencies had their real value in the dollar. That does not go together too well. Either a nation achieves a money that is reliable, maintains a stable value, and constitutes the ultimate form of accumulating wealth; then this money really is the valid reality of its capitalistic assets. It stands on its own, face to face with all other national moneys, and can critically measure them just as it is itself measured by them. Either that, or else a currency measures and represents national wealth only in a transitory way because the really valid measure and ultimate form of this wealth is a foreign money. In that case the state's monetary sovereignty is worthless-the state does not have credit, nor can it create credit. America's partners were supposed to do both at once. They had to make their currencies convertible, i.e., real independent moneys with a value worthy of recognition abroad, but nonetheless convertible only against the dollar and through it, measured unilaterally by it and actually recognized and usable abroad only through their relation to it. That is, their money was to be convertible without having the power inherent in this "property" of in turn measuring and determining the value of other nations' money exchanged for it. What was required was proper money that was at the same time second-class: a national world money that ranked lower than the only true world money from America.
This impossible feat was achieved in practice because America's partners in the world economy were nothing but debtors at first, their own national currencies being constituted by nothing but American credit, i.e., actually mere offshoots of the dollar. But this was not supposed to last. These states were supposed to lose no time in vouching for their national credit with actually earned world money and justifying the credit they had received by accumulating assets of their own; and indeed they did their best. But the more successful they were at this, the closer their currencies came to matching the dollar, acquiring some of the dollar's initially monopolized power of acting as the ultimate measure and recognized material for a nation's wealth. It took a while, but in light of the way the United States had set up its global monetary system, its dollar debtors inevitably grew into rivals which could no longer tolerate, and finally no longer allowed, the unique position of the "gold dollar."
The crucial transition took place without any change in America's way of doing business, which simply obeyed the rules of the Bretton Woods system. The world power opened up world trade without bothering about the rest of the world's "liquidity" problems, which would have stifled any decent international business if the old pattern had still held, that of nations with autonomous economies acquiring and accumulating receivables amongst one another, to be settled ultimately in gold. America was not content to be a competing foreign trader, but acted as universal creditor and capital investor on the condition of general free world trade in the sense of GATT. Government credits created the necessary minimum of business capability abroad. American firms exported capital and used their enrichment to advance capital accumulation in their foreign spheres of investment. The Americans thus credited the rest of the capitalistic world before it became a solvent sales market for American goods and an inexpensive source of purchases for American importers. American capitalists earned money from foreign locations even before American and foreign produced goods competed with each other on the markets of the Free World. The United States thus obtained partners for a business system that was conceived globally from the start and lived on dollar credits. Conversely, this made the dollar what the Bretton Woods agreements had intended it to be: world money. And from the American point of view there was no necessity to make any fundamental corrections in this way of utilizing the rest of the world as machinery for a capitalistic accumulation of dollars.
This dollar economy brought about a decisive change to America's partners. They began their postwar economic careers as the mirror image-as debtors of the United States, before getting involved in any foreign trade resulting in this or that deficit. American credit was the basis for restoring their national credit and money systems. Involvement in world business based on the dollar was the crucial starting condition for national capital accumulation. Acquisition of dollars, whether by exporting goods or by importing capital, was accordingly the purpose and criterion for success of their national economies. This meant coping with the contradiction of being both challenged and empowered to regain their own successfully accumulating national wealth, validly represented by a convertible credit money, while at the same time being defined as pieces of the global capital accumulation denominated in American money.
This contradiction first showed its troublesome face as a dollar squeeze. America's rising partner states had set about advancing their national capitalism by way of acquiring dollars. They (or at least some of them) were so successful in creating the required means of competition (also thanks to American investments) that they had hopes of conquering ever greater shares of world business. They were held up on this path to success by a lack of international solvency-a lack which the United States had fundamentally remedied by elevating its credit money to the status of global means of business, but "only" for itself and its capital investment needs. Strictly speaking, the problem was therefore not an insufficient sum of dollars circulating worldwide, but that they were not appropriately available to the partners engaging in world business with increasing success. It was not a liquidity problem at all, but a basic incongruity. These nations were suffering from the fact that they had not yet managed to participate in worldwide money-earning independently with their own currencies to the extent their success already enabled and entitled them to. For their national gain they were always referred back to the American currency as the only recognized material for global accumulation of wealth, and confronted with the fact that only America and American business had it at their disposal to create credit.
This dissatisfaction therefore did not subside. Rather, it went a step further when, after a dozen years of business, there was no longer a worldwide dollar scarcity to be seen on either side, simply because America had kept on doing what it had always done. American capitalists had kept on buying into other nations' capital accumulation with a lot of credit. American politicians had used even more of the nation's dollars to set up military bases around the globe and wage expensive wars. The first one was in Korea and promptly triggered the worldwide boom of the same name, which spurred West Germany, with its exemplary focus on the imperative of acquiring dollars, to a real economic miracle. Now, and for the next dozen years, there were laments about an increasing glut of dollars. Again, this was no quantitative problem, but the protest of America's economic partners about their discrimination due to the dollar's exclusive preferential position. The American state and its capitalists were able to monopolize the whole world with their freely created credit simply because their currency was world money. They thereby prevented other capitalistic economic powers from doing the same thing and using the power of their national credit to create worldwide conditions that suited them. That is how far the main complainers had come: they now wanted their own money to perform the same services for them that the United States had hitherto reserved for itself and its dollar. And they now had money that could actually have performed such services if the dollar privilege had not been in the way. This is in any case how they saw themselves and their currencies. Various currencies, especially the Deutsche mark thanks to Germany's successful exports,[note 5] were in fact meanwhile being recognized and employed by capitalists outside their respective nations as useful material for making payments and preserving value, i.e., as secondary world currencies. America's partners were no longer willing to accept their continuing submission to American money, as if abstract wealth could truly exist only in the form of dollars.
One can learn several things from the complaint raised especially by West German "guardians of the currency." They protested that they were forced to buy up all dollars at the fixed rate, i.e., create credit of their own to the extent that America created dollars for its own concerns and used them in world business, and that this made it impossible to implement any autonomous monetary policy, "importing inflation" in an unprecedented way. The problems decried as "excess liquidity" thus stood firstly for the demand for full sovereignty over one's own national credit. The times when capitalistic nations were forced to accept restricted sovereignty in money matters were declared to be over.
Secondly, the demand for an end to the world money regime which had been handed down in favor of equal rights for all national credits made use of the economic argument that the masses of credit circulating worldwide were not being put to that great a profitable use anyway. Those from outside America clearly attributed this to the increasing overabundance of American promissory notes denominated in dollars, and wanted to protect their own currencies from the "inflationary dangers" this was said to be causing. If they could create their own credit autonomously, i.e., without being obliged to acquire dollars, they could well imagine a business use for it which would justify it by national growth. This was a clear challenge to America. They were resolved to take up competition with the United States in the absolutely crucial economic question of transforming credit into capital accumulation.
Economic policymakers outside America were quite sure that they would do better once America lost its monopoly on world money. This led to the third clarification. The dollar, to which they owed their power to create their own currencies, now represented only a credit of inferior quality. For monetary authorities outside America, the dollar had thus definitely had it as the absolute measure and definitive material for global abstract wealth, as defined and decreed in Bretton Woods. It was no longer first-class world money, qualitatively better than other national moneys, but merely the paper token for nationally authorized promises of payment just like their own. And promises of payment in dollars were not even that economically credible any more. While they had hitherto been automatically considered safe and solid assets (and still raised a claim to be just that), they were now mere debts just like-and even more than-the circulating banknotes of other nationalities. They were debts with no solid prospects for national growth, and therefore of highly debatable value. Conversely, the currencies initially credited by the dollar now represented solid wealth and national growth with good prospects: more wealth than America had ever lent, and with better prospects than those America could offer for its own notes. So when the foreign wards of the dollar went on buying up dollars and creating money for them as prescribed, they were now giving credit to their leading power's debts, paying America's uncovered deficits with their own good national credit. They had turned from dollar debtors into creditors of the United States-and complained that their debtor simply would not recognize it.
The United States could in turn not completely ignore that its partners meanwhile had convertible currencies and were demanding ever more insistently that these currencies together with the premier world currency should now be mutually convertible in truly free fashion and without any positive or negative discrimination. There was a "force of circumstance" too. Encouraged not least by the dissatisfaction of money creators outside America, internationally active financial traders had long since pounced on the various dollar-convertible currencies, and their speculation had supplied comparative evaluations that challenged the conventional parities. American fiscal policymakers saw that their world money system was under some "speculative pressure"-and reacted, after the usual haggling, by agreeing on new exchange relations encompassing a devaluation of the dollar. They thereby gave in to the demand-which was already reality-that the dollar should be subject to critical comparison with other currencies. However, they wanted each new parity to settle the comparison. That is, they allowed the revision of the quantitative relations in order to reestablish the exceptional qualitative position of the American currency and repulse the claim of equal validity for all currencies. Afterwards the masters of the dollar could set about compensating the loss of value in all public and private dollar assets-by openly expanding their credit production even further...
In the long term the Americans therefore could not avoid facing the "problem" of the "glut of dollars." Only they had a somewhat different problem than their complaining colleagues abroad. Although also concerned about the profitable usability of their promises of payment circulating worldwide, they considered the prospects of their own national capital growth. And they reacted accordingly, by restricting the freedom to invest dollars circulating abroad within the United States. This may have been a violation of the system of global market freedom they had arranged themselves, but it complied fully with the sense and purpose of this freedom. The United States had made the globe available to its own entrepreneurs for the purposes of capital accumulation. On this basis it had succeeded in exporting not only capital but also overaccumulation of capital, spurred by big government ventures. Now it shielded its national economy from the danger of its credit being handed back after failing to find profitable investment around the world, and forcing the great American state to admit that it had no capitalistically profitable use for the dollars it itself had created. This problem was supposed to remain a problem only for America's partners. The rule that the other nations had to accept American promissory notes and remunerate them with credit of their own did good service here once again. However, America's act of force entailed the admission that the dollars roaming the globe were nothing but debts created by the activity of speculators or state administrators, i.e., no longer represented abstract wealth "in the flesh." Their advantage of being directly equated with value everywhere had been invalidated by the very maker of this money. The Americans were the ones least bothered by this small contradiction.
America's partners consequently had to do quite a bit before their great debtor, which still wanted to be considered the creditor of the capitalistic world, was willing to erase the equal sign between the American currency and world "liquidity." A few more waves of speculation were required, in which growing dollar sums were "invested" in the "expectation" of a drop in the dollar, European central banks fought "defensive battles" against the influx of "hot" money, the German Bundesbank "closed its foreign currency counters" for hours, and so on, until the dollar crisis came to a head. France's Fifth Republic, which had been renewed by de Gaulle with a certain anti-American spirit, contributed a demonstratively provocative act of state. It took the rules of Bretton Woods literally and actually treated the dollar assets "flooding" the world as debts, handing its foreign exchange in dollars back over the Atlantic to have it redeemed in precious metal. Eventually the United States ended the gold convertibility of its currency, this fictitious "ultimate guarantee" for the exclusive quality of the dollar as world money which had been maintained by not being implemented. Finally, America's most important economic partner in Europe, West Germany, suspended its dutiful buying of dollars altogether. Then the American state could no longer avoid agreeing to a basic "reorganization of monetary relations."
With the much-cited "end of the Bretton Woods system" the central banks took up the practice of "floating," i.e., the continuous revaluation of all currencies in relation to each other through the free business activity of speculating money dealers, whose first deed was to make the dollar drop significantly in relation to the Deutsche mark. That was the whole change;[note 6] but it was really something.
Firstly, this meant a very important change of role in world politics for the states involved. The United States had given up its supremacy over the capitalistic world's money. With its dollar bills it was no longer the bank of all other central banks and the universal creditor but, like all other states, the creator of a credit money which had to submit to critical evaluation by international trade as a national debt and currency of relative value. Conversely, the other states had acquired recognition as sovereign money creators with equal rights, thus emancipating themselves from their initial debtor role. The resulting devaluation of the dollar-an inevitable reaction to its losing its previous exceptional position-caused some confusion in the system of worldwide capitalistic wealth-not necessarily to America's disadvantage (as explained in the following chapter), and not simply in favor of West Germany and its partners in the European Community either. The waves of speculation right up to the final "dollar crisis" had made the Europeans' own foreign currency reserves swell enormously, since they had to soak up dollars to maintain parity, and now they saw them lose considerable value-measured in their own currencies, which were now in a new way the measure of all values! This was the price they had to pay for the strike for independence which reduced their burdensome dollar credit, first qualitatively and then also quantitatively, to a volume which could henceforth be functional for their global economic interests.
Secondly, the elimination of the old parity system thoroughly redefined these interests and the function of the various national moneys. The nations' agreement to end the dollar's extravagant special position as a kind of gold substitute did not mean a return to an international monetary system using precious metal as the means for international transfers of wealth. Rather, all capitalistic currencies now acted in principle as world money in the same way-to the extent that they were used by the business world for their various concerns. And they all represented the world's abstract wealth with equal validity-to the extent that they were rated as bearers of value by money capital with its international demand for and supply of credit moneys in relation to each other. A whole lot of currencies which were in an equal way conditionally valid and whose values were determined relative to each other replaced the dollar in its special role as the absolute measure of value and unconditional world money, a role that the United States could no longer maintain against its challengers.
This made it clear that the states and their capitalistic national economies in any case still had the one essential determination which the United States had imposed on itself and its partners by establishing an integrated dollar world economy after the war. In their efforts to gain national wealth, they were still parts of a global business life. No nation had claimed the right nor been given the freedom to first of all accumulate capital for itself and then maybe turn to foreign trade. From the start, each nation's own gainful activities meant creating and distributing internationally measured and accumulating capitalistic wealth, i.e., earning world money.
The new business condition of world money pluralism without discrimination gave these efforts to gain world economic success a new criterion and thus a new goal. The endeavor to earn as much world money as possible from other nations was no longer aimed at acquiring a certain dominant currency or merely procuring a pile of various foreign currencies. Instead, each nation with a halfway functioning capitalism began to compete for the use and evaluation of its own national credit money in relation to others by the international brotherhood of money dealers. This was what now decided whether and to what extent a nation's own currency was world money; and this was now the crucial way to own world money. To this extent each nation could now conquer a piece of the power the United States had hitherto monopolized: the power to mint world money, real abstract wealth that was generally recognized and could be used all over the world.
This opened up a new kind of competition with a toughness of its own. It was no longer merely a matter of earning foreign money elsewhere and insisting on it being redeemed in a single money, a generally recognized and usable equivalent form of value. Rather, since the end of the Bretton Woods system, all buying and selling has been devoted to the goal of pushing one's own national money as a preferred means for worldwide profiteering, i.e., crowding out the use of foreign money in favor of one's own, so that one's own credit money represents ever greater shares of globally-achieved abstract wealth. The competing nations refused to automatically equate American national credit to assets that would act as capital, rather than to debts of dubious value and usefulness. They expected the capitalists of the whole world to establish and certify that equation for their own national credit-not absolutely but in any case to a higher measure and wider extent than their rivals' national credits. States have waged this competition with the wealth they have at their sovereign disposal, i.e., using precisely the credit money whose dominant role is at issue. All nations wrestle to use their credit, and have the capitalistic world use it, in such a way that its creation and continuous accumulation is proved right by the result, namely, the successful business achieved with it.
The United States has also been subject to this competition since then. However, it is not just one participant like any other. Its level of aspiration has remained extravagant. If its dollar was no longer the absolute world money it should at least be the best one, i.e., settle the free and equal competition of the currencies clearly and one-sidedly in its own favor. With this interest America has not merely accepted the new competitive system, but made it its very own concern again. And even after giving up the special position it had used to set up the world economy of the postwar era, the United States, as its long-time operator and beneficiary, had the means for reaching its goal like no other nation.
The United States faces international competition in principle, like any other state. This competition is for overall national success in an endeavor that is not pursued directly by state power, namely, the business of capitalistic entrepreneurs. This business starts with a monetary advance, as a rule financed by debts. Success comes about when the debts have changed into real monetary proceeds through profitable use of labor and sale of the products at appropriate prices. The public interest, which is the state power's business, is something like an overall balance sheet of such successes (and the necessarily accompanying failures), but it is not the mere sum and comparison of all entrepreneurial expenditures and returns. What capitalists advance for their undertakings from cash resources or bank credits and what banks lend to their clients, that is private property. But from the state's higher point of view, this property involves a public performance which constitutes an advance of a more fundamental kind. This advance is credit created by the state central bank, put into circulation with legal authority as the definitive means of payment. On the one hand, the state power will brook no doubt that this credit is money, and this is the only reason why it represents real wealth. On the other hand, however, its central bank does not use this credit money simply to make good the proceeds realized from the capitalistic use of property. Rather, it uses it to anticipate the total profit of a business economy which is supposed to make successful use of these sums expressed in national currency and legally declared to be money, and thereby turn its credit into the expression of the real, profitable realization of capital. It is only such business success that economically justifies national credit advanced by the state power. However, whether and to what extent this goal has been reached, and the state's task for its private business world achieved, cannot be seen merely from profit and loss statistics of private businesses, because this goal is precisely the object of competition between nations. Overall national success does not consist in absolute, numerical profit, but in the relative reach of the nation's monetary wealth existing in capitalistically usable form as legal tender; i.e., in relation to the corresponding power of other national credit moneys. This relation results from comparison of the various nations' overall credit, a comparison made on the basis of their property as legal tender, and achieved by the reciprocal measurement of the moneys' value, i.e., the value they represent. This measurement is not a theoretical matter of arithmetic but the everyday business practice of a special branch of money capital. The reciprocal evaluation of national means of payment takes place in the professional exchange of currencies, done under the criterion that it has to pay off. There is no other way of settling national success in economic competition. Conversely, this is the way it does exist, as an objective economic situation for all creators and users of credit, and therefore binding.
This already says what the state power must do, and can do, for this success. It creates the credit which is the starting point for all business activity, which in practice has to arrive at a continuously updated "closing balance." One avenue of credit creation involves being the ultimate creditor of the banking sector, which on this reliable basis "creates" the money advance required for the production of capitalistic wealth, in exchange for sharing in the profits. Or the state creates credit money on its own account by borrowing money, creating the national debt on one side and the corresponding notes which are as good as money on the other side. It can also fund itself directly out of ongoing national business by means of taxation, using the revenue to initiate profitable business and above all to make sure that as much as possible of all initiated business follows a good course and ends up with good results-which includes a whole world of business conditions to be created by the state. All these state economic activities are aimed at bringing about this overall national success by promoting the means for it. The state obviously does not have the "final" result under control, since this success can only be had in competition. First, the protagonists of national credit utilization, capitalistic entrepreneurs, must succeed against each other. Second, their balance sheets must be sufficiently "in the black" to justify, as successful start-up financing, everything the state has done by way of creating credit and promoting business. Third, this success has to be greater than in other nations. And finally, the foreign exchange markets expressing the business interests of the worldwide capitalist community have to agree with this comparison in practice, thereby certifying the nations' efforts and making the comparison objective and binding. National economic success thus can not be decreed, but as long as the government exercising power in the capitalistic state is in the hands of market economy fans, the state would not try to do that anyway. Instead, it faces the challenges through competition. That is, it does what it can, and what its means permit, for overall capitalistic success in its own territory-these means being national credit and the state's legal power over its use. Also it does everything it can to penetrate the business spheres under foreign sovereignty, and let the users of its national credit share in the capital realization and accumulation brought about by their rivals. The first-mentioned efforts are summarized under the heading national budget policy; the other branch of state action is international blackmail.
In this competition the United States plays an outstanding part.
The United States never had the problem of being unable to do anything with its dollars in world business when the old system of fixed exchange and parities was gone. There were no direct repercussions on the solvency of its business world or the state power which could not have been eased or even compensated by correspondingly stepping up the creation of money. But this was little comfort for the governing officials of the American global economic power. They not only witnessed a never-ending decline in their fine currency, so recently equivalent to gold. As a complement to that, they also saw the United States lose more and more shares of world business to rivals with "harder" money. And even though these shares constituted a small percentage, the trend was still alarming: the nation's economic power was in decline.
The problem the United States did have was of having to ensure that its masses of dollars were used profitably enough to be confirmed as both real wealth and as the economic might of the nation-just like any other nation but to a much greater extent and with even more sweeping success. To maintain the power of the nation's dollars assets over the world's wealth (or even regain the former extent of this power) it was necessary not only to clarify the hierarchy of states externally, but also to put American national credit in action in such a way that the growing state debt was matched once again by more economic success.
This task found its man: a president whose belief in America's greatness made him sure that the unscrupulous use of this greatness could not fail. It just had to bring back to the nation its "eroding" world power undiminished. In this spirit, Ronald Reagan first decided that all technical difficulties and strategic impossibilities of a nuclear war that would guarantee final victory over the Soviet Union were irrelevant, and commissioned an effective military occupation of near-earth space intended to make the enemy give itself up militarily or force it to its knees by actual war. And he ingeniously linked this goal of a monopoly on nuclear force with the second goal of restoring America's old rule over the world's money and markets under the new conditions of competition. With his aggressive lack of concern for any doubts about fiscal policy, he not only drummed up the funds for his "Strategic Defense Initiative" but also worked out the exemplary budget policy principles the United States would have to follow to live up to its own claim to superior economic power.
The measures are easy to list. Taxes were lowered to strengthen the competitive power of American capitalists. This was intended to stimulate such a growth of the national economy as a whole that tax revenue would rise and justify all kinds of creation of credit by the state. The immense funds required for the project of arming for an ultimatum toward the Soviet enemy were spent with the same economic objective. Such armament orders made American companies big and profitable enough to be able to use their newly developed products and methods to establish whole new branches of the world market and exploit them fairly monopolistically. The resulting budget deficits, which increased mightily at first, were blamed on the burdensome funding of social programs, now considered unproductive and thus reduced. The nation on its way to a new capitalistic greatness owed its welfare clients nothing more than the hope for the new jobs that were bound to come about. To help these jobs actually materialize, the state also did its bit to lower the national price of labor by winning a tough fight against the opposing power of the unions. To cover the budget deficits, money was attracted from the rest of the world by high interest rates, quite in accordance with the capitalistic "law" of supply, demand and equilibrium price. What this technique was really all about was flooding the capitalistic world with the American state's dollar debts, which were assured recognition as capitalistically useful assets by a bountiful rate of return. The prospect of high rates in turn increased the value of the greatly multiplied dollar over other world currencies. And this not only further promoted the state's solvency, it also gave American capital more international punch in the competition for opening up and further utilizing foreign spheres of investment, just as intended.
With this bundle of measures, which has gone down in the history of capitalism as "Reagonomics," the United States did not merely achieve temporary success in competition on world financial markets. Its boss demonstrated in exemplary fashion how a global economic power has to wage its competitive struggle in general. The important thing is the nation's credit, which combines past performances and profits, i.e., the existing capitalistic potential, with the prospect of the future business to be brought about on its foundation. The nation's credit is the anticipation of its later successes. So what was crucial was the national reemergence Reagan initiated, in all its various objectives. The trial of strength, aiming at final victory over the Soviet enemy, fundamentally won the favor of the capitalistic business world for that nation that really dared to realize such a project. And this was not merely because business fearfully calculated that locating in the homeland of the Strategic Defense Initiative would most probably offer the greatest security in case of a military decision. It was rather the resolute will, operating with credible means, to make the "concept" of one capitalistic world finally come true that showed its power of persuasion among like-minded speculators, creating credit not merely in the figurative sense. The usefulness and thus the value of a nation's credit actually depends on how much power of self-assertion its home state is seen to have, in relation to other sovereign sources of credit. Demonstrations of military power regularly turn directly into financial means. The huge debts the president incurred for his arms program were therefore not a "warning signal" for the national and international business community but themselves another convincing "indicator." Their utterly exorbitant quantity really showed how uncompromising the nation was about realizing its political will-both the will to military superiority and the decision to organize the required armament by the business rules of financial capital, i.e., make it a source of earnings for money owners. The high interest paid was one big affirmation of this confidence-inspiring perspective. The nation thereby demonstrated how much value it attached to future growth in power and business and how much of this growth it expected to be able to achieve. This bold anticipation of the future profits of a nationally useful business expanding over the whole globe not only justified the budget deficits, inclusive of the promised interest. The nation's future prospects pursued with such determination automatically gave "stability" back to all the already-existing masses of dollars circulating worldwide, whose value had become increasingly dubious. Suddenly dollars proved to be first-class means for doing business with America and its "reemergence." And they gave the nation an inexhaustible source of credit funds permitting this reemergence to be brought about in a fine capitalistic way. The mass of American national credit still circulating as world money thus proved useful as a lever for more accumulation in quite a new way and, for the first time since it had stopped being the only alternative, the dollar was traded and evaluated as the comparatively best alternative among all currencies.
America's competing partners were impressed, and they reacted accordingly. They had little option but to copy America's actions as best they could, i.e., arming strategically and spending masses of their own national credit on creating bigger capital and new industries. And of course they also had to pay a correspondingly high rate of interest to financial capital for holding their bloated debts in esteem. The allies knew they could only lose in this competition for the time being, expressing this in clear dissatisfaction with their leading power (one variant being the know-it-all criticism of American budget policy by Germany's "international economist," chancellor Helmut Schmidt). And in fact quite a few participants in the world market ruined their currencies at the time. It is only to be expected that not all calculations worked out right for America either, since these calculations were aimed at a new competitive struggle being opened up and not at a final balance, which never exists in capitalism anyway. Besides, this discovery, which America's own international economists were the first to make, properly belongs to the next phase of competition.
After "Reaganomics" stopped working out as intended, even former admirers considered America's program for economic success against its competitors to have failed, and furthermore to have actually been doomed to failure from the start. Proof was the massive increase in federal budget and foreign trade deficits, the "double deficit" anxiously lamented for years. Of course things looked different as long as the program was in full swing. Despite lower tax rates there was a rise in tax revenues, not close to covering the enormous public expenditures, but anyway that was not the intention. The massive debt served to set enormous business going and equip American companies with new competitive power. Their growth ultimately did not reach the heights of the constantly required new borrowing, but it was never a problem to raise funds. The nation's power of economic access as represented by the dollar even increased. It was no weakness that foreign countries also earned money on America's upswing, turning the balance of trade negative. For years the United States made cheap purchases all over the world, while in various branches of business American companies met with unrivaled productivity. This was success in competition. One cannot say it never existed just because competition kept on going and after several years produced results on the American side that involved a negative overall balance. It may even be that the budget and foreign trade deficits seen to be damaging the nation under Reagan's successor were no higher than before. What counts is the economic substance of these deficits. Are they justified by an increase in American power, in world politics and the military sphere, as well as in America's disposal over the abstract and concrete wealth produced throughout the world, so as to leave all rivals behind, both the Soviet Union strategically and the other economic powers economically? Or are they producing no such increase, but signaling rather that certain rivals are getting a better hold on global economic growth? The latter was the case in the years after Reagan.
As far as the budget deficit is concerned, one day it was no longer justified by America's debt-financed national awakening, but proved to be an accompaniment to low or even "negative growth", stagnating or falling tax revenues, and dwindling confidence in the national currency-the latter being both a consequence and an additional component of a critical overall assessment. The deficit was a burden on the budget, which was now needed more than ever as a source of new national growth. The reason for the deficit could now only be a bad one. Depending on their party affiliation people blamed it either on the interest payments for the Republicans' old SDI debts or on the Democrats' exorbitant expenditures for luxurious social programs. One reason was as objective as the other. The budget that was "in the red" included these two items along with many others on the expenditure side, showing no sign of which item could properly be said to be the true cause of the shortage in revenues. It was only, and in any case, clear that the budget was not good for as much any more. Everyone responsible for the deficit complained that there was no recognizable national benefit in the state's creation of credit. And regardless of whether the interest payments on Reagan's old promissory notes or the public feeding of the poor was to blame, the politico-economic fact which politicians noted beyond all their ideological disagreement was that the national credit growing by enormous new debts year after year was not leading to a national capital accumulation that produced and earned good dollars to justify the nation's growing total advance.
The general view that the "holes in the budget" were no longer acceptable economically was confirmed by the nation's second deficit, the one in the balance of trade. Its "red ink" was no longer written off as a painless accompaniment to economic growth, because every assessment of the nation's competitive position yielded a minus in both the function and substance of the national credit-namely as a means of business for the world and as public and private assets. Dollars were becoming less and less useful worldwide. In the light of this overall assessment, the negative balance between export and import figures was taken as proof that certain foreigners were one-sidedly earning much too much on America, not letting America earn money on their markets to a fair extent. This interpretation of the situation was rather lacking objectivity too. The "red ink" was not a problem because it was "red" and even less because it meant "black" elsewhere. The problem was that national growth left something to be desired when compared internationally. Otherwise-as in Reagan's day-nobody would have paid any special attention to the fact that the total payments for imports, which are taken care of by the national creation of credit anyway, were higher than the sums of dollars earned by exports. Asking who was to blame and promptly finding an answer was the ideological form for registering the fact that the bloated share of American dollar debts in the volume of credit circulating worldwide was not matched by any increased share of American dollar revenues from the capital which had accumulated worldwide.
This politico-economic fact also changed the status of the debts the United States had abroad. Their increase was not faced by any growth of American assets big enough to keep the bloating of the American national credit from affecting its power to act as money and dispose of the world's wealth. Those in charge noticed the dwindling of this power in their own way; not so much as a consequence of the incessant competition between nations in which their currency was losing, but rather with a glare at their rivals, or rather one rival, which was earning money directly on the growth of America's external debts and could therefore at the same time be held liable for the so clearly unproductive, if not counterproductive, growth of these debts. Japan was even collecting interest after already getting more dollars out of the United States in foreign trade than the country was entitled to on the basis of its imports from the United States. The reverse interpretation, that the Japanese were making the dollars diligently earned in America available again to the insatiable American treasury for a small, utterly honest fee, was about equally lucid but out of the question because America's fiscal policymakers could see no tangible advantages in this double transaction. Instead, the more time passed, the more anxiously they realized both that foreign business was not improving their debt position and that their own creation of credit was unable to fix up the external relationship. The nation was forced to admit that it had pretty well taken on the role of the debtor state in the world economy.
Finally, this role was no longer justified by any higher strategic prospects either. The fact that the Free World had won the "battle of the systems" against the outlaw Soviet power may have relieved America, but it took a much greater burden off its allies. By winning the Cold War the United States actually lost its most powerful argument for the exclusive trust which it had been able to claim as the indispensable leader of the entire capitalistic world in the struggle with an archenemy hopelessly superior to all other nations, and which trust it had also literally converted into credit. There was no way to get around the diagnosis that America's economic power was seriously damaged.
This diagnosis was from the beginning synonymous with a new awakening. In the spirit of American patriotism which, in its boundless trust in the power of American wealth, considers its success to be mainly a question of will, the nation became self-critical. It must have done something fundamentally wrong, the state must have mismanaged national wealth, if all the borrowing and spending had led only to an accumulation of foreign claims against the nation rather than the nation's enrichment from the rest of the world. If all the dollars the state created and spent kept on proving to be useless for America's success in competition, then it was obviously totally un-American to let the state have so many dollars at all. With the Republicans' "conservative revolution" this self-criticism became quite fundamentalist. To prevent the state from misusing the nation's wealth once and for all, it had to be stopped "at the source" by simply prohibiting state borrowing. What a blow to the élan of the "revolutionaries" on the Right from the Democratic president's approval of this proposal. The whole nation was in agreement that a "balanced budget" was the only possible corrective program.
Interestingly enough, the measures intended to make this emphatically demanded debt-avoidance policy work are nothing but an up-to-date version of the "Reagonomics" whose terrible legacy the Democrats are so fond of citing as the reason for the persistent budget problems. Again, the first thing is tax cuts intended to make it easier for capital to grow and thereby increase tax revenues. There is also plenty of state credit for putting together chunks of capital big enough to guarantee American firms global success. And there is most definitely a higher geo-political purpose to create confidence in the good sense of creating credit, namely that America's superintendence of the world, which the world of course needs, has now been redefined. The greatest efforts are required and justified for successfully performing and ensuring this superintendence for the new millennium, in order to consolidate existing technological leads or gain new ones. This includes developing an up-to date "strategic defense" and doing what that requires, to the point of reviving space programs. The plan of strengthening American credit by employing it in a forward-looking national way thus involves once again the well-known "key strategic industries." For example, the civilian and military branches of airplane construction are currently being brought together under state approval to form an overall concern whose only conceivable rivals in the world are the European Airbus manufacturers. New technologies are being pushed because technology itself has become an economic category. Its development increases the productivity of labor, while its application revalues existing capital, i.e., it devalues the productive capital of foreign rivals (by "moral depreciation" as Marx would say). A real national campaign has been launched with the goal of conquering markets by opening them up with superior production and new, initially unrivaled products, leaving the competition behind. In order to make both the old debts and the new credits financially sound, there is no skimping on one thing, namely the interest paid for them. The interest rate is as high as necessary for convincing the business world that America believes in its future-"again"-and is willing to pay whatever the cost. This is how the United States makes sure its new and old obligations are recognized as sound assets and its currency has an acceptable exchange rate. The interest rate need not be as high as in Reagan's day, firstly because there is enough investment-seeking money capital around, thanks to past creation of credit, that the demand for it can be satisfied more cheaply. Secondly, this "datum," like the dollar rate it "stabilizes," and the gladly-noted growth figures and reports of tax revenues actually rising, is a sign that the world economic power's basically never-changing competitive strategy is apparently once again producing an accumulation of successes which impress and are honored by the international business world.
Special mention has to be made that Clinton's social democratic government does not merely copy the budget policy of its Republican predecessors, but most resolutely surpasses it in fighting the deficit by cutting federal social expenditures. New laws restrict welfare to a definite segment of an individual's life history, thereby linking up with the best traditions of the American social state in double fashion: this unburdens the economy of the expenses of the poverty it produces, and abolishes the un-American situation that social policymakers see in the growing welfare expenditures, namely that of the poor simply having a great time in their poverty with the state's support. With new vehemence these people, who are American citizens after all (others do not even have a claim to this "social benefit"), are being released into their freedom, untainted by any state intervention, to contribute to the expansion of American business life by rising up from welfare recipient to taxpayer. The American economy meanwhile offers enough opportunities for this. Part-time and temporary jobs are being introduced into lines of business which never had them before; branches of production are being handed over to auxiliary suppliers which run their operations with part-time jobs depending on the level of incoming orders; production is being transferred to areas with high unemployment where no wage offer can be refused. This means more jobs-simply because more people are doing various work by rotation and on call. And a new low-wage competition is underway on the national labor market, putting old-age pensioners and housewives back on the labor market and giving capital more freedom in cutting wages. Companies get around union-negotiated wage rates by hiring people as "part-time workers" in normal jobs, at lower wages and with no social benefits.[note 8] The state still has the task of cutting medical care for the poor and the low-income aged. Getting rid of people who are no use for making profit any more, who do not contribute to the nation's wealth but merely detract from it; completing the poverty of those who can still make themselves useful on the given terms by the state-organized pauperism of those who have become useless: this is no blemish for the world power of capitalistic surplus, but a constitutional demand.[note 9]
By keeping to this tack, the United States has once again managed to make its national capitalism run better than elsewhere. And that means it does anything but lean back self-contentedly and let the world economy do its thing. The successful accumulation of national capital increases its power of access to foreign markets, but in the same measure also its need for those markets to be solvent. This gives the state power legal claims against the nations in and on which American enterprises want to earn the money they need for their surging accumulation. America's big rivals accordingly find themselves under a new kind of pressure to be successful, which they have so neutrally christened "globalization," and are reacting once again in their typical way: by imitating the standard-setting model.
With their project of economic and monetary union (EMU) America's rivals united in the European Union have set about creating a credit money intended to put them in a better position than before in comparison with the economic power of the United States, to undermine America's competitive advantages, and open up greater parts of worldwide business to their national credit. Fiscal policymakers in Washington are demonstratively unexcited in their reaction to these efforts by their European colleagues:[note 10]
"Fundamentally, I think that the dollar will remain the primary reserve currency for the foreseeable future, and any further erosion in its relative position in the system is likely to happen, if it happens, only slowly. It is true that the dollar's reserve role has declined somewhat over the past two decades. Since 1973, when the dollar constituted about 76% of official currency reserves, its share of total reserves has fallen...to around 65 percent. Some believe that this process will accelerate sharply because investors will find the euro to be a more attractive investment instrument than the individual currencies it replaces.
"I believe that these predictions are substantially overstated for several reasons.
"First, it is likely to take some time for the markets to become comfortable with and confident in the new currency. Credibility normally takes time to establish...
"Second, the revolution in European financial markets that many expect to follow EMU will not happen overnight. It is true that the immediate effect of EMU will be a substantial expansion in the range of assets denominated in euros - perhaps some multiple over those now denominated in the German mark. Yet, there will still be different assessments of the credit risks of the government securities issued by the member states. And the range of instruments available may take some time to match that of the United States capital markets.
"And, finally, it is difficult to overstate the power of inertia. Markets may be forward looking and many participants may be confident that they can see with confidence a dramatic eventual shift into the euro from other currencies, but caution is also a powerful force in the face of uncertainty...
"Some observers in Europe have expressed a desire to gain a dominant reserve role for the euro as a matter of prestige. I think that this view confuses cause and effect. Prestige alone will not create a successful economic outcome...
"For all these reasons, we expect the impact of the euro on the monetary system to be quite limited initially and to occur only gradually over time. The best outcome from an American perspective would be a sound euro-underpinned by sound European macroeconomic policies."[note 11]
So it is perfectly clear to the Americans that the European project is in principle supposed to, and could, end up "eroding" the domination of the dollar in world business.[note 12] But for the time being they are sure of the economic power relations reflected in the quantitative ratios of monetary reserves. As long as two thirds of them are in dollars and "markets" react "inertly," i.e., go on working the same way as before, there is no acute danger for America on this front. At the same time the Americans are of course also expressing, with all diplomatic politeness, a condition on which the United States will accept Europe's competitive project. The system must go on running the same way as before, in particular according to the only correct relation between "cause and effect," i.e., with no falsifying intervention by "prestige"- hungry state powers; but rather so that the "cause," the interests of the business world, continues to decide freely on the "effect," the use and valuing of the currencies-that is, more or less with the accustomed and current result. America, as the stronger side, is pleased to face the comparison of performance of the various moneys executed by the free money and credit markets. Only, the other side must do the same thing. It must not erect any barriers against the free use of the dollar, but must permit good dollars to be earned in and on Europe without restriction as before. If that is ensured, then there is no reason at all from the Americans' point of view why one good European currency should be more dangerous or obstructive for them than the many more or less good ones they have made use of up to now. In that case it can only be useful for dollar owners to meet with an approximately equivalent money in Europe.
The United States is all the more sensitive on the one point that Europe must remain open as a business field for the realization of American credit and the accumulation of American capital, and American dollar owners must not be excluded from any opportunity to earn money. For the United States it is a matter of principle, the principle being that the size of America's capital is its main weapon in international competition and such huge capital simply needs the whole world as a business partner, so partners have to comply by providing "open markets." That is why the United States government takes immediate and inexorable steps against any EU guideline that discriminates against meat from hormone-fattened cows or genetically altered soybeans (ostensibly or really) in the interests of public health. Such exports happen to be high-tech products of the American agro-industrial complex, and the nation will brook no attack on its competitive lead. The same with aircraft: it is nobody else's business if the American government reorganizes its military- industrial complex involving the merger of the two national aircraft concerns. If the only rival does try to interfere, i.e., when the EU Commission poses as the guardian of free competition in the interests of its Airbus consortium, stipulating conditions for the Boeing and McDonnell-Douglas merger and even threatening to take defensive measures on the European market in case these conditions are not met, the immediate answer is the threat of "trade war," and by naming France as the main candidate for such measures the administration in Washington drives a wedge into the "enemy camp"... So for the time being the EU is content if the new American giant promises to restrain the aggression of its sales methods.
There is always something of this kind for the United States to fight over; and its rigidity in such matters sheds some light on the generous attitude it adopts toward the euro, the Europeans' competitive project actually intended to be much greater and more fundamental. America's encouragement to go on with it in a "sound" way may be guided by tactical considerations; but it in any case also shows that the United States has not altered the contradictory principle of its commitment to global capitalism through all the ups and downs of its fight for world economic power. It most emphatically demands that its big partners make not merely expedient, but successful, efforts to promote their business life and achieve a useful national credit of their own. America takes for granted that whatever they bring about is a means for itself, namely for its companies with their world-record turnovers. It challenges other nations to compete - and gets nasty as soon as it discovers that its partners' efforts are of course aimed against it too. As soon as it loses sales markets, it thinks it has been cheated out of its success, which the big companies with their big turnovers have a right to because they need it. Being the arranger of worldwide competition between nations, as well as a participant, it ignores the implications of the autonomous striving for success it demands from everyone. For example, it takes no note of what new kind of competition a successful euro would actually evoke. Whenever faced with a result it does not like, it takes action - not to correct its paradoxical position toward its rivals, nor its general command to compete for the benefit of the world economy, which is self-serving but at the same time endangers its own benefit - but to correct its adversaries. So it can go on exactly the same way: challenging the others with approval to compete and then making precise claims for its own success against theirs.
At the present time, the Europeans can expect from America a demanding approval for their faltering euro project. The other side of the coin, the call for correction, is aimed more at America's other big business partner.
The United States does a major part of its foreign trade, in both directions, with Japan-and has been complaining for some time that it is unfairly excluded from free market access there. This assessment is beyond all doubt-not because it derives from any real restrictions to access or other discriminatory foreign trade practices by Japan, but because of the result, i.e., that the bilateral balance of trade is notoriously negative for the American side. This finding is a constant and fundamental strain on the world power's relations with its trans-Pacific ally, regularly coming to a head whenever the United States registers more loss than gain and sees a need to take critical stock of its overall world economic position. With respect to Japan, the Americans in charge inevitably forget how much they profit from cheap imports, how much worse off their foreign traders would be without their Japanese customers, and how much money American companies earn in and on Japan, even in the United States. And the last thing they could possibly realize is that the freest and fairest world trade cannot save them from trade deficits since it is simply a matter of capitalist competition. The negative balance in their trade with Japan instead confronts them most tangibly with their debtor position in international business. This position does not come from Japan crediting America's deficits by its banks using the dollars they have acquired to buy "products" from American financial traders or from the Treasury itself. And when the balance makes America suffer from its debtor position (until the overall trend improves and the excitement inevitably dies down), it is definitely not because of some special financial relations with Japan. But no matter. Whenever those in charge register a "decline" in the American economy they always go beyond constructive self-criticism to draw the "conclusion" that the foreigners are at the root of the problem. With the same self-assurance with which the nation considers itself capable of whatever it sets its mind to, it assumes that its success against all others is inevitable if it is only given a fair chance. It is therefore forced to conclude that only foreign machinations have prevented such a fair result. To identify who is mainly to blame, the Americans in charge need only take a look at the bilateral balances of money earned.
It is a certain irony of history that the reason for Japan's foreign trade successes in America and its creditor position vis-à-vis America is that this country has played a role completely conforming with the system of global capitalism designed and brought to life by the United States. It dutifully rebuilt itself around the goal of acquiring world money as part of the world economy, and was equipped with capital and used by American companies accordingly. Unlike the European powers, however, Japan for a long time found no sales market for earning world money other than that of the United States. The nation consequently directed all its competitive efforts toward this market; its successes increased with every boom of the American economy and did not disappear again afterwards. Because of this one-sided orientation toward the United States, the administrators of Japan's political economy did not even manage, until a few years ago, to use their growing dollar surpluses to establish an internationally used credit money of their own, unlike their West European colleagues, and create a "yen zone" within the world market comparable to that of the Deutsche mark. They remained dependent on the American capital market for using their dollar influx from the American market. Instead of confronting the whole world with their own debts as a creditor, they remained mere dollar owners even as they remained America's creditor, dependent on the credit funds created by their debtor. For the Americans, this peculiarly dependent position of their main trade partner is nothing but a double dependence of their own. American dollars are turned into accumulating export capital in Japan-rather than in the United States-and the yields of this capital are turned into dollar investments still in Japanese hands which American debtors have to pay interest on-rather than dollars in American hands commanding the wealth of other nations through the global financial market.
This diagnosis points the way for America's foreign traders to offer resistance. It does not occur to them to call free trade with Japan into question in any way; their demands are all in the name of long overdue fairness in free trade. Equipped with this directive, government agents go looking for both formal and informal practices to be held as discrimination against American exports, and naturally find them whenever an export lobby makes its expert knowledge available to them. Japanese rice farmers are paid subsidies unfairly depriving American agrarian manufacturers of their export opportunities; in telecommunications American cell phones are not served by their own transmitter network, i.e., are excluded from a seminal market... Such efforts do not help much, even taken altogether. So one must generalize: Japan's "financial services market" is still completely in Japanese hands; and the country has too little domestic demand, which would otherwise inevitably be vented in a run on American articles. Proven supply-side theorists start calling for billions in government aid to stimulate business for the rival, because they quite simply consider it the duty of their trade partner to make its entire domestic circulation of goods and money meet American capital's imperative need for sales. They of course immediately have another reason to complain about discriminatory subsidies as soon as the Japanese state does stimulate its business. Complaints are no use even when Tokyo formally complies with them. Consequently, the Americans also start criticizing the terms of foreign trade- the (actual or conjectured) effects of exchange rates on exports and imports- although prevailing opinion tends to consider them a product of nature and the United States otherwise bestows its famous benign neglect on them. For years, the masters of the dollar advocated a shift in parity to the yen-the goal being to make imports from Japan more expensive and to promote exports to Japan. The result was that a lot of things got into disarray, American exporters earned a bit better, Japanese ones clearly worse, and the trade deficit as a whole increased or decreased depending on the successfully applied competitive powers of various branches of business. Along the way, the Japanese owners of American credit papers, right on up to the national bank, were relieved of a considerable part of their assets, measured by their own money. The fact that this did not bring American credit into worldwide disrepute once again testifies to how unsuccessful the Japanese were in emancipating themselves and all their dollar surpluses from American money as the substance of their national assets and creating an equivalent alternative in their own national credit. After all, the shift in the exchange rate got quite a bit going-yet another "side effect" of America's forcing the world to compete. The "strong yen" made the Japanese business world develop an interest in the United States as a sphere of capital investment, at the same time giving them a powerful means of access. Such investments managed to alter the balance of payments, but not the dissatisfaction of American governments. The "sellout" of American treasures to the Japanese was not right either. Although productive capital investments were welcome, they were immediately suspected of being instruments for promoting exports, i.e., by way of trans- Pacific internal business transactions. The United States resisted this by "local content" clauses, rules on the minimum share of real American value product in the final product value-thereby disturbing not only a lot of bilateral and multilateral financial and commodity flows but also many branches of its domestic market activities; and the result of this did not please it either. As a last resort for recouping themselves, the managers of America's national success thought of simply obligating their Japanese adversaries to buy certain quantities of export goods. In its brutal directness, this extortionate "Hand over your money!" betrays as much superiority as it does impotence.
This never-ending cold trade war is not due to America's arbitrariness, no matter how much patriotic, xenophobic misinterpretation of the nation's trade balances is at work. The United States can actually not afford to give up market shares or whole markets, consoling itself that it is still earning quite a bit elsewhere. Every loss impairs its national means of competition, which happens to consist in its mass of capitalistically applied wealth. Every foreign gain at its expense endangers the gap in the volume of capital which secures its special competitive power. It is the prerequisite for American capital, which realizes the nation's credit and transforms it into ever more capital, to earn ever more on the world, to actually be successful, accumulate, and thereby remain capital-this is how dependent on world business the United States has made itself. And it lets its trade partners feel it-in proportion as negative balances prove it has lost business which it should really have had on a really expanding world market.
The United States has not only put the other states under a "regime" which pins them and their particular national capitalism down to the role of parts of and participants in one global economy. Its own capital also, and above all, makes use of the whole world's sources of money as the condition for its growth from the start, and not merely of native resources and solvency. For its national growth, for the expansion and realization and further expansion of its national credit, the United States therefore requires both independently expanding business opportunities all over the world-and growing shares of them for itself. It cannot tolerate the growth of world business slowing down somewhere, and it cannot tolerate any of this business escaping it. It keeps a corresponding grip on the world of states: there is definitely a method to it.
America's basic attitude toward its trade partners' competitive efforts is one of concerned sympathy: it sees them as a source of business opportunities for its own capitalists. As long as this is ensured and the nation altogether earns its fair share, it regards world trade as fair and the calculating involvement of responsible sovereigns as a matter of course. This is even required. It is out of the question for any power, no matter which one or how big, to withhold its country from the blessings of free competition. For that would mean withholding a piece of existing wealth, i.e., a real or potential source of wealth, from American access. Other states may accept the failure of their capitalists somewhere; but the United States is not just theoretically omnipresent, it is a global economic power so that its vital interests are affected by any restriction anywhere. There does not even have to be a real danger of an economic power becoming a dangerous rival beyond American reach. It is quite enough if something lies, or is intended to be kept, beyond the reach of American money. Then, the openhearted goodwill with which the United States invites all nations to join in free competition suddenly shows its other side. Anyone who ignores the invitation or who violates the explicit and implicit business terms of competition (which is almost the same thing from the American point of view) must expect a correction to be made.
It is up to the American sovereign to decide when such a case for intervention is given. It is by no means necessary that a state actually declare itself to be an exception to the rule of the world economy and behave accordingly (as the "Eastern Bloc" did in its day)-this automatically calls for belligerence. Even if the others join in willingly, all business is subject to a constant check of whether any opportunities for earning money are being arranged and exploited bypassing American capitalists. America's intolerance here and the reasons for it have been shown above through the example of its big rivals.
When it finds that foul play is going on again somewhere, the American state power abandons the business level and confronts its adversary no longer merely with its commercial interests but with claims of the higher kind. It declares its benefit to be a right commanding respect, and the other side's service to be a duty. Formally, it is doing what any sovereign state power does when it thinks its material needs are being harmed by another sovereign. However, the United States is not only much more comprehensive in its interests, much more demanding in its interference and accordingly much more finicky when it comes to its national needs being respected. It also has much more means for making effective corrections in the way other states do business. It disposes over whatever amounts of the money other nations might need, either to become or remain economically competent, or to increase their own national credit and secure the universality of their own national credit money. It has in its hands the biggest market in the world on which this money can be acquired, as well the biggest financial market on which this money can be borrowed. The acquisition of money, prescribed to sovereigns of the modern world as the condition for economic existence, goes crucially through the United States. With its sovereignty over the conditions of access to this object of general (both private and state) desire, the United States is consequently involved with the economic life process of other nations as if it were really an objective, natural force. In fact, its ideas of what constitute a benefit for itself are objective business conditions for other states. So it easily makes the transition from strict business to the level of extortionate force. It merely has to remind its partners of their well-understood self-interest. Among capitalistically interested and engaged states, force comes well before the guns go off. It already comes with the use of the access power of national money as a means of political coercion.
Of course, this easy transition from business benefit to political intervention presupposes that the other states do not allow themselves any alternative to continuing participation in the general hunt for world money. This was the case for fifty postwar years in only one half of the world, and not fully taken for granted even there. This raised, as mentioned, the basic question of the world order which only military force can answer, namely of who bears the ultimate, binding responsibility for it. Nowadays, capitalistic world peace still does not work without deterrent policy and occasional military actions. But it now holds worldwide; and within that "framework" economic resources, which the United States has the most of, prove useful as levers of extortion fairly readily. In this matter there is no more question of calculating profits gained and lost. Rather, on this level the use of money and credit is instead measured by the political effect: by the subservience the other state power is willing to show in general and in particular.
When using commercial benefit as an instrument of political power, the United States operates bilaterally everywhere, but by no means only. The reach of its means, the versatility of the resulting relations and levers on other states, allows it to use the method applied so perfectly for the first time in Bretton Woods. It wins allies for the generalization of its business interests, creates quasi-supranational joint concerns of a commercial kind, and does not merely give these the semblance of a higher and more general justification but actually makes them into a sweeping system of rules. It of course also holds for this system of rules that whatever presents itself as international law is only worth as much as the power which thereby manages to assert itself against others. However, the power of the United States is characterized by the fact that it always asserts its national interests as an international legal position. It is out to get other national sovereigns to consent to the enforcement of its interests for reasons of their own self-interest. And it has acquired enough general respect for itself and its concerns to organize this consent in binding fashion by way of an international system with recognized norms, fixed procedures and even special administrative institutions. The Bretton Woods system worked this way; and after its demise, under the conditions of a general competition for the best money, it has been suitably developed further in its two branches, the movement of goods and worldwide "liquidity."
- As soon as a global financial market was erected and could readily be furnished with "liquidity," the IMF organized a regime of pressure against all nations slipping into insolvency, implemented multilaterally and supranationally with fixed rules using the credit weapon. The affected nations have in any case to remain "in business" with everything they have to offer the world market or are able to mobilize for it, even as absolute losers on this market. The agency achieves this by the old "trick" laid down in its founding charter of defining insolvency as a "liquidity bottleneck" and "bridging" this with collectively created international credit funds ("special drawing rights" have since been joined by quite a few other special "facilities"). In return the receiving countries have to make "adjustments" to the requirements of earning world money, which the agency devises case by case. They regularly and rather unspecifically have to reduce their "national economy" to the proportions of business opportunities of interest to capitalists, i.e., above all to relieve the definitely unproductive "state sector" whose bloatedness is such a drag on global economic profit, and cut the equally unproductive, if not actually counterproductive subsidies for mere survival. Such programs are intended to ensure that measure of creditworthiness which foreign business needs in order to be able to make some profit on the country in spite of everything. The international force which is thereby applied lies completely in pinning the states down, with no alternative, to serving the world market as the means of survival for their rule. On this basis the joint loan from the concerned world of states makes this force appear as multilateral aid. The IMF can meanwhile look back on a fine tradition of using imperialistic force in this businesslike and civilian manner- "overcoming" the Latin American debt crisis, grooming the African countries with only their raw materials to offer, "transforming" the formerly Socialist state monopoly traders into objects for capitalistic speculation, and "saving" the diverse "emerging markets" in Central America and East Asia.
- Free world trade has now been provided with a new supervisory authority: the World Trade Organization (WTO). The WTO is used by the United States, together with its great rivals and against them, to assert its own commercial interests of global importance. One such interest is, e.g., a worldwide "opening" of all "telecommunications markets," which for the most part have not been markets at all up to now but an advance performance for a capital-friendly "infrastructure" in each country. Another example is the "protection of intellectual property" intended to secure American companies a global monopoly on marketing not only Hollywood movies but every kind of technology developed in the course of the great American modernization program, thereby securing the nation on the whole its competitive lead. Through the WTO the United States demands from the whole world that invitations to tender state projects must give foreign, read American, firms a fundamentally equal chance. This is where the United States works to erect a control regime over the economic policy of other nations in order to prevent "anticompetitive" dumping and open up the last national preserves to global commerce. And this American interest not to be excluded from an opportunity to earn money anywhere in the world is the quite unideological starting point for the worldwide mania for privatizing all state activities that could somehow make money. In fact, the United States uses the WTO to organize many of the general competitive conditions which market-economy experts attribute to the force of nature known as "globalization."
Not only is the WTO good for dealing with fundamental questions like these but also for seeing to the details. It is where the United States puts its most current demand for corrections to its partners' trade policy in the diplomatic form of a legal complaint, an insistence on proper interpretation of the rules and a petition for a binding decision. The United States actually attaches so much importance to this world organization's arbitrated awards that it has announced as a precaution that it will refuse to obey them should they go against American interests too often.
This American reservation shows once again, in conclusion, what interest the United States has in a general legal regime over world business and the competitive efforts of other nations. The United States is out to generalize and objectify its own claim to economic success, without by any means forgetting to enforce it by way of bilateral and multilateral extortion. It is also revealing that the United States needs to announce a reservation like that. This is an admission that an objectified system of rules accepted by all rivals out of calculation definitely does not necessarily coincide with its national interests. The equation only works out as long as the United States is content with its successes in competition. Otherwise, the result conflicts with the rule-and makes it wrong. But because this does not make the instruments of generalized regulatory power unnecessary, they have to be "flexible." It would be an easy matter if the United States were not dealing with rivals that, firstly, have interests of their own, secondly, have their own means of economic power for asserting them and, thirdly, make every effort to meet America's challenge and utilize the institutionalized global blackmailing business, which they are invited to participate in, for their own concerns. The set of instruments the United States has created to make the world totally functional for its politico-economic needs turns out to be what it can only logically be in a world set up like this: instruments of competition between nations, a system of rules which brings about arrangements reflecting the power relations between the rivals involved, and is therefore itself an arena for, and object of, their trial of strength.
As the arranger of a global economy and an equally global control regime over it, the United States has thus brought about a cosmos of sovereign nations which do not only compete and strike a balance with each another as foreign traders and guardians of currencies. Quite as intended by the arrangements made, they furthermore compete for power over their adversaries' competitive conduct on the level of forceful concern for their common weal. It is not as if capitalistic states did not do this necessarily nor under all circumstances. The special achievement of the United States is that this competition, just like the merely commercial one for shares of business, automatically includes all nations, either as activists or as ones affected, depending on their means. And the United States has made sure that this trial of strength takes place- regardless of all bilateral extortion relations and alongside them-in the form of a power struggle within an institutionalized system of rules, over how these rules are defined and handled. The nations continuously apply their economic extortionate force against each other in an organized form, competing with each other in this way.
This way of measuring strength goes beyond everything the free markets do by way of measuring national credits and the currencies based on them. In the competition over who is competent in matters of the global agenda which the United States challenges all states to take part in, goods and money literally turn into weapons.
World trade is always more than capitalistic commerce. This is shown by the worldwide arms business. This line of business, which is one of the highest- selling in globalized capitalism and is dominated quite clearly by the Americans, intervenes directly in international power relations. It provides an essential part of the potential for attack, defense and deterrence which determine the global management of force. For the United States, this is the ideal case: it can equip states with the means for sovereign rule over their own territory and people as well as establish power relations between nations at no expense-in fact by making money. Creating capable allies and helpers pays off, in the form of especially profitable business directly guaranteed by the trade partners' state credit.
These relations which are so obvious in the international arms trade hold equally in the doubtless even bigger line of business dealing in all those goods-from microchips to turnkey chemical factories-which are specified as "dual use" articles on the embargo lists the United States prepares whenever necessary. If selling arms establishes state power, this is logically even more so with the trade in equipment and materials for arms production. It may be possible to draw a line between the diverse commodities which are suitable for producing means of violence and goods that can only be used for civilian purposes. Even this is always a bit arbitrary, however, and gets more and more questionable the "deeper" one goes into the means of production. Such elementary industries as nuclear power or- quite classically-the production of coal and steel are definitely a nation's key strategic industries. But it is not only with the use-values, the useful qualities of things, that the dividing line between civilian and military use inevitably gets blurred upon closer consideration. Actually, the distinction itself is fairly absurd in view of the fact that capitalism produces the ultimate "dual use" article in the form of money, the real possibility of all use-values. This, by the way, is exactly what so clearly predestines the abstract wealth of capitalism to be the optimum means of sustenance of state force, and is exactly what prompts certain states to try to impose an embargo against enemies to prevent them from procuring not only certain strategic goods but foreign currency altogether. The inclusion of a state in international trade is therefore more than its formal recognition as a sovereign protagonist in world affairs; it makes a material contribution to this state's political power to act in general and its military power to act in particular-if it is not actually the precondition for this power.
This basic congruence of commerce and force is an enormous boon for the only world power (until it starts turning into a mighty problem). Wherever in the world the United States sees to modern, civilized conditions, that is, conditions useful for world politics, it creates a need for means of violence. This starts with police and military equipment in the narrow sense and leads unerringly to the elementary state need for admission to capitalistic world business, which American merchants in general and arms dealers in particular are sure to make money on. And, conversely, wherever businessmen from the United States buy things on this basis, i.e., let other nations earn dollars and earn them back by selling versatile commodities, sovereign powers develop whose civilian and military dealings are based on this commerce with America. American capitalists meet with other states' need for force as the first and biggest of all favorable business conditions, and thank their world power by making sales, profitable both to them and to America, that help produce the "powers" whose "relations" are the object and the instrument of American world politics. In this way, and to this extent, profit and power coincide in globalized capitalism for the United States-that is the good side of the peace order it has imposed on the world of states.
Historically speaking, the Second World War's clarification of power relations in Western Europe and the Far East was the starting point for an especially exemplary coincidence of profitable business and expedient strategic relations. By raising the losers of the war to the status of its strategic frontlines, the United States created the precondition for their integration into the world market. By crediting a national accumulation of capital and participating vigorously in it, American financiers armed Japan and Germany to be great powers which have functioned as civilian and, in different ways, military "cornerstones" in the system of American world peace up to today. Now that power relations in Eastern Europe have also been "clarified," American politicians seem to want to repeat this unrepeatable ideal case when they think of combining NATO's eastern expansion with a "new Marshall plan" for their new partners. This will at least provide the American arms industry with contracts for the necessary rearmament of the newly acquired armies, which all NATO members will get to join in paying for.
The United States has also made some fine arrangements for defending "its" oil wells in the Middle East. Israeli and American troops ensure a "balance of forces" in the region which includes the "oil sheikdoms" in doubly advantageous fashion. They receive arms from America as its partners in strategically controlling the area, and pay for them with the dollars they earn by selling their petroleum to American and other companies.
Matters are quite different but the components are still the same in the model case of Chile. A putsch was needed here to make the country doubly useful again in the proven way. The defeat of the democratically elected socialists was intended to serve as an example, and indeed made it clear which alternatives were not open to the countries on the continent. Out of gratitude the American business community made money on the monetarist experiment conducted on the nation, likewise in exemplary fashion. The successful result was that Chile, with its military, its poverty and its national wealth credited by the North, did a better job than ever as an additional "cornerstone" of American world peace in the western hemisphere.
And so on. With its decision to give cooperatively minded members of the world of states credit for launching a world market career, and to ensure worldwide conditions for successful American business, the United States has at all times and in all cases pursued these two goals which are not at all identical but so peculiarly congruent: making expanding spheres of business available to the nation's accumulating capital, and creating both capable and reliable mainstays for its own power. And American arms dealers have always profited from the guaranteed creditworthiness of even the most bankrupt regime.
The mighty hitch in the happy coincidence of power and business, profit and control, i.e. the disadvantage for the United States, is obvious: it is not an American monopoly. And the reason it is not is the very fact that the United States has forced a peace order on the world in which it has successfully insisted on boundless capitalist business. In this world of sovereign states, all taking part in world trade because it is a means for, or even the basis of, their sovereign power, even America's rivals are free to let other states earn or borrow money, to sell arms, nuclear reactors, arms factories, etc., and thereby exert influence on the global distribution of power-without any guarantee of the effects fitting in with America's conception. On the contrary, every arms deal between other countries (and what counts as arms is so much a matter of discretion, as mentioned, that all commerce can be regarded as relevant to power in the end) holds the danger for America of other nations misusing the free world market. By exerting influence on the basic facilities of third powers they more or less automatically acquire zones of influence which are damaging to the United States in two ways. They cut up world trade into pieces, making the benefit one-sided depending on the sphere, and thereby withholding it from America-while America's great postwar feat was actually to dissolve the colonial empires, later even the Socialist "camp" (which was ultimately nothing but a hermetically sealed "colonial territory" from the point of view of free trade), to install one world of free competition in which every sovereign has the same direct relationship to the dollar and its owners. Instead of all sovereign powers fitting functionally into the one big world order of force under American leadership with the means they have earned and the arms trade they have been conceded, the proper hierarchy and all power relations are messed up by the separation of the world of states into commercial and political spheres of influence. Power starts being redistributed without license, i.e., distributed wrongly. In the end-as the United States anxiously foresees-the competing nations, simply by acting on America's example and treating world trade as the power instrument it is, will destroy the system of peace and freedom which has only given them the opportunity to exploit global capitalism so improperly for their own purposes.
This fundamental conflict between the United States and its kindred partners was masked for forty years by their joint hostility to the Soviet Union. This big opposing power not only refused to fit into the hierarchy of states in the world peace order and withheld its "bloc" from free capitalistic business. It also used the arms trade weapon to disturb and destroy all proper power relations, strengthening the wrong states (an easy diagnosis: any power the Soviet Union armed was automatically wrong) while distressing the good and right states.[note 13] In view of this paramount East-West conflict, all the efforts of America's allies to gain trade partners and friends of their own in the world of states, particularly exclusive arms customers if possible, were basically useful. It was even all right to supply states which refused to be dependent on business with the United States and its military industry since this could prevent or break any Soviet responsibility in an area of the world and restrict its influence. The end of the Cold War has put an end to such lenient calculations. It is in fact a different matter now when America's rivals maintain or even create zones of influence without a joint archenemy any more. Such activities are no longer functional for the global fight against the Soviet power; their inherent claim to exclusivity is automatically directed against the power which is fundamentally unable to tolerate such exclusivity.
This lesson was taught to the German partner on the occasion of the Gulf War. Relations that had previously been approved of as anti-Soviet influence on states beyond direct American reach such as Iraq or Libya were now termed "dealing in death" and even suspected of being careless, if not actually deliberate, abetment in "another" mass murder of Israel's Jews, this being the way of making the unacceptability of zones of separate national influence unmistakably clear in diplomatic terms. The world power continued fighting disruptive spheres of special influence by objecting to Europe's and specifically Germany's policy toward Iran, now under the hefty diplomatic slogan of the worldwide fight against terrorism. The lesson is being taught point by point. Firstly, not just arms deals, but any kind of deal with an outlaw of the American system is out of the question, because of the mutual benefit inevitably involved. Secondly, the old moral alibi that used to hold in Soviet days-that recognizing and supporting a foreign power through trade was only a way of domesticating it for America's world order-is no longer accepted. Similar messages are being sent out to France regarding its black African zone of influence; it has to stop supporting the downright anti-American activities there. The United States is left out much too much when French paratroopers protect old governing business partners of the former colonial power and the arms trade passes America by. The moral labels that opinion-making news agencies apply to various "civil" war gangs make it clear enough which parties the Americans have discovered to be on the wrong, i.e., all-too-French side.
The free world trade the United States has initiated and wants to preserve provides it with means and handles for its regime over the global relations of power-but also provides its rivals for their kindred, i.e., opposing activities. Using these resources is immensely conducive to business-but not exclusively for America. The end of the Soviet Union meant the end of America's automatic success in two respects-which the United States never actually relied on but which defused the competition within the Free West in Cold War times. Firstly, the power relations created by the capitalist partners by way of free trade in arms and other means for sustaining state force no longer benefit the joint power of the alliance and thus the United States. Secondly, the special relationships that do develop make it harder for America to earn money from supplying the world of states with purchasable means of power. And one cannot even be sure anymore that the business world will honor military actions by showing more confidence in American credit as reflected by the dollar rate.
For the United States this problematic situation can only mean one thing. It has to take all the more vigorous action to make sure its double-entry (strategic and commercial) bookkeeping still shows nice one-sided results under the new conditions.
In its attempt to ward off strategically undesirable consequences of free trade in means of power, it has already succeeded in subjecting the worldwide nuclear power industry and trade in its products of military interest, and now also the chemical arms business, to a control regime based at the UN. That at least complements the overview of these sensitive military areas which it can get by itself anyway, but more importantly gives its claim to control and restriction of others the status of a recognized right to intervene. The United States moreover takes the liberty of intervening on the civilian level against any trade - not only in arms - with states it has put on its list of notorious "human rights abusers," "rogue regimes" and "supporters of terrorism" because it is afraid these powers will disturb its strategic arrangements. Such interventions are aimed mainly against the big rivals which conduct such forbidden trade; they are emphatically reminded of their duties as allies and their well-understood self-interest within the world peace order. However, often this is not enough to take care of the matter. Sometimes exemplary punitive actions are necessary, which are aimed at targets in the incriminated states but intended to be understood as an emphatic warning not only by them but above all by the homelands of the capitalist suppliers and business partners. But this does not clear up the problem for good either. As long as the world of states is defined, and works, as a freely accessible business sphere, there will inevitably be cases of the wrong kind of support. And this will always make it necessary to wreak a bit of havoc in a foreign country every once in a while.[note 14]
This permanent necessity confronts the United States all the more acutely with the question of the gain to justify its uses of force. Not that these actions could or should be made contingent on the profit they earn. Control of global power relations is definitely the world power's unconditional purpose, and this purpose is hardly calculated in terms of loot or any other material benefit. America, conversely, lays claim to the peacetime economy of the whole world - in the boundless way only the home of globalized capitalism would dare to and could afford to. This is why the politicians commanding the American machinery of force in fact calculate how to shed the burdens of carrying out their campaigns for world peace, a peace which can end up benefitting the wrong states or the competing allies for their wrong politics. And as long as they cannot be sure their partners will not abuse the blessings of world peace, it is only fair for the partners to give their protecting power due compensation for its efforts to avoid or reduce global damage.
It would doubtless be most simple from the American point of view to have the world of states pay for the control exerted over it. This actually worked (albeit never sufficiently) with the protection it granted against the Archenemy by way of the "equalization of burdens within the Alliance." Without this handle things are much worse; remuneration has to be demanded and collected from case to case-which the world power is not at all above doing.[note 15] In the end this does not solve the problem, though, it just makes it clearer. Once the United States starts offsetting costs like that, it is no longer certain it can really use the capitalist world economy as the wherewithal for its world power; and it cannot get rid of this uncertainty-in any case not through any tribute paid by its allies.
The United States has taken steps so that this uncertainty arising from the rivalry of the big capitalist powers will not be the last word. The most important safeguards are strategic and discussed in the first part of this article (section A). For dealing with the competitive struggle for money and power outlined in the present section (B), a struggle which thoroughly mixes up balances of trade and WTO rules, arms deals and zones of influence, currency problems and debt adjustments, it has also created a special diplomatic handle: the exclusive G7 ("Group of Seven") club, just extended to the "Group of Eight."
The periodic meetings of government leaders in this exquisite circle do not have an especially good reputation among the democratic public. Critical business journalists are wont to accuse the elaborately staged conventions of a lack of results and a disproportion between expense and "concrete" gain. However, they are thereby only revealing their measuring stick, namely, the ideal of a steering committee for the world economy which would lay down the guidelines for sovereign states, as well as for the financial world empowered to free speculation, to follow to the letter. Such effective "world government" is indeed not to be had from the political chieftains of capitalist competition. The mere fact that they meet at all, sign specially invented official wordings on the problems of the world economy and have themselves photographed all together, is the whole result and thus the point of the exercise-which is remarkable enough. Lately, the skeptical public has noticed this when the world's stock exchanges react to the style and mood of the meeting with an up or down. For the world of big business the "show" is a signal, and a weighty one at that. It documents how the truly important world economic powers intend to treat each other. Their bosses demonstrate the current state of their will to make common cause and thus their determination not to carry their competition to the breaking point, which points the way for "the markets," i.e., the global community of speculators. Competitive affairs of the kind discussed above thus take their course while, decidedly beyond them, the rivals assure each other, the money dealers and the rest of the world of their desire for consensus.
That is quite necessary; and the way this discussion group arose from the need of the decisive economic powers to get better control of the "currency turbulence" following the "dollar crisis" and the end of the Bretton Woods system[note 16] indicates why. Currencies run into "turbulence" when states competing for world money challenge "the markets," which are investing money and thus speculating, to show preference for their credit money over that of other states, to be especially critical about testing certain currencies, to recognize a "need for correction" and to act accordingly-and when on this basis the professional shifting-around of credit from one national money to the other really gets going. Such dealings can all too easily ruin a currency's value, force a state to disclose its hopeless debt position, or at least thoroughly damage its credit in the world. Since the end of the Bretton Woods system this has happened to most nations which thought they could enter the world economy with their own proper credit money and earn money on it. The fate of these nations is not the G7's problem. The G7 members just do not want to be this kind of "debtor country" themselves; they certainly do not want to be damaged in their position as issuers of world money by the monetary competition they wage against each other. So they seek reassurance for their national credit, at the place where the danger arises: their big rivals. And they are heard by each other-these Seven apparently each expect the other not only to be out to compete but also to have the power to damage their own credit, and at the same time fear negative repercussions for their own credit if one of the six big partners has to admit its debts. They size each other up to be cases in which a national money crisis might possibly not be localizable but could grow into a global crisis of confidence for the capitalist currencies. This is what these seven states insure each other against by having their bosses meet with the express intention to jointly calm down "currency turbulence" or jointly give "the markets" a "signal" that they are still sticking up for each other. The meeting of those in power is this assurance, it is the practical expression of their will to ultimately trust each other when it comes to their debts, i.e., credit the national debts and hinder speculation on the destruction of each of the seven moneys. That is why such a meeting has to be repeated periodically, and staged so that the message is roughly within the grasp of capitalism's economic minds assembled at the world's stock exchanges-that is to say childishly, with drums beating and trumpets sounding and background reports about disagreements being more or less settled. That is how the politically mighty spell out to the financially mighty that they can rely on the accident insurance the big credit creators grant one another.
The topics dealt with at G7 meetings are meanwhile no longer restricted to questions of the world economy, which makes sense in view of the goal of a joint mutual credit guarantee. After all, state credit is a question of political will itself. Because it anticipates the particular nation's global economic future it depends essentially on what it is used for, i.e., what the state power plans to achieve and expects from and dictates to its society in order to succeed in the competition for world money and power. Therefore, an international credit guarantee necessarily raises the question of how this expression of will links up with the nation's will to compete: how credible it is; whether it instead betrays a dependence on the rivals which arouses doubts about the nation's "will to control its own future;" which nation draws which advantages of its own from the others' guarantees... This automatically brings all the affairs of world politics into play which might be good for altering the partners' power relations, or even their hierarchy. These affairs measure the states' will to compete, which their credit depends on, and at the same time their will to agree, which it also depends on. And this has become equally more important and more difficult with the end of the "Eastern Bloc" because there is now so much power to be gained or relatively to be lost when the big Seven settle the inheritance. The G7 consensus must prove itself on these open questions of power-in some way, i.e., clearly enough for "the markets" to grasp-in order to remain credible for the absolutely crucial question of their economic recognition. It must prove to be a basic capitalist consensus valid even beyond the inevitable changes in the power relations between the Seven. Or, to say the same thing the other way around: for their agreement in economic and monetary questions the seven most important powers revert to the political conditions for their credit-creating consenus.[note 17] By expanding their catalog of topics they admit that capitalist states only agree about money if and when they come to terms on the distribution of power between them. And with his energetic way of determining this catalog of topics the American president makes it clear diplomatically on the highest level that the consensus of great world-economic powers that must constantly be renewed has exactly one boss and six or seven contributors.
So when the major capitalist powers jointly worry about a stable system of world money, this brings them back quite automatically to the other main imperialist cause: America's interest in a global management of force...
1. A comprehensive treatment of this theme can be found in the book, The U.S.A.-World Power Number One: Dissenting Views on Imperialism, by K. Held & T. Ebel, Resultate Verlag, Munich, 1987. Chapter One: World Power Number One. I. How the Wild West Became a World Power, II. Democratic Home Life, III. American Sovereignty in the World.
2. Since the Great Depression the nation has had a welfare system, and has been asking the self-critical question whether it is not thereby depriving its citizens of their human dignity. After all, to the American way of thinking (which is merely the bourgeois way of thinking in its unvarnished form) human dignity stands or falls by free moneymaking.
3. An important part of the "start" America openly gave its capitalistic allies was the European Recovery Program (ERP, 1947-52), which has gone down in history as the "Marshall Plan." At the same time it was intended to stabilize them materially as vassals in the fight against Stalin's Soviet Union, which was rather too "victorious and glorious" for Western taste. A total of 14 billion dollars was used to finance the exportation of raw materials, food and some machinery from the United States to Western Europe. For West Germany this was done by selling the goods for fresh-made Deutsche marks at the fixed exchange rate and having the resulting sums of Deutsche marks make their contribution to (re)establishing a national financial capital at the national Bank for Reconstruction as the equivalent for the dollar value of the delivered goods, i.e., for a corresponding dollar credit (which Germany was later even released from paying back.) At the same time the Americans forced a supranational West European clearing and payment system on their capitalistic development projects, so that the dollars transferred in the form of goods could also act as "liquidity" between the supported countries and get trade going between them, for American capitalists to participate in, without a lack of solvency crippling it all the time.
4. The thing, namely abstract wealth, cannot be had without state force either: wealth is definitely not abstract by nature. Within the capitalistic economy, however, the tricky difference between abstract wealth and its "merely" legal representative plays a leading role. This will be dealt with in following sections.
5. There is a historical reason for the special "strength" of Germany's postwar currency. In the Western zones of conquered Germany a completely new monetary sovereignty based on the dollar was created under the occupation regime, annulling the debts left over from Nazi rule and recognizing and evaluating other old credits on the maxim that the result had to pay off for the new national credit economy, i.e., in creating a useful credit volume and the liquidity necessary for a market economy. This gave West Germany's postwar capitalism a persistent head start over its big Western European neighbors, which were dragging along their war debts as victor nations and also plunging into new debts to win back or stabilize their old colonial empires by force. This was a venture that eventually failed in military terms, and furthermore turned out to be an absolutely bad investment of national resources on the capitalistic terms of business imposed by the United States, its calculation with sovereign states as useful trade partners and spheres of capital investment under the regime of GATT and the IMF. At the same time West Germany, which had now become the most important European address for the investment of productive American capital, experienced an upswing as an export nation, earning many times the initially borrowed dollars on world markets, and achieving an international currency of its own in trading with its EEC partners. The successful promotion of the Deutsche mark as a stable means of business conflicted increasingly with the worldwide inflation of American credit money.
6. The resulting innovations made in the global credit superstructure, i.e., the new tasks for the IMF and "World Bank," are dealt with in the next chapter in connection with the current methods of competition of the United States as a global economic power.
7. Site policy reflects the point of view that national growth take place within the national territory, as opposed to a nationally- based global accumulation. While the term is not in widespread use in english, the point of view is quite alive. The debates over site policy are often couched in the ideological terms of "job creation" and "job export."
8. This new trend in the lower levels of American working life was fought in the summer of 1997 by a two-week walkout at United Parcel Service, which employs mainly such cheap workers. The Teamsters Union ended the strike-under government pressure but in the end full of pride about attaining a "historic turning point for workers in this country"-with an agreement providing over the next five years for a raise in the hourly wage to fifteen dollars as well as the creation of altogether 10,000 full-time jobs- while 15,000 of the more than 300,000 currently employed will be dismissed. If that is the "turning" away from part-time and cheap labor, then the democratic "job miracle" is well on its way.
9. The capitalistic world power thus also refutes in exemplary fashion the old socialist rumor that it has to buy the loyalty of its proletarian citizens through bribery. Workers participate in the fruits of the nation's imperialist business by getting lower wages and less state support, doing their bit to help the nation fight for the dollar.
10. There are also some critical reflections by important Americans that the Europeans' "crazy project" of a supranational currency could mess up international money markets, which the United States needs for worldwide use of its dollar and must therefore be dependable; and that the EU partners would not be doing themselves a favor by that either. This concern about the functioning of the international financial system does not conjure up the necessity of warding off the European rivals' monetary offensive, but rather the danger of an unintended disaster.
11. From a speech by US Deputy Treasury Secretary Lawrence Summers at the Euromoney Conference on April 30, 1997.
12. At a recent conference of the Inter-American Development Bank (IDB), the calculations on all sides about the euro project were clear to see. The finance minister of Mexico of all places, a country linked to the United States in NAFTA, saw the euro as "an opportunity to strengthen economic relations between Latin America and Europe." An IDB study on "European-Latin American cooperation" explains what the idea is. Not only could trade with Europe then be invoiced in euros rather than dollars as now, but "a big euro capital market could offer an alternative to American markets for Latin American debtors and enterprises that issue shares; conversely, Latin American investors-including the central banks of the region, which have about $160 billion in currency reserves-would utilize portfolio investments in euro papers as a chance for diversification" (Handelsblatt, Dusseldorf, March 19, 1997). Such speculations show how the project is intended. In all private and state money matters the euro is to become a "real alternative" to the dollar worldwide-not just mainly on the European continent, like the German mark. The rest of the world is to take the euro as an offer of "liberation" from one-sided dependence on the dollar. And European futurists link this with the explicit prospect of thereby creating not only more demand for euro credit but also new political relations of dependence and subordination; preferably right in the heart of the Americas.
13. One even used to hear the interesting accusation that the Soviet Union was only capable of selling arms and not of doing extensive profitable business with other states; its trade in military paraphernalia had no material basis and therefore automatically no higher justification. This accusation-yet again-says something only about the side that raised it. The leading powers of the Free World take it for granted that the deployment of power has to pay off, and wherever something pays off the beneficiary deploys its power legitimately. The realm of freedom must offer at least that much congruence between force and business!
14. This unfortunate fact has instilled in America's Western-educated leaders the insight that a sound military deterrence system will apparently be necessary as long as the world power has to do with something as unwieldy as human nature (mainly abroad of course, not so much among its own levels of leadership): "Until human nature changes, power and force will remain at the heart of international relations." That is what security advisor Anthony Lake found out about "Meeting new (!) security challenges in the post Cold War world" and elaborated into a catalog of "circumstances which may call for the use of force:
"to defend against direct attacks on the United States, its citizens, and its allies;
"to counter aggression;
"to defend our key economic interests, which is where most Americans see their most immediate stake in our international engagement;
"to preserve, promote and defend democracy, which enhances our security and the spread of our values;
"to prevent the spread of weapons of mass destruction, terrorism, international crime and drug trafficking;
"to maintain our reliability; because when our partnerships are strong and confidence in our leadership is high, it is easier to get others to work with us;
"for humanitarian purposes, to combat famines, natural disasters and gross abuses of human rights." (March 6, 1996)
Altogether a fine list of commitments to the immanent violence of capitalism and democracy. But as we know, the market economy and free election system is nothing but the expression of true human nature anyway. So it all makes sense after all...
15. For its war on Saddam Hussein the United States asked its partners for material contributions in the form of soldiers or dollars, and actually received money from German and Japanese "checkbook diplomats." That was of course definitely not the material profit which would have brought the Gulf War out of the "loss column" in the American budget and made it good business, if that had been the intention. In reality, the Americans did not want to be the military sweeper-up exploited by their rivals, but even less their paid sheriff. The money the United States nevertheless took did not so much pay for its operation as symbolically compensate a national annoyance for the superpower. Similarly, the richest country in the world recoups itself morally by always paying its UN dues late or not at all. It thereby demonstrates its total lack of understanding for a financial construction obligating the United States to help pay the expenses for the supervision it is already bestowing on the world of states.
16. The founding legend has it that the original idea, a Franco-German initiative, was to hold an annular "fireside chat" at which the "international economist" Helmut Schmidt would explain the eurodollar market to his colleagues.
17. This is how the head of Russia, ruined by its transition to capitalism, recently landed in the illustrious Group of Seven. It is not that the American president, who decided on and implemented this expansion of his club, thinks the ruble is in any way important as part of the capitalist world's credit, let alone as a participant in, and contributor to, a supreme global credit guarantee (Yeltsin was not allowed to attend the talks on world currency matters). The important thing was the multilevel meaning of the step: as a gesture of recognition for the nuclear power undergoing liquidation, to promote its compliant willingness to disarm; as an expression of America's will to bring Russia "home" to the "one world" system for good; as a demonstration of America's intention, reaching far into the future, of making Russia a useful addition to its world business; and last, but definitely not least, as a provocative clarification that the United States once again takes over the leadership in a matter of the highest strategic and economic importance straight out, without bothering to ask its six biggest partners much, by just creating facts "on the ground" and making the others toe the line. Now that creates credit!
© GegenStandpunkt 2000