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GLOBAL TRANSFORMATION : WHY WE NEED IT AND HOW WE CAN ACHIEVE IT
(C) 2004 Richard K. Moore
Part II : THE STORY OF AMERICA
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Chapter 5: 1945-2001: PAX AMERICANA AND COLLECTIVE IMPERIALISM
* The postwar regime: Pax Americana and Bretton Woods
As mentioned in the closing of the previous chapter, the
Council on Foreign Relations (CFR) carried out a series of
secret economic studies between 1939 and 1941. The purpose of
these studies was to align American war policy with America's
anticipated postwar economic requirements. These studies not
only determined the timing of America's entrance into World
War II, but they also laid out an architecture for the postwar
world order. This architecture called for the establishment of
a United Nations organization and for certain international
economic arrangements.
In 1944, an international conference was held at Bretton
Woods, New Hampshire. An agreement was reached, signed by 45
nations, establishing the World Bank and the International
Monetary Fund (IMF). The agreement also established fixed
exchange rates between national currencies, pegged to the
dollar and to gold. These arrangements became known as the
Bretton Woods system, and they collectively implement the CFR
design. During the war, the USA, UK, and USSR adopted a United
Nations Charter, again modeled on the results of the
then-secret CFR studies. In 1945 a conference was held in
which 51 nations agreed to establish the United Nations, based
on the UN Charter.
Thus by 1945, the world was operating under a system that had
been secretly designed by the Council on Foreign Relations, on
behalf of the U.S. government, prior to America's entrance
into the war. On the PR surface, this international system
appeared to be yet another act of benevolence on the part of
liberator Uncle Sam. After saving the world from fascism, the
U.S. was now sponsoring a new era of peace and stability.
Nations would sit down in the UN and work out their problems
instead of settling them by warfare. International finances
were to be stabilized and democracy was to be spread
throughout the world as the old colonial empires were
gradually disbanded.
The reality, however, was quite different. In Holly Sklar's
anthology, "Trilateralism", Laurence Shoup and William Minter
examine the discussions that went on in those world-shaping
CFR planning sessions:
"Recommendation P-B23 (July, 1941) stated that worldwide
financial institutions were necessary for the purpose of
'stabilizing currencies and facilitating programs of capital
investment for constructive undertakings in backward and
underdeveloped regions.' During the last half of 1941 and in
the first months of 1942, the Council developed this idea for
the integration of the world.... Isaiah Bowman [territorial
advisor to the Department of State and President of John
Hopkins University] first suggested a way to solve the problem
of maintaining effective control over weaker territories while
avoiding overt imperial conquest. At a Council meeting in May
1942, he stated that the United States had to exercise the
strength needed to assure 'security,' and at the same time
'avoid conventional forms of imperialism.' The way to do this,
he argued, was to make the exercise of that power
international in character through a United Nations body".
Whereas European imperialism had typically been
colonialist--enforced by military garrisons and administrative
bureaucracies--American imperialism had typically been based
on selective interventionism to protect American investments.
Thus when Bowman talks about "programs of capital investment
for constructive undertakings in backward and underdeveloped
regions", he is talking about a systematic program of
imperialism--American style. He confirms this interpretation
when he refers to "maintaining effective control over weaker
territories".
He envisions the UN as a cover for US imperial management.
Significantly, he does not talk about joint management. The UN
is to provide an illusion of "international character", but
the U.S. is to "exercise strength" unilaterally. But within
this U.S.-managed system, there is no mention of exclusive
American access to investment opportunities. America is to
provide imperial security, but investment is to be open to all
capitalist powers.
In fact, Bretton Woods and the rest of the postwar
architecture was a design for a new regime of global
imperialism. The old regime was one of competitive,
partitioned imperialism. France, Britain, Germany, and the
other players each had their own private colonial realm.
Economic opportunities for each nation could be measured by
the size of its colonial realm, and competition over realms
was the cause behind the frequent wars among the European
powers. The U.S. vision was to convert competitive imperialism
into collaborative imperialism. Instead of partitioned realms,
there would be one global market where all players could seek
their fortunes. European nations would no longer need to
compete militarily for territories, but could instead compete
in a business sense for the opportunities opened up by the
global market.
The U.S. would provide a level economic playing field to its
European counterparts, but it preserved certain prerogatives
to itself. Furthermore America was in a far better position to
exploit the new investment opportunities, given its
significant advantages in terms of available investment
capital and industrial infrastructure. As regards
prerogatives, the U.S. was to be the primary policeman, the
supreme arbiter of imperial stability. This prerogative was
challenged just once, when Britain and France launched the
Suez War--the kind of thing they had been doing for centuries.
The U.S. promptly put an end to that and Pax Americana has
reigned supreme ever since as the international military
order.
For centuries it seemed that European wars would never end.
But once Pax Americana was established, the idea of France,
Germany, or Britain fighting one another became as
unimaginable as Arizona and California fighting one another.
Credit is commonly given to European integration for ensuring
this peace, but in fact it was the removal of the economic
motivation for inter-sibling warfare that led to both European
peace and European integration.
The Cold War had nothing to do with an imagined Soviet
expansionism--it was simply a matter of the U.S. excluding the
Communist World, in so far as possible, from interfering with
or participating in the global imperial regime that the U.S.
had established. Despite the wartime alliance-of-convenience
between America and the USSR, American elites had always
considered the USSR to be an enemy. Not because it is an
imperial competitor--but because it isn't! U.S. elites know
how to deal with competitors, but they cannot tolerate
opposition to capitalism--their golden goose. In a very real
sense, it is possible to characterize the European theater of
Word War II as being a joint invasion of the USSR by Germany
and America. The Nazis supplied the troops and the industrial
plant, while the USA supplied the necessary funding and
additional industrial support. This collaboration continued
even after American bombers had joined the British in bombing
German cities. When British and American troops invaded Italy,
for example, they intentionally allowed several German
divisions to escape to the Eastern Front to fight against the
Soviets. And as mentioned in the previous chapter,
American-owned war factories continued operating in Nazi
Germany throughout the war.
We were presented during the Cold War with a propaganda myth
of an expansionist Soviet empire, threatening the Free World.
What we actually had was a global American empire, with the
Soviets more concerned about their internal economic and
national development than with any kind of expansionism. So,
in the end, the Cold War stands only as a side chapter in the
story of the Twentieth Century, a temporary distraction to the
main story--the continual growth of American wealth and power.
In addition, the Cold War provided an excuse for large U.S.
military budgets--necessary to fund imperial policing
interventions. As a result, the end of the Cold War did not
bring the great relaxation of tensions that everyone had hoped
for. The Soviet "threat" turned out to be irrelevant the real
business of America, the business of imperial management.
Let's review these developments in terms of America's growth
cycles. Recall that Tyrannosaurus Americanis' most recent
predation had been in 1898. The ensuing boom phase ended in
1929, and was followed by a very effective consolidation phase
during the Great Depression. Based on previous averages, a new
growth cycle would have been needed somewhere around 1934. The
usual way of achieving a growth cycle--predation--was out of
the question at that time. Just imagine trying to launch a
major invasion in the middle of the Great Depression!
Instead, in order to keep the American economy going, a kind
of holding action was undertaken. By investing heavily in
Japan and Germany during the 1930's, American corporations and
investors were able to experience a minor boom phase without
the need of a predation. And then when America began
mobilizing after Pearl Harbor--and supplying its new-found
allies--its economy moved into a major boom phase, lasting
right up to the end of the war. The rise of Hitler and Tojo
(Japan's wartime leader) turned out to be critical to
America's growth plans in both a short term and longer term
sense. In the lead-up to the war their rise provided a needed
minor boom, and in the aftermath of the war enabled by their
rise, America ended up king of the mountain.
We now reach a discontinuity--a paradigm shift--in world
affairs and in the American economy.
Ever since the Treaty of Westphalia (1648), European affairs
had been dominated by territorial rivalries among the major
nations. Originally, the rivalries were over European
territory and over external realms, based on mercantile
considerations (basically, how much gold could be extracted).
After the Industrial Revolution (c. 1800), the rivalries
became increasingly focused on satisfying the growth needs of
capitalism. As a consequence of this imperialism, European
affairs became world affairs, and European national rivalries
became embedded in a new global game called geopolitics. With
Pax Americana, geopolitics was eliminated as a major force in
world affairs, and a three-century paradigm was broken. The
architecture of the "Free World" became reminiscent of the
days of the Roman Empire, except that the management was to be
carried out using higher-leverage techniques. A small number
of Legions could be transported when needed to any trouble
spot, vastly reducing the relative requirement for garrisons
and administration.
The paradigm shift in the American economy was that its realm
was now the entire globe, less the Communist hold-outs.
Earlier I said the European theater of World War II could be
characterized as a joint attack by Germany and the USA against
the USSR. Similarly, America's postwar architecture can be
characterized as a scheme by the USA to rob Europe of its
imperial territories. America claimed the moral high ground so
convincingly, and held such a dominant geopolitical position,
that Europe had little choice but to go along.
America's greatest predation of all time was accomplished
mostly by proxy. While untold millions died in China, the
USSR, and in Germany--and lesser numbers in the other
participant nations--America suffered very minor casualties,
relatively, and experienced no damage at all on its own
soil--apart from the initial single attack on Pearl Harbor.
To be sure America was sharing its new realm, rather than
monopolizing it in the tradition of previous geopolitical
victors. But what did that sharing really amount to? In the
initial years of the postwar era, American elites knew they
would get the lion's share of benefit from the new global
market. Indeed, the Marshall Plan was needed to enable
European nations to become viable economic players. And if
growth problems were to arise later, America could always
change the rules--that's why it insisted on a Pax Americana
regime. American elites succeeded in leveraging America's
temporary postwar dominance into long-term hegemony--while
appearing to be peace keepers.
Up until 1918, America had for the most part stayed out of
geopolitical affairs. As I said before, it tended its own
(rather sizable) patch and kept more or less to itself--as
compared to the intense rivalries going on continually amongst
all the other great powers. But what a formidable geopolitical
player the USA turned out to be once it decided to sit down at
the table! Perhaps this is related to the popularity of the
game of poker, reflecting something about the national psyche.
More likely, it's the fact that America was able to refine its
imperial management techniques for a century without needing
to ward off competitors.
In its first century (up to 1898), America's realm came to
embrace the Pacific - half the area of the Earth's surface. In
the next half century (up to 1948), America came to dominate
the other half of the globe as well, except for the Communist
areas, which it successfully contained and eventually
destabilized. And in all of this the most costly war it ever
fought was the one it fought against itself--the Civil War.
Everything else was gained either as easy pickings, or else by
leverage which made the cost insignificant compared to the
gains. I challenge anyone to find an historical precedent for
so much gained by so little effort.
* 1945-1980: The global postwar boom
With geopolitical affairs stabilized under Pax Americana,
economic affairs stabilized under Bretton Woods, and a global
market open for business, 1945 saw the beginning of a global
capitalist growth cycle. Instead of a single nation
experiencing a growth cycle within its imperial realm, all
capitalist nations were beginning a growth cycle in the same
shared imperial realm--what came later to be known as the
"third world". And as with all growth cycles, this one began
with a boom phase.
America, with its available capital and production capacity,
was able to get an early start on the boom, launching
development projects and capturing market share in the third
world. Europe and Japan had to deal first with their own
internal reconstruction needs. But they also had advantages as
the boom phase unfolded. Their destroyed industries gave them
the opportunity to start anew, building around the latest
technologies--many of which had advanced considerably as a
result of wartime research and development. As Europe and
Japan began to compete in the global market, they were able to
employ efficient, modern production methods and their labor
costs were much less than in the U.S. As a result, Germany
experienced an "Economic Miracle", and Japan rose to become a
first-rank capitalist player. There were opportunities enough
for all, and the boom was more a shared feast than a
competition.
As is typical of boom phases, the profits were shared
relatively widely within capitalist societies. This was an era
characterized by high employment, rising standards of living,
improved working conditions, low crime rates, increased social
services, a growing middle class, and gains in civil rights
and civil liberties. From a social perspective, one might call
these first three decades of the postwar era the "Great Era of
Liberal Democracy".
While capitalist populations were enjoying domestic
prosperity, international capitalism was experiencing dramatic
evolution. The scale of the market was global and corporations
were becoming global enterprises. Raw materials could be
sourced globally, markets for products were distributed
globally, and operations needed to be optimized and
coordinated globally. A new species of corporation evolved in
response to these conditions - the transnational corporation
(TNC). To be sure there were a few earlier precursors of this
species, such as the British East India Company, the Hudson
Bay Company, and the Seven Sister Oil Majors. But in the
postwar era, TNC's proliferated dramatically and became the
dominant players in all global markets. This development was
analogous to the speciation that occurs in nature after a
dramatic change in environmental conditions. In the
post-dinosaur world, for example, the little nocturnal mammals
rapidly evolved into a proliferation of much larger and bolder
mammals in response to the feeding niches that had become
available. The same dynamic led to the postwar proliferation
of TNC's.
Every boom phase must come to an end, and this grand global
boom phase was no exception. In the early 1970's, about 25
years after the beginning of the postwar growth cycle, the
boom began to run out of steam. The scale of the global market
was unprecedented, but it was finite. Even global markets can
eventually be saturated and stop growing at sufficient speed
to feed the engine of global capitalism. The continued growth
of global capitalism--and hence the continued operation of the
global economy--now required the beginning of a consolidation
phase.
A boom phase is characterized by "all boats rising" as they
"ride the boom". It's a fraternal, share-the-wealth kind of
time. A consolidation phase, on the other hand, is a
push-and-shove kind of time. So that some boats can continue
rising, other boats must be driven onto the shoals. In the
Great Era of Liberal Democracy, we had come to believe that
all boats were equal. In the consolidation phase we were to
find out that some boats were more equal than others. In order
to assure that their own boats would be the most equal,
American elites would need to change the rules of their own
Bretton Woods game.
In 1971 Nixon took America off the gold standard. With growth
declining, that was the only way America could finance the
Vietnam War. His action removed the underpinnings of the
Bretton Woods regime of international financial stability.
With the dollar floating, the fixed exchange rates between
major currencies had to be abandoned. Currency speculation
became possible, and it became possible for currencies to
collapse. The stage was being set for the push and shove of
international money markets and financial raiders. In 1973,
using the Arab oil embargo as an excuse, the major petroleum
companies boosted oil prices dramatically. This "push" by
these gigantic TNC's ensured that their own boats would keep
rising. These developments were precursors of bigger changes
to come.
* Elite Planning and Global Management
Recall that the whole postwar global scenario was orchestrated
with some considerable precision way back before Pearl Harbor
by a study group of the Council on Foreign Relations. Their
blueprint was implemented, and it led to the kind of results
it had aimed for. The U.S. government showed itself to be
capable of shepherding the project along and keeping it close
enough to a true course--through the effective use of money,
diplomacy, and force of arms, both overt and covert. And the
U.S. government, along with the elite-run media, was able to
maintain adequate public support through the twists and turns
of the project--creating cover stories and spin at every
juncture to mask the fist of imperialism, hiding behind the
smoke screen of the Cold War.
Although the original Bretton Woods blueprint was remarkably
comprehensive and showed considerable foresight, there
remained the day-to-day business of managing the global
imperial system. The system required monitoring, the
identification of dangers and opportunities, and the
application of selective and high-leverage interventions to
deal with those. In the postwar years a huge intelligence &
analysis apparatus--a planning community--arose around the
Washington beltway to carry out such required tasks of empire.
The CIA and related intelligence agencies, countless think
tanks, consulting firms, law firms, and the Council on Foreign
Relations all play a role in this elite-serving community.
When things were booming in the postwar era, the job of the
planning community was to keep things booming, and to alert
the political apparatus whenever intervention was needed. And
when things began to stop booming, the attention of this
community sensibly turned to re-considering the founding
blueprint.
One particular document stands out as a pivotal and candid
expression of the kind of thinking that was going on in U.S.
elite circles in preparation for a new economic regime. In
1975 Harvard Professor Samuel P. Huntington, a prominent
member of the Council on Foreign Relations, published his
now-infamous essay on the topic of "The Crisis of Democracy".
In this passage, also taken from "Trilateralism", Huntington
describes in his own words the U.S. elite and its role:
"To the extent that the United States was governed by anyone
during the decades after World War II, it was governed by the
President acting with the support and cooperation of key
individuals and groups in the executive office, the federal
bureaucracy, Congress, and the more important businesses, banks,
law firms, foundations, and media, which constitute the private
sector's 'Establishment'".
Huntington's view of how the U.S. is governed, evidently, is
in complete alignment with the perspective I have been
presenting to you. He makes no mention of the electorate or
the political process as providing input to the policy-making
process. Instead he identifies a constituency that is more or
less the same as what I have been calling the "elite
community" and the "planning community".
Elsewhere in his essay, Huntington tells us that democratic
societies "cannot work" unless the citizenry is "passive". The
"democratic surge of the 1960s" represented an "excess of
democracy," which must be reduced if governments are to carry
out their traditional domestic and foreign policies.
In order to understand what is implied by Huntington's words
we need to do a bit of decoding into practical language. By
"democratic" societies, Huntington is actually referring to
capitalist societies. If he thought they were fundamentally
democratic, then it would make more sense for him to speak of
an excess of capitalism rather than an "excess of democracy".
Clearly, in his mind, democracy is the expendable item. By
"carry out their traditional domestic and foreign policies",
Huntington refers to the ongoing need to manage the continued
growth of the capitalist system. We know this because that is
what "traditional domestic and foreign policies" have always
been about since the time of the Industrial Revolution.
What Huntington is actually saying is that liberal democracy
must be curtailed in order to enable the capitalist system to
continue operating. The democratic surge of the sixties led to
various activist movements, including the Anti-War Movement
and the Environmental Movement. Such popular activism
interferes with corporate profits and capitalist growth. In a
boom phase, such interference can be tolerated. But in a
consolidation phase such obstacles to growth must be
systematically undermined and removed.
In a consolidation phase elites achieve capital growth by
increasing their relative share of a comparatively stagnant
economic pie. Freeing corporations from regulatory
intervention contributes to this process, and so does freeing
the military to to pursue profit-enabling interventions.
Achieving public passivity, or acquiescence, in such
regulatory and foreign policies becomes a political necessity,
as reflected in Huntington's essay. But there are also many
other ways by which elites can increase their share of the
pie, and these are reflected in the new blueprint American
elites came up with to replace the Bretton Woods system.
There are a variety of elite publications available, such as
CFR's "Foreign Affairs", in which it is possible to trace
elite thinking and decode the implied agendas. I included
Huntington's essay as an example of that genre. And there are
many useful independent publications, such as Sklar's
"Trilateralism", which present valuable research for those of
us interested in what goes on behind the scenes. But for our
purposes here, we have only occasional need of such sources.
We can see the elite agenda simply by following the headlines
in the daily news, and watching the spin and selection of
media stories. We can then decode that information by
correlating it to the known requirements of the capitalist
growth machine.
The blueprint developed by U.S. elites during the 1970's, as
the boom was winding down, was clearly revealed in 1980 by
the programs of Ronald Reagan and his tag-along British
counterpart, Margaret Thatcher.
* 1980-2001: The neoliberal project and global consolidation
In any nation which pretends to be a democracy, a major shift
in government policy must always be accompanied by an
appropriate shift in official rhetoric. At the end of World
War II, the new policy focused on exploiting the third world,
and the supporting rhetoric talked about "spreading democracy"
in the "free world". The rhetoric provided a framework which
could be used to justify the actions that are required by the
policy. If an intervention was needed to suppress a democratic
movement, that could be explained as "protecting democracy
from rioters". And as usual, it would in fact be capitalism
that was being protected from democracy.
Similarly, 1980 brought a major shift in policy and a major
shift in rhetoric to the USA and to Britain. The rhetoric was
about "getting government off our backs", "freeing business to
be more efficient", and "eliminating wasteful bureaucracies".
The policies focused on deregulation of corporations,
privatization of public infrastructures, cutbacks in social
services and benefits, and reductions in corporate and capital
gains taxes. In the 1900's, such policies went under the name
of "laissez faire capitalism". In the 1980's the policies came
to be known as "neoliberalism". Neoliberal policies are
precisely what we would expect for a consolidation phase. They
are designed to facilitate the systematic transfer of wealth
from the population and the national coffers to wealthy elites
and to large corporations--to increase the elite share of the
economic pie.
The most direct and obvious transfer of wealth was seen in the
reduction of corporate and capital-gains taxes. Every dollar
not paid in such taxes was one more dollar for the elite, one
more dollar to feed the capitalist engine, and one less dollar
to run the affairs of the nation and to provide public
services. This drain on the national treasury forces a
government to choose between borrowing and cutting back
programs. To the extent it borrows, it provides an investment
opportunity for big bankers, increasing yet again the elite
share of the pie. The pressure on national budgets is raised
still higher because military budgets--required to support
imperial interventions--are generally protected from budget
cuts. In Reagan's case military budgets were dramatically
increased. Ever since 1980, as a consequence of this tax
regime, Britain and America have been experiencing a
relentless decline in public services and in quality of life
generally--and the American government in particular has gone
heavily into debt in order to keep operating and to expand
military operations.
Privatization transfers wealth in two ways. In the initial
transfer of ownership, a valuable public infrastructure is
signed over to a private operator--and typically the valuation
assigned reflects neither the public investment in the
infrastructure nor the true value of the infrastructure. Such
transfers are insider deals, between governmental elites and
their corporate old boy brethren--a legalized form of
embezzlement. Additional wealth is transferred through the
operation of the infrastructure. Under public ownership, all
proceeds from operations go back into providing the service,
or else to fund other government operations. Under private
ownership, profits must be siphoned off, and that must come
either from price increases or else from cutbacks in service
and maintenance. The profit stream is a form of wealth
transfer, and the cutbacks in service and maintenance
represent a decline in the social value of the infrastructure.
Besides transferring wealth to elites, tax reductions and
privatization also transfer power and control over society
from democratic institutions to corporate operators. While
governments struggle under tight budgets to provide essential
services, private operators are in essence being subsidized to
go out and run society their own way. MacDonalds hamburgers
and TV advertisements in the schools, inadequate public
transport and dangerously un-maintained rail networks,
exploitive conditions and increasing unemployment for the
service workers--such matters under privatization are
determined by profit-hungry corporate executives rather than
by elected officials.
Deregulation creates wealth for corporations and banks by
reducing or eliminating the ability of governments to ensure
that those private entities operate in the public interest.
Deregulation is a direct transfer of power from democratic
institutions to private corporations, and that power enables
corporations to increase their profitability in a wide variety
of ways--at the expense of society generally. Some of these
ways are direct and immediate, the obvious increased
profitability that arises from exploiting workers, polluting
the environment, ignoring worker safety, and producing unsafe
or unhealthy products. But deregulation also enables
corporations to achieve longer term benefits by more indirect
means. As a consequence of neoliberal deregulation, elites and
corporations have been able to transform the very structure
and nature of national economies and of international commerce
and finance--for the benefit of elites and at the expense of
national sovereignty and prosperity.
Under neoliberalism, we see the following kinds of trends.
Corporations move their manufacturing facilities to the third
world, exploiting workers there while causing massive
unemployment back home. Corporations hide their profits in
offshore tax havens, transferring still further tax benefit to
elites. Governments lose control over their own currencies,
and speculative international markets develop in currencies
and in various financial instruments. Instability in these
various markets brings further pressure and instability to
national budgets and economies. Meanwhile those speculative
markets generate profits to feed the capitalist engine,
without contributing to the productive economy. Corporations
loot pension funds, and speculative investors raid formerly
protected industries--such as the American Savings & Loan
industry-- looting them and leaving economic havoc in their
wake. It would take several pages to enumerate all the scams
by which elites and corporations have managed to fleece the
people and their governments under neoliberalism.
Neoliberalism came to the USA and Britain first because those
nations were the most thoroughly capitalistic of the major
powers. The Continental European and Japanese economies tended
to mix capitalist enterprise with a strong dose of government
ownership and participation. These governments were better
able to buffer the effects of the declining postwar boom.
Furthermore, neoliberal rhetoric would have been nearly
impossible to sell to their more socialist minded populations.
America's elite planning community manages the global system
on a daily basis, and it is only natural that they would be
the first to design and implement a replacement to the Bretton
Woods system. Britain, continuing in its close relationship
with America in geopolitical and economic affairs, naturally
followed suit. American and British populations were wooed by
the promises of economic revival, lower taxes, and less
government bureaucracy. Except for those few who knew the
history of the 1900's and the Robber Baron era, the people had
little reason to suspect that these promises were encoded, and
that the people were to experience a declining quality of life
while the big corporations were to get the benefit of the
promised lower taxes and experience a monumental economic
revival. The people did not understand that regulatory
bureaucracies had been established expressly to protect them
from corporate abuses and from economic instability.
As a result of neoliberalism, American and British
corporations enjoyed a competitive advantage, in comparison
with their European and Japanese rivals. Deregulation and tax
reductions lowered the Anglo corporations' cost basis, and
they were able to lower their prices on international markets
and still make a profit. This is part of the push and shove of
a consolidation phase. By adopting neoliberal policies, Anglo
elites were increasing their share of the global economic pie,
at the expense of competing elites in Europe and Japan--while
at the same time the Anglo elites were increasing their share
of their domestic economic pies at the expense of their
populations and nations.
Throughout most of the 1980's European elites suffered under
this competitive disadvantage. They wanted to emulate the
Anglos, but they faced certain opposition from their
populations if they tried to directly adopt neoliberal
rhetoric and policies. European politics included significant
socialist and communist constituencies, and labor was
relatively well organized and able to wield political
influence. European elites needed a more devious means to
achieve neoliberalism, and they found that means by smuggling
in neoliberalism under the cloak of European integration.
I happened to be in France in the summer of 1988, just after
Denmark had rejected the Maastricht Treaty, and in the midst
of a massive PR campaign in France selling the Treaty to the
French people in the run up to a national referendum on the
matter. The issues under discussion publicly, and among people
privately in my experience, were mostly about the political
problems of unification. What would be the effect on
sovereignty? How would subsidiarity be interpreted in
practice? To the extent economics was seen as an issue, the
concerns had mostly to do with the threat posed to traditional
national industries by potential outside competition. And
people were enthusiastic about the ability to compete
economically with America and Japan, since businesses could
operate on a bigger, European-wide scale. The topic of
neoliberalism was not under discussion, and I doubt if many
people would have found it relevant to the Big Question on the
table: "Shall we integrate or not?".
And yet, if you look at the Maastricht Treaty, you find that
it implies a lot about neoliberalism, and contains little
substance about European integration--those details were left
to be settled later. The treaty was not drafted by heads of
state, nor by diplomatic ministers, but by financial
ministers, in secret session. This gathering, representing
elite financial interests, and laying down the foundations of
European unity, was in many ways analogous to the elite
gathering at the American Constitutional Convention, which
laid down the foundations of Colonial unity. Just as the
Founding Fathers ensured that the new Constitution would serve
the interests of the wealthy elite, so did the European
finance ministers ensure by the Maastricht Treaty that Europe
would begin its journey down the neoliberal path. Under the
rubric of "conservative fiscal policies" the Treaty
incorporated the basic neoliberal paradigm into the
proto-constitution of the new European Union. European
governments were to have less flexibility in managing their
economies, and there would be greater reliance on market
forces to deliver economic results. This was a trade-off that
Anglo populations had been ready to accept, not understanding
the consequences, but in Europe the trade-off was made without
the population even knowing it was under discussion.
Maastricht established the foundation for European
neoliberalism in two ways. The emphasis on fiscal conservatism
enshrined the basic principles of neoliberalism. That was a
start. In addition, the structure of the EU government, laid
down by Maastricht, is highly undemocratic--in comparison to
American or European standards. Power is centered in the
European Commission, an unelected body--that would be the
equivalent of the American President or the British Prime
Minister being appointed instead of elected. The Commission
represents wealthy elite interests, and once enthroned in
Brussels, it's power has been used to pursue the neoliberal
line. The Commission has been able to accomplish what national
European governments would have been politically unable to
accomplish.
The EU represents a triple blow against democratic
accountability in Europe. The first blow comes from scale
itself--Brussels cannot help but be remote and unresponsive,
in comparison to the smaller and closer national governments.
The second blow comes from the lack of a Bill of Rights.
Although the EU has tended to wear a liberal face--in response
to current public pressures--there are no firm constitutional
guarantees as regards civil liberties and protection from
government invasiveness. The third blow comes from the
undemocratic structure of the EU--a structure that would not
be politically acceptable to Europeans if it were proposed at
the national level.
In the 1990's, with the Anglos a decade into the neoliberal
project, and the new EU elite leadership now empowered to
pursue a similar agenda, Western elites launched a coordinated
diplomatic campaign to implement neoliberalism on a global
scale. The GATT process (General Agreement on Tariffs and
Trade) was hijacked for this purpose and in 1993, at the
Uruguay Round of GATT, the World Trade Organization (WTO) was
established. That marked the world's entry into the era of
free trade treaties and globalization--the global neoliberal
project.
"Free trade" treaties are designed to transfer power from
national governments to corporations. Under the rubric of
"anti-protectionism", these treaties reduce the ability of
governments to set product standards, protect the environment,
or to otherwise regulate corporate activities. "Free trade"
represents a wholesale version of deregulation, affecting all
member nations of the WTO. The WTO began to take on an
increasingly active role in global affairs, seeking to extend
corporate power ever further in a regular series of treaty
conferences, each one adopting more thoroughgoing deregulation
measures than the previous. Although the actions of the WTO
have profound political consequences, delegates to the WTO are
selected from elite financial circles in each nation, and are
in no way representative of the populations.
While the WTO was pursuing its deregulation agenda, the IMF
and World Bank began to radically shift their roles in the
global economy. Under the Bretton Woods system, the purpose of
the these institutions had been to stabilize international
finance and to provide credit for development projects. Under
globalization, these institutions began to use the power of
debt to force third-world nations to adopt neoliberal policies
which were even more radical than those promulgated by the
WTO. In order to obtain urgently needed credit, third-world
nations were forced to adopt "structural adjustment programs"
which removed regulations, privatized infrastructures,
drastically curtailed social programs, and dedicated national
budgets to the repayment of outside debts. While under Bretton
Woods the IMF and World Bank acted as bankers to imperialist
nations, under globalization these institutions became direct
agents of imperialist intervention.
As the Twentieth Century drew to a close, the world had become
a quite different place than it had been during the postwar
boom era. Instead of governments regulating corporations,
corporations now regulated governments through the authority
vested in the World Trade Organization and IMF by so-called
"free trade" treaties. The WTO, the IMF, the World Bank, and
the related corporatist institutions were becoming to some
extent a de facto world government. Instead of prosperous
nations and improving living conditions in the West,
governments were struggling to manage their budgets and living
conditions were continually deteriorating. The overall pattern
of the consolidation-phase elite blueprint was now becoming
clear: the world was being corporatized. TNC's were becoming
the primary unit of power and wealth in the global society,
while the nation state was in decline. Political power had
become subservient to corporate power. Capitalism had
triumphed over democracy. The Enlightenment vision of
sovereign and democratic republics had been covertly replaced
by corporatism--Mussolini's preferred name for fascism.
________________________________________________________
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Wexford, Ireland
_____________________________
"...the Patriot Act followed 9/11 as smoothly as the
suspension of the Weimar constitution followed the
Reichstag fire."
- Srdja Trifkovic
There is not a problem with the system.
The system is the problem.
Faith in ourselves - not gods, ideologies, leaders, or programs.
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http://www.co-intelligence.org
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