United States Empire
Rules An Unbalanced World
Robert Hunter Wade
you are a modern-day Roman emperor, the leader of the
most powerful country in a world of sovereign states and
international markets. What sort of framework of international
political economy arrangements do you create so that without
having to throw your weight around more than occasionally,
normal market forces bolster the economic preeminence
of your country, allow your citizens to consume far more
than they themselves produce, and keep challengers down?
want autonomy to decide on your exchange rate and monetary
policy in response only to your own national objectives,
while having other countries depend on your support in
managing their own economies. You want to be able to engineer
volatility and economic crises in the rest of the world
in order to hinder the growth of centers that might challenge
your preeminence and in order to allow your vulture funds
periodically to buy up their assets at fire-sale prices.
You want intense competition between exporters in the
rest of the world that gives you an inflow of imports
at constantly decreasing prices relative to the price
of your exports.
want to invite the best brains in the rest of the world
to come to your universities, companies and research institutes.
You befriend the middle classes elsewhere and make sure
they have good material reasons for supporting the framework.
You make it unlikely that elites and masses should ever
unite in nativistic reactions to your dominance or demand
"nationalistic" development policies that nurture
competitors to your industries.
features do you hard-wire into the international political
economy? First, free capital mobility. Second, free trade
(excepting imports that threaten domestic industries important
for your re-selection). Third, international investment
free from any discriminatory favoring of national companies
through protection, public procurement, public ownership
or other devices, with special emphasis on the freedom
of your companies to get the custom of national elites
for the management of their financial assets, their private
education, health care, pensions, and the like.
your currency as the main reserve currency. Fifth, no
constraint on your ability to create your currency at
will (such as a dollar-gold link), so that you can finance
unlimited trade deficits with the rest of the world. Sixth,
international lending at variable interest rates denominated
in your currency, which means that borrowing countries
in crisis have to repay you more when their capacity to
repay is less.
combination allows your people to consume far more than
they produce; it periodically produces financial instability
and crises in the rest of the world, which hold back the
crisis-affected countries and also cause other governments
to hold more of your currency and therefore help to finance
your deficits; and it allows your firms and your capital
to enter and exit other markets quickly. You also need,
of course, a bail-out mechanism that protects your creditors
and displaces any losses from periodic panics onto the
citizens of the borrowing country.
supervise the international framework you want international
organizations that look like cooperatives of member states
and carry the legitimacy of multilateralism, but are financed
in a way that allows you to control them.
Machiavellian interpretation of the U.S. role in the world
economy since the end of the Bretton Woods regime around
1970? Certainly. In reality, America's engineering of
its dominance has at times been for the general good,
when it used its clout to "think for the world."
But often its clout has been used solely in the interests
of its richest citizens and most powerful corporations.
This latter tendency has been dominant lately.
see it in its new single-minded unilateralism in international
relations, much exacerbated by the mixture of rage at
Sept. 11th and gung-ho jubilation at "success"
in Afghanistan. And we see it in what the United States
is now ramming through the international supervisory organizations.
United States has engineered the World Trade Organization
to commit itself to negotiate a General Agreement on Trade
in Services, which will facilitate a global market in
private health care, welfare, pensions, education and
water, supplied - naturally - by U.S. companies, and which
will undermine political support for universal access
to social services in developing countries.
it has engineered the World Bank, through congressional
conditions on the replenishment of IDA, the soft-loan
facility, to launch its biggest refocusing in a decade
- a "private sector development" agenda devoted
to the same end of accelerating the private (and nongovernmental)
provision of basic services on a commercial basis. The
World Bank has made no evaluation of its earlier efforts
to support private participation in social sectors. Its
new private sector development thrust, especially in the
social sectors, owes everything to intense U.S. pressure.
power relations and exercises of statecraft are obscured
in the current talk about globalization. Far from being
just a collapsing of distance and widening of opportunities
for all, the increasing mobility of information, finance,
goods and services frees the American government of constraints
while more tightly constraining everyone else. Globalization
and the global supervisory organizations enable the United
States to harness the rest of the world to its own rhythms
course these arrangements do not produce terrorism in
any direct way. But they are deeply implicated in the
very slow economic growth in most of the developing world
since 1980, and in the wide and widening world income
inequality. (The average purchasing power of the bottom
10 percent of Americans is higher than that of two-thirds
of the rest of the world's population.)
economic growth and vast income disparities, when seen
as such, breed cohorts of partly educated young people
who grow up in anger and despair. Some try by legal or
illegal means to migrate to the West; some join militant
ethnic or religious movements directed at each other and
their own rulers. But now the idea has spread among a
few vengeful fundamentalists that the United States should
be attacked directly.
United States and its allies can stamp out specific groups
by force and bribery. But in the longer run, the structural
arrangements that replicate a grossly unequal world have
to be redesigned, as we did at the Bretton Woods conference
after World War II, so that markets working within the
new framework produce more equitable results. Historians
looking back a century from now will say that the time
to have begun was now.
writer, a professor of political economy at the London
School of Economics and author of "Governing the
Market," contributed this comment to the International