Fw: The US has structured the world economy to enrich itself. It cannot last - Guardian

["Nello Margiotta" <animarg@tin.it>]

 The Guardian                                     Saturday January 5, 2002

 The American empire

 The US has structured the world economy to enrich itself. It cannot last

       By Robert Hunter Wade

 Suppose you are a modern-day Roman emperor, leader of the most powerful
 country in a world of sovereign states and international markets. What
 international political economy do you create so that, without having to
 throw your weight around too much, normal market forces bolster the
economic
 pre-eminence of your country, allow your citizens to consume far more than
 they produce, and keep challengers down?

 You want autonomy to decide on your own exchange rate and monetary policy,
 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 centres that might
 challenge your pre-eminence. You want intense competition between exporters
 in the rest of the world to give you an inflow of imports at constantly
 decreasing prices relative to the price of your exports.

 You want to invite the best brains in the rest of the world to your
 universities, companies and research institutes. You befriend middle
classes
 elsewhere and make sure they have good reasons for supporting your
 framework.

 What features do you hard-wire into the international political economy?
 First, free capital mobility. Second, free trade (except imports that
 threaten domestic industries important for your reselection). Third,
 international investment free from any discriminatory favouring 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, healthcare, pensions, and the like. Fourth, 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. This combination allows your
 people to consume far more than they produce (and it periodically produces
 financial instability and crises in the rest of the world). To supervise
the
 international framework you want international organisations that look like
 cooperatives of member states and carry the legitimacy of multilateralism,
 but are financed in a way that allows you control.

 Is the above a Machiavellian interpretation of the US role in the world
 economy since the end of the Bretton Woods regime around 1970? Certainly.
 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.
>
 We see it in its new single-minded unilateralism in international
relations,
 much exacerbated by the mixture of rage at September 11 and gung-ho
 jubilation at "success" in Afghanistan. And we see it in what the United
 States is now ramming through the international supervisory organisations.

The US has engineered the WTO to commit itself to negotiate a general
> agreement on trade in services, which will facilitate a global market in
 private healthcare, welfare, pensions, education and water, supplied -
naturally - by US companies, and which will undermine political support for
> universal access to social services in developing countries. It has
 engineered a "private sector development" agenda devoted to 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
development
 thrust, especially in the social sectors, owes everything to US pressure.

 These power relations and exercises of statecraft are obscured in the
 current talk about globalisation. The increasing mobility of information,
 finance, goods and services frees the American government of constraints
 while more tightly constraining everyone else. Globalisation enables the US
 to harness the rest of the world to its own rhythms and structure.

 Of course these arrangements do not produce terrorism. But they are deeply
 implicated in the very slow economic growth in most of the developing world
 since 1980, and in the widening world income inequality.

 Slow economic growth and vast income disparities 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 US should be attacked
 directly.

 The US 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, so that markets working within the new
 framework produce more equitable results. Historians looking back a century
 hence will say that the time to have begun was now.


 Robert Hunter Wade is professor of political economy at the London
 School of Economics and author
 of Governing the Market (Princeton University Press).
 --