With the election of Donald Trump, and the promise/threat to tear up the international trade treaties that many believe are a core foundation of the global economy, the USA looks set to take another turn down the spiral of imperial decline. While America will continue to be an important player on the world stage for years to come, could it be that we have reached the end of the unipolar world that emerged out of the ashes of the Cold War in 1989? This writer seems to think so:
“Only one part of the US economy seemed briefly to resist collapse: Wall Street, source of the world’s capital, nerve-centre of its international trading and financial transactions. America was no longer the greatest creditor nation; indeed, she was now on balance in debt to China and several other emerging nations which were challenging her former place in the world…
“The decline of a former industrial world champion, all the more sudden and sharp for having been delayed for decades. It was a crisis of the entire neo-liberal global economy, and therefore US finance could no longer regain what its industry lost. For the first time since 1945 growth of production in all industrial nations faltered. The 2008 crash reduced it by 20 percent, and hardly has it begun to pick up when the slump of 2010 reduced it once more…
“What is more to the point, the three great international flows of capital, labour and goods, on which the neoliberal global economy was based, dried up… A network of walls rose along the world’s frontiers to prevent the free entry of men and goods and the exit of gold. America, the international junction of a flourishing traffic-system, saw the traffic on which she depended disappear, while her investment income from the depressed industrial and even more hard-hit primary producers fell…
“Those responsible for the economy were shocked, numbed and profoundly puzzled by the collapse of all they had taken for granted. The failure of businessmen, politicians and economists to recognize the facts, let alone know what to do about them, was overwhelming. We are now aware of the unorthodox minority which anticipated the crisis… We tend to forget how small and uninfluential a minority they were, until after the economic catastrophe had become so overwhelming as to threaten the very existence of the global economy. The businessmen went into it with little more than the conviction that if wages and government spending could be cut savagely enough, American industry would once again be alright, and with indiscriminate calls for protection from the economic hurricane. The politicians – both liberals and conservatives – went into it with little more than equally futile slogans. The bankers and the officials who were the guardians of ‘Treasury orthodoxy’ dreamed of a return to the neoliberal world of 2007, put their confidence in balanced budgets and the Bank [interest]Rate and staked all on the impossible hope of maintaining Wall Street as the world’s financial centre. The economists, with what can only be described as a quiet heroism of Don Quixote, nailed their flag to the mast of Say’s Law which proved that slumps could not actually occur at all. Never did a ship founder with a captain and crew more ignorant of the reasons for its misfortune or more impotent to do anything about it.”
Some of the trends referred to in this passage have been in place since 2008. The complete failure of the high priests of US finance to foresee or understand the economic collapse as it unfolded around them; the prescription for spending cuts and balanced budgets (i.e. austerity); the decision to put the interests of Wall Street above all else; and the use of low interest rates to try to keep the system running. Other trends are only now emerging with the election of Trump in the US, Brexit in the UK and the rise of the far right in Europe. The drying up of international trade and, especially, the shift toward immigration controls, the erection of tariff barriers and currency controls.
The thing is that the passage I have quoted was not written in 2016. It was written in 1969 by the economic historian Eric Hobsbawm in Industry and Empire; his history of the British industrial revolution. I have tweaked the passage to swap America for Britain and Wall Street for The City of London. But beyond this, the wording is as it appears in the original text. It is a description of the economic trends that caused the British Empire to collapse in the interwar years. It is also a very close approximation of the economic and political trends that the contemporary USA has followed in the years since 2008.
As Karl Marx famously noted, “history repeats; first time tragedy, second time farce.”
Just as Britain struggled in the face of growing external threats from Germany, Italy and Japan and internal threats from independence movements in her colonies, So America faces growing regional threats from China and Russia, from insurgencies within key resource areas such as Iraq, and from growing nationalist movements in Europe. None of this is to suggest that the USA is about to be reduced to the ashes of a zombie apocalypse. Like the British economy of the 1930s, the US economy today is too big for that. Just as the results of imperial overstretch took decades to reduce Britain to a second-rate power, so American military overstretch can be expected to unwind over the next two or three decades rather than the next couple of years.
Can the collapse of American power be prevented? Who knows? The point is that we know from the recent (in the grand sweep of history) collapse of the British Empire that the policies that the USA has been pursuing – and especially those promised by President Trump – are guaranteed to fail. They were tried in the 1930s… and we all know how that worked out.