Maurice Coakley, in an important assessment of capitalist interstate rivalry, analyses the changing and contradictory nature of imperialism and its impact on revolt against the system.
The end of the Cold War was supposed to bring a new era of peace and prosperity. Instead, we have economic turbulence, social unrest and a new age of war which has now escalated to genocide. Something seems to have gone badly wrong.
We appear to have entered a period reminiscent of the years leading up to the First World War with deepening inter-state tensions and the emergence of new alliances between states. There are, of course, important differences between now and then. Most of the world had been colonised by European states and the battle for control of colonies was a major cause of the war. Already at this time many socialist writers were discussing the emergence of a new form of imperialism which could overlap with colonialism, arising from a capitalism in which production and finance were more closely interwoven.
The First World War initiated a global crisis of colonial rule. Across Africa and Asia, oppositional political movements – and in some cases armed resistance bodies – emerged. This shift was in part brought about by the influence of the Bolshevik revolution in Russia which called for national self-determination for all peoples. Equally important was the changing stance of the United States. In the late 19th century, much of the American elite aspired to becoming a major colonial power. After defeating Spain in the 1898 war, they acquired the Philippines and Cuba as colonies, but not without significant resistance.
From Protectionism to Globalism
The turning point for Washington came in the 1930s when the British empire abandoned ‘free trade’ and introduced protectionist measures against other states. For American capital this was a major setback. They were committed to unfettered access to markets and resources across the world (although this did not stop the US imposing protectionist measures to defend their own industries and agriculture).
The new imperial order which emerged at the end of WW2 maintained some continuity with the older order but also involved significant changes. The US was now the world’s leading power, a role that Britain had previously played. The US dollar replaced sterling as the world’s leading currency, used by firms from other states for cross border trade. The US also established a network of organisations like the World Bank and the IMF (International Monetary Fund) and what later become became the World Trade Organisation, to regulate the global economy.
Britian had pioneered industrialisation but by the beginning of the 20th century it had already fallen behind the US and Germany. By the end of the Second World War, the US was the supreme industrial power. Germany and Japan were utterly crushed and France and Britian seriously weakened.
This moment of US triumph created its own problems. It was the war which had lifted the US out of the ‘Great Depression’. What if the world was heading back into a new great depression? This problem was magnified by the way the war ended in Europe. It was the Red Army, not the American army which had defeated the German military; 80% of the Wehrmacht’s divisions were on the eastern front.
Furthermore, was there not a real danger that the worn-down German working class would turn to Communism? Already in France and Italy, Communist parties were numerically the largest parties. Further afield, the American elite was horrified to see the People’s Liberation Army come to power in China. What would happen if the Japanese working class turned to Communism? And so, the United States committed itself to the revival of European (especially German) and Japanese capitalism. The project was hugely successful, bringing about the largest wave of economic growth the world has ever experienced.
The resurgence of German and Japanese capitalisms ran the risk of reviving inter-state rivalry, but this risk was reduced by maintaining networks of military bases in Germany and Japan, across Western Europe and on the periphery of East Asia. The presence of foreign military bases in other states – outside of wartime – is historically unprecedented, making these states as much satellites of the US as they were allies.
During the Cold War, the US projected its military interventions around the world not as imperialist projects but as protection of the ‘free world’ against Communist tyranny. However, the US defeat in Vietnam at the hands of what Henry Kissinger described as a ‘third rate peasant power’ seriously damaged its global standing and it did so in the context of a new global economic downturn.
Neoliberalism and the Rise of Finance
The history of capitalism has always involved periodic waves of growth and slowdowns, booms and bursts. By the 1970s, the post-war boom was over and America’s position of global leadership over the ‘free world’ was imperilled.
A century earlier (1873-96), a similar downturn had occurred. This proved to be the beginning of the end of the first age of economic liberalism. It was also the start of a new period of intense interstate rivalry, which culminated in the Great War. This time around the pattern was reversed. Instead of undermining trade and markets, the 1970s downturn led to a restoration of ‘free trade’ and ‘free markets’ across the globe, in the process undermining of the sovereign state and social welfare programs across most of the world.
If the shift to greater protectionism in late 19c Europe (and the US) aimed to protect domestic markets, the return to economic liberalism in the late 20th century had quite the opposite intention and effect: it gave the US greater control over global markets. The dollar remained the world’s dominant currency. America’s two major economic rivals, Germany and Japan, remained under US military command, which gave the US great leverage when it came to economic policy.
The turning point came in 1979 when the Federal Bank (the US central bank) raised the interest rate on the dollar to over 18%, an astonishingly high level. The ‘Volcker shock’, proved a wonderful success for Wall St but for the American working class, it marked the beginning of a deep recession, very high levels of unemployment and a much weakened labour movement.
Washington and Wall Street won an even greater victory across the Global South. US banks had encouraged states to take out large loans in dollars, at low interest rates which resulted in these countries becoming burdened with massive levels of debt. Their only route out was to hand over effective control of their economies to the US-controlled IMF (International Monetary Fund) and the World Bank which imposed “structural adjustment programmes” or massive cuts in social spending and the handing over of domestic resources to US corporations. Their domestic economies were opened up to ‘free trade’ and their local industrial bases and agricultural economies, unable to compete with the giant US agro-industries, destroyed.
The Volcker shock greatly strengthened the role of the dollar as the world’s leading currency, a position it would maintain long after the interest rates came down. States and firms around to the world wanted to hold dollars because they were reliable which in turn enabled the US government to print many more than would have considered viable previously. Both public debt and private debt soared. The US in effect created an ‘empire of debt’ and the result of this was a vast explosion of finance.
America’s embrace of finance in the late 20c has been compared to Britain’s financial turn a century earlier, although there are crucial differences. In the late 19th century, a major technological breakthrough – centred on chemistry and electricity – had occurred in Germany and the US and Japan. Britain missed out because they did little to encourage scientific growth, and their primary focus was on financial investment and holding on to their empire.
A similar breakthrough occurred in the late 20th century focussed on information and computer technology. This time it was the US led the way. Despite its proclaimed adherence to ‘free markets’, it was state investment, mostly via the ‘defence’ industries that pioneered the new technologies. The internet itself was developed as part of Cold War investment, to ensure that the US communications systems would survive a nuclear war. US high-tech companies still lead the world. America’s key allies/rivals, Germany and Japan, were completely bypassed. In the 1990s the US temporarily returned to economic growth but then, apart from the financial sphere, stagnation set in. The US has experienced deepening social inequality.
Why did the US not experience a new extended wave of economic growth and broader prosperity as it had in earlier periods? While economic stagnation has also affected, Europe and Japan, East Asia, especially China, has experienced exceptional levels of economic growth, similar to the US in earlier periods. There is a real paradox here. The Americans pioneered a new wave of advanced technology, and the Chinese experienced a wave of growth and prosperity.
Earlier waves of technological change had the effect of increasing the size of the industrial labour force but the high tech changes eliminated large numbers of jobs, not only in factories but also among white collar workers. The size of the industrial workforce significantly declined not only in the US but across Europe and Japan. There were two distinct factors involved here: more advanced machinery needed fewer workers, and many companies shifted much of their production to lower wages countries.
The rise in information and commuter technology occurred around the same time – the Clinton era – that new rules were introduced permitting free movement for capital to leave the US. The development of the internet greatly facilitated this shift of production. China, in particular, was the recipient of much of this transfer of production, not only from US companies, but also from German and Japanese firms. The reason for this was very simple. China had a highly developed material infrastructure, an educated labour force, and wages were low.
Oil, Imperialism, and Climate Change
One of the most celebrated ideas which emerged after the end of the Cold War, the “end of history”. Capitalism was the only viable social form and this was to be humanity’s future. Along with this went the notion that states – and inter-state rivalry – had become much less important. If the ‘end of history’ ideas were to become real, then the US would have to lead the world in securing global peace and deal with the emerging global climate crisis.
As early as the 1960s, the US government was informed about climate change. By the 1990s – the age of globalisation – the evidence was overwhelming. The prospect of destructive climate change offered the US an ideal opportunity to lead the world, by directing a transition away from fossil fuels towards more sustainable forms of energy. During the 1990s, new global bodies were set up to discuss the problems of global warming but no practical solutions to the climate crisis emerged.
From the beginning of industrialisation in late 19th century America, oil had played a crucial role in the process. The US was fortunate to have its own plentiful supply of oil; it didn’t need to import it. By the end of the 20th century the American domestic supply of oil was running out. This seemed like a perfect opportunity for Washington to lead the world in a transition to more sustainable forms of energy. But instead of focussing on the development of a more environmentally friendly energy system, the US turned to fracking which was even more damaging to the environment.
Why did the transition to safer forms of energy not happen? The influence of the Big Oil companies undoubtedly played a part. Not only was carbon energy production hugely profitable but the capitalist class as a whole had a vested interest in benefiting from the profits of big energy companies. As Peter Gowan put it, in the United States the capitalist class is too powerful for its own good.
Geopolitical factors also played an important role. The US was the dominant power in the Middle East where most oil production was centred. This not only gave the US great leverage over the global economy, it was also hugely beneficial for maintaining the dollar as the world’s leading currency.
Washington’s inaction on climate change was in sharp contrast to their military aggression in the Middle East. The people who carried out the 9/11 bombings were assumed to have close links the Afghan government. The US engineered an invasion by NATO forces. NATO had been established to defend Western Europe from Soviet attack, or at least that was its official justification. When NATO finally engaged in military action, it does so not to protect Europe, but to invade central Asia.
The invasion of Iraq over a year later was even more revealing. Iraq had nothing to do with the 9/11 bombings, but it was a major producer of oil. It was obvious to most of the world that the US invasion of Iraq was aimed at securing greater control of the world’s oil supplies. The ability of the US to carry out military assaults on Afghanistan and Iraq certainly impressed any potential rivals around the world but these couldn’t help noticing that the US failed to secure full control of either country.
The idea that we had entered a new age of globalisation where inter-state conflicts were a feature of the past was seriously discredited by the invasions of Afghanistan and Iraq but many on the left and centre continued to believe the globalisation myth. Afghanistan and Iraq were ‘rogue’ states; this was not normal international politics.
From Financial Crisis to Systemic Crisis
It was only with the financial crisis of 2007/8 that the fragility of the neo-liberal order – and the Dollar-Wall Street system at its heart – became apparent to large numbers of people across the world. The financial crisis was centred in the American financial system, but its impact was global and across the Global South, it provoked huge popular uprisings.
The Chinese state, despite having embraced neoliberal market ideas, now concluded that it needed to maintain control over its own financial system. In Europe the political elite drew the opposite conclusion. Following the financial crisis, the major European banks were rescued from collapse by the US Federal Bank. The ruling elites in Europe concluded that they could not afford to challenge US global leadership without risking their own wealth and power. The most crucial change though occurred in the US where the bulk of the ruling elite came to the conclusion that US needed to adopt a more militarily aggressive stance if it was to maintain its position of global leadership.
The shift in US foreign policy occurred within the period of the Obama presidency. Despite Obama’s proclaimed desire for peace, the US was actively involved – in conjunction with European states – in the overthrow of the Gaddafi government in Libya in 2011. It was clear by then that the US invasions of Afghanistan and Iraq had been a disaster. The US response was not to seek a peaceful resolution to the very real problems in Middle East politics but to double down on its alliance with Israel, creating the conditions for the current genocide in Palestine.
The most dramatic change occurred though in relation to Russia and China. The CIA instigated a coup in the Ukraine in 2014 that brought a right-wing nationalist government to power that effectively turned Ukraine’s Russian speakers (40% of the population) into second-class citizens. This set the scene for a deepening conflict within the Ukraine, culminating in Russia’s invasion in 2022.
As early as 2011, Obama announced ‘the pivot to Asia’, a clear attempt by the US to assert itself as the leading power in the Asian-Pacific region. This was not a response to any military actions by China, but to the fact that China led a major economic recovery following the financial crisis.
In the US, Europe and Japan, there has been an extended period of economic stagnation. In order to prevent a 1930s-style Great Depression, the governments there brought in very low interest rates (to make borrowing cheaper and to encourage growth). These succeeded in preventing a full-scale collapse but did not enable sustained growth. One side-effect of these low interest rates has been to permit an even greater expansion of finance and debt. The more recent attempt to raise interest rates have shown just how unstable the global financial system has become.
This is the economic background to the current escalation of interstate rivalry that risks turning in a full-scale global war. The current global polarisation is not about ideology or differences in social systems. It is about economic rivalry between states, competition to maintain or advance their positions in the global economy.
As states experience major economic decline or stagnation, they run the risk up undermining their own political system. Their own populations becoming increasingly disillusioned and lose confidence in the ruling elites. This is what has been happening in the United States; Trump is best understood as a symptom of America’s crisis. The European rulers are terrified that the same thing will happen to them. The fact that Trump or the European far-right have no idea how to resolve the problems of American or European capitalism is not reassuring for the ruling classes. On the contrary, it indicates the depth of the current crisis of global capitalism.
The persistence of imperialism
At its core, imperialism is about the extraction surplus wealth from around the world. The active role of states is needed to accomplish this. A central theme of globalisation theories was that there was no need for economic rivalry between states to develop into political (and military) hostility so why has this happened now?
In the early 20th century control of colonies was the central issue for the major states in the conflict. That no longer applies but control of resources and access to markets across the world remains crucially important. The late 20th and early 21st century has also witnessed an expansion of finance and often linked to it, of overseas investment, especially for the United States and its ‘satellites’. The American capitalist class is hugely dependent upon the US maintaining the political and military power to continue to extract returns from rent and debt from around the world, especially from the Global South.
Most of the economic growth in the 21st century has been centred in the Global South or the East, highlighted by the rise of the BRICS (Brazil, Russia, India, China and South Africa). This rebalancing of the global economy has undermined the power of the US and its closest allies. The response of the US has been to seek to isolate key rival states – especially those states which combine economic and military power – Russia, Iran and China. But this has all backfired badly.
Russia didn’t collapse politically or economically. It is winning the war in the Ukraine; its economy is stronger, and it has established closer ties to China (and Iran). The big losers in the Ukraine war, apart from Ukraine itself, have been the European states, especially Germany, whose industrial base has been severely weakened. The EU could have striven for a peaceful resolution to the conflict there, but they chose to back war against Russia and are now paying the price.
It is too early to assess the outcome of the Middle East conflict but there is no doubt that American (and European) support for Israeli genocide has done enormous damage to the credibility of the US and the EU across the Global South. The attempt to isolate China has proven to be an even bigger disaster. Washington efforts has resulted in a significant expansion of the project, now known as BRICS+. The BRICS+ is not a military alliance but a military alliance has emerged within the BRICS+ between Russia, China and Iran. Whether this becomes a stable alliance or merely a temporary one, or whether it expands to include other states is too early to judge.
For the last half century, social rebellion across the world has been marginalised and suppressed. But the growing conflict between the ‘West’ and the ‘Rest’ opens up a political space where radical political and social change becomes possible once again. In part, the conflict between the ‘West’ and the ‘Rest’ is an inter-imperialist conflict. In part, it is something else: a revolt by the Global South against Western imperialism. These two elements are distinct but deeply interwoven.
This is occurring in a context where warfare is potentially more destructive than ever. The spread of nuclear weapons means that a third world war could easily escalate with disastrous consequences for humanity. And in the background, we have a developing global ecological crisis without historical precedent.
Alex Callinicos has argued that we have entered a new age of catastrophe. There is certainly a very real danger of that. We might reformulate this: without mass movements across the globe seeking an end to war, to social inequality and to environmental destruction, the world is likely heading for catastrophe.
