American Empire Foreclosed?
Reconsidering U.S. power in a time of economic crisis
Not long ago, excitement over American imperialism reached levels not seen in a century. “People are coming out of the closet on the word ‘empire,’” the right-wing columnist Charles Krauthammer told The New York Times in early 2002. Neoconservatives were on the rise in
Wall Street Journal editor Max Boot, for instance, took issue with Pat Buchanan’s belief that the
It is hard to believe that those sentiments, hallmarks of George W. Bush’s first term, were features of our very recent history. The debate they were a part of now seems distinctly strange and foreign. Since then, the world has experienced a catastrophic occupation in
And that, of course, is to say nothing of the bursting of the housing bubble, the fall of Lehman, and the end of the hedge fund era. With unemployment rising and Wall Street shamed, we have entered a period of economic downturn acute enough to raise serious questions about the viability of
The answer involves more than just quibbles over the semantics of
Stretched Beyond the Limits?
The theory of imperial decline that has become standard over the past two decades is known as “overreach” or “overstretch.” Historian Paul Kennedy most famously described the concept in his 1988 book, The Rise and Fall of the Great Powers. Kennedy argued that, historically, dominant world powers doomed themselves by engaging in overseas adventures that drained their strength and strained their finances. His analysis, with its implication that the
At the time, American conservatives fumed. They argued that the British-born professor was a doomsdayer who did not appreciate
Today, the price tag on
Johnson explains, “The purpose of all these bases is ‘force projection,’ or the maintenance of American military hegemony over the rest of the world. They facilitate our ‘policing’ of the globe and are meant to ensure that no other nation, friendly or hostile, can ever challenge us militarily.” Since the end of the Cold War, holding such unrivalled power has been a stated cornerstone of
We must now ask: Can such hegemony plausibly be maintained? On the objective level, President Bush made the strains on empire more severe by occupying multiple countries and creating a need for more troops than the military could recruit. Highlighting this dilemma, Kennedy argued in a 2006 interview, “U.S. Army generals would definitely say that
But even more significantly, Bush upped the political and economic costs of empire by engendering ill-will and resistance to the
Democratic resistance also determines the relative limits of empire. Among our allies, the Bush administration’s “with us or against us” attacks on multilateralism diminished the willingness of other powers to shoulder part of the burden of
Dangling the Dollar
President Obama may be able to reverse some of the diplomatic damage of the Bush years, but his administration faces problems of its own. Global force projection requires not only a huge amount of political capital; at a most fundamental level it demands financial treasure. Thus, degrees of overstretch must also be gauged relative to economic health—something which is now in short supply. Many would think that
It was an unsustainable state of affairs, and most nations would never have been allowed to maintain it. The International Monetary Fund (IMF) would have railed against wanton economic mismanagement and warned creditors not to invest in that country unless the government promised sweeping reforms. Even without the institution’s influence, textbook economics holds that, on seeing such signs of economic weakness, investors would shy away from the country, its currency would fall, consumers would no longer be able to afford as many foreign goods, and the economy would undergo a necessary, if painful, “correction.” Financial hardship and declining standards of living would logically prompt a country to scale back pricey involvements abroad.
Now that crisis has struck, it would seem that we are overdue for a tough reckoning with imperial costs. However, the state of the markets is not the only factor in play. Like in the political sphere, the ability of the
What makes the
Ironically, one effect of the crisis thus far has been to sustain high demand for the dollar. The logic is simple. In a chaotic economy, many investors consider U.S. Treasury bonds the only safe place to hold their money—even if interest rates are low. But this won’t last forever. Already noises of discontent have come from major investors. As world leaders were gathering in
Progressive economists such as Paul Krugman and Dean Baker have debated the significance of
The Promise and Perils of Multipolarity
Even if the
Even before the financial crisis,
These predictions are proving to be well founded. According to the London Independent, the G20 summit put a version of a multipolar order on display; it was “a summit that show[ed] the new balance of power.” There, “the voice of the
Debates rage about the implications of the multipolar shift. Some commentators have worried that, paralleling the rise of fascism in the interwar period, a global economic collapse could bring reactionary, xenophobic movements to power in many countries. And already in the Bush years, conservative defenders of empire, such as Harvard historian Niall Ferguson, spread fear about the prospects of unipolarity’s end. “If the United States retreats from global hegemony—its fragile self-image dented by minor setbacks on the imperial frontier—its critics at home and abroad must not pretend that they are ushering in a new era of multipolar harmony, or even a return to the good old balance of power,” he wrote in Foreign Policy. “Unfortunately, the alternative to a single superpower is not a multilateral utopia, but the anarchic nightmare of a new Dark Age.” The historian warned of “Waning empires. Religious revivals. Incipient anarchy. A coming retreat into fortified cities. These are the Dark Age experiences that a world without a hyperpower might quickly find itself reliving.”
Of course, those who most bemoan the loss of “hyperpower” are the same people who cheered the invasion of
But while the rejection of both corporate and imperial models of globalization may not be sufficient for creating a more just global order, it is necessary. Today’s economic crisis, global in scope, will mean real pain for working people and for economically vulnerable communities throughout the world, those who will suffer most during a “Great Recession.” But there is also hope in this time of crisis. The dual delegitimization of empire and of market fundamentalism has created more space for global alternatives than has existed since the end of the Cold War. Now is a moment ripe for the spread of political and economic visions emerging from below. And it is an opportunity for the
A Softer Power?
More pressing, then, than determining whether the
One current danger is that President Obama, while rejecting the brash unilateralism of the Bush administration and pulling back the fist of
The international financial institutions forced developing countries to comply with the prescriptions of the “Washington Consensus” in order to receive economic support. These market fundamentalist policies benefited a corporate elite while deepening inequalities and producing very limited growth in the countries where they were implemented. Corporate globalization’s deregulated markets also proved crisis-prone, producing systemic shocks ranging from the Asian financial crisis of 1998 and 1999 to
During the Bush years, the power of the IMF and the World Bank dramatically waned, in part because of the discrediting effects of the earlier crises and in part because of the Bush administration’s disinterest in investing in multilateral structures. The Bush White House, with its penchant for unilateralist hard power, did not appreciate the advantages of
want to drag down the old, multilateral order and replace it with a new,
For critics of the IMF and World Bank, seeing these bodies diminish was a sign of progress. But it now looks like the job of dismantling the past hegemonic order was far from complete. The Bretton Woods system may be more enduring and effective than even Monbiot would have guessed.
Today, the global economic downturn is giving new life to some of the institutions that did the most to create the crisis in the first place. Critics fear that the Obama administration might use these institutions to reassert
At the G20 summit, the assembled leaders vowed to channel $750 billion or more through the IMF to support developing countries, tripling the institution’s resources. As the London Independent describes it, “If everyone honors their pledges, institutions that seemed on the verge of redundancy only a few years ago will soon find themselves awash with new cash and new responsibilities…. The Bush-era contempt for the UN and other multilateral forums is a thing of the past. At least for now.”
A positive interpretation of these events would hold that people and institutions change along with political conditions. “The Larry Summers of 2009 is not the Larry Summers of 1999,” the argument goes--positing that the former Treasury secretary, a leading corporate globalist in the Clinton years, will help to advance a far more progressive economic agenda within the altered circumstances that have allowed him to become Obama’s director of the National Economic Council. The IMF might optimistically be expected to undergo a similar rebirth. Although the Fund in the past worsened the Asian financial crisis by making countries cut spending and eliminate economic regulations, it will now be compelled to remake itself as an institution able to stimulate spending and distribute Keynesian largesse to those in need.
This view may not be entirely naïve. In advance of the G20 summit, British Prime Minister Gordon Brown explicitly delineated a break with former practices. “Too often,” he acknowledged, “our responses to past crises have been inadequate or misdirected, promoting economic orthodoxies that we ourselves have not followed and that have condemned the world’s poorest to a deepening crisis of poverty.” Brown went further at the G20 summit itself, flatly declaring, “the
The New York Times reported corresponding shifts within the IMF:
There have already been signs of change. Late last month, the IMF announced a revamp of its lending criteria so that less emphasis is placed on evaluating a borrower’s ability to meet “structural performance criteria,” the fund’s jargon for such measures as spending cuts and tax increases. Supporters of the IMF say that the fund has learned lessons from its experience working with Asian countries after the region’s financial crisis in 1998 and is now in a position to offer credit without harsh conditions.
There are, however, many reasons to be suspicious. The IMF’s habit of imposing harmful conditionality is hardly ancient history. Bailout deals brokered over the past year with countries such as Hungary, Latvia, Romania, and Pakistan have called on recipient countries to drive up interest rates, reduce the wages and benefits of civil servants, or otherwise prevent their central governments from injecting money into their economies—the exact opposite of what any real “stimulus” plan would demand.
The G20’s embrace of the WTO was similarly problematic. Despite this institution’s history in promoting neoliberal deregulation, the G20 leaders committed to forging ahead with currently stalled negotiations there.
Commenting on the summit’s final declaration, trade lawyer Lori Wallach, director of Public Citizen's Global Trade Watch, argues that "One page of the communiqué identifies ‘major failures ... in financial regulation and supervision' as ‘fundamental causes of the crisis' ... while the next page reaffirms the leaders' commitment to concluding the WTO Doha Round negotiations that require further deregulation of finance."
The international financial institutions’ continued failures relate to their woefully undemocratic structures. At the IMF, reforms of recent years have made token overtures toward increasing the voting power of developing countries. However, the
First Do No Harm
A key step in moving toward a post-imperial foreign policy would be to abandon the idea that the
As it considers alternatives, the Obama administration should recognize that some of the most dynamic democratic processes in the world have been taking place in
In the past decade, Latin American voters have consistently beaten Prime Minister Brown to his insight about the dysfunction of the Washington Consensus. In country after country they have elected new leaders with mandates to break with the international financial institutions and to pursue new economic policies. As a result, even before the current crisis, countries such as
To the extent that it allows such experiments to progress, an inward focus by the Obama administration on dealing with the domestic implications of the economic crisis would be welcome. In that case, whether the still-unrivaled U.S. economy, its cultural reach, and its worldwide network of military bases will continue to qualify it as an imperial power—or whether other language more accurately describes its sway within an emerging multipolar system—will remain open to debate. But we will have moved closer to the day when “enlightened” and “self-confident” foreign administrators, whether in pith helmets or cuff links, are permanently retired.
-- Mark Engler, a writer based in