Translated from GegenStandpunkt 4-1992

The USA in crisis

I. A “peaceful revolution,” American style

1. The mood among the voters

The USA’s first presidential election since the end of the “Cold War” turned out differently than expected. Instead of the planned celebration of the final victory over the main enemy and the beginning of a new “American age,” there was a staging of national discontent the likes of which the USA has not seen in ages. That hurt the incumbent president: Nationwide, the electorate refused to give the patron of the abdication of the East bloc the thanks and votes he deserved and instead elevated a southern governor who until recently had been completely unknown in national politics to be the newest bearer of hope. In a break with national tradition, he set a tone and a consensus by focusing on the domestic situation instead of enticing the people with his determination to preserve and expand the American world order, and made the state of the national economy his overriding campaign issue.

In doing so, he captured the overall mood of the nation. Since then, political experts and the media have yet to tire of using a thousand bad “indices,” from jobs to export figures to national debt, to paint a detailed picture for voters of how hopelessly messed up the nation’s economy has become. The people have been familiarized with a view of things that sees America’s problems and challenges as no longer coming from “overseas,” but “at home”; they have learned to distinguish the candidates by the way Clinton deals with “domestic concerns” while Bush hangs out in the Middle East and Japan with no feelings for the real needs of the nation and neglects the situation “at home.” With such trite and even childish campaign verdicts, the new awareness of the nation’s problems has been given the character of an irrefutable truism that no nationally responsible thinking person can ignore. Something has gone fundamentally wrong with the American economy and must be fundamentally changed.

With regard to the nature and quality of the malaise and the substance of the fundamental changes that are being called for, the same group of experts remain rather vague. But that doesn’t matter. They are at the same time certain how “it” could have come to this: The nation has spent too much and cared too little about its earnings, and the incumbent president is to blame for this because he isn’t interested in the nation’s economic success. That is why the situation is now so bad that it will be very difficult to improve it; as summed up in the classic Spiegel headline: “Burdening the peaceful revolution: An ailing economy that prevents a rapid recovery.” No doubt about it: the sicker it is, the harder it will be to get better! So the conclusion is inevitable: To combat this difficult situation, the nation needs new, determined leadership.

This much is certain: Clinton came out on top. As a representative of the will to “change,” he had more credibility than Bush simply because, according to the logic of democratic thinking, he was the newcomer. The incumbent, on the other hand, saw himself convicted of “old ways of thinking,” no matter how hard he tried to present his drive to promote the economy in the right light, both “internally” and “externally.”

So there was a good reason for the election campaign. First, the American people have been mentally and morally attuned to the new national problems. The candidates’ discussion of “resolve,” “vision,” and “caring” ensure that the concerns of every unemployed and evicted American citizen have been properly categorized as an expression of the nation’s concerns that must be solved. And secondly, it has once again been made clear where one is to look for the solution to every pinch: to a president who energetically addresses these concerns. He deserves the trust and “cooperation” of the citizens, especially if and because he cannot and will not promise anything but “hard times.” That is what makes him so credible as the savior of the nation.

2. “New resolve”

Sorting national concerns and candidates into “internal” and “external” is suitable for an election campaign, but it is completely bogus. Clinton has no intention of giving up the USA’s overall responsibility for the fate of the world and shifting its focus from supervising and waging wars to looking after the American economy, let alone the living standards of the masses; nor do Bush’s initiatives on Japanese market liberalization and European agricultural subsidies indicate an inertia in terms of economic policy. But it’s also not just that: sorting American problems into “at home” and “abroad” misses the point of where and how the American nation secures, and wants to continue to secure, the sources of its wealth. After all, the critical national look “inwards” at the inadequate performance of the economy at home is based on no other yardstick and interest than recapturing America’s leading role on the world market; in other words, on its right to once again be able to freely access the wealth of other nations “outside.” The candidates did not need to emphasize this because it was already clear without any further justification:

“We can only be a superpower if we are an economic superpower. We can only be an economic superpower if we have a growing job base.” (Ross Perot in the first TV debate between the candidates)

The nation’s leaders have noticed that the role the USA plays, and wants to continue to play, as the world’s leading power is no longer quite matched by its economic capability to accomplish this task. They see this as an intolerable situation that should be remedied by a new policy focus on “the economy.” The imperialist omnipotence of American politics requires a new, powerful economic foundation in order to be able to freely access the resources for this policy. A fine clarification: the economy and its potential exists to give the politicians a free hand; if the latter see themselves hindered in their projects, they declare a national state of emergency in economic matters.

There is no doubt that it is within the power of the USA to regain its position as an economic superpower:

“We can bring the same courage and sense of common purpose to the economy that we brought to Desert Storm … We must encourage investment.  We must make it easier for people to invest money and create new products, new industries and new jobs. We must clear away the obstacles to growth: high taxes, high regulation, red tape and, yes, wasteful government spending...[and] speed up pro-growth expenditures as quickly as possible.” (Bush in his State of the Union address, January 1992)

When an American president promises his people that he will remove “obstacles to growth” and “speed up growth” with courage and a sense of common purpose, he is deluding himself at least as much as his voters. This delusion is the very national consensus from which the election campaign in the USA drew its lackluster excitement. The dispute over “visions” and “concepts” thrives on the conviction that the nation's economic might gives it, in principle, the potential to once again become a superpower in this sphere. It thrives on the fixed idea that the politicians just need to kick start its potential and put it to use for everything to work again the way it did before. As fans of a state power accustomed to success, politicians and voters alike think only of mistakes and omissions that have caused the current situation and of recipes for overcoming them. An American can no more imagine that there could be any barriers to the nation’s success in monetary matters other than a lack of determination on the part of those responsible for it than a German can imagine that the strength of the deutschmark is not due to the vigorous action of the Bundesbank. The idea that the relationship between economic power and “resolve” might be the other way around; that the nation’s economic woes might even have something to do with an objective economic situation in which the nation finds itself, would seem downright defeatist to them.

Nothing has changed in this conviction with the peaceful revolution in the USA. What is new is the diagnosis that the nation has about its own situation; and the answers that the politicians are coming up with to save America are therefore also somewhat new – at least by American standards.

II. National self-criticism: capitalism, organized incorrectly

1. “Jobs”

The situation on the American labor market has been the subject of alarming reports for some time now. Time magazine writes:

“The ax just keeps falling on the beleaguered American worker … The harsh reality is that the U.S. remains mired in a prolonged period of stagnation that threatens to drag on for years. Companies have restructured, whole industries have scaled back their work forces, and staying lean has become embedded in the corporate consciousness...While some parts of the economy — notably the health-care industry and state and local government — are adding workers, most American firms are making cutbacks a way of life... So far this year, corporate America has shed an average of 1,500 positions a day...White-collar workers are feeling the pinch as never before....White-collar employees constitute 36% of the country’s unemployed workers, compared with 22% during the 1982 slump. Even companies that are expanding see little reason to add new workers... While Chrysler said last week it is investing $225 million to build a new line of Dodge pickup trucks in 1993, the company noted that it plans to add just 70 new jobs … In Atlanta, BellSouth eliminated 3,000 jobs, or about 3% of its work force... But even if the economy should rebound sharply, the regional phone company has no plans to take anyone back.” (Time, July 20, 1992)

To poignantly recap it all: teams of reporters ambush normal families and let them cry into the cameras that the father is unemployed, the wife is not making enough money, and the next installment on the house can no longer be paid. Workers who have been laid off, or who are about to be, report on the closure or relocation of “their” factory, and the reporter rubs it in with the news that it is completely off base to take any consolation from the thought that, despite everything, these people will find work again at some point or somewhere else.

This is not all that unusual. First of all, it is the job of responsible managers everywhere in the capitalist world to reorganize the workforce in the interests of increasing profit. And secondly, people who live in poverty without a “job,” i.e. without money, are really not a new phenomenon in the USA, where entire sections of the population have always fallen outside the workforce that is profitably employed by capital.

Now we are supposed to discover something new about unemployment and poverty: The misery of the “little man” has recently come to stand for a national emergency. This is underpinned by the politicians in words and deeds: Campaign opponents vie to tout their respective economic programs as a means of providing the American people with “jobs” or to deny this achievement to their opponent. The president releases budget funds for infrastructure measures ahead of schedule, postpones the deadline for tax payments in order to stimulate a “consumption surge,” extends the period for unemployment benefits, and designs his campaign trips as visits to American defense companies, promising to maintain projects that were scheduled to be cancelled or to launch new ones. The Democratic presidential candidate goes one better and promises that his first act as president will be to initiate a “job creation program.”

Presenting the nation’s concern that its capital is faced with a poor business climate as if this were a concern for the victims of its business policies is, of course, hypocrisy. What is not hypocritical is that American politicians are actually declaring themselves newly responsible for an effect of capitalist business that they had previously consigned, with conviction, to the hazards of competition, i.e. to the individual’s ability to deal with life’s problems. In the USA, it is customary for the state to give capital a free hand in sorting the proletariat into the various sections of the industrial reserve army; state measures to alleviate the hardships of those affected or even to “create jobs,” if they exist, are regarded as inadmissible “interference” in the beneficial effects of free competition, which should therefore be temporary at best. The national credo is: “Jobs” exist as a by-product of a completely successful industry. Having any “job” at all is therefore the first component of the wages of a “hardworking American.” He not only enjoys the dubious good fortune of being able to keep his head above water by working for someone else: This highly personal “pursuit of happiness” also gives him the moral bonus of being a decent person, a good citizen, a patriot. Anyone who doesn’t have a “job,” on the other hand, not only has little to nothing to live on – he is therefore also “from the wrong side of the tracks,” a dropout, and as such, at best, a victim of unfortunate personal circumstances, but in principle a criminal. The best proof of this theory is, of course, those who “despite their humble beginnings” still manage to become good Americans, i.e. rich and successful: see Bill Clinton. This racist theory of capitalist competition thinks that any state support for the poor disrupts the beneficial effects that a lack of money has on the lower class’s “willingness to make something of themselves,” even and especially where there is no possibility of it. Where the waste products of capitalist business life cause too much disruption, state violence is on hand with soup kitchens and the police; no secret is made of the fact that a little food is only a highly inadequate supplement to violence, and by no means a substitute for it.

There is no doubt about it: this system worked wonderfully for many years, and it made the USA rich and powerful. To the extent that they mattered, the poor and the wretched were not an issue, and certainly no reason to doubt the fundamental goodness of American capitalism. They just existed, that’s all. Now the entire American political mafia, including the media, is declaring “jobs,” or the lack of them, to be a national problem that politicians must address. There is a certain irony in this: wasn’t this fine system recently supposed to be a model for the ailing Eastern bloc? Nothing has changed, of course, in this viewpoint. Rather, the current waves of layoffs have made politicians realize that the rising unemployment numbers are not a reflection of the successful calculation by business with the relationship between wages and productivity. The constantly rising number of layoffs does not indicate a recovery of an economy that is opening up new opportunities for production and profit with a streamlined, cheaper workforce, but rather “stagnation,” at best a steady but generally shrinking business. Even if the redundancy of people who have so far provided useful services to the wealth of American companies boosts the profits of one capital or another, this does not result in national growth:

By cutting costs, “numerous companies will make money this year, regardless of how the economy develops... high profits in 1992 will provide no more information about the state of the US economy as a whole than the poor figures of last year.” (Handelsblatt, Feb. 26, 1992)

As a result, the nation can’t see any benefit from the ever-increasing unemployment. On the contrary, it finds that it is causing damage: the consumption of the masses, earmarked as an integral part of the growth rates of the auto, construction, and textile industries, is failing to contribute to the profits of these sectors. Tax revenues are falling; and the state, which never really wanted to look after the poor, is now incurring increasing expenditures on them. For the first time in a long time – in 60 years, to be precise – the nation has drawn up a balance sheet in which the poverty of the people serves as nothing but a cost that hinders the growth in national wealth, rather than as a profitable cost. This has led the US government to criticize the way the nation is dealing with poverty: it accuses itself of having paid too little attention to the services it is supposed to provide to the nation. This should change in the future. The new “covenant with the American people” promises the “hardworking Americans” “opportunities” to serve capital growth, and the state will no longer allow the useless remainder of the population to settle into squalor, but demand a (labor) service for every benefit, no matter how paltry: In the words of the new president, “welfare” should in the future be “help for self-help” and no longer a “way of life.”

2. “Collapsing health and education systems”

2.1 Who takes care of public health?

The people’s poverty, from which too little national wealth can be extracted, has become a cost for the nation. US politicians are currently noticing this, especially in their healthcare system:

“There are two different problems in health care that are at odds with each other. Costs are exploding while 36 million Americans have no health insurance. US health care spending now amounts to $820 billion a year – nearly 14% of the gross national product... This is not just Monopoly money. All health care dollars come out of household incomes, either directly or through taxes, insurance premiums, higher prices for products or lower wages for workers. Despite all this spending, uninsured Americans often go without treatment or crowd into emergency rooms where their care results in higher costs for everyone involved. For would-be reformers, the trick is to control costs and increase insurance coverage while maintaining quality care.” (Newsweek, Oct. 19, 1992)

An interesting complaint in a country that has until now always prided itself on its principles of “personal responsibility” and “freedom” when it comes to social insurance! After all, US social policy has always deliberately defined its services until now as the “last resort” of a society that in principle is responsible for taking care of the costs of being capitalistically useful. Either you are lucky, i.e. you have a job in a company with employee insurance or enough money left over to insure yourself; or you fall through the non-existent social safety net and fall victim to programs such as “Medicare” and “Medicaid.” To do this, however, you have to be sick enough to be considered worthy of emergency hospital treatment. Anything below that is none of the state-organized medical system’s business, and even in that case, you may have to go into debt for the rest of your life to get care.

Now politicians are discovering that fewer and fewer ordinary people are even in a position to be “responsible” and take care of their continued usability. More than half of all disputes between labor unions and companies are sparked by companies cutting social benefits; those who are laid off lose their insurance coverage anyway. Nobody considers this a damning verdict on a mode of production that takes so much pride in its “medical advances”; the fact that “exploding health care costs” could have something to do with the fact that even robust Yanks do not survive 100 years of capitalism completely unscathed is no more an issue in the USA than it is here in Germany. What is disturbing is the barrier that capitalistic poverty is currently putting on state finances in the USA. Programs that were organized as a last resort for the destitute now have to be used to provide services for which they were never intended: to provide care for ordinary citizens.

This has given rise to suspicions in the US political establishment that not only is too much money being spent here, but it is being spent inappropriately. Suddenly, it’s become apparent that these costs are “exploding” without making any contribution to the maintenance of public health. They were never intended to do so in the past, so it’s quite inappropriate to measure them by this yardstick. Now this yardstick is being officially introduced; and US politicians are considering whether, if the state is already spending money on “healthcare,” it might not ultimately be cheaper for it to apply this previously frowned upon point of view:

“Companies are cutting health care spending... And what happens to all these people? They still get medical care, but only when they’re really sick. It costs a fortune, and everyone else pays for it... We currently spend 13.3% of our income on health care. Canada is at 9.1%, Germany at 8.7%.” (Clinton in USA Today, August 14, 1992)

The verdict is: “The healthcare system is not working properly!” This criticizes the previous strict separation between those who participated in the healthcare system and those who were “outside” it as dysfunctional for the national interest in public health. In the future, the whole nation is to be burdened with the costs of healthcare as a society of “mutual support” and to benefit from it according to the capacity of this mutual support society. According to the new line, this will be cheaper for the nation as a whole than leaving this issue to the special calculations of companies and private individuals.

2.2 A bad education system jeopardizes competitiveness

The American education system has also come under fire. There are a lot of complaints: too many illiterates; American students are doing poorly by the standards of international comparison; private and state costs are rising without the promised returns:

“A government report last fall ... found that students today are barely achieving the levels that were considered normal 20 years ago... Despite Bush’s 1988 pledge to be the ‘education president’ and calling for the 1989 ‘education summit’ of state governors, the education sector continues to underperform. Two years later, little progress has been made on the six national education goals (including ‘ensuring that all adults are literate and able to fulfill their responsibilities as citizens and workers’) that that summit set... Although federal spending on education increased by 22 percent under Bush, it is claimed that his approach has benefited essentially only white middle-class children.” (Guardian Weekly, August 30, 1992)

And why is this now suddenly a bad thing? After all, in this US policy area, success has always proved who is right. So there are halfway decent schools in communities where parents are willing and able to pay for them; whether you can afford to finish high school and which “good” or less good college you can attend afterwards depends on your parents’ financial situation, your own income, the rare availability of scholarships, and so on. Now critics of the US education system, who came to the same conclusions 25 years ago as they do today, are now being listened to: schools are practically non-existent for blacks and minorities in the ghettos, school standards are constantly falling, university education is becoming increasingly expensive for parents... In the meantime, the nation has now discovered that the condition of its education system is a disaster that affects more than just the wallets and life chances of its citizens:

“In short, the report concluded that the United States is producing an increasingly unskilled labor force that is inevitably undermining economic competitiveness.” (ibid.)

As long as US companies made good profits, no one except a few education idealists was bothered by the poor math skills of US schoolchildren; so their lack of knowledge probably didn’t play a decisive role in the profitability of capital. When companies decided that their workforce needs some new “education modules” because of new machinery, data processing, etc., they still did it themselves in the USA, and didn’t rely on the results of the school system; and the “qualifications” of people who were never intended for “employment” anyway really didn’t concern anyone. Now that the USA has grown into a competitor on the world market, things should be seen the other way around: Korean kids are better at math, no wonder they are taking markets away from “us”! US policymakers accuse themselves of having been negligent in ensuring this aspect of national competitiveness, and they quickly find out: In a reversal of cause and effect, the fact that capital no longer needs a large number of workers for profitable business is now said to be due to the workers’ lack of qualifications. As a result, an education system that for many years was regarded as the pinnacle of individual freedom, self-determination, and human dignity is now suspected of contributing too little to the nation. While previously the competition between educational institutions for funding and the competition between students for access to them – celebrated by American education policymakers as the “market model” – was supposed to guarantee the exceptional quality of the results, US policymakers are now realizing that the young people being churned out of the nation’s education institutions leave a lot to be desired in every respect. They are incompetent, unwilling to learn, unmotivated, take drugs, and open fire at any opportunity...

Unlike previous campaigns of this kind, such horror stories are not only used to morally strengthen the nation’s next generation. Politicians accuse themselves of an oversight when they point their fingers at the young and lament their intellectual condition: they have not done enough to ensure that the “potential” of American youth is optimally tapped for the benefit of state and capital. With slogans like “life-long learning,” the announcement of a “national vocational training program,” and a “training promotion law,” the Democratic Party is championing a correction to the national view that competition between private interests is still the surest way to ensure that the nation gets the citizens and workers it needs.

3. The “burden of armament”

The costs imposed on the nation by its increasingly dysfunctional poverty is half of the nation’s complaint about its predicament. The other half is due to dissatisfaction with the costs that the nation has voluntarily and deliberately taken upon itself, and which it has therefore never accounted for as such: military spending. Before the Russians abdicated, these costs were not only self-evidently necessary; they also always served as proof of American superiority and greatness. Reagan won his election with “Star Wars” and the question of costs was aggressively rebuffed. It was within the nation’s power and freedom to invest a vast portion of its national wealth into a project that would make it forever invincible.

In this respect as well, a lot has changed since the Russians abdicated. Democrats have called for massive cuts in the defense budget, and have been accused by Bush of undermining the “national defense capability”:

“They want to start by cutting defense outlays over the next four years by nearly $60 billion beyond the President’s cuts ...The Democrats use the defense budget as a bottomless piggybank to try to beat swords into pork barrels. This is folly.” (Republican Party Platform of 1992, adopted August 17, 1992)

Since then, the dedate about how much the nation needs in terms of arms has been on the national agenda; the viewpoint has been introduced into the national debate that even arms spending is a cost that the nation must be able to afford. What is certain is that everything necessary, including a lot of new things, must be done to ensure the USA’s military incontestability. At the same time, the question of “financial sustainability” is raised and proposals are made to “reallocate” funds from old programs to new projects. This debate has its starting point, but not its reason, in the fact that the main enemy has disappeared and parts of the military specifically set up to destroy it have become superfluous. This lies in the fact that the USA has somewhat lost the freedom it previously took for granted to decide on new arms policy necessities.

It is becoming apparent – and this is the true background to Bush’s campaign trips to arms companies – that cutting arms programs may reduce burdens on the budget, but this is not necessarily in the nation’s economic interest. Politicians are currently noticing this above all in the fact that a significant proportion of the layoffs currently taking place in the USA are directly or indirectly related to cuts in arms projects. In retrospect, the US military-industrial complex is proving to be the government economic stimulus program that this nation had never wanted to invest in as such – no way is it “government intervention in the economy.” For decades, the American nation has squandered a large part of its wealth on tanks, airplanes, soldiers’ salaries, smaller and larger wars; in other words, entire sectors of the national economy have derived their profits and capital growth from nothing but the constant growth of the military budget.

The fact that the USA thought it needed neither social welfare for its people nor well-considered support for the “general conditions of production” such as infrastructure, energy policy, etc., does not mean that it did nothing for the growth of its economy. On the contrary: the largest national budget in the world was used without question to expand and secure superior military power – even where the budget line was “development aid” – and it therefore was automatically a huge “economic stimulus program.” US policymakers did not concern themselves with the effects these government responsibilities had on the business of capital, on jobs, etc. National business life was supplied with a seemingly endless influx of money purely according to government requirements. This is how the US government promoted “technological development” among the corporations that were allowed to forge its modern weapons; this is how it ensured a significant portion of what there is in terms of “infrastructure,” “jobs” and “social spending” in the USA. Depending on how companies and regions benefited from the arms business or from the purchasing power it generated, or how federal and local authorities were allowed to account for the proceeds of the arms business as tax revenue, such benefits came about or didn’t – see “Silicon Valley.”

In sheer volume, the USA’s economic stimulus program, which was not supposed to be one, overshadowed all the economic stimulus and development policies of the other imperialist states. For a long time, the US never even considered that it might need to pay attention to the costs that the constant increase in military spending was imposing on its budget. While European states budgeted arms exports as a means of reducing the costs of their military budgets and focused on marketing nuclear technology internationally at the same they they were developing into nuclear powers; while they explicitly declared “technology support” to be an object of state responsibility, the USA did not waste any thoughts on such “side effects” because, and insofar as, they automatically took care of themselves. Successful arms exports made it unnecessary to elevate arms exports into a national agenda item: they took place within its assumption of the “arms burdens” of the NATO allies and within the import of “national security” by the many second-tier allies that the US created for itself around the world. The high-tech required for state-of-the-art missiles bore fruit in the business calculations of American multinationals who turned every new technology into new dollars because they were the only ones who had both anyway. And anywhere in the world anyone wanted to buy high-tech, airplanes, etc., they knew where to go.

This golden age in which America had no competitors in the business of the technical means of cost reduction and increasing productivity has been over for a long time now. Now that cuts and restructuring in the military budget are imminent, the USA is discovering qualities in its defense industry that make it not so easily dispensable for the nation:

“For decades, the United States presented itself as the arsenal of democracy. Its vast network of private military contractors appeared no less vital to national security than the Pentagon. But with the end of the Cold War and the decline in military spending, the arsenal is shrinking, and many of its suppliers are uncertain about their future. Now Thomson-SF of France, one of Europe’s leading electronics and defense firms, is seeking to buy one of the leading US aerospace and defense companies. The offer has sparked a fierce debate in the United States—not only about national security, but also about economic priorities.” (Newsweek, June 1, 1992)

The arms industry has realized that it has to look somewhere else other than the military budget for its salvation, i.e. to capital for new investments and new business – and the politicians have noticed that all that private wheeling and dealing was, after all, being carried out on a national mission. So a debate is ensuing over the extent to which this mission is still valid, how it should be redefined, and whether such arms companies can simply behave as if they were a completely normal branch of business that looks for its markets and investors wherever it sees fit. Politicians realize that such companies have not only produced weapons, but have thereby become the nation’s “technological base”; that they have “high-tech,” patents, and “know-how,” which the nation should not allow to fall into the hands of imperialist competitors. However, this point of view is countered by another, equally important one: that capital urgently needs to be injected into nearly bankrupt assets to enable them to become a piece of American growth again.

Whatever point of view the politicians adopt in this case, one thing is clear: the once self-evidently valid identity of interests between state and capital is over. It is no longer the case that the politicians see their projects through to the end, capital automatically profits from them, and both sides are satisfied with their success. That’s why fundamental doubts about the methods of state economic policy are on the table, and political jargon has been enriched by new catchphrases for complaints:

4. “Special interests” and a “trickle down economics”

The business world, which has so far made a wonderful living from the arms business, is complaining that there is no “support for technology,” no “industrial policy” in the USA. The managers of “Silicon Valley,” previously staunch Reagan fans, have gone on record to say that they intend to vote for Clinton this time because he at least has “ideas” to offer in this direction. This is how they sound:

“I have news for the forces of greed and the defenders of the status quo: Your time has come and gone. Its time for a change in America....Our people are pleading for change, but government is in the way. It has been hijacked by privileged private interests...The President is caught in the grip of a failed economic theory...Now under President Bush, America has an unpleasant economy struck somewhere between Germany and Sri Lanka...I do know the old ways don't work. Trickle down economics has sure failed.” (Clinton at the Democratic Convention, July 22, 1992)

It was left to the “man of the people” to boil this complaint down to its fundamental core:

“Now, see, we practice 19th century capitalism. The rest of the world practices 21st century capitalism. I can’t handle that in a minute, but I hope we can get back into it later. In the rest of the world, the countries and the businesses would be working together to make this transition in an intelligent way.” (Ross Perot in the 1st Candidates Debate, October 14, 1992)

Taken together, this leads to the contradictory finding that the state is said to have put itself at odds with the economy by allowing its agents to appropriate its resources for private special benefits. Thus, a “trickle down economy” has emerged in which state resources rather randomly “trickle down” to the economy and “trickle away” somewhere, instead of being spent in a coordinated and systematic way to promote growth.

This is not exactly a particularly apt description of the coordinated and systematic cooperation that the state and capital have cultivated in the US for 40 years for the purpose of military buildups and other things. But for fans of successful economic policy, it only makes sense to talk about a hostile relationship between the state and the economy by blaming everything on its “lobbies” when the results of this form of cooperation are no longer pleasing. Then they make sense of the bad situation in which the national economy finds itself in such a way that, although all kinds of private interests are enriching themselves from the state, the economy is not becoming richer as a result. Hence, the state is not helping the economy by contributing to its agents, but harming it: namely, in the overriding sense that it neglects its duty to judge special interests according to their contribution to the national whole and to promote them solely in this way.

This too is a highly remarkable complaint in the USA. After all, in the USA, the accumulation of private wealth and the economic power of the nation have always been regarded as one and the same; a distinction between the two has never been considered necessary; this is precisely how the USA has achieved the special status of its wealth and power worldwide. Regulating access to state resources through competition between lobbies and “special interests” has not been a failure of the American method of policy-making; rather, it’s based on the judgment that those who are rich and powerful, i.e. successful in financial matters, are the ones who know best how to make more money with the help of state resources. This has been seen as an automatic guarantee that more state wealth would result: more growth, more tax revenue, a broader basis for the state’s access to the economic resources it wants. Now this method of allowing the competition of private interests to decide on the usefulness and necessity of government assistance, once celebrated as a hallmark and special quality of the “American way of life,” is causing tongues to wag. In the absence of success, the old method of success is now seen as a bad way of bundling special interests into national might.

The self-perception of America’s woes is now complete. The diagnosis, in summary, is that the American state is ill-equipped and wrongly organized for the task of making the USA the world’s leading economic power again. Instead of promoting the potential of the national economy with the resources it withdraws from the economy and allows to flow back to it, it harms it. The entire state apparatus, its revenues and expenditures, its uses and methods of administration have become a burden for the nation. The catchphrase that summarizes this fundamental self-criticism is:

5. “Deficit”

You can add up the American national debt in billions or trillions; you can forecast its future rate of increase; you can convert it to the per capita of the American citizen: The mere quantity of the national debt still does not constitute an argument. For years, the USA has run up a national debt that easily eclipses the gross national product of many other countries without this leading to fundamental concerns about the functioning of the state and the economy. Although the “deficit” has been discussed as a problem from time to time for some time now, in practice this has been of little concern to politicians.

The sums that have accumulated in the meantime are now seen as proof that things simply cannot continue like this:

“In the long run, a single problem dominates the nation’s economic landscape: the federal debt… It absorbs investment capital and adds billions of dollars in interest payments to the taxpayer’s annual burden.” (Newsweek, September 21, 1992)

The nation is criticizing in hindsight the Reagan era boom as a “national spending spree” in which everyone lived beyond their means. As if “everyone” could do that so easily – it was the state that freely expanded its credit as needed to force the USSR to arm itself to death and financed a few medium-sized wars along the way. This provided finance capital with interest revenues and speculative material, and corporations with profits and capital growth; as long as this went well, everyone was happy to earn money off state credit. Now it is being said in retrospect: The whole “Reagan boom” was not a “real” boom at all, but just a system of government subsidization of its economy. The economy produced at state expense when the opposite was intended: that the state should finance its spending from the growing wealth generated by its economy. And now the same credit, the increase in the ability to pay that made everything boom, is called debt and being negotiated as a “legacy” that the “Cold War” left behind for the nation.

Because the national economy is failing to serve the national debt, it has come into focus as the “means” beyond which the state is said to have “lived.” The entire state apparatus is simply too expensive for the national economy; the state’s debts are “too much” for it in relation to its performance. Admittedly, nobody who illustrate this finding with new billions every day would know how to measure this excess in dollars and cents. But the fact that there exists a measure is certainly noted in the complaint that the state has exceeded it. Hence the bourgeois mind, which otherwise dismisses “value” as a metaphysical category and discusses money as an insubstantial unit of account and merely a technical means for transacting business, is struck by the difference between an accumulation of real and fictitious value: it has suddenly realized that the increase in state credit notes, which for years flowed into society as additional purchasing power and improved all kinds of balance sheets, is not quite the same as a real increase in wealth in monetary form, which is what matters in capitalism.

However, the national debate on the “deficit” does not want to notice the simple finding that the USA’s financial wealth no longer provides what the national debt demands of it. Those who see the debt as too high for the economy insist that the current situation of debt and growth is in an imbalance for which politics is responsible. They cling to the ideal that there is a “correct,” successful relationship between the national budget and economic growth, and that it is within the power of politics to restore this. Proof: It worked in the past! Political expertise recognizes the impotence of political power in the face of the laws of value creation which cause every boom to crash into “weak growth,” “recession,” or even “depression” – and does not accept this finding. It would strike the holders of state power as defeatism and a betrayal of their mission to admit that their power could not force the effects of these laws into serving national success – despite the power that politics has in every economic transaction! The self-accusation of the politicians that they allowed the “deficit” to come about through negligence in all departments actually reinforces their sovereignty over the operations and profits of business: so the politicians have announced that they are now devoting themselves with even more power and responsibility to the goal of bringing economic performance and state borrowing back in line.

It is not surprising that there is a dispute among the political elite about the right methods to achieve this. All these “ideas” cannot avoid the fact that the budget and growth do not fit together at the moment and cannot be made to fit, no matter how many clever budgetary moves are made. On the one hand, the motto is “save money”; on the other hand, everyone is familiar with useful budget services that cannot be dispensed with or have to be reintroduced precisely because of the “fight against the national debt.” On the one hand, budget cuts are intended to reduce the national debt; on the other hand, they should not damage domestic business and thereby reduce government revenue. Complicated calculations are used to show that the deficit can be reduced if the state takes in less or spends more: Bush wants to cut taxes for “more investment”; Clinton promises an “ambitious program of targeted stimulus measures” to better achieve the same result. Experts come up with combinations of spending increases and/or cuts, tax increases and/or tax cuts, and immediately say that it is of course impossible to know whether the desired effect on the deficit will materialize. And the now completely confused newspaper reader is advised to prepare for the fact that the deficit issue will probably drag on for a while.

So the opponents work their way around the conditional circle from government spending that’s too high to economic yields that are too low and come to the conclusion that what is needed here is not one or the other corrective measure, but nothing less than an “American Renewal” (Bush) or a new “covenant with the American people” (Clinton), i.e. that final victory on the economic front cannot be achieved unless all the strengths of the nation are exerted. This shows that the sources of American money have been damaged, which does not prevent the new administration from continuing to pretend that it is only dealing with the consequences of bad economic policy.

III. Government debt and economic crisis

The official diagnosis of how the US economy is doing claims that the state has harmed the economy’s “growth potential” by too much spending. The truth is the other way around: Because the US economy is in crisis, government credit is being devalued.

1. “Stagnation” = too much capital for profitable use

The USA has been experiencing a banking crisis for a few years now. The banks were expanding their lending, providing solvency to companies, merchants, and landowners. They were turning these loans into capital: They invested them in factories, in offices and department stores, in purchasing and speculating on titles to shares of ownership in earnings generated by the business activities of others, and in government bonds. This is how the banks increased their capital: as legal titles to participate in the gains generated in this way by their debtors, these represented the “collateral” which served as the basis for the banks themselves to draw loans. For some time now, American banks and savings and loans have realized that these legal titles are merely fictitious. Because their borrowers were no longer generating any gains from the loans they were granted for all kinds of businesses, the lenders were also getting into trouble. Instead of a plus on interest, which proves that the granted loan was the same thing as capital, banks and savings and loans were only recording a minus on their balance sheets; their loan, i.e. their capital, was devalued. As a result, a lot of banks have become insolvent vis-à-vis their creditors; the others are being more careful to include any incoming revenue when restructuring possibly nonperforming loans; they have terminated loans prematurely, made their loans more expensive, and are looking more closely at the creditworthiness of their customers. Credit was shrinking; more borrowers were having payment problems; finally, the state felt compelled to use its credit to guarantee the payment obligations of bankrupt savings banks in order to prevent the lons which were bursting at some banks from affecting the functioning of the credit system as a whole.

This has been going on for some time now. Despite a large scale devaluation of credit, a renewed expansion of bank lending is not getting off the ground. The sluggish demand for credit from the spheres of production and trade, but also the banks’ hesitant attitude towards further lending, make it clear that the banking business has been deprived of its solid basis in the real accumulation of capitalist wealth. The full severity of this is particularly evident in the market otherwise considered the most solid in the capitalist business world:

“When prices (for houses, offices, etc.) began to crumble, rents fell as well... Those on a weak financial footing had to sell off properties or file for bankruptcy... Many investors could no longer meet their obligations to the banks.” (Handelsblatt, August 28, 1992) The consequence is: “Because bankruptcy vultures are circling the construction scene, US banks are still refusing to issue new commercial real estate loans on a large scale.” (August 21)

Because the solvent demand for residential or office space is no longer ensuring profits for the real estate and construction industries, there are suddenly far too many barely profitable houses, offices, etc., to serve as capital assets. Not only is it no longer profitable to build houses as a means of making money. The old ones are no longer any good as capital either; they stand empty and fall into disrepair. Their owners declare themselves insolvent; with the income missing, the capital they owned is also gone. Banking capital has drawn its conclusions from the lack of loans being serviced: From now on, the construction business is considered sketchy; construction companies can’t get new loans, have no orders, go bankrupt; they lay people off... Suddenly it turns out to be a complete fraud that, at the time of the boom, owning land was considered to be a particularly secure capital investment with a “stable value”; because profits were calculated and collected on it, it was bought and sold at ever higher prices, and new loans were always issued on it. As long as profits in production and trade were growing, the mere power of disposal over land allowed its owners to make ever better deals by renting, selling, and leasing it as a mere prerequisite for any business activity. When profits failed to materialize, the entire “land value” and its increases turned out to be a purely fictitious calculation based on nothing but the speculative exploitation of surpluses earned elsewhere. In the crisis, accounts are being settled: And the collapse of the superstructure of speculation shows that capital, with its growth, has created nothing but claims on future profits that can no longer be met from the profits produced. Hence, it is being devalued.

2. The crisis of the dollar

The particular form in which the USA is participating in the current crisis can be explained by the particular way in which this nation has requisitioned the production of capitalist wealth for its national purposes. The USA has always seen itself as particularly competent and entitled to use its state consumption to help itself to the profits generated by US capital at home and abroad. It derives this ability from the fact that it is the world’s largest economic power: Its market produces the greatest mass of national capitalistic wealth, and its currency, the dollar, is accordingly unassailable, universally valid world money. The justification for this comes from its mission as the supervisory power that ensures the global success of the mode of production to which it owes this very wealth. The USA rightly sees its military power as the absolute condition of existence for its business world’s freedom to use every corner of the earth for capital accumulation; therefore, the question whether the nation can afford this military superstructure seems like national surrender. The freedom that the nation’s wealth affords the US state also justifies the ruthlessness with which it uses this wealth for its own purposes.

For many years, the USA allowed itself to treat this ruthlessness as its exact opposite: That is, as nothing but additional opportunities for capitalist business. By using credit to finance its military apparatus, the USA performed the minor miracle of transforming state consumption, i.e. the withdrawal from productive use, into additional means of capital accumulation. It gave its need for useful goods for state purposes the form of “supplying” the economy with additional credit; the solvent demand created by the state financed and realized additional production capacities and profit claims. With its massive military budget, the US state thus provided US capital with additional sources of enrichment and growth for many years.

The “miracle” that the US state achieved was a formal transformation of the costs that the military apparatus imposed on capitalist business, but it did not cause them to disappear. During the “Reagan boom,” the US burdened capital with ever more withdrawals from the productive application of wealth without taking into consideration that this production must always recreate its supply. In this way, the USA overstretched the growth potential of global capital accumulation. That this was the case can be seen in the money of the USA, the dollar. In its devaluation, the competition between capitalists and nations has presented the USA with the bill for its miracle.

In recent years, the competition between capitalists has caused the formerly prominent position of the USA on the world market to fade. The US economy no longer decides world market business, but has been reduced to one business location within it that, alongside and in comparison with others, serves as a means of importing and exporting commodities and capital. As a result, globally accumulating capital has also gradually eliminated the special position of America’s money. Alongside and in addition to the dollar, it is increasingly using the currencies of other nations, preferably the deutschmark and the yen, as a means of conducting global business, thereby increasing their values in competition with the dollar. This has given the nations which are the guardians of these currencies new liberties in organizing their global access to sources of wealth in competition with the USA and in harnessing other nations to their own ends. The relative extent to which the credit money of the USA, the dollar, earns money on the world market is constantly decreasing; the demand for the dollar has not kept pace with the demand for the deutschmark and the yen for some time now. The result: the USA is commanding less and less wealth on a global scale with its national money. Or what amounts to the same thing: the nation’s credit is worth less and less. So the USA is being shown that the claims it makes in dollars on the earnings of business with its constant increase in dollar loans can no longer be met.

This also reveals that, in the course of accumulation, US capital has in fact increasingly used US loans as a substitute for seeking new, additional sources of money-making. On the one hand, US capital had a huge domestic market at its disposal as a business sphere; it enriched itself from exports as long as US commodities were the only viable means of doing business for the rest of the world anyway; otherwise, as a multinational, it was always involved in every deal. That’s why, for a long time, it saw no need to deal with foreign markets, specifically in opposition to its competitors; it was relatively uninterested in all the newly emerging divisions of world market business such as producing consumer electronics and cars for foreign countries around the world. Wherever it emigrated as capital and became a multinational, its business successes ultimately benefited the balance sheets of other nations. Because it could participate in any business in the world with dollars, it didn’t care how much its business dealings strengthened the dollar. And as long as world market business was business with the dollar, the US did not need to worry about the equation between the business use of dollars and the national interest in dollars.

From its national point of view, the business of capital was supposed to ensure that its national credit money, the dollar, proved to be, in comparison with other national currencies, money capable of being turned into more money, i.e. capital; in this way, it was to ensure that the dollars put into circulation by the state also guaranteed it an increased ability to pay. This national calculation has not worked out for the US for some time now. Since then, there are complaints about the foreign trade deficit. With this complaint, the US has taken a new stance toward the world market. It accounts for the loss of world market business in dollars as wealth taken away from the USA by its world market competitors, instead of surpluses that add to its wealth in dollar form. The USA would be the last to admit that it was its system of military claims that overstretched the world’s wealth production and squandered its credit. The foreign trade balance serves as evidence for the view that foreigners have taken away America’s share of the world market and are also unjustifiably enriching themselves off America’s domestic market. Consequently, the nation has been distinguishing the dollar’s sources of accumulation in the domestic US market, which are to be secured, from markets and profits abroad, which must increasingly be conquered. A concern about the usefulness of external trade for its currency can be seen, on the one hand, in the admission of US policymakers that the nation has yet to earn the wealth that it has long been accessing through its credit expansion and, on the other hand, in its firm determination to reverse the loss of creditworthiness that the nation is incurring in the battle for market shares and trade surpluses.

For all its “export offensives” and “market opening initiatives” in recent years, the US has not been able to prevent the devaluation of its credit. Now US capital has entered a crisis, and the devaluation of the dollar asserts itself as the loss of the US ability to secure even greater access to social wealth by increasing dollar loans. Because capital is unable to increase the monetary wealth of society independently of state credit, the money symbols, the payment slips for produced value that the state puts into circulation, are proving to be an ever less suitable means of access: the increase in these credit notes only leads to their devaluation.

3. The nation’s credit is devalued – debts paying debts

This has not stopped the nation from creating more and more credit. Precisely because it of its devaluation, the nation’s freedom to help itself to society’s wealth by means of credit has turned into the need to continue and maintain it. Because so much of the country’s business and ability to pay now depends solely on government loans, cutting any of this spending only serves to trigger crises for the banks and companies; conversely, maintaining it only leads to the national debt ballooning even further and credit being further devalued. The state’s indebtedness is spiraling out of control: it no longer borrows because of and for the projects it has decided on, but is only reacting to the situation of its economy with further debts, and is consequently being confronted with ever newer “holes” that have to be “plugged” one way or another. Politicians are realizing that they have lost sovereign control over their money.

Politicians notice this state of emergency in public finances in the fact that the indebtedness of the state is costing more and more:

“For the first time in American history, the Treasury is spending more on servicing debt than on the Pentagon in the past financial year” (SZ October 31, 1991),

i.e. now about 20% of the American budget. The state is paying away a growing part of its budget to finance capital. This part of its business world makes money from the state, but the deal remains one-sided: finance capital is helping itself less and less to the profits of its business world because these are shrinking. US policymakers are not taking this situation lying down: they are turning to credit policy “instruments” to ensure better business conditions. With this in mind, the Federal Reserve has lowered the refinancing rate for banks 24 times since 1989. As a “signal” to the bank world, these rate cuts are intended to ensure a general reduction in interest rates which, in the imaginings of monetary policy, is considered a “favorable business condition.” As a second effect of such a general interest rate cut, the Fed hopes to be able to offer the financial world the new government debt instruments at a lower interest rate as a profitable investment and thus reduce the future interest burden on the budget. A “high interest rate policy” like during the Reagan era is not going to be pursued; the US policy is not set on attracting money capital through interest rates, but instead sees interest rates as a cost to the state that should be reduced as much as possible.

The business upswing through cheap credit has not worked so far. Instead, you can read in US newspapers about a miraculous restructuring of the banks’ balance sheets –

“The banking industry earned $15.5 billion in the first half of 1992, its highest net profit ever” (Newsweek 10.19.92) –

alongside reports of newly “at risk institutions” and speculation that a new “bank crisis” has been merely “covered up” for campaign purposes. Apparently, nobody really wants to claim that these bank profits in fact stand for a healthy business situation in the credit superstructure. This isn’t surprising. After all, this reorganization is obviously only happening because the financial world, for lack of other profitable investments, is doing a good business by speculating on the buying and selling of credit securities and government bonds. Every economic observer who otherwise regards every fictitious credit note as a “capital investment” is struck by the difference between sound and unsound business. The state has increased its debts, the financial world is making money from it, but apart from this shuffling of fictitious securities, nothing is happening in the credit industry. Bank profits do not indicate any upswing in businesses that would provide a new basis for government loans; on the contrary, the ever increasing government loans are further damaging and undermining the soundness of the financial business, in such a way that everyone immediately sees through its earnings as fraudulent. With all its debt, the US state is not in a position to ensure that its credit functions as a means of capital accumulation. With its loans, it only makes sure that the basis of credit, the lending and rates themselves, continues to function, and that it therefore continues to have access to money. But that is all that the power of the state can guarantee. At the same time, this guarantee costs it more and more; and the whole world can no longer avoid the question of what such a loan is actually worth.

4. Government bankruptcy – or what?

The question of what US credit is still worth has long been posed by the business world. Every day, it compares the relative suitability of US credit for all kinds of world market, borrowing, and speculative transactions with the suitability of competing credit moneys, above all the deutschmark and the yen. For several years now, the bottom line of this comparison has been a steadily declining dollar exchange rate. For the USA, this means a constant loss in the national ability to pay. However, not to the extent that the nation, or its business world, would really ever be unable to pay. After all, they pay in dollars; the US and its business world continue to enjoy the advantage of having a currency that functions directly as international credit, making them creditworthy everywhere. Only, they are getting less and less for their dollars; and those who accept payment in dollars are getting money that is constantly depreciating. For them, the obvious question is why the dollar should still be accepted as a means of payment. As the exchange rate falls, the whole world has long taken the view that less and less is possible with the dollar; yet the US state is not being asked to compensate for its increasingly bad credit with other, better money.

In other, similar cases, despite all the platitudes that “something like this” can’t actually happen today, economic expertise is more likely to suspect that a country’s “financial reserves” have been “exhausted” and that country is virtually “bankrupt.” When financial speculation and politics recently forced Italy and England to massively devalue their currencies, hand over their foreign exchange reserves, and declare their limited ability to pay, everyone immediately knew that this was bound to happen! Given the national debt, the lack of growth rates, the bankruptcies of banks and companies, the negative trade balances, the inflation rate... The general consensus was that nothing could follow from this other than the financial world fleeing the ailing credit of these nations and their obligation to obtain new loans, not by increasing their own credit money, but from abroad, from superior competitors.

Nobody in the USA would think of such as thing. “Alarming figures” on unemployment and trade balances are reasons for the exchange rate to fall further, but not for the financial world to express fundamental doubts about the dollar, like the lira and the pound, as to its suitability as a means of doing business. From time to time, the dollar rate also rises a little when some “data” or event in Europe or overseas makes speculation against the deutschmark or the yen more advisable. No calls are heard from the leaders of Europe or Japan for the USA to admit that its national credit is exhausted and that in the future it will have to turn to the central banks in Bonn and Tokyo for its ability to pay. It is said that in recent years the USA has transformed itself from the largest international creditor country into the largest debtor nation. However, the USA is not being forced to repay its debts in “good money” like England and Italy, nor is it being forced to pledge its raw material reserves to its creditors in the “rich countries” in order to service its debts, like Mexico has in the past. Rather, the USA continues to be one of the rich countries whose credit money is distributed to the “poor countries” as “hard currency” according to the conditions of the “donors.”

Apparently, the balance sheets in terms of debt, growth, and currency do not in themselves define the liberties that a nation can take with its credit. It depends very much on whose credit is in trouble; which nation is behind the money in which the debt is multiplying. And in this respect, the case of the USA is very different from the cases of Italy and England:

First of all, because of its power. It is true that the constant fall in the value of the dollar, which even a mid-level war could only briefly interrupt, shows that the times are over when the currency of the undisputed leading power, the USA, had an equally undisputed value. But as the leading power of the free world, the USA still has no need to be told what to do by any other power in matters of credit and currency, and the up-and-coming rival imperialists will be wary of making any such demands. The guardians of the deutschmark and the yen also know that they are dependent on the world supervision of the imperialist-in-chief; they want to use it and profit from it. For this reason alone, none of them would dream of denying that this power’s money has the quality of credit, or even of presuming that they can tell the USA how to use its money, as Germany quite naturally claims to do with Italy and England.

Secondly, because of the function that the dollar continues to fulfill as credit of the world market nation USA for its competitors – devalued or not. Having dollars may be comparatively stupid – compared to the deutschmark or the yen. But compared to countless other national currencies, it is still comparatively useful. After all, the US market remains one of the largest in the world, and everyone still wants to use it; no one can see any advantage in accusing this huge part of the world market of being inefficient, “over-indebted,” and writing it off. So, for better or worse, they have to live with the money that keeps this market going: Too much of their own business, too much of their own credit depends on doing business in the USA with the dollar. As long as there is still plenty of business to be done with the dollar and money to be made from it, the business world will accept its “creeping” devaluation and deal with it.

Thirdly, the situation is now such that the verdict "too much debt!” is not only hitting the dollar. The global economic crisis is also hitting Japan and Europe; these parts of the world are also experiencing the occasional banking and real estate crash, and Europe is struggling with the “costs of unity.” In this respect, the dollar may be bad money; the extent to which the others are actually any better is debatable. That is why the competing world economic powers not only do not entertain the idea of presenting their debts to the USA and pushing for a settlement: The world’s economic powers can’t imagine anything more terrible than a dollar crisis. The example of the pound and the lira already shows that it is one thing to declare the state credit to be a “weak currency” and thus urge the financial world to get rid of this bad money as quickly as possible; and it’s quite another thing to resolve such a credit crisis so that it doesn’t turn into a general crisis of all the loans that are intertwined and interwoven with the lira and the pound a thousand times over. Anyone who “disparages” the lira must, in case of doubt, also be in a position to use their own currency to guarantee Italy’s ability to pay, if all business with this nation is not to collapse. It is certain that a sudden devaluation of America’s credit would be the same as a global credit crunch which would damage the competitors at least as much as the USA. That neither the credit of the Europeans or the Japanese would be in a position to subordinate itself to the dollar to guarantee the ability to pay of the USA in its place is somehow clear to everyone who rambles about the dangers to “the world economy” posed by the “weakness of the dollar.” Not only does nobody want to put the dollar credit in doubt: According to the world market’s supervisors, it must not be doubted at all if the global economic crisis, which is already here, is not to erupt into a general credit crunch that will bring business life to a standstill worldwide.

Everyone involved is aware that there is too much credit in the world as a whole, and not just in the USA. This makes all the actions taken by the world economic powers to secure their credit by competing against each other increasingly precarious; they themselves are putting their willingness and ability to jointly control and supervise each other to an increasingly difficult test. Therefore, the fact that none of the world currency guardians want to see the dollar called into question because of the repercussions on their own credit does not dispel the fear that “it” – through some ill-considered statement or act of politics – could nevertheless come to that. By now, it is striking even to the dumbest view that the constant exhortations about “shared responsibility” are merely the flip side of a competition to avoid the damages that the crisis of capital is causing in all national balance sheets; and the financial capital of all countries is constantly on the move in order to be in the right place at the right time for this distribution of damages.

The USA now finds this situation particularly intolerable. It realizes that the longer it drags on, the worse it will be. The fact that no other nation is questioning the dollar does not make it a suitable instrument for the USA, but only means that the competition is continuing to exploit it to the best of its ability for its own balance sheets. The fact that international finance capital is not orchestrating a flight from the dollar does not mean that it is forever immune to it, as the USA realizes from the fact that it can neither secure nor guarantee the value of the dollar. The USA recognizes the global economic crisis as a dependency of the nation on the calculations of competing states and the international money business and thus as a barrier to its national ability to act in monetary matters. It no longer wants to tolerate this, so it is itself initiating a reorganization to free itself from this dependency.

That’s the “peaceful revolution.” The USA defines the threat to its credit as a challenge to the nation and thus announces in good imperialist fashion that it is just as unwilling as any other capitalist nation to adjust its demands to what world market competition allows it to do economically. The USA sees things the other way around: it is ultimately a global economic power, which is why it is using this power to fight to ensure that its money once again determines the course of world market transactions.

IV. “American renewal” – but how?

What the crisis in the USA shows: the laws of accumulation of capitalist wealth apply to this nation too. That means: if the state is using its credit to promote profit and facilitate economic growth, then that is all it is doing. The calculations of private business people decide what and how these possibilities become realities; according to the will of the state powers that look after this mode of production, that’s what they should do. They decide this on a market that has long been a world market – not least at the instigation of the USA itself – where the offers and business opportunities that the state power of the USA has under its control must be comparable with those of other nations and regions.

What the USA makes of this situation is something quite different: the USA also needs a national economic policy that fixes up these offers and business opportunities into competitive resources for the nation and does not simply rely on the fact that the USA as a business location is automatically an offer. The nation is giving up the notion that America has a seemingly inexhaustible wealth that it can access almost automatically and at will; it has decided to fight, like any other capitalist nation, by organizing its spending so that the wealth it produces and earns is worth its weight. So the USA is acknowledging that it is subsumed in the capitalist competition for national sources of wealth accumulation; no longer a “superpower,” but only – at least from the US national point of view – a “power.”

The admission that it must compete, and therefore also wants to, is anything but defensive. At the same time, the USA is making known that the unconditional assertion of US interests against the rest of the world is not currently intended. The US wants to profit more from the world market because its own domestic market, and the capitals producing “at home,” have long been involved and integrated into it; the resulting business relationships and dependencies should serve as leverage so that the US nation can use its power and money to assert itself more decisively against the competition. On the one hand, such a program relies on the fact that the competitors will continue to expect advantages from doing business with the USA or, what’s not quite the same, that they will remain dependent on the validity of American power and the American market’s ability to pay. At the same time, it wants to exploit this dependence in order to reverse the direction that the distribution of benefits and harms in this market has taken in recent years:

“We have entered a global economy. Today we have the opportunity to meet its competitive challenges rather than allow these changes to undermine our strength.” (Clinton, statement in Little Rock after his election. November 4, 1992).

This is a contradictory project.

1. Violence on behalf of exports and profits

Clinton’s promise of “continuity in foreign policy” will surely be kept. His project of making the USA the “strongest trading power in the world” is nothing new; US presidents have been pursuing the same goal since it became apparent 10 years ago that the rise of competitors was causing damage to the dollar. What is new is the situation in which the new president is renewing the US vow that it won’t put up with any more encroachments on US economic power by the competition.

1.1 Weapons

The first thing that the politicians are looking at is the “markets” that the USA has and the political dependencies that have been established. Supplying foreign rulers with US military equipment combines both aspects in the best possible way. The “demand” has not diminished with the disappearance of the USSR; nor has its need to create new political dependencies with its own arms deliveries, if only because of the corresponding activities of its imperialist competitors. The USA is therefore reassessing its arms industry as a means of business and power:

“The US more than doubled its arms sales to Third World countries last year (1990)... The American military budget, which has been declining for two years, presents arms manufacturers with the choice of going under or developing new markets abroad, according to the annual report to Congress. The US now commands 45% of the Third World market, while Germany, France, Great Britain, and Italy together account for 10%, compared to 22.4% the previous year.” (SZ, August 13, 1991)

It is hardly credible to attribute this expansion of arms exports entirely to the private initiative of the respective companies, especially for a nation that invents Cocom lists and pushes “non-proliferation” on others. The USA is explicitly implementing its changed stance, according to which the state budgets of foreign sovereigns are now a “market” on which US companies should compete, with its sale of 150 fighter jets to Taiwan:

“The F-16 is being built by General Dynamics in Bush’s adopted home of Texas. 3,000 Texans who were supposed to be laid off by the company by 1995 can now count on continued employment.” (Handelsblatt, September 4, 1992)

Attaching the label “mere campaigning” to this act isn’t even half the truth: after all, one can also campaign on “peace dividends,” “sharing” and “solidarity.” The older US administration took the position that, in the wake of the “New World Order,” the American arms industry could also provide the nation with new, useful services. Here one can rely on “continuity”: The USA will not only remain the world’s arms manufacturer – it also wants to make more money from it in the future.

1.2 Credit

as a political weapon was the preserve of the European would-be superpower during the East-West conflict. Under the umbrella of the American world order, it used its good money to secure special favors and deals with less well-off sovereigns; also and especially in the former “East.” The USA, which had previously been rather critical of such machinations, has now also discovered credit as a weapon. On the international financial markets, the power of the dollar may only count in relative terms: for countries that have no credit at all, i.e. no money, access to such world money is still the absolute prerequisite for accessing world market products at all. The USA recently brought this power of the dollar to bear on the Commonwealth of Independent Sstates (CIS): it kindly agreed to sell part of its otherwise unsellable agricultural surpluses to Russia, and in return Russia agreed to give priority to servicing its dollar debts over all others. Of course, the fact that these “other debts,” the legacy of the defunct USSR, are largely on the books of German banks simplified matters from the US point of view.

In this way, the USA has not only successfully demonstrated to the Russians that the USA is the state they must stay on good terms with if they hope to get any “help” with the survival of their market economy project. Above all, it has shown its imperialist competitors how the USA intends to use its power in the future to gain access to sources of money; that it is willing and able to disregard previously established methods of agreement and competitive techniques – in this case, the ongoing imperialist event that is “CIS debt rescheduling.” It is recognized that these “debt rescheduling negotiations” are only about distributing the damages that the de facto insolvency of the CIS is causing to the balance sheets of Western banks; the tone between Bonn, Paris and Washington has now become correspondingly toxic. This is what makes the US move to register new dollar loans as a priority claim on foreign currencies earned by Russia particularly explosive. After all, the world power is abandoning a business practice with which the rival imperialist nations have so far secured their competition by mutual agreement. Respect for globally circulating credit, its treatment as a common object of concern, is being terminated. Instead, a creditor nation is making the not-so-modest claim that its credit includes an exclusive right of access to the debtor’s balance sheets and economic policies.

If two nuclear powers have suddenly decided to suspend a functional principle of the IMF as a result of an agreement about wheat exports, then this affair will soon lead to heated discussions about the future of world trade.

2. Fighting “protectionism”

When the USA harnesses the dependency of third countries for its balance sheets, the other world economic powers see themselves as particularly affected. After all, they have all discovered the trade balance as their weapon and want to secure the world as the primary domain of their “good” money against the others. That’s why they see every deal that the USA makes with third parties as aimed against them, denying or withholding sources of power and money from them. They cannot prevent special agreements between the USA and Russia, Saudi Arabia, etc., so they grumble and oppose them in other areas. In this way, the USA is constantly being confronted with the fact that its position of wanting to secure its “rightful share” of the world market is not only not recognized, but that its competitors see things exactly the other way around: When the USA brings the special position of its power into play in order to reverse competitive outcomes, then it is the USA that is violating the “free world trade” which it was once aggressively propagandizing for.

In line with this logic, Clinton’s announcement that he would “place greater emphasis on the economic aspects of foreign policy” has earned him a reputation among European leaders for wanting to initiate a “relapse into protectionism.” Yet Clinton has merely vowed to return this accusation with more intensity. He is fighting against protectionism; that of Europe and Japan, of course.

Ever since the monopoly position of American multinationals and American money began to falter, the USA has been complaining about competitors violating the rules of “fair play” in trade issues. In asking “How could it have come to this?” the Americans answer, without fail, that it is Europe and Japan that have illegally made their national budgets instruments for projects that compete directly against the USA instead of letting “the world market” operate freely. In the dispute over Airbus subsidies, for example, the USA complains that Europe is using state funding to break the US monopoly on civilian aircraft production and demands “fair competition.” The European governments counter that Boeing only has the financial and technological potential to build civilian aircraft because of its function as a quasi-state-owned defense company. This accusation seems completely absurd to the USA. It takes the view that it was entirely due to Boeing’s private capabilities that the company was able to generate civilian revenues from weapons. It considers this to be absolutely incomparable with the competitors’ express intention to equip industries at state expense in order to fight US supremacy; the latter is seen by the US as a distortion of the “real,” “genuine” competitive situation between the nations.

The Airbus dispute and the associated battle for market shares in the aviation sector has its ups and downs, as does the clarification of other legal issues related to competition, which repeatedly includes agriculture in its capacity as a national balance sheet item. The tone of US politicians has recently become harsher:

“We know from our experience with military security that the key to economic security must be based on ‘peace through strength,’ not unilateral disarmament. For this reason, I recently announced the largest amount of wheat ever awarded through the Export Promotion Program – nearly 30 million tons to 28 buyers.” (Bush, Program for American Renewal, September 16, 1992)

This measure by the US government was seen as a reaction to Europe’s refusal to make further concessions to the US position in the GATT dispute over market liberalization and subsidy cuts for agricultural exports. By financing its farmers with competitive prices for profitable exports, the US was denying export earnings to the EC; moreover, it was making it clear that it will not accept the EC’s reluctance to give in to its demands on world trade issues without a fight. The subsidization of American export revenues is intended to blackmail the EC into realizing that it cannot afford to resist US demands, because the latter has the power to seriously damage it. This message has been received by the EC and commented on accordingly. Europe has a lot to lose in this market and therefore sees no reason to simply bow to US demands. On the contrary:

“The EC Commission spoke in a statement of ‘a warlike situation that is not exactly conducive to fruitful relations between the EC and the USA.’” (SZ, September 4, 1992)

In the meantime, the “trade war” has entered the next round. The Europeans – despite a GATT decision to the contrary – are refusing to make further concessions on cutting oilseed subsidies. The USA sees this as a violation of the “rules of free world trade by the EC” and therefore feels justified in following up its first blackmail with a second: as a precaution, it has decided to impose punitive tariffs on European agricultural imports.

This US offensive is a test of how united and cohesive Europe already is as a world market bloc; the extent to which the various European nations still have their own particular business interests in mind, or the common interests of the new, but not yet existing, European superpower. The USA is taking advantage of the fact that Europe does not yet have the political clout that it is aspiring for with the completion of its Union; it is testing whether this circumstance can be exploited to the advantage of the old superpower in the current situation in which everyone has to keep an eye on their balance sheets. To some extent, this calculation is working out. “Crisis meetings” are being held to salvage the new GATT agreement “at the last minute.” European politicians are insulting each other for having “torpedoed” the result. And the press is wondering how “one” could be so unreasonable as to jeopardize all the “trade of the free world” for the sake of a few million in export revenues, and accuses German politicians of subservience to French intransigence. The disputes that have been raised cannot be settled by arguing that it is only a matter of “small sums”; French agricultural exports determine the functioning of entire regions in that nation, which is why it cannot help but emphasize the fundamental importance of such modest-looking percentages in its foreign trade. Now, of course, negotiators on all sides could still rubber-stamp their supposedly long-ago completed agreement on 999 other trade issues and leave the question of oilseed subsidies open. In the case of “oilseeds,” however, all those involved are no longer just talking about whatever new business opportunities the nations can negotiate in exchange for concessions in other areas. The subject of the negotiations has long been what benefit the world’s economic powers can still see in agreeing together on rules for their competition; concessions and “standing firm” represent the degree of willingness to compromise in principle that they still see as necessary in the current situation of the world economy. In this respect, the talk of a “threat to world trade” is quite apt. This “world trade” does not exist in any other way than as a competition between political supervisory powers, i.e. for the profits that nations seek to secure for themselves from cross-border business. The suggestion by well-meaning observers that the powerful should try to work together to ensure “free trade,” especially now that the “global economy” is so sluggish, is therefore missing the point: the nations are clashing precisely because its returns are in doubt.

With its offensive, the USA is making clear the nature of its interest in institutions such as the GATT. Its regulations are acceptable if they satisfy American interests; if not, the US reserves the right to secure its access to the world market through its own means. The US invented the GATT in the first place simply to enforce the freedom of US capital; in the meantime, however, it has proven to be a faithful reflection of the competing interests that call the shots within it. The US will not tolerate this. So it is announcing that it will seek new levers to assert its interests if and when the old ones are no longer effective: it sees no point in a global economic regulatory body that, in Clinton’s words, “undermines our interests instead of strengthening them.” The threat is that the USA could, in the future, refrain from engaging with the competitors at all if they continue to be intransigent.

Whatever the outcome of such affairs may be, they only have a limited effect in reversing the distribution of benefits and harms that the USA is aiming for. The USA does not have the means to decide the global market competition on its own: It can no longer insist on dependencies without having its own dependencies demonstrated to it. Whatever new agreements have been reached between the competitors in recent years, the USA can always draw up a balance in which the bottom line is that it and its balance sheets are coming out on the short end. No “market opening” enforced by the USA elsewhere has been able to guarantee that the deals promoted in this way will primarily benefit US balance sheets. The best example of this is US trade with Japan: the US keeps forcing Japan to make new concessions on imports and exports, and Japan’s balance sheet surplus with the US is constantly increasing.

US policy is now drawing conclusions from its 10 years of “fighting protectionism.” These are that the USA must take measures to permanently safeguard the nation’s benefits from the world market against the competition. The ideal has emerged that the politicians must ensure a monopoly on business opportunities that can guarantee that capital producing in the USA can once again access the entire world market.

3. The new offensive: “Securing markets”

To this end, the USA has come up with a

3.1 “System of bilateral trade agreements”

These are intended to secure from other countries exclusive rights for American exports of commodities and capital. American politicians are proposing to

“...initiate a strategic network of free trade agreements across the Pacific and Atlantic, as well as in our hemisphere. This network will stand in stark contrast to the backward blocs of economic isolation. If we truly want to be an export superpower, we cannot limit ourselves to just one region... (we want) to use our attractive domestic market (i.e.: NAFTA; see point 3.2.) as the foundation of a powerful free trade policy that will strengthen America’s economic reach worldwide and complement our global military presence. By focusing on opening markets, we can reduce the structural barriers to competition in North America, Western Europe, Japan, and elsewhere... New trade and economic opportunities in Latin America... Free trade agreements with Poland, Hungary, and the Czech Republic... NAFTA-ASEAN linkage...” (AD, September 16)

This “free trade policy” differs quite fundamentally from what this term was previously understood to mean: The USA is no longer promoting general rules of world trade that apply to all states, under whose rule US capital is to have free access to all the world’s markets, but is rather asserting its right to a whole host of special conditions. The “backward blocs” have apparently not so much “isolated themselves economically” as interfered all over the world in such a way as to benefit their balance sheets. The USA wants to counter this by forcing the nationalization of world market revenues with special political regulations. This is how it makes officially known what it is doing in the GATT negotiations: A “free world trade” that does not yield US surpluses is nothing of the sort. So the USA is introducing new rules for what it will from now on consider to be free world trade:

“Internationally, we will promote free trade and open markets on all fronts – global, regional, and bilateral. If some say no, we will seek out those who embrace our vision of stronger trade and better growth.” (US Secretary of State Zoellick to ASEAN in Manila, July 24, 1992, according to AD, July 29)

The contradiction in this program is that it wants to get more from the world market, from the international back and forth of commodities and capital, by terminating it. On the one hand, the US list of nations and regions designated for “bilateral agreements” is once again very global: the USA is not so modest as to want to carve out any corner of the world market for itself and conduct its business there exclusively. On the other hand, the question of which nation will ultimately benefit from the multi-sided business should, if possible, be decided in advance; the criterion for buying, selling, and investing should be the particular interest of the USA. The US does not want to prohibit itself or its new exclusive partners from doing any business with the other world economic powers from the outset; at the same time, it wants to “direct” the proceeds from business onto US balance sheets by means of negotiated exclusive rights. This expresses the national need to sort out in advance which imports and exports of commodities or capital are more beneficial to the USA and its money, and which are more beneficial to its partners and/or competitors. Once opened up, this point of view causes a lot of confusion in international business life.

The free trade zone that has recently been established in North America shows how the USA envisages the realization of this ideal of monopolized US access rights. The “North American Free Trade Agreement”

3.2. NAFTA

was propagated by the last president as the project to regain American strength:

“My opponent claims that America is a declining nation. Regarding our economy, he says we’re somewhere between Germany and Sri Lanka. Don’t let anyone tell you America is second-rate... Perhaps he hasn’t heard that we're still the world’s largest economy... Just two weeks ago, the three nations of North America agreed to free trade from Manitoba to Mexico.” (Bush, speech before the Republican convention)

This praise of the USA’s performance is somewhat revealing. This “world’s largest economy” can apparently no longer rely on the sheer mass of its wealth as a reliable means of competition; otherwise, the USA would never have come up with a construct like NAFTA. And the fact that the “world’s largest market” now stretches from Manitoba to Mexico cannot entirely conceal the fact that the nations that are coming together here have somewhat incomparable economic powers.

The USA sees NAFTA as a “response” to the EC; however, it does not have much in common with it. First of all, NAFTA creates neither a “customs union” nor a “single market,” but is a free trade agreement that expands the existing free trade zone between the USA and Canada to include Mexico. Secondly, it is not comparable capitalist nations joining forces in order to mutually gain more on the world market by pooling their resources; rather, a dominant capitalist power is subsuming the economies of its neighboring states in order to increase its economic clout. The USA evidently considers it necessary to firmly integrate Canada’s and Mexico’s economic ties to the business of US capital, which have long existed, into the newly justifiable protectionism of the USA, and to secure them politically. It is clear from the outset who is to receive new revenues from this agreement, and there can be no question of “mutual benefit.” This is what makes this project so unique.

The main content of NAFTA consists of comprehensive tariff reductions. However, this does not mean that all parties will reduce their tariffs against each other in unison and in equal measure; rather, the timing and extent of the reductions are to be meticulously regulated for each individual national tariff. The first comprehensive tariff reductions mainly affect Mexican tariffs on US manufacturing and high-tech commodities as well as on cars; by contrast, large parts of the US agricultural sector will remain protected from Mexican imports until the tariff reductions are completed in 15 years. The same “one-sidedness” applies to the rules for liberalizing capital movements: de facto, these only affect Mexican industry.

For Mexico, NAFTA completes the national project that was already underway there. In recent years, Mexico has relinquished national control over its domestic industry in a gigantic “privatization wave” and has found its salvation in submitting to the calculations of international capital. The “liberalization of investments” through NAFTA definitively abandons the position of wanting to restrict corporate takeovers by foreign capital in order to prevent the “selling off” of national financial resources. And the tariff reductions eliminate Mexico’s previously effective point of view of using tariffs as a means of protecting domestic production.

The “how” of this “market opening” is the joke, however. After all, Mexico is eliminating tariffs exclusively for US commodities and giving special access rights to its national capital exclusively to US capital, especially in the oil sector. The “liberalization” is such that it simultaneously secures US capital a right of first refusal in all areas of the new, “private” Mexican business life. Mexico already sources a significant portion of its imports from the US; US capital has bought into privatized companies; and in the “maquiladoras” along the Mexican border, US companies are already taking advantage of low Mexican wages and non-existent environmental regulations to outsource parts of manufacturing, the products of which can be re-imported into the USA duty-free. NAFTA completes the subsumption of the Mexican economy under the interests of the USA; and Mexico is counting on this triggering a special interest on the part of US capital in participating in business in Mexico.

With NAFTA, the USA wants to make every conceivable business transaction conducted in and with this territory a means of the US balance sheet. In the words of its main protagonist, NAFTA should both “open a vital market to the US, a Mexican economy whose growth prospects, its expanding industries and its consumers will quickly turn it into an excellent American customer...” as well as “strengthen our global competitiveness by integrating American, Mexican and Canadian capabilities, allowing American companies to purchase subcontracting services at lower cost.” (Bush, Program for Renewal)

US capital is certainly happy with the opportunities provided by the politicians to take advantage of an exclusive sphere of profit making. More important for US companies, however, will likely be the prospect of being able to use Mexico’s territory even more extensively as a means of low-cost production and source of cheap supplies. This will probably also be the “growth prospect” offered to this “excellent customer.” After all, there is no intention of upgrading Mexico from the status of a third world country, and questions about the payoffs of “free trade” for this nation fall outside NAFTA’s purview from the outset.

With NAFTA, US politicians are taking the position that a “larger market” should improve the competitiveness of US capital. At the same time, US politicians are emphasizing that existing US capital should not be harmed. This becomes particularly clear in the regulations on “local content” found in the NAFTA agreement. These regulations cover the conditions for producing and importing cars from foreign (Japanese) companies: If they want to set up production facilities in the USA (from 1994: in the NAFTA area), they must commit to sourcing up to 65% of the value of their cars from US suppliers; and only cars with a corresponding US content may be imported into the USA duty-free from Canada or Mexico. US politicians apparently see the internationalization of capital as follows: capital investment from abroad is good if it strengthens national growth potential, but bad if it results in imports from the respective company’s country of origin. This worsens the national balance sheet or damages the business of US suppliers; rather, the new capital investment should open up a new business sphere for them, which they in turn use to contribute to national growth.

This is neither free trade nor export promotion. The politicians are securing the domestic market for manufacturing capital in the USA by prohibiting cost comparisons and forcing sellers to produce at the place of production rather than calculating with quality and price. The USA is relying on foreign capital’s interest in enriching itself on the US market and at the same time forcing it to calculate costs in the US national interest. This policy may prevent additional imports, but it does not exactly promote additional exports. Securing a lot of business under US control is simply not the same as promoting a globally competitive capitalist growth.

On the question of whether imports should be viewed more from the angle that they reduce costs for capital or that they destroy the market for domestic business, the USA is taking the second side. With the modern autarchic concept of “local content,” it is insisting on securing its domestic market as a national means of competition at all costs. The USA does not embrace “global competition” in such a way that it forces domestic manufacturing capital, in the interests of improving national competitiveness, to face up to cost comparisons on a global scale. Rather, US policy continues to rely on the fact that the sheer size of the US market is a means of competition, and the preservation of existing production against external competition appears to be just as much a means of gaining new markets as the promotion of new capital growth.

With NAFTA, the USA is taking a part of the world market under its own exclusive control in order to produce the “global competitiveness” there that it constantly denies to the free movement of commodities and capital. Against the world market, it should have every aspect of profitable business on it at its disposal; against its competitors, the USA should be ensured special conditions of competition. So the doctrine of “open world trade” is over, however much the USA may still sell its new projects in terms of the “old” trade.

4. A domestic political upgrade

From this point of view, US politicians are refocusing their attention on the capitalist activities taking place under their sovereignty. The politicians are deeply dissatisfied with the results: capital is simply not doing enough for the national goal of increasing exports and strengthening the dollar. US politicians have a dual justification for this: first, policies have not been sufficiently supportive of capital in performing this national task. And secondly, capital itself is not national enough, does not seem sufficiently committed to this mission, or is even working against it.

4.1 “Investment promotion”

should be the new top priority of US policy. The new administration announces that from now on it no longer wants to stare at the deficit like a rabbit at a snake, but to use government loans as a lever for “jobs,” “markets,” and “competitiveness”:

“In the past, we have used savings in the defense budget to spend on rising healthcare costs and the restructuring of thrift banks. We propose to use those savings to invest in American jobs, transportation, communications and the new technologies of the 21st century.” (Clinton)

The new president has big plans. The old tasks will not simply become obsolete when he takes office and decides to put the money to use on new government projects. For this, he wants to set up an extra “investment fund” into which all the savings from the military will be transferred and spent only as a quasi-separate budget for “investment promotion.” The national debate on the criteria under which this new American “national objective” should be tackled is already underway:

“Some Clinton advisers favor a ‘strategic’ trade policy, where Washington imitates the Japanese by building and protecting key industries at home. Others just want a more cooperative, civil relationship between government and business.” (Newsweek, November 16, 1992)

The new administration realizes that it lacks the tools and institutions to implement its project of “revamping the US economy.” With this in mind, the new president has announced that right at the beginning of his term of office he will convene an “Economic Security Council, similar to the National Security Council,” which will work out the new policy direction on economic issues.

The project is meant in all seriousness. Ideally at any rate, Clinton and co. are writing off government loans for weapons, which the US government has used for years to promote investment, “high technology,” infrastructure and energy policies and to create “jobs,” as a huge national bad investment. Now investing in government loans should begin again: On projects that are aggressively aimed at capturing new global market shares for US capital. In the midst of the crisis, the USA is taking the view that it can and wants to provide domestic capital with better business conditions to enable it to stand up to its competitors in “their” markets. It has decided to go on the offensive to see what else can be done with US loans – in a situation where the loans of others are also in trouble.

The criteria by which private business activity is to be promoted for the national goal of “competitiveness” will then be established. However, it is already clear that the politicians no longer simply want to leave it up to private business calculations to decide how they can benefit the nation. Politicians are devising methods to anchor the national point of view in private business calculations: the favors that capital can hope for from the state should at the same time oblige it to serve the state’s interest in the profits of business. In the future, companies are to be granted “tax credits” when they invest; at the same time, taxes on the “higher incomes” are to be increased. The policy introduced by Reagan of “encouraging” the economy to grow by simply taking less taxes from wealthy citizens and leaving more income at their free disposal is thus a thing of the past. The US state no longer wants to simply emphasize that the nation is almost automatically served by private calculations with opportunities to make money; it should be capital expenditures, financial investments for the purpose of productive use, that justifies the right to preferential treatment by the state.

Beyond such “incentives,” America’s new economic policy has so far consisted essentially of asking the question: then how do the others do it? True to the logic according to which the bad shape of the US economy is due to failures in American economic policy, the new US administration is quite undogmatically looking to its competitors for “concepts” for its envisaged revamp of the USA. One European commentator mockingly remarks:

“Clinton takes his health care policy from Germany, his education support programs from Sweden, his vocational training concepts again from Germany, and his concept of a strategic role for government in the economy partly from French planification and more from Japan’s MITI. But his welfare policies, his commitment to law 'n order and the economic nationalism he promoted in the election campaign could almost as easily have come from right-wing ideologue Pat Buchanan.” (Guardian Weekly November 15, 1992)

This is not a contradiction at all, because all departments of economic and social policy serve the same purpose. America is to become great and powerful again; and “job creation programs,” new methods of “contolling healthcare costs” and “protective measures against Japanese competition” are not to be confused with projects to feed the poor. Success, if it occurs, will again be measured by corporate profits, balance sheet surpluses, and the exchange rate of the dollar, not by improvements in poverty statistics.

4.2 “Economic nationalism”

The “investment promotion” point of view doesn’t simply aim to boost the growth of corporate profit, but wants to “channel” the proceeds of this growth into the US balance sheet. So the same capitalist business that should be supported from the standpoint of a lack of ability to serve the national balance sheet is being harshly criticized from the standpoint of a lack of willingness to do so. For example, the new president has announced his intention to re-examine the NAFTA treaty to determine whether it jeopardizes too many jobs in the USA. He also criticizes the agents of business for taking advantage of such opportunities: “American companies should act like Americans and export products, not jobs.” (Clinton)

What was presented in Bush’s eulogy on NAFTA as a contribution to boosting US balance sheets – US capital should use Mexican low-wages to cut costs – comes under fire here as a detriment to them. The question is whether US investments in Mexico, as an export of capital, ultimately increases US wealth or harms it as capital flight. This question is, of course, unanswerable: because capital has freed itself from national ties, as a multinational uses nations and their peoples, resources, markets, and tax systems as “locations” for making profits and constantly imports and exports both capital (“jobs” in Clinton’s parlance) and commodities across all borders, it is no longer possible to see which national balance sheet is best served in the end by the individual export of commodities or capital. The fact that this question is arising in the USA shows that the internationalization of capital is now essentially seen by the USA as damaging to the nation and no longer as a means of enriching it, as was previously the case. Politicians are now drawing the appropriate conclusion from this situation. This goes: if the domestic economy is not generating wealth for the state, then the state has failed to emphasize this national point of view in relation to the activities of capital on its territory. Not only has its “own” “domestic” capital – what industrial strategists call “key industries” – not been promoted enough, but capital has also been allowed too much “anti-nationalism,” and “foreign,” overseas capital has been able to take too many liberties. So US policy is now taking the view that in order to promote national profits, it must once again make a sharper distinction between national and foreign business. True to this logic, Clinton has announced that he wants to redefine capital as “American” and commit it to ensuring growth “at home” and using the world market more for the export of commodities. In the case of “foreign” capital, on the other hand, it is less a matter of “promoting industry” than of examining the extent to which its activities on US soil are motivated by un-American motives.

Even under Bush, the decision was made to increase the business of international corporations in the US to finance the federal budget. US politicians claim to have found them guilty of anti-American tax evasion:

“According to statements from the Clinton camp, the average profit rate for American companies is 9% compared to only 1% for foreign companies operating in the USA. This leads to the assumption that a significant amount of profits are being shifted abroad via transfer pricing to reduce tax liabilities... The official goal is to generate additional revenues of $5 billion by tightening tax collection.” (HB, November 13, 1992)

According to a new tax law, a “Comparable Profit Interval” method should be used to determine what these companies should actually have reported as profit in order to tax them on this basis. As a result, leading Japanese companies have already reached an “Advanced Pricing Agreement” with the US tax authorities, which sets “transfer prices” in advance to avoid this suspicion and the threat of additional tax payments.

The fact that the whole thing could also be viewed the other way around – perhaps “American” multinationals prefer to report more profits at home than abroad? – is of course completely irrelevant to the USA in its approach. The procedure is based on a fundamental mistrust of “foreign” capital investment which does not contribute to US economic growth, but only seeks to unjustifiably enrich itself in the US location. The fact that the USA is also being scrutinized by international capital from the point of view of its locational advantages and disadvantages is something the USA is now declaring to be a position that it is only willing to tolerate to a limited extent.

US politicians have good reason for their mistrust because, even from the viewpoint of promoting the business location, they make all kinds of special offers to internationalized capital for enriching itself. A classic example of this is the BMW settlement in Spartanburg, South Carolina:

“South Carolina was awarded the contract because the federal, state and local governments pulled out all the stops. They anticipated BMW’s every wish and mobilized advance investments of around $200 million.” (HB, October 22, 1992)

Among other things, for expanding an airport for jumbo freighters, for infrastructure, for purchasing the required land “from 140 individual properties with around 100 owners whose houses had to be demolished or moved onto low-loaders,” for reducing property taxes for 20 years, for financing the training of skilled workers in Munich, etc. etc. The USA, too, now needs to make offers to capital for profitable investments. In this respect, it is hardly surprising when US legislators claim that 70% of foreign companies in the USA pay no taxes at all. So, on the one hand, politicians celebrate the beauty of foreign investment as a means of turning poor areas where nothing else is happening into national sources of revenue; and, in view of the costs that politicians incur for this, they raise the suspicion that these offers do not actually benefit the nation at all, but merely the profit seeking of capital.

With its new tax legislation, which Clinton wants to tighten even further, the USA has drawn a conclusion from this contradiction. It is making it clear that in the future it wants to derive greater national benefits from the business location it has to offer. It is giving the relevant companies the choice of either paying up or ceasing to have access to the US market; in other words, it’s about how much their interest in profiting from the US market gets them to make the appropriate “concessions.” The actions of Japanese companies confirms US authorities that they are on the right track.

The US interest in the nationalization of world market profits is therefore also creating new internal conflicts in the world market and thus with the competing powers:

“The Japanese authorities criticized the American approach and stated that they wanted to join forces with the Europeans to call for a cautious approach... The regulation of the tax treatment of transfer prices could not be the responsibility of a single state.” (HB November 13, 1992)

The “could” part is not entirely true, because the USA is making the rules and the competitors can’t prevent it, which is why it also recommends that affected companies reach an amicable agreement with US tax authorities. At least, it is clear that the message of the new US administration has reached the boardrooms of Europe and Japan. The “American Renewal” is directed against them, even and especially where US policymakers are hollering for an economic rearmament “at home.”

V. The results

of the US project are uncertain. First of all, because there is a global economic crisis, and secondly, because the intensification of competition between the world’s economic powers has raised the increasingly urgent question of who should put up with what from whom. The basis for a consensual regulation of competition has disappeared: First, there is only damage to be distributed, and secondly, the irrefutable reason for this is that the main enemy, the USSR, has ceased to exist. This has put the procedures themselves, i.e. the whole beautiful “world economic order,” which the nations of the world economy have so far repeatedly used to reconcile their competing interests and imposed on the rest of the world of states as a common interest, is up for grabs:

“The soybean dispute is turning into a test that will define the new order – or disorder – of the post-Soviet world. It would cast a sad light on the West if it were to fall into a spiral of destructive strife once the external threat of the Cold War had disappeared.” (Washington Post)

So it could also be said that the Free World is less a “community of values” than of imperialist states, none of which voluntarily renounce their nation’s right to secure their national returns from the business of capital. Perhaps it was the USSR that secured world peace for 45 years after all.