Do we need American hegemony to build and maintain the global capitalist economic order?

In the era past World War II, America established itself as one of two superpower nations. With the Soviet Union providing counterbalancing power, America waged a diplomatic war (Cold War) to assert and spread its ideological content. This ideological confrontation manifested in two forms: 1. between communism and liberal democracy, 2. between socialism and capitalism. The former belong in the realm of political systems while the latter belong to the realm of economic organization. But even while balance of power existed between the two superpowers, American ideological imposition on the global stage was gaining ground. By the start of 1970s, currents of change were detected in the global economic order, with nationalism and protectionism being replaced by neo-liberalism and free flow of capital. Even as American elites promoted this new economic order, the process was facilitated by respective participant elites from nations across the world. The irony lies in the fact that communist China was at the forefront of the global neo-liberal program, despite claiming its socialist credentials. If the ideological gates of the authoritarian and highly protectionist China could be broken open for free-market capitalism, then it was only a matter of time and strategy before other power bastions of the world are broken through. And this is precisely what had happened. With the collapse of the Soviet Union in the late 1980s and the shift in policy framework of several developing countries, the nature and complexion of geo-economics has taken a different form. Needless to say, America’s position as the sole superpower has been strengthened by this change. The unsavory aspects of this sweeping change include “the appearance of a nearly feral form of entrepreneurship in which black marketers, drug barons, arms merchants, rackets bosses, Mafiosi, and other profiteers are emerging as the economic and political leaders of the social transformations underway in their respective societies.” (Buchanan, 2000, p.1) Before embarking on answering the essay question, understanding what neo-liberal globalization truly entails:

“Globalization is a short form for a cluster of related changes.(1) Economic changes include the internationalization of production, the harmonization of tastes and standards and the greatly increased mobility of capital and of transnational corporations (henceforth “transnationals”). Ideological changes emphasize investment and trade liberalization, deregulation and private enterprise. New information and communications technologies that shrink the globe signal a shift from goods to services. Finally, cultural changes involve trends toward a universal world culture and the erosion of the nation-state.” (Laxer, 1995, p.287)

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What is more relevant to this essay, though, is the mode and manner in which this grand transformation in global economics was brought about. It was not as if that different regimes across the world saw the merits of neo-liberal capitalism and assented to join in the party. The truth is much more complex and far less pretty that what propaganda has projected. It is reasonable to say that American military might had been the primary factor in bringing about this transformation. Either the threat of forceful action or direct military involvement has been a coercive factor in the global economic order (the ongoing occupation of Iraq is a prominent recent example). (Grondin, 2005, p.228) There is also the interests of regional elites, who saw the benefits of aligning with the mighty at the cost of disregarding democratic considerations. Now into its fourth decade, neo-liberal capitalism seems to have strongly entrenched, and it is difficult to see how its march could be stopped. It is in this context that the topic question of this essay has to be pondered upon.

The essay topic can be broken down into two components. First, we need to ask if neo-liberal capitalism at the global stage should be accepted without question or challenge. Second, we need to ask if American hegemony (in political and economic realms) is of any good; if so, for whom? And finally, we can synthesize and answer the whole question, namely, “Do we need American hegemony in the global economic system to build and maintain the liberal global capitalist economic order? The rest of this is an endeavor to answer these questions.

One of the points often raised against neo-liberal capitalism is its affect on workers and consumers. Some believe that under this system, workers become helpless pawns of their capitalist masters, compelled to sell their labor power at sub-optimal costs. The only theoretical alternative they have to evading this exploitation is to become destitute, which is a far greater misery. Multi-national corporations (MNCs), which are the facade of the liberal economy are perceived as coercing citizens to unwillingly participate in the capitalist market system, while also leaving consumers with no choice but to buy their products. In the book titled Telling the Truth about History, author Joyce Appleby traces how MNCs came to be the dominant institutions of our age. Here, the author makes some scathing observations about the nature of capitalist enterprise:

“One of the distinguishing features of a free-enterprise economy is that its coercion is veiled. . . . The fact that people must earn before they can eat is a commonly recognized connection between need and work, but it presents itself as a natural link embedded in the necessity of eating rather than as arising from a particular arrangement for distributing food through market exchanges….” (Joyce as quoted in Levite, 2002, p.32)

As the chief promoter of the capitalist order, America is also criticized for promoting ‘wage-slavery’, whereby human beings are reduced to mechanical automatons as they go through the drudgery of work each day. Here too, the slavery is not so much express as it is veiled. Instead of use of violent force, the threat of employment and attendant destitution serves as the whip. Those who support capitalism, on the other hand, have a different take on the subject: “As for employment, accepting the best (or only) offer available, as unattractive as it might be, is not the equivalent of slavery-a situation in which actual violence, or the threat of it, is used to compel people to labor without pay and without the option to seek other work. That circumstances limit one’s choices does not prove that one has neither the capacity nor the opportunity to choose, since everyone’s choices are limited.” (Levite, 2002, p.32)

In the same vein, it is argued that just as competition brings down real wages, thereby applying the squeeze on the working classes, it can also bring down the price of commodities. It is argued that under a free-maket capitalist system, the pressure exerted by competing manufacturers will bring the prices down to an optimal level, which is beneficial to the consumer. This also makes available more choices and models for consumers. But once again, this situation gives the critics more ammunition, as they complain of a profusion of goods leading to a consumerist culture. Hence, there are pros and cons to America’s grand agenda to bring the whole world under capitalist ideology. But there appears to be more critical views than supportive ones as of now. (Harris, 2002, p.3) So, while American hegemony (derived largely from its military and economic power) might be crucial to the sustenance of the prevailing global economic order, there are more fundamental questions that first need to be answered.

It should be remembered that U.S’ commitment to the capitalist ideology does not supersede its self-interest. In other words, where there is conflict between the execution of this system and its effect on major American corporations, it is always the interests of the latter that is looked after. This is nowhere more clearly visible in the history of NAFTA (North American Free-Trade Agreement). The terminology can be a little deceptive here, for despite claims of being a ‘free-trade’ agreement, it has many protectionist provisions in it. A brief survey of the effects of NAFTA on the general population reveals that American, Mexican and Canadian elites have seen most of its benefits. Despite initial promise of creating more jobs for Americans, under the NAFTA regime many industries were moved to Mexico, due to cheaper labor there. (Ciccantell, 2001, p.57) As to the question of how important is U.S’ continued hegemony (both in the region and in the rest of the world), we should remember that Canada and Mexico were not doing badly under the influence of European and Japanese trade links prior to the initiation of NAFTA. Even if the latter were not to be construed and implemented, there would not have been any remarkable decline in the GDPs of the two countries. The key long term goal for the U.S is not so much the establishment of liberal capitalist economies in the neighborhood as it is to reconstruct its hegemony that was formerly seized by Japan and Europe. To put things in perspective,

“The declining competitiveness of U.S. raw materials supply systems badly damaged U.S. hegemony during the 1970s and l980s. The original U.S. strategy was to create a continental energy market to reduce overseas oil imports, guarantee access to oil and natural gas from Canada and Mexico, and reduce price instability. The evolution into broader agreements reflected the interests of other U.S. industries and the efforts of Canadian and Mexican states and firms to capture benefits from restructuring.” (Ciccantell, 2001, p.57)

In the last two decades, the manufacturing sector in the United States has virtually collapsed, leaving tens of thousands of workers unemployed. Similarly, the effects of NAFTA can be partially attributed to the problem of illegal immigration from Mexico to the United States. A salient question at this point is whether such a steep social/national cost worth bearing for the sake of American hegemony? Moreover, as the history of NAFTA succinctly illustrates, the manifestation of U.S hegemony need not have a purpose beyond that of domination and self-interest. Whether it aids or hinders global capitalist economic order can be incidental to the cause. (Worth & Kuhling, 2004, p.31)

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