Super Imperialism. Michael Hudson
of world payments, competitive devaluations, tariff wars and international autarchy that characterized the 1930s. This state of affairs was less an explicit attempt at imperialism than an inept result of narrowly legalistic and bureaucratic intransigence regarding the war debts, coupled with a parochial domestic tariff policy. It was just the opposite of a policy designed to establish the United States as the world’s economic center based on a reciprocity of payments between creditor and periphery, a complementarity of imports and exports, production and payments. A viable U.S.-centered world economic system would have required some means of enabling Europe to repay its war debts. What occurred instead was isolationism at home, prompting drives for national self-sufficiency abroad.
One can find cases throughout history in which seemingly logical paths of least resistance have not been followed. In most such cases the explanation is to be found in leadership looking backward rather than forward, or to narrow rather than broad economic and social interests. Although it certainly was logical in the 1920s for private U.S. investors to extend their power throughout the world, the financial policies pursued by the U.S. Government (and to a lesser extent by other governments) made this impossible. The Government narrowly construed America’s national self-interest in terms of the Treasury’s balance sheet, putting this above the cosmopolitan tendencies of private financial capital. This forced country after country to withdraw from the internationalism of the gold exchange standard and to abandon policies of currency stability and free trade.
The burden of Britain’s war debts impelled it to convene the Ottawa Conference in 1932 to establish a system of Commonwealth tariff preferences. Germany turned its eyes inward to prepare for a war to seize by force the materials which it could not buy under existing world conditions. Japan, France and other countries were similarly stymied. Depression spread as the world financial crisis was internalized in one country after another. As world trade and payments broke down utterly, the national socialist governments of Italy and Germany became increasingly aggressive. Governments throughout the world responded to falling incomes and employment by vastly extending their role in economic affairs, prompting Keynes to proclaim the end of laissez-faire.
The Great Depression extinguished private capital throughout the world, just as intergovernmental capital had been extinguished by the shortsightedness of governments seeking to derive maximum economic benefit from their financial claims on other governments. This poses the question of why such debts were allowed to become so problematic in the first place.
Britain’s agreement to begin paying its war debts to the United States no doubt was inspired largely by its world creditor ideology of maintaining the “sanctity of debt.” Yet this policy no longer was appropriate in a situation where Britain, along with continental Europe, had become an international debtor rather than a creditor. There was little idea of adjusting the traditional ideology concerning the sanctity of debts to their realistic means of payment.
The Great Depression and World War II taught governments the folly of this attitude, although they were to lose it again with regard to Third World and Eastern Bloc debts within a few decades of the close of World War II.
American plans for a postwar “free trade imperialism”
Since 1945, U.S. foreign policy has sought to reverse foreign state control over economic policies generally, and attempts at economic self-reliance and independence from the United States in particular.
As U.S. diplomats and economists theorized during 1941–45 over the nation’s imminent role as dominant power in the postwar world, they recognized that it would emerge from the war by far the strongest national economy, but would have to be a major exporter in order to maintain full employment during the transition back to peacetime life. This transition was expected to require about five years, 1946–50. Foreign markets would have to replace the War Department as a source of demand for the products of American industry and agriculture. This in turn required that foreign countries be able to earn or borrow dollars to pay the United States for these exports.
This time around it was clear that the United States could not impose war debts on its Allies similar to those that had followed World War I. For one thing, the Allies had been stripped of their marketable international assets. If they were obliged to pay war debts to the United States, they would have no remaining funds to buy American exports. The U.S. Government therefore would have to provide the world with dollars, by government loans, private investment or a combination of both. In exchange, it would be entitled to name the terms on which it would provide these dollars. The question was, what terms would U.S. economic diplomats stipulate?
In January 1944 the annual meeting of the American Economic Association was dominated by proposals for postwar U.S. economic policy. “For the first time in many decades,” wrote J. B. Condliffe of the Carnegie Endowment for Peace, “– indeed for the first time since the very earliest years of the infant republic – attention is now being paid by soldiers and political scientists, but little as yet by economists, to the power position of the United States in the modern world. This attention is part of the reexamination of national policy made necessary by the fact that this war has shown the folly of complacent and self-centered isolationist theorist and attitudes.”1 Such an examination should not be thought of as Machiavellian or evil, Condliffe urged, but as a necessity if U.S. ideals were to carry real force behind them.
A central theme of the meeting was the relative roles that government and business would play in shaping the postwar world. In a symposium of former presidents of the American Economic Association on “What Should be the Relative Spheres of Private Business and Government in our Postwar American Economy?” most respondents held that the distinction between private business and government policy was becoming fuzzy, and that some degree of planning was needed to keep the economy working at relatively full employment.
This did not necessarily imply a nationalist economic policy, although that seemed to be an implicit long-term tendency. Speaking on “The Present Position of Economics,” Arthur Salz observed that “government and economics have drawn close together and live in a real and, to a large extent, in a personal union. While formerly the economist made his reputation by constructive[ly] criticizing governments, he is now hand and glove with them and has become the friend and patron of the government machinery whose severest critic he once was.”2
The problem of government/private sector relations was put in most rigorous form by Jacob Viner, the laissez-faire theoretician from the University of Chicago. His speech on “International Relations between State-Controlled National Economies” challenged the idea that private enterprise “is normally unpatriotic, while government is automatically patriotic.” National economic planning was inherently belligerent, he warned, and the profit motive would be the best guarantee against the waste and destruction of international conflict. Corporations could not go to war, but governments found in war the ultimate expression of their drives for power and prestige. Viner concluded hopefully: “The pattern of international economic relations will be much less influenced by the operation of national power and national prestige considerations in a world of free-enterprise economies than in a world of state-operated national economies.”3
This was just the opposite of socialist theory, which assumed that national governments were inherently peaceful, except when goaded by powerful business cartels. Hobson had insisted that “The apparent oppositions of interests between nations . . . are not oppositions between the people conceived as a whole; they are expositions of class interests within the nation. The interests of America and Great Britain and France and Germany are common,”4 although those of their individual manufacturers and exporters were not.
The war debts and reparations after World War I had brought into question this generality. According to Viner’s laissez-faire view, the tendency for conflict among nations – and hence the chances of war – would be greater rather than smaller in a world of state-controlled economies. Looking back on the experience of the 1930s in particular, he found that “The substitution of state control for private enterprise in the field of international economic relations would, with a certain degree of inevitability, have a series of undesirable consequences, to wit: the injection of a political element into all major international economic transactions; the conversion of international trade from a predominantly