United States Foreign Policy: Yesterday, Today, and Tomorrow

The contradictory character of Trump foreign policy has left the peace movement befuddled. Perhaps the task is to include in the project of building a progressive majority ideas about challenging the US as an imperial power.

October 26, 2019 Harry Targ MR Online   reprinted in Portside

Just before the Korean War started in 1950, post-World War key foreign policy advisers to President Truman threw their support behind recommendations made in a classified document, National Security Council Document 68, which recommended a dramatic increase in military spending. NSC-68 also recommended that military spending from that point on should be the number one priority of the national government. When presidents sit down to construct a federal budget, the document recommended, they should first allocate all the money requested by military and corporate elites and lobbyists concerned with military spending. Only after the military advocates receive all they request should government programs address education, health care, roads, transportation, housing and other critical domestic issues. 

When the United States entered the Korean War, in June, 1950, Truman endorsed the recommendations of NSC 68 and used the war on the Korean peninsula as justification. In Andrew Bacevich’s words the United States fully committed to a “permanent war economy.” As political scientist, Hans Morgenthau wrote about that time; there was no turning back from the new war economy and a “Cold War” against the former Soviet Union. Each subsequent president expanded on the war economy and the narrative of a dangerous world that justified trillions of dollars of spending. According to Chalmers Johnson (Blowback, Sorrows of Empire), between 1947 and 1990, the permanent war economy cost the American people close to $9 trillion. Ruth Sivard (World Military Expenditures) presented data to indicate that over 100,000 U.S. military personnel died in wars and military interventions during this period. And, in other countries, nearly 10 million people died directly or indirectly in wars in which the United States was a participant.

Seventy years later, Trump era military budgets have reached record highs, $738 billion dollars in the 2020 fiscal year and a projected $740 billion in 2021. As William Hartung wrote: “The agreement sets the table for two of the highest budgets for the Pentagon and related work on nuclear warheads at the Department of Energy since World War II (in Jake Johnson, ‘Unprecedented, Wasteful, and Obscene’: House Approves $1.48 Trillion Pentagon Budget,” Common Dreams, Friday, July 26, 2019). Including past and present military-related spending the War Resisters League estimates that the 2020 federal budget will consist of 48 percent of all spending, exceeding non-military spending by six percent. Just one weapon, the notorious F-35 latest generation fighter plane is costing, by conservative estimates, $1.5 trillion. (Manufacturing facilities for the plane are found in 433 of 435 Congressional districts).

Rationalizing the Permanent War Economy

A factional dispute among foreign policy elites began to emerge in the 1970s about the best strategies and tactics which should be pursued to maximize the continued global economic, political, and military dominance of the United States in the international system. The dispute was not over whether the United States should continue to pursue empire but rather how to continue to achieve it. The debates were occasioned by the rise of the countries of the Global South, the societally wrenching experience of the Vietnam War, the growth of power and influence of the former Soviet Union, and since its collapse, the emergence of China as a new global economic, political and military power. In addition, the new international economy was becoming more global, that is to say more interconnected. Debates about strategy, tactics, surfaced between the neoliberal globalists who emphasized so-called free trade, financial speculation, and the promotion of a neoliberal agenda that advocated for the privatization of all public activities by states and the development of austerity policies that would shift wealth from the many to the few. The international debt system would be the vehicle for pressuring poor and rich countries to transform their own economic agendas. This faction dominated United States foreign policy making for generations, particularly from Reagan to Clinton to Obama. In political/military terms, they have sought to push back challengers to neoliberal capitalism: Russia, China, populist Latin American countries, and they have advocated advancing US economic interests in Asia and Africa. Many of the institutions of the neoliberal globalists, sometimes called the “deep state” include the CIA, NSA, and other security agencies.

The other faction represented by President Trump and some of his key aides prefer economic nationalism, restricted trade, building walls, avoiding diplomacy, and they are driven by a deeply held white supremacist ideology. They believe, as political scientist Samuel Huntington argued, that we are engaged in a civilizational conflict with Islam, a fourth world war. The neoliberal globalists undermined Ukraine, put more NATO troops in Eastern Europe and want to depose Putin and weaken Russia. This is not on the Trump agenda.

The forbearers of the current generation of Trumpian economic nationalists, came from the so-called “neo-conservatives,” historically organized around the 1990s lobby group, The Project for a New American Century (PNAC) and in the 1950s and 1970s of The Committee for the Present Danger (CPD). Both the neoliberals and the neoconservatives share a common vision of a global political economy controlled by the United States but the former prefer selective use of military force and greater use of economic and diplomatic pressure and covert interventionism while justifying policy on humanitarian grounds, including expanding democracy. Since, they say, the United States represents the hope of democracy in the world, it is as Madeleine Albright called it. “the indispensable nation.” The neoconservatives, in a sense more frank, argued that with the collapse of the former Soviet Union, the United States was the hegemonic power. With that power PNAC argued, the United States should have imposed a world order and state regimes that comported with US interests and ideology. Over the years, the policies of the two factions converged; hence economic penetration, covert interventions, occasional wars, and support for expanding military spending. But, often for reasons of domestic rather than international politics, conflicts between the two factions resurface. That is the case in 2019.

The Ruling Class Agenda for the United States Role in the World: Before the 2016 election

From a Washington Post editorial, May 21, 2016:

HARDLY A day goes by without evidence that the liberal international order of the past seven decades is being eroded.China and Russia are attempting to fashion a world in their own illiberal image…This poses an enormous trial for the next U.S. president. We say trial because no matter who takes the Oval Office, it will demand courage and difficult decisions to save the liberal international order. As a new report from the Center for a New American Security points out, this order is worth saving, and it is worth reminding ourselves why: It generated unprecedented global prosperity, lifting billions of people out of poverty; democratic government, once rare, spread to more than 100 nations; and for seven decades there has been no cataclysmic war among the great powers. No wonder U.S. engagement with the world enjoyed a bipartisan consensus.

The Washington  Post editorial quoted above clearly articulates the dominant view envisioned by US foreign policy elites for the years ahead: about global political economy, militarism, and ideology. It in effect constitutes a synthesis of the “neocon” and the “liberal interventionist” wings of the ruling class. First, it is inspired by the necessity of 21st century capitalism to defend neoliberal globalization: government for the rich, austerity for the many, and deregulation of trade, investment, and speculation. (Neoliberal globalization, the latest phase in the development of international capitalism is described in an important recent book, Jerry Harris, Global Capitalism and the Crisis of Democracy, Clarity Press, 2016).

Second, the Post vision of a New World Order is built upon a reconstituted United States military and economic hegemony that has been a central feature of policymaking at least since the end of World War II even though time after time it has suffered setbacks: from defeat in Vietnam, to radical decolonization across the Global South, and to the rise of competing poles of power in Asia, the Middle East, Latin America, and even Europe. In addition, despite recent setbacks, grassroots mass mobilizations against neoliberal globalization and austerity policies have risen everywhere, even in the United States. The Washington Post speaks to efforts to reassemble the same constellation of political forces, military resources, and concentrated wealth, that, if anything, is greater than at any time since the establishment of the US “permanent war economy” after the last World War.

Historian, Michael Stanley, in an essay entitled “‘We are Not Denmark’: Hillary Clinton and Liberal American Exceptionalism,” (Common Dreams, February 26, 2016) points to the ideological glue that is used by foreign policy elites, liberal and conservative, to justify the pursuit of neoliberal globalization and militarism; that is the reintroduction of the old idea of American Exceptionalism, which in various forms has been used by elites since the foundation of the Republic.

The modern version, borne in the context of continental and global expansion, serves to justify an imperial US role in the world. Along with posturing that the United States is somehow special and has much to offer the world, American Exceptionalism presumes the world has little to offer the United States. The only difference between Democrats and Republicans on foreign policy is whether the exceptionalism still exists and must be maintained or has dissipated requiring the need to “make America great again.” Leaders of both parties, however, support the national security state, high military expenditures, and a global presence—military, economic, political, and cultural.

“Innovation and National Security: Keeping Our Edge:” Council on Foreign Relations 2019

The influential Council on Foreign Relations issued a Task Force report in September, 2019, on national security. Task force members included representatives of prestigious universities, large corporations, and staff from the CFR. In the forward, the report pointed out that the United States had led the world in technological innovation and development since the end of World War Two. But, it said, “…the United States risks falling behind its competitors, principally China.” It goes on to propose that the United States “…needs to respond urgently and comprehensively over the next five years and put forward a national security innovation strategy to ensure it is the predominant power in a range of emerging technologies such as AI and data science, advanced battery storage, advanced semiconductor technologies, genomics and synthetic biology, fifth-generation cellular networks (5G), quantum information systems, and robotics.” The report calls for increases in federal support for basic research and development. This would include investments in higher education, selective immigration of skilled scientists, and reform of military institutions to more effectively incorporate new technologies into military capabilities.

Major findings of the Task Force included the following:

        . Technological innovation leads to economic and military advantage.

        . US leadership in science and innovation is at risk.

        . US federal funding for research and development has stagnated for years.

        . US leadership in STEM education is declining

        . The Defense Department and the intelligence community risk falling behind “potential adversaries” if they do not employ more technologies from the private sector.

        . The defense community “faces deteriorating manufacturing capabilities,” and “insecure” supply chains, while depending on other nations for technologies.

        . There is a ”cultural divide” surfacing between technology and policymaking communities weakening connections between the defense and intelligence communities and the private sector.

And, as to our major competitor China:

       . China is investing significantly in new technologies and will be the world’s biggest investor by 2030.

        .China is closing “the technological gap” with the United States, and it and other countries are approaching the US as to artificial intelligence (AI).

        .China is “exploiting” the openness of the US to secure valuable innovation by violating intellectual property rights.

While praising President Trump for some of his efforts the report says that increased budgets have been too “incremental and narrow in scale.” The Administration has inadequately moved to develop new communications technologies, and to respond to the challenge of Huawei’s global expansion.

Therefore the United States must:

• restore federal funding for research and development.
  

• attract and educate a science and technology workforce.
  

• support technology adoption in the defense sector.
  

• bolster and scale technology alliances and ecosystems.
  

In short, “during the early years of the Cold War, confronted by serious technological and military competition from the Soviet Union, the United States invested heavily in its scientific base. Those investments ensured U.S. technological leadership for fity years. Faced with the rise of China and a new wave of disruptive technological innovation, the country needs a similar vision and an agenda for realizing it.” (9)

Where Does the Foreign Policy of Donald Trump Fit?

Taking “the long view” of United States foreign policy, it is clear that from NSC-68; to the response to the Soviet challenges in space such as during the Sputnik era; to global wars in Korea, Vietnam, Afghanistan, and Iraq; to covert interventions in the Middle East, Latin America, Asia, and Africa, the United States has pursued global hegemony (and is suggested in the CFR statement). It is also clear that the pursuit of empire has of necessity involved the creation of a permanent war economy, an economy that overcomes economic stagnation by the infusion of enormous military expenditures.

It is also clear that justification for empire and military spending has necessitated the construction of an enemy, first the Soviet Union and international communism; then terrorism; and now China. The obverse of a demonic enemy requires a conception of self to justify the imperial project. That self historically has been various iterations of American exceptionalism, the indispensable nation, US humanitarianism, and implicitly or explicitly the superiority of the white race and western civilization.

In this light, while specific policies vary, the trajectory of US foreign policy in the twenty-first century is a continuation of the policies and programs that were institutionalized in the twentieth century. Three seem primary. First, military spending, particularly in new technologies continues unabated. And the CFR report raises the danger of the United States “falling behind,” the same metaphor that was used by the writers of the NSC-68 document, or the Gaither and Rockefeller Reports composed in the late 1950s to challenge President Eisenhower’s worry about a military/industrial complex, the response to Sputnik, Secretary of Defense McNamara’s transformation of the Pentagon to scientific management in the 1960s, or President Reagan’s huge increase of armaments in the 1980s to overcome the “window of vulnerability.”

Second, the United States continues to engage in policies recently referred to as “hybrid wars.” The concept of hybrid wars suggests that while traditional warfare between nations has declined, warfare within countries has increased. Internal wars, the hybrid wars theorists suggest, are encouraged and supported by covert interventions, employing private armies, spies, and other operatives financed by outside nations like the United States. Also the hybrid wars concept also refers to the use of economic warfare, embargoes and blockades, to bring down adversarial states and movements. The blockades of Cuba, Venezuela, and Iran are examples. So the hybrid war concept suggests the carrying out of wars by other, less visible, means.

Third, much of the discourse on the US role in the world replicates the bipolar, super power narrative of the Cold War. Only now the enemy is China. As Alfred McCoy has pointed out (In the Shadows of the American Empire, 2017), the United States in the twenty first century sees its economic hegemony being undermined by Chinese economic development and global reach. To challenge this, McCoy argues, the United States has taken on a project to recreate its military hegemony: AI, a space force, biometrics, new high tech aircraft etc. If the US cannot maintain its hegemony economically, it will have to do so militarily. This position is the centerpiece of the recent CFR Task Force Report.

Recognizing these continuities in United States foreign policy, commentators appropriately recognize the idiosyncrasies of foreign policy in the Trump era. He has reached out to North Korea and Russia (which has had the potential of reducing tensions in Asia and Central Europe). He has rhetorically claimed that the United States must withdraw military forces from trouble spots around the world, including the Middle East. He has declared that the United States cannot be “the policeman of the world,” a declaration made by former President Nixon as he escalated bombing of Vietnam and initiated plans to overthrow the Allende regime in Chile. For some of these measures, Trump has been inappropriately criticized by Democrats and others. Tension-reduction on the Korean Peninsula, for example, should have been encouraged.

However, while Trump moves in one direction he almost immediately undermines the policies he has ordered. His announced withdrawal from Syria, while in the abstract a sign of a more realistic assessment of US military presence in the Middle East was coupled with a direct or implied invitation to the Turkish military to invade Northeast Syria to defeat the Kurds. Also, at the same time he was withdrawing troops from Syria, the Defense Department announced the United States was sending support troops to Saudi Arabia. He withdrew from the accord with Iran on nuclear weapons and the Paris Climate Change agreement. Time after time, one foreign policy decision is contradicted by another. These contradictions occur over and over with allies as well as traditional adversaries. Sometimes policies seem to be made with little historical awareness and without sufficient consultation with professional diplomats. (One is reminded of the old Nixon idea, the so-called “madman theory.” Nixon allegedly wanted to appear mad so that adversaries would be deterred from acting in ways contrary to US interests out of fear of random responses).

The contradictory character of Trump foreign policy has left the peace movement befuddled. How does it respond to Trump’s occasional acts that go against the traditional imperial grain at the same time that he acts impetuously increasing the dangers of war? How does the peace movement participate in the construction of a progressive majority that justifiably seeks to overturn the Trump era and all that it stands for: climate disaster, growing economic inequality, racism, sexism, homophobia, and hybrid war? Perhaps the task for the peace movement is to include in the project of building a progressive majority ideas about challenging the US as an imperial power, proclaiming that a progressive agenda requires the dismantling of the permanent war economy. These are truly troubled times, with to a substantial degree the survival of humanity and nature at stake. The war system is a significant part of what the struggle is about.

Harry Targ is  Professor Emeritus Political Science, Purdue University. He has written books and articles on US foreign policy, international political economy, and issues of labor and class struggle. He blogs at Diary of a Heartland Radical.

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LOOKING AT THE INTERNATIONAL SYSTEM IN 2020

Harry Targ

I want to make four points about the international system today:

First, we are witnessing a qualitative shift in the distribution of global power (economic, military, social, and cultural). The hegemon of the last 150 years, the United States, is experiencing a decline in relative power. Among the new rising powers are collectives from the Global South--BRICS, the Non-Aligned Movement, what remains of the Pink Tide--and most importantly China. Chinese economic development since 1979 has been enormous. 850 million people have risen from poverty. Chinese economic development, scientific advances, global investments and participation in the movements of transnational capital have been significant. As Alfred McCoy (In the Shadows of the American Century:  The Rise and Decline of US Global Power, Haymarket, 2017) has pointed out, the United States, a declining empire, is pursuing a desperate path to retain its hegemony through the only means it has at its disposal, new military advances: drones, the space force, new generations of aircraft, new rounds of nuclear weapons, and the development of a cyber-war capability. At the policy and ideological level this has meant a recurring proclamation by Trump spokespersons, and leaders of the Democratic Party, that we are at war with China. This new Cold War, given the current environmental and public health dangers and new military technologies, represents an even bigger threat to humanity than the first Cold War.

Second, since the declining empire sees itself in competition all across the globe and massive resistance to US hegemony is rising everywhere, most notably in the Western Hemisphere in recent years, the United States has upgraded its hybrid war strategies-adding to covert interventions by supplementing them with brutal economic sanctions. Countries like Venezuela, Cuba, and Iran are being systematically starved in the  hope that starvation will lead to internal revolutions. (The US has achieved some successes in places like Bolivia, Ecuador, and Brazil) but it has so far failed in Cuba and Venezuela and countries like Argentina are moving back to the center/left).  In addition to economic sanctions against declared enemies, the United States remains allied with regimes that brutalize their own people and make war on others. https://heartlandradical.blogspot.com/2020/01/hybrid-warswhat-is-new-and-what-is-not.html

Third, the US project to maintain global hegemony is linked to continued and escalating military expenditures. The official DOD projected budget is at about $740 billion dollars. There are military projects still in about 430 Congressional Districts, universities are increasingly currying DOD research dollars to overcome lost revenues, and numerous corporations still rely on military contracts. Whether we still call it the “military (university, congressional)industrial complex” or Andrew Bacevich’s “permanent war economy,” military spending has thoroughly permeated US society. While they are demonstrably wrong political elites believe that escalating military spending will serve both to build a capacity to resist imperial decline and to overcome the US stagnating economy. https://www.nationalpriorities.org/analysis/2020/militarized-budget-2020/

https://heartlandradical.blogspot.com/2009/01/permanent-war-economy.html

Fourth, according to the World Bank almost one half of the world’s population lives in poverty (under $2.50 per day).While race is a critical force in facilitating poverty by dividing masses of people, the class divide between the tiny minority capitalist class who rule the world in juxtaposition to the overwhelming majority of humankind remains a critical fact in understanding what happens within societies and between them. In other words, undergirding the nation-state system, rising and declining empires, and a vast incremental growth in militaries is a global class struggle. The immiseration of the global masses of humanity is propagated by institutions, social practices, and ideologies that perpetuate exploitation, racism, patriarchy, ethno-nationalism, and homophobia. In this moment, sectors of the world’s marginalized have been mobilized by appeals to the rightwing agendas promoted by ruling classes. In the end, the struggles for economic justice, environmental justice, the end to racism, patriarchy, and ethno-nationalism must be understood as significant byproducts of a worldwide capitalist system that is in disarray. https://heartlandradical.blogspot.com/2020/04/understanding-venezuela-global-north.html

In short, in the midst of pandemic, increasing hostilities between nations, enormous military expenditures, escalating racial tensions, the tasks of the peace movement remain daunting. But given the rising of people all around the world, however, hope is justified. Our tasks should include:

--Say no to Cold War. Resolve disputes through diplomacy not through threats of war.

--End brutal economic sanctions against all countries and people.

--Stop supporting regimes that brutalize their people and make war on others.

--Radically cut military spending.

--Articulate the connections between imperialism, capitalism, racism, patriarchy, ethno-nationalism, homophobia, and environmental destruction. Unite with others to challenge them all.

Conference on 21st Century Imperialism Revisits Theory and Practice

For a thorough discussion of 21^st century imperialism and global struggles against it, attend the following conference:

http://ouleft.org/wp-content/uploads/imperialism-conference.pdf  (Correction: The conference opens July 18, 2020, noon Eastern time)

If you missed that amazing webinar, you can find the recordings here:

http://ouleft.org/wp-content/uploads/21st-CenturyImperialism-session1.mp4  

http://ouleft.org/wp-content/uploads/21st-CenturyImperialism-session2.mp4

http://ouleft.org/wp-content/uploads/21st-CenturyImperialism-session3.mp4

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An earlier commentary:

THE REALITIES OF IMPERIALISM AND DEPENDENCY: STILL RELEVANT TODAY

Harry Targ

Imperialism

Students of imperialism appropriately refer to the polemical but theoretically relevant essay authored by Marx and Engels, The Communist Manifesto. In this essay, the authors argue that capitalism as a mode of production is driven to traverse the globe, for investment opportunities, for cheap labor, for natural resources, for land. One can argue that Marx and Engels were among the first to theorize about globalization.

Lenin advanced the theory of imperialism in his famous essay Imperialism, the Highest Stage of Capitalism. In addition to the inspiration from Marx and Engels, he drew from the sophisticated writings of Rudolf Hilferding and John Hobson. For him, writing in the midst of the bloodshed of World War I and revolutionary ferment in Russia, there was a need to understand the connections between the expansionist needs of capitalism, competition among capitalist states, and imperialist war. With that motivation, Lenin postulated five key features of what he called imperialism, the highest stage of capitalism. This new stage of capitalist development in the twentieth century included:

1) The concentration of production and capital developed to such a high stage that it created monopolies, which play a decisive role in economic life.

2) The merging of bank capital with industrial capital, and the creation, on the basis of this, "finance capital," or a "financial oligarchy."

3) The export of capital, which has become extremely important, as distinguished from the export of commodities.

4) The formation of international capitalist monopolies, which share the world among themselves.

5) The territorial division of the whole world among the greatest capitalist powers is completed.

Lenin’s descriptions of these five features of twentieth century imperialism were prescient as to their long-term vision. Imperialism was not just a way in which powerful states acted in the world but a global stage of capitalism. The political, military, and economic dimensions of the world were inextricably connected in a profoundly new way, different from prior periods of human history.

In this stage national economies and the global economy were dominated by monopolies. That is, small numbers of banks and corporations controlled the majority of the wealth and productive capacity of the world. (The Brandt Commission in the early 1980s estimated, for example, that 200 corporations and banks controlled twenty-five percent of the world’s wealth). Monopolization included a shrinking number of economic actors that controlled larger and larger shares of each economic sector (steel, auto, fossil fuels, for example) and fewer and fewer actors controlling more of the totality of all these sectors.

Lenin added that twentieth century finance capital assumed a primary role in the global economy compared to prior centuries when banks were merely the bookkeepers of the capitalist system. Corporate capital and financial capital had become indistinguishable. This, in our own day, became known as "financialization.”

The development of finance capital, Lenin argued, led to the export of capital, the promotion of investments, the enticement of a debt system, and the expanding control of all financial transactions by the few hundred global banks. Capitalism was no longer just about expropriating labor and natural resources, processing these into products for sale on a world market but it now was about financial speculation, the flow of currencies as much as the flow of products of labor. It was in this stage of capitalism that the financial system was used as a lever to transform all of the world’s economies, particularly by increasing profits through imposing policies of austerity. Austerity included cutting government programs, deregulating economies so banks and corporations could act more freely, and, further, instituting public policies to maximize the privatization of virtually every public institution. These policies were referred to as “neoliberal.”

And lastly, Lenin observed, world politics was shaped by economic and political collusion of international monopolies to collaborate, routinize, and regulate economic competition. But, as he saw in 1916, that world of routinized global finance capital had broken down, states representing their own financial conglomerates engaged in massive violence, in World War, to maintain their share of territory and wealth. So that imperialism, the highest stage of capitalism, always had embedded within it, the seeds of ever-expanding war between states driven by their own monopolies.

Dependency

Theorists and revolutionaries from the Global South found Lenin’s theory of imperialism to be a compelling explanation of the historical development of capitalism as a world system and its connections to war, violence, colonialism, and neo-colonialism. However, they argued that Lenin’s narrative was incomplete in its description of imperialism’s impact on the countries and peoples of the Global South. Several revolutionary writers and activists from the Global South added a “bottom up” narrative about imperialism. Theorists such as Andre Gunter Frank, Samir Amin, Frantz Fanon, Walter Rodney, Fernando Cardoso, Theotonio Dos Santos, and Jose Carlos Mariategui added an understanding of “dependency” to the discussion of imperialism.

Dependency theorists suggested that the imperialist stage of capitalism was not enforced in the Global South only at the point of a gun. Dependency required the institutionalization of class structures in the Global South. Ruling classes in the Global South, local owners of factories, fields, and natural resources, and their armies, collaborated with the ruling classes of the global centers of power in the Global North. In fact, the imperial system required collaboration between ruling classes in the global centers with ruling classes in the periphery of the international system. And ultimately, imperialism, the highest stage of capitalism, was a political and economic system in which the ruling classes in the centers of power worked in collaboration with the ruling classes in the Global South to exploit and repress the vast majority of human beings in the world.

Dependency theory, therefore, added insights to the Leninist analysis. First, the imperial system required collaboration from the rich and powerful classes in the centers of global power, the Global North, developing and recruiting the rich and powerful classes in the countries of the Global South. It also meant that there was a need to understand that the imperial system required smooth flows of profits from the Global South to the Global North. Therefore, there was a mutuality of interests among ruling classes everywhere. The addition of dependency theory also argued that people in the periphery, workers and peasants in poor countries, had objective interests not only opposed to the imperial countries from the north but to the interests of their own national ruling classes. And, if this imperial system exploited workers in the centers of power and also in the peripheral areas of the world, then there ultimately was a commonality of interests in the poor, oppressed, and exploited all across the face of the globe.

Relevance for the Twenty-First Century

Although the world of the twenty-first century is different from that of the twentieth century, commonalities exist. These include the expansion of finance capital, rising resistance to it everywhere, and conflicts in the Global North and the Global South between powerful ruling classes and masses of people seeking democracy and economic well-being. In the recent past, the resurgence of protest by workers, students, farmers and peasants, the popular classes, has been reflected in mass movements against neoliberal globalization and international financial institutions. These include Arab Spring, the Fight for Fifteen, and a number of campaigns that challenge racism, sexism, joblessness, the destruction of the environment, land grabs, and removal of indigenous peoples from their land.

In Latin America, movements emerged that have been labeled “the Pink Tide” or the “Bolivarian Revolution.” These are movements driven by struggles between the Global North and the Global South and class struggles within countries of the Global South. Workers and peasants from the Global South have been motivated to create, albeit within powerful historical constraints, alternative economic and political institutions in their own countries. The awakening of the masses of people in the Global South constitute one of the two main threats to Imperialism, the Highest Stage of Capitalism. The first threat is the movements that are struggling to break the link between their own ruling classes and those of the North. That includes working with leaders who are standing up against the imperial system (leaders such as in Venezuela, Bolivia, and, of course Cuba). The other threat to Imperialism, the Highest Stage of Capitalism, is, as Lenin observed in 1916, war between imperial powers.

In sum, as activists mobilize to oppose US war against the peoples of Latin America, the Middle East, Africa, and Asia, it is critical to be aware of the imperial system of finance capital, class systems in the Global North and Global South, and to realize that solidarity involves understanding the common material interests of popular classes in both the Global North and South. In 2019, solidarity includes opposing United States militarism in Latin America, economic blockades against peoples seeking their own liberation, and covert operations to support current and former ruling classes in their countries that collaborate with imperialism.

Concretely, this means supporting the Bolivarian Revolution in Venezuela and throughout the Western Hemisphere, protests in Haiti, and, of course, the Cuban Revolution.

NEW THINKING, POLITICAL ECONOMY, AND ECONOMIC POLICY

Harry Targ

The University Community as a Microcosm of the National Economy

In a recent article Shawn Hubler surveys the impacts of the Covid 19 pandemic on the political economy of campus towns (The New York Times June 28, 2020). During the spring shutdowns of college campuses millions of dollars were lost in revenues as students departed. Now with many universities and colleges contemplating reopening for the fall term, resistance has emerged from faculty, staff, and students because of the continuing threat of the spread of the virus. Some campuses have followed the lead of Purdue University in ordering equipment, trying to figure out on-campus teaching with social distancing, and preparing pledges students and faculty will be required to make to honor a health code.

Although the plans for the fall may sometimes sound bizarre, the impacts of not reopening universities would be drastic for what one might call “campus town political economies.” Whole university communities rely on dollars spent by thousands of students. Tuition makes up a larger share of university budgets today compared with twenty years ago as state funding for higher education has declined. Athletic programs attract alumni contributions and the sale of sports paraphernalia. To the host communities, losing revenue from student populations may be coupled with declining census figures because students will be elsewhere. With declining student residents, federal and state funding for community life could be reduced significantly. And, in addition, many universities are the largest employers in cities and counties so that a shutdown would constitute a massive rise in unemployment, in many instances larger than those coming from the plant closings of the 1980s.

Political Economy and the ideology of Balanced Budgets

Today the microeconomics of campus political economies and the macroeconomics of the nation in general face a horrific dilemma. On the one hand, recent data indicates that the pandemic may be spreading, not receding. And those states that either refused to honor the warnings of public health officials or had begun a phased reopening of their economies prematurely have seen dramatic spikes in the pandemic. Some states, such as Texas, Florida, and Arizona, with pandemic skeptics in leadership roles, are seeing enormous increases in viral infestations and many more dying from the disease. A high percentage of viral victims are young people, those presumably who have congregated in beaches and bars and who may be returning to college campuses. And, unfortunately, even other states which had honored the warnings, imposed rules to limit contact, and have only reopened their economies more carefully are also experiencing dangerous increases in pandemic victims.

On the other hand, while the victims of the pandemic increase, leaders from the Trump administration and some state governors and legislators challenge the efforts to limit social and economic interaction. Some are advocating a return to pre-viral economic and social interaction. The crassest spokespersons declare that victims of the disease are unfortunate but necessary resultants of the need to return to usual economic life. More frequently politicians, of both political parties, argue that the United States must return to normal economic activity because businesses and jobs depend upon it. As unfortunate as the pandemic is, they suggest, economic realities come first.

And for many of these politicians, the modest and ineffectual first Congressional bailout of business and workers cannot continue. Why? Because the federal government, and state governments with balanced budget rules, cannot afford to incur debt. In the face of the economic crisis brought on by the impacts of the virus on the economy, Republican Senators have argued that any future bailout would reward the financial mismanagement of blue states (such as the often-cited state of Illinois). But more generally, critics of   government spending in the face of the multiple crises of the economy and public health claim that spending during these crises will lead to debt that will damage the economy by creating inflation now and a deeply indebted national economy in the future.

Even Democrats worry about what Stephanie Kelton calls, “The Deficit Myth.” During the Democratic presidential race, most candidates proclaimed their opposition to deficit spending. They would endorse broadening medical coverage for example but castigate Medicare for All advocacy by asking: “How do we pay for it?” (Of course, this question never gets raised when Presidents launch wars).

And the population at large has been raised from the cradle to believe that debt has very precise limits. We, as individuals, can charge items we purchase but we need to be concerned about the accumulation of too much charge card debt. And, the theory suggests, the same principle applies to all governments.

One illustration of this view was expressed by Mitch Daniels, President of Purdue University, and former Indiana governor. He called the national debt, the “new Red Menace.” In a National Review article (Jay Nordlinger, December 5, 2019) Daniels dismissed the word, “entitlements,” suggesting that Social Security, Medicare, Medicaid, and veterans' benefits are the “drivers of debt.” Debt, he suggested, led to the “failed regimes of history.” Daniels’ comments are representative of a perspective that is broadly accepted by Congress and both political parties. Even while the Congress has fashioned an emergency bailout during the health and economic crisis, the danger of burgeoning debt shapes the discourse and mindset of politicians.

It is Time to Examine Alternatives to The Deficit Myth

During the last several years, newer generations of economists have begun to question the proposition that the federal debt constitutes a fundamental threat to the survival of the US economy and polity. For example, Stephanie Kelton, a Professor of Economics at the University of Stonybrook, builds on the emerging tradition of “modern monetary theory” (MMT). (The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy, Public Affairs, 2020).

Professor Kelton discusses four key elements of MMT. First, using the household budget as a metaphor for governmental budgeting is inappropriate. Family debt can be incurred but over time must be repaid. In the twenty-first century many households and individuals can charge goods and services they purchase but the expenditures have to be paid for in a relatively short order. Politicians of both parties then argue by analogy that government expenditures have to be repaid. Therefore, short-term deficits should be avoided or repaid in subsequent national budgets. Of course, these strictures are not adhered to even by the most fiscally conservative politicians. They give blank checks to the military, and they support pork barrel legislation advantageous to their favorite lobbyists and districts. And, of course, these same politicians who oppose deficit spending are the first to endorse massive tax cuts for the rich.

Second, Professor Kelton argues, however, that while some spending might be irresponsible, sovereign governments are not analogous to household or individual spenders. This raises the issue of sovereignty. Max Weber pointed out over one hundred years ago that states hold a monopoly on the legitimate use of violence. Modern Monetary Theorists argue that nation-states also have a monopoly on the issuing of money. States can print as much money as is needed by the economy. Contrary to individuals and families, who are not sovereign, governments do not have to repay themselves.

Third, therefore, sovereign governments can use their capacity to print money to support projects that promote the general health and welfare of the society. They do not have to accept the myth that the debt will somehow punish future generations, create chaos, and destroy the normal course of social and political interactions.

Fourth, the deficit hawks warn that the printing of money could have negative consequences, the most often discussed is uncontrollable inflation. That is, with the printing of more and more money, the price of goods and services could skyrocket. Professor Kelton and others have referred to historical examples of unbridled inflation that destabilized economies and societies, what President Daniels called “the failed regimes of history.” Although Kelton argues that inflationary spirals can occur, and have historically occurred, it has been because too much money chased too few goods and services. In other words, if citizens/consumers acquire more money while the production of goods and services stagnate, the price of those commodities can rise to dangerous levels. What this suggests to MMT is that the printing of money should be proportional to societal needs, the availability of goods and services, and the employment of workers.

In sum, MMT suggests that the printing of money can be calibrated to the fulfillment of short and long-term needs.  Money could and should be provided for health care for all, support for education (K through university), structural renovation, transitioning away from fossil fuels, the creation of jobs for all and universal basic income programs, and support for a Green New Deal. These programs were vitally needed before the pandemic and are even more essential since its onset. Of course, cutting military spending, pork-barrel legislation, and creating a progressive tax system helps. But the human needs articulated by progressives should be defended. And doing so requires a realistic assessment of the causes and consequences of national debt. History has shown that the idea of “the debt” has been an ideological tool used to challenge the creation of a just society. 

Returning to the campus town political economy example during the pandemic, funds should be made available to keep universities alive, provide for the continued jobs and incomes of campus workers, and for support for small businesses in campus towns. Providing for the economic necessities in local settings could be replicated in the national economy as well; both to maintain the economic life of the population and to enhance social and economic justice. And, of course, programs to enhance social and economic justice were needed even before the pandemic occurred.

Posted in Diary of a Heartland Radical, July 2, 2020 and The Rag Blog in July 8, 2020.