Military or Market-Driven Empire Building: 1950-2008

02.05.2008

Military or Market-Driven Empire Building: 1950-2008

By Prof. James Petras

Source: Global Research, April 29, 2008 *

Introduction

From the middle of the 19^th century but especially after the Second World War, two models of empire building competed on a world scale: One predominantly based on military conquests, involving direct invasions, proxy invading armies and subsidized separatist military forces; and the other predominantly based on large-scale, long-term economic penetration via a combination of investments, loans, credits and trade in which ‘market’ power and the superiority (greater productivity) in the means of production led to the construction of a virtual empire.

Throughout the 19^th to the middle of the 20^th centuries, European and US empire building resorted to the military route, especially in Asia, Africa, Central America, North America and the Caribbean. By far the British and US colonized the greatest territories through military force, followed by the introduction of state directed mercantile systems, the Monroe doctrine for the US and imperial preference for the British. South America following independence became the site of the growth of market powered empire building. British and later US capital successfully captured the commanding heights of the economies, especially the agro-mining and petroleum export sectors, trade, finance and in some cases attached customs and treasury to cover debt collection. As late developing capitalist countries and emerging imperial powers (EIP), the US, Germany and Japan faced the hostility of the established European empires and limited access to strategic markets and raw materials. The EIP adopted several strategies in challenging the existing empires. These included demands for free trade with their colonies and the end of imperial (colonial) privilege/ preference. The EIP established parallel colonial settlements and concessions, bordering the old empires. They fomented and financed ‘anti-colonial’ revolts to replace existing colonial collaborators and pursued economic penetration via superior production. They disseminated political propaganda promoting ‘democratic’ values within a market driven empire. World War Two marked the decline of the European military based colonial empire and the US transition from a predominantly market to military-based empire. This ‘transition’ was facilitated by earlier military occupations in the Philippines and the Caribbean and a multitude of invasions in Central America.

Nationalist liberation movements, based on liberal, nationalist and socialist leaders and programs, drawing on returning soldiers, weakened colonial control and post-war European anti-fascist and anti-war sentiments, led to the dismantling of their military-based empires. Internal reconstruction and domestic working class radicalism influenced the agenda for most European colonial powers. The attempts by the European powers to re-impose their colonial empires failed despite bloody wars in Indo-China, Kenya, Algeria, Malaya and elsewhere. The French, English and Israeli invasion and occupation of the Egyptian Suez (1956) marked the last major attempt at military-driven imperialism.

The US opposition to this effort at European re-colonization marked the supremacy of US-centered empire building and, paradoxically, the beginning of US military-driven empire building. The European powers, especially Great Britain, engineered a strategic shift from a colonial-military empire toward market-driven empires based on supporting pro-capitalist nationalist against socialist revolutionaries (India, Malaysia, Singapore, etc.). While Europe transited to the market-driven empire building model based first and foremost on the reconstruction of their war-torn domestic capitalist economy, the US quickly moved toward a military based empire building approach. The US established military bases throughout Europe, militarily intervened in Greece, elaborated a complex and comprehensive military buildup to challenge Soviet spheres of influence in Eastern Europe and intervened in the Chinese and especially the Korean and Vietnamese civil wars.

Immediate Post-WWII: The Combination of Market and Military Roads to Empire

Because the US economy and military came out of the victory during WWII with enormous resources far surpassing any other country or group of countries, it was able to pursue a dual approach to empire building, engaging in military and economic expansion. The US dominated over 50% of world trade and had the greatest surplus public and private capital to invest overseas. The US possessed technological and productivity advantages to promote ‘free trade’ among its would-be competitors and to increase domestic living standards.

These advantageous circumstances, directly related and limited to the first decade of the post-WWII period, became embedded in the practice and strategic thinking of US policymakers, Congress, the Executive branch and both major parties. The conjunctural ‘world superiority’ generated a plethora of elite ideologies and a mass mind set in which the US was seen to be ‘by nature’, by ‘divine will’, destined by ‘history’ and its ‘values’, by its ‘superior education, technology and productivity’ to rule over the world. The specific economic and political conditions of the ‘decade’ (1945-1955) were frozen into an unquestioned dogma, which denied the dynamics of changing market, productive and political relations that gradually eroded the original bases of the ideology.

Divergence in the World Economy: US-Europe-Japan

Beginning with the massive military buildup with the ‘Cold War’ and the subsequent hot war in Korea, the US allocated a far greater percentage of its budget and GNP to war and military empire building than Western Europe or Japan.

By the mid-1950’s, while the US vastly expanded its state military apparatus (armed forces, intelligence agencies and clandestine armies), Western Europe and Japan expanded and built up their state economic agencies, public enterprises, investment and loan programs for the private sector. Even more significantly, US military spending and purchases stimulated Japanese and European industries. Equally important state-private procurement policies subsidized US industrial inefficiency via cost over-runs, non-competitive bidding and military-industrial monopolies.

US empire building via projections of military power absorbed hundreds of billions of dollars in government expenditures in regions and countries with low economic payoffs in the Caribbean, Central American, Asia and Africa.

While military-driven empire building did increase short term domestic growth and rising income, and led to some important civilian spin-offs and technological breakthroughs that entered the civilian economy, European and Japanese market-based empire building moved with greater dynamism from domestic to export led growth and began to challenge US predominance in a multiplicity of productive sectors.

The US prolonged and costly war against Indo-China (roughly 1954-74) epitomized the replacement of European colonial-military empire building by the US version. The hundreds of billions of dollars in US government war spending spilled over into Japanese and South Korean high-growth manufacturing industries. Western European manufacturing achieved productivity gains and export markets in former African and Asian colonial nations, while the US Empire’s murderous wars in South East Asia discredited it and its products throughout the world. Domestic unrest, widespread civilian protests and military demoralization further weakened the US capacity to pursue its imperial agenda and defend strategic collaborating regimes in key regions.

The relative decline of US manufacturing exports was accompanied by the massive growth of US public debt, which in turn stimulated the vast expansion of the financial sector which then shaped regional and national policy toward de-industrializing central cities and converting them into a finance-real estate and insurance monoculture.

The contrasting and divergent roads to empire building between the US on the one hand and Europe and Japan on the other, deepened with the advent of the ‘Second Cold War’ under the Carter-Reagan years. While the US spent billions in proxy wars in Southern Africa (Angola and Mozambique), Latin America (Nicaragua, Chile, El Salvador and Guatemala) and Asia (Afghanistan), the Europeans were expanding economically into Eastern Europe, China, Latin America and the Middle East. Even at the moment of greatest imperial success, the overthrow of Communism in the USSR and East Europe and China’s transition to capitalism, the US militarily driven empire failed to reap the benefits: Under Clinton the US promoted the raw pillage of the Russian economy and destruction of the state (civilian and military), market and scientific base rather than stabilize and jointly exploit its existing markets and human and material resources. The US spent billions undermining Communism, but the Europeans, primarily Germany, and to a much lesser degree France, England and Japan, were the prime beneficiaries in terms of securing the most productive industries and employing the better part of the skilled labor and engineers in the former Soviet bloc. By the end of the Clinton era and the bursting of the information technology speculative bubble, the European Union eclipsed the US in GNP, outperformed the US in accumulating trade surpluses and foreign debt management.

Market Versus Military Empire Building in the 1990’s

During the Bush-Clinton years, US military-driven empire-building vastly expanded its commitments in financing and providing troops into the Balkan and Iraq wars, military entry into Somalia, the bombing of the Sudan, the increased subsidy of Israel’s colonial wars, the Afghan wars, Colombia’s counter-insurgency and to a lesser extent the Philippine’s counter-insurgency and counter-separatist wars. While the US spent billions to prop up a gangster-ridden and corrupt KLA regime in Kosova in order to spend billions more in building a huge military base, Germany was reaping the economic benefits of its economic hegemony in the relatively prosperous regimes of Croatia, Slovenia and the Czech Republic. While the US spent hundreds of billions in the First and Second Gulf Wars, China, the new emerging market-driven empire builder, was looking to sign lucrative oil and gas contracts in the Middle East, especially with Iran. While the US was backing an unpopular minority regime backed by its client Ethiopian military force in Somalia, China was signing major oil contracts in Sudan, Angola and Nigeria and even in Northern Somalia (Puntland). While the US military-centered empire-building state was giving away over $3 billion in military aid (plus transferring its most up-to-date military technology to competitor firms) per year to Israel, European, Asian and Latin American private and public enterprises were signing long-term lucrative contracts with the Gulf oil states as well as with Iran.

A clear sign of the long-term economic decay of the US global competitive position between 2002-2008 is evidenced by the fact that a 40% depreciation of the dollar has failed to substantially improve the US balance of payments, let alone produce a trade surplus. Despite the handicap of appreciating currencies, China, Germany and Japan continued to accumulate trade surpluses, especially with the US. While the US spent hundreds of billions in Asian wars, CIA propaganda and subversive operations in the former USSR, Eastern Europe, the Baltic States, the Caribbean (Cuba/Venezuela) and the Caucuses, the principle beneficiaries were the revitalized European market-driven empire-builders and the newly emerging market empire builders.

While the US spends enormous sums in building new military bases surrounding Russia, including new offensive operations in Kosova, Poland and the Czech Republic, with new preparations for NATO bases in Georgia and the Ukraine, Russian, Chinese and European capital expands buying out or investing in privatized and public-private strategic mining, petrol and manufacturing enterprises in Africa, Latin America, Australia and the Gulf.

While China harnesses foreign capital, including major US MNCs to make itself the ‘manufacturing workshop of the world’, Germany with its high precision heavy manufacturers are prospering by ‘constructing the workshops’ for the Chinese. US manufacturers and productive capital flee to state-subsidized (via tax reductions and low interest rates) financial, real estate and speculative sectors, and go overseas to avoid high rent and fringe payments to US labor. The resulting decline of the domestic market and a shrinking base of industrially trained labor reinforce the overseas and speculative movements on US capital. These capitalist structural changes undermined the economic fundamentals underlying the financial sector.

The deterioration of the US economy became apparent as the speculative paper pyramid (sub-prime and credit crises) collapsed during the 2007-08 recession. The recycling of multiple layers of ‘exotic’ financial ‘instruments’ each more precarious than the other, each more divorced from any tangible productive unit in the real economy characterized this period. Their predictable collapse dragged the US into recession. Even among the big banks and financial houses there is no knowledge of the real value of the paper being traded or of the ‘material collateral’ (housing and commercial property being held). The fictitious economy revolves around unloading the devalued paper, to cover costs and lessen losses…and let the next holder of the paper face the risks and uncertainties. As a result there is a total lack of confidence in the market because the ‘objects’ up for sale have become so lacking of value, i.e. so intangible and unrelated to the real economy.

The decline of the real producer basis of goods and social services and the predominance of the paper economy accentuated the divergence between military-directed empire building and the global economic interests of the US. The paper economy is not directly influenced by imperialist militarism, as is the case with US MNC’s with physical assets at risk from imperial wars, armed resistance, the disruption of trade routes, the destruction of overseas markets and the disarticulation of access to minerals and energy sources.

The ascendancy of speculative finance capital coincides with the greater autonomy of the militarist empire builders over and against the residual influence of American manufacturing and commercial interests supporting market imperialism. The extraordinary role that the pro-Israel power bloc plays in shaping a bellicose Middle East foreign policy over and above what US oil companies looking to sign contracts with Arab countries exercised, can only be understood within the large upsurge of ‘militarist driven imperial policy’.

Washington’s unconditional support of Israel’s militarist colonial regime reflects two important structural changes in US empire building. One is the extraordinary organization and influence of the principle pro-Israel Jewish organization over local, regional, national legislative and executive bodies and in the mass media and financial institutions. The second change is the rise of a political class of executive and legislative militarist policy-makers, which has an affinity with Israeli colonialism and its offensive military strategy. Israel is one of the few – if not only – military-driven ‘emerging imperial powers’ and that is part of the reason for the ‘resonance’ between Jewish leaders in Israel and Washington policy-makers. This is the real basis of the often stated and affirmed ‘common interests and values’ between the two ‘countries’. Military-driven imperial powers, like the US and Israel, do not share ‘democratic values’ – as even the most superficial observer of their savage repression of their conquered peoples and nations (Iraq and Palestine) can attest – they share the military route to empire-building.

Historic Comparison of Market and Military Driven Imperialism

A rational cost efficient evaluation of the US major and minor military invasions demonstrates the high economic cost and low economic benefits to both the capitalist system as a whole and even to many key economic enterprises.

The US blockade and subsequent war with Japan ultimately unleashed the Asian national liberation movements, which undercut European, and US colonial-style military imperialism. The Korean War ignited the massive re-industrialization of Japan and created optimal conditions for Korea’s model of protectionism at home and free trade with the US (so-called Asian state-led export model). The result was the creation of two major manufacturing rivals to the US economic expansion in Asia, North America and later in the rest of the world.

The US invasion, colonial occupation and imperial war in Indochina and its subsequent defeat severely weakened the military capacity to subsequently defend global imperial interests and client states in Southern Africa, Iran and Nicaragua. More to the point, by concentrating resources on war-making the US lost markets to the emerging market empire-builders and diverted capital from increasing the productivity and productive forces which create market dominance.

In the broader picture, military and market driven imperialism, which coexisted and seemed to complement each other diverged in the period between 1963-1973, with the militarist faction gaining supremacy in directing US empire-building. The divergence was papered over by several instances of complementary activity such as the overthrow of President Allende in Chile on behalf of US MNCs and similar earlier cases as in Guatemala (1954), Iran (1953) and in other countries where quick imperial victories over smaller countries did not seem to carry any significant economic or political costs.

The ascendancy of Reagan and the negative long-term economic impact of new arms buildup were obscured by the break-up of the Communist system and the Chinese and Vietnamese transitions to capitalism. The windfall gains to US economic interests in the former European communist countries, especially Russia, were largely based on pillaging existing resources in alliance with gangster-capitalists. Long-term, large-scale benefits were not due to US capitalist taking over and developing the forces of production and developing the internal markets of the ex-communist countries. The political and military gains that accrued to US military empire building obscured the continued loss of economic power in the world marketplace to the market-driven imperial powers. Moreover, China unleashed a large-scale, long-term process of dynamic capital accumulation, which in less than two decades displaced the US from manufacturing markets and challenged its access to energy markets.

In other words favorable resolution of the US-Soviet conflict led to their mutual economic decline. What is worse from a practical historical perspective, the military-driven empire builders saw their ‘victory’ over Communism as vindication and license to escalate their militarist approach to empire building. According to this line of argument, the Soviets fell because of military pressure, backed by ideological warfare. Moreover in the absence of a countervailing military pole, the Bush-Clinton-Bush Presidencies saw an open field for pursuing the military road to empire building.

From the Gulf, to the Gulf and Back to the Gulf : 1990-2008 (and beyond)

The first Bush Presidency assumed the military road to empire building but tried to avoid the high costs of occupation and colonization. The Israeli colonial model had to await the Zionist occupation of policy-making positions in later administrations. The first Iraq War was intended to project US imperial military power, secure US economic interests among the Gulf oil states (Kuwait and Saudi Arabia) as well as expand Israeli influence in the Middle East. Most of all it was seen as the launching of a ‘New World Order; centered in US world supremacy, supported by docile allies and financed by rich Arab oil states.

Shortly after the Gulf War, the triple alliance, which emerged during the war, collapsed as Europe pursued its own market-driven empire in competition with the US, Saudi Arabia paid some of the US military expenditures and then abruptly ended its funding, and domestic opposition grew as the electorate demanded less imperial expenditures and the re-building of the domestic economy.

Military-Driven Empire-Building (MDE) and Zionism

The Zionist Power Configuration in the United States successfully secured from the White House and Congress massive sustained multi-billion dollar military and economic grant and aid packages for Israel throughout the 1980’s ensuring Israel’s military superiority in the Middle East. Yet both Presidents Reagan and Bush (father) tried to maintain a balance between the interests of major US oil multi-nationals working with Arab regimes on the one hand and on the other Israeli and Washington’s military-driven empire building (MEB).

Bush Senior’s attack of Iraq in the First Gulf War, greatly reduced Baghdad’s military capability but he refrained from destroying its armed forces or overthrowing Saddam Hussein as Israel and the ZPC were demanding at the time. Above all Bush did not want to destabilize the region for US oil deals in the Gulf, even as he imposed a US military presence to ensure dominance.