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INTRODUCTION
A Southern Perspective on the Crisis of the Empire

On November 2, 2004, the most significant electoral contest in the world took place in the United States. Yet only 115 million people participated in an exercise that the British Broadcasting Corporation described as “a truly global election,” the results of which would drastically affect the future of the vast majority of the world’s people. To be exact, the choice of only slightly over 59 million people mattered in a decision of global consequence. Hundreds of millions outside the borders of the United States were rooting for the Democratic candidate, John Kerry, mainly because he was not George W. Bush, and they stood by helplessly as the latter won a second term owing to the support of people who saw the rest of the globe as a threat to their privileged status.

A not dissimilar situation existed over 2,000 years ago, when the fate of several million people who inhabited the area bounded by Spain in the West and Syria in the East, Gaul in the North, and Africa in the South was decided in factional struggles among a handful of citizens in the city of Rome. Like this earlier people, today’s global population is hostage to the dynamics of political competition and political succession in an imperial republic.

This book is, first of all, written from the point of view of an observer from the global South, on the imperial periphery,where Washington’s far-flung legions are stationed to maintain global order. Only recently have Americans begun to think of their country as an empire. But for those of us subjected to repeated imperial interventions—incursions designed to uphold the interests of a distant power—empire is an everyday reality.

Why is this experience important? Because it profoundly affects the perspective that we bring to events. This notion became quite clear to me in the aftermath of September 11, 2001.At that time, the French newspaper Le Monde editorialized: “We are all Americans now.” It was speaking for the French, for Europeans maybe, but certainly not for somebody like me.My reaction to September 11 was expressed in an article I wrote a few days after the horrific event:

The assault on the World Trade Center was unpardonable, but it is important not to lose perspective, especially a historical one. . . . The scale and consequences of the September 11 attack are massive indeed, but this is not the worst act of mass terrorism in U.S. history, as some U.S. media are wont to claim. The over 3000 lives lost are irreplaceable, but one must not forget that the atomic raids on Hiroshima and Nagasaki killed 210,000 people, most of them civilians, most perishing instantaneously. One may object that you can’t compare the September 11 attack to the nuclear bombings since, after all,Hiroshima and Nagasaki were targets in a war. But why not, since the purpose of the nuclear bombings was not mainly to destroy military or infrastructure targets, but to terrorize and destroy the civilian population?

In contrast to the European reaction, I pointed out, the response to the September 11 event in the South was muted. A survey would probably reveal that

while many people in the Third World are appalled by the hijackers’ methods, they are not unsympathetic to their political objectives. As one Chinese-Filipino entrepreneur said, “It’s horrible, but on the other hand, the U.S. had it coming.” If this reaction is common among middle class people, it would not be surprising if such ambivalence towards terrorism is widespread among the 80 per cent of the world’s population marginalized by current global political and economic arrangements.

The underlying motivation behind September 11, I suggested, was a sense of injustice and outrage. These two emotions were directed at the twin pillars of U.S. policy in the Middle East: first, the needs of the peoples of that region are subordinate to America’s strategic and economic interest in Middle Eastern oil; second, the United States must provide unstinting support for Israel. Unless the United States abandoned these policies and addressed the roots of terrorism in injustice and inequality, I argued, “there will always be thousands of recruits for acts of terrorism.”¹

At the time, these comments outraged many readers, a number of whom branded me as an apologist for terrorism. I suspect that the article would still strike a raw nerve among some readers in the North today.

What is more, my fundamental analytical approach has provoked heated disagreement. I take the view that the moment of greatest triumph for an individual, an institution, or a system may also exhibit its vulnerabilities. The shadow of defeat accompanies every victory. Winning the battle may accompany defeat in the larger war, as was the case with the United States Pyrrhic victory during the Tet Offensive in Vietnam.

A few days after George W. Bush landed on the deck of the USS Abraham Lincoln to declare American victory in Iraq on May 1, 2003, I wrote: “This point may sound surreal after the massive firepower we witnessed . . . [but] there is good reason to think that [the United States] is overextended. In fact, the main strategic result of the occupation of Iraq is to worsen this condition of overextension. Washington’s goal is to achieve overwhelming military dominance over any rival or coalition of rivals. This quest for even greater global dominance, however, inevitably generates opposition, and it is in this resistance that we see the roots of overextension.”²

If my analysis of September 11 aroused anger, the commentary on May 1 evoked ridicule from some readers, who saw it as the ultimate in wishful thinking. “Which planet are you on?” was not an uncommon reaction, even among some fierce critics of the United States. Today that counterintuitive view does not seem so strange after all.

CRISES OF GLOBAL CAPITALISM

This book, which is about the crisis of the American empire, is focused on the interrelated dilemmas of imperial economics and imperial politics. Actually, three crises threaten to convulse the empire: a crisis of overproduction, a crisis of overextension, and a cr isis of legitimacy.

Crisis of Overproduction

The economic core of the empire is an expansive capitalist mode of production, one that is based on the extraction of profit from the accumulation and investment of capital. Today global capitalism is distinguished by the hegemony of the U.S. economy, both as a market for goods and as a destination for capital. Roaming the world, U.S. transnational corporations function as agents for capital accumulation and production. Their drive for profit makes capitalism both relentlessly expansive and prone to contradiction or to crises. One crisis is rooted in the contradiction between the increased consumption of natural resources and the production of waste and finite ecological space. A second stems from the more intense conflict between the minority in command of productive and financial assets and a majority with little control over these. Related to this is a third crisis, on which we shall focus our discussion: the widening gap between the growing productive potential of the system and the capacity of consumers to purchase its output. This gap has increased in recent years because of the radical free-market policies pushed by the global elite, which have depressed the incomes of working people in both the North and the South while concentrating wealth in the hands of a small minority. Termed variously as overproduction, overcapacity, or overaccumulation, this dynamic has resulted in declining growth rates in the center economies and disappearing profits in the industrial sector. It has also resulted in global financial speculation becoming the central source of profit and capital accumulation.

Crisis of Overextension

The development of capitalism and of markets has accompanied the development of states, or “systems of domination,” to use the felicitous phrase of the sociologist Max Weber. Although states have promoted the expansion of capital both at home and abroad, governments recognize the need for restraint to ensure social stability or to protect and promote the competitive ability of capitalist elites. States are not simply at the beck and call of the economic elites as cruder versions of Marxism would have it. Governments function with relative autonomy vis-à-vis the system of production, partly because of their conflicting roles in providing order, supporting capital accumulation, and maintaining social stability.Moreover, nation-states must coexist with their global counterparts. In an international system marked by anarchy, states are driven to maintain or extend their strategic reach.

The wealthy nations tend to develop a grand strategy, or a fundamental approach toward the world—a conflict-ridden process fueled by competition among elites. Contending elites mobilize mass constituencies to provide them with a decisive edge in imposing their policies. The struggle during the Cold War between the strategies of “containment” and “rollback”—between those who sought to prevent the Soviet Union from expanding beyond its post–World War II borders and those who yearned to reverse, or roll back, Soviet conquests in Eastern Europe and elsewhere—is an example of competitive dynamics.

In addition, the drive to extend the state’s strategic reach may run up against, and even outstrip, the resources available for achieving its ambitions. Such an eventuality is the source of the second crisis of the U.S.- dominated global system: overextension or overstretch. In pursuit of undisputed military supremacy wedded to unlimited economic and political goals, the Bush administration courted trouble even before the invasions of Afghanistan and Iraq. But by making Afghanistan and Iraq exemplary wars—demonstrations of American invincibility—it ended up exposing the limits of its military strength. It thereby provided an unintended lesson to U.S. foes in the global South: one can fight the U.S. military to a stalemate—and in guerrilla warfare, a stalemate is a triumph for the guerrillas.

Crisis of Legitimacy

The third major crisis is one of legitimacy. Ideologies are central to creating and maintaining not only the economic but the social conditions for capital accumulation, both domestically and abroad. Ideologies legitimate the system.

In the legitimation process, the subordinate classes (the citizens of a superpower, for instance) assent to the control of the dominant elites. Legitimacy, rather than force or coercion, is the linchpin of social order. In Western capitalist societies, the enhancement of individual freedom and economic mobility through the operation of the market and democratic representation serves as the ideological cornerstone of legitimacy. Moreover, the creation of legitimacy is not just a cognitive process, one that is achieved through an inculcation of values and ideas. It is actively engaged in by members of the subordinate classes themselves—for example, when they participate in elections.

At the international level, similarly, domination cannot simply take the form of coercion. The creation of international or multilateral institutions that seemingly promote universal interests is essential. The development of the Bretton Woods institutions—the World Bank and the International Monetary Fund—was a response to this imperative. A more recent example is the establishment of the World Trade Organization. Multilateralism involves yielding at least some control and behaving as primus inter pares, first among equals, an actor on whom the rules are also binding.When it encounters opposition, however, the dominant power in a multilateral system will almost always be tempted to achieve its objectives through unilateral means. It is this tension that accounts for the oscillation between multilateral initiatives and unilateral measures in the development of U.S. foreign policy.

Today a crisis of legitimacy pervades the multilateral system and the neoliberal ideology that underpins it. Instead of promoting prosperity, as the major postwar financial institutions promised, corporate-driven globalization has proven destabilizing. It has increased poverty and widened inequalities both within and between nations. In pursuit of its narrow interests, the Bush administration has exacerbated this crisis by strong-arming the World Bank, the IMF, and the WTO, instead of taking the longer but more legitimate route of forging consensus. Consequently, international economic institutions have seen their credibility erode, especially in the South.

Alongside the crisis of legitimacy of the multilateral system is the crisis of legitimacy of democracy. Born out of an anticolonial struggle, the United States has found traditional mechanisms of colonial rule problematical. To maintain the reality of empire while concealing it, America has resorted to forging dependent political structures posing as carriers of democracy. Dependent democracies, however, have often failed to take root. In many cases,Washington has had to rely on authoritarian regimes to serve its strategic and economic interests, dealing a severe blow to imperial legitimacy. The newest attempts to revive the democratic rationale for empire have also failed, because the U.S. government has used the formal mechanisms of civil society to impose harsh programs of economic adjustment on Third World societies. Moreover, U.S. democracy has itself entered a crisis of legitimacy.Transparent corporate domination of the political system, as well as widespread restrictions on the civil liberties of citizens, has diminished the attractiveness of U.S.-style democracy as a model for people in the global South.

CENTRAL CONFLICTS

When these three fundamental crises of empire intersect in volatile and unexpected ways, as they are likely to do, the system’s inherent instability and propensity for crisis and unraveling becomes evident.

For nearly fifty years after the Second World War, the conflict between the central capitalist nations, led by the United States, and the so-called Socialist bloc, led by the Soviet Union, represented the dominant global cleavage. Since the collapse of the Soviet bloc in the late 1980s, other tensions have come to the fore.

First, there is the rivalry among the major players. The leading capitalist societies have experienced both interdependence and competition. Interdependence prevailed during the early postwar decades, as the United States supported and derived benefits from the reconstruction of the war ravaged economies of Europe and Japan. Since the 1970s, however, competition has trumped cooperation. The central economies seek to achieve recovery and growth at the expense of the others.With the formation of the European Union, the competition reached a new level. Political differences on such issues as relations with the South, approaches to environmental problems, and the role of multilateral institutions exacerbate the economic rivalries.

Second, there is the continuing conflict of capital and labor in the North. In the United States, the tensions between the classes have always been marked by racial, gender, and ethnic discrimination and, recently, by increasing antagonisms over social values and other cultural issues. Some commentators prefer to talk of a “cultural civil war” rather than class conflict. Nonetheless, the capital-labor struggle continues in the United States. The power of labor has significantly eroded, and corporations and Republican administrations have colluded in rolling back the trade union movement.Whether a confrontation looms remains to be seen.

Third, there is the conflict between the major economies of the North and the developing countries of the South, where most of the world’s marginalized people, some three billion, are located.More and more, this complex struggle defines the age we live in.

The resistance by northern elites to the demands, by newly independent countries, for political equality and economic redistribution has aggravated this conflict.At the same time, the industrialized world seeks to speed up the integration of the South into the global economy in order to offset the stagnation overtaking the northern economies.

In the first postwar decades, the struggles by the South against domination often took the form of wars for national liberation.While they sometimes deployed the language and ideology of Marxism-Leninism, these enterprises, as in China and Vietnam, had as a fundamental objective the achievement of political independence and economic modernization. There also were non–Marxist-Leninist versions of this goal, as in Nasser’s Egypt, Sukarno’s Indonesia, Mexico under the Institutional Revolutionary Party (PRI), and the military dictatorships in Brazil and South Korea.

While they were on different sides of the Cold War divide, these leftwing and right-wing governments pursued programs marked by domestic protectionism, government direction of the industrialization process, efforts to cartelize the production of oil and other raw materials, strong regulation of foreign investment, and capital controls.Momentarily, in the 1970s, left-wing and right-wing elites—in Mexico, Cuba, Indonesia, Brazil, Iraq—united under the ideology of the New International Economic Order, which proposed a substantial redistribution of wealth and power from the North to the South. For many of the developing nations, a model of sorts was provided by the Organization of Petroleum Exporting Countries, which brought together regimes as varied as Mu’ammar Gadhafi’s Libya, the Saudi monarchy, center-right democratic Venezuela, and Saddam Hussein’s Iraq in an ambitious effort to dictate the price of oil and accumulate financial resources.

Ronald Reagan’s election in 1980 marked a turning point in the North’s drive to roll back the South. His victory was initially seen as a triumph for a new foreign policy elite dedicated to militant confrontation with the Soviet Union and Communism. That it certainly was: the Reagan adminis- tration moved quickly to upgrade its strategic arsenal to gain first-strike capacity while seeking to develop a shield against incoming ballistic missiles, the so-called Strategic Defense Initiative. But the actual wars of the Reagan administration—the invasion of Grenada, the intervention in Lebanon, the long effort to bring down the Sandinistas in Nicaragua— were fought against Third World insurgencies, in a continuation of the pattern of U.S. interventions in the Philippines, Korea, Guatemala, Vietnam, and Chile.

Reagan did chart new territory, however, launching comprehensive economic counterinsurgency campaigns to undermine those state-assisted capitalist regimes that had served as the base for such challenges as the New International Economic Order. The right-wing foreign policy circles of the Reagan regime wanted to transform these nations into free-market economies. Trade wars were waged to open up more advanced economies of the South, like Taiwan and South Korea, which were making the transition from developing to developed country. Most decisive, though, were the structural adjustment programs, inaugurated by the IMF, that promoted trade liberalization, deregulation, and privatization. They served as the principal mechanism for disciplining the economic aspirations of the South.

Succeeding American administrations continued the strategy of rollback and resubordination of the South. Under Bill Clinton, structural adjustment was repackaged as globalization. Washington, in collaboration with the IMF and the WTO, speeded up the elimination of barriers to investment and the lowering of tariffs. The more rapid integration of the South into the global economy, also designed to widen the arena for exploitation by transnational capital, was, in turn, critical for northern economies trying to escape the dilemma of their own stagnation.

Thus the intersection of the crises of the imperial system—overproduction, overextension, and illegitimacy—has intensified those traditional cleavages that have long marked the empire. Especially critical today is the North-South conflict, in which the chief battlefields are Iraq and the World Trade Organization. Although the United States remains the world’s prime power, its global system of domination is under severe assault and may be in the process of unraveling.

PLAN OF THE BOOK

We begin by examining the grand strategies formulated by U.S. administrations over the last half century. Chapters 1 and 2 focus on the way George W. Bush’s open-ended drive for military superiority has provoked a crisis of overextension that leaves the credibility of U.S. military might severely compromised.

Doubts about American military invincibility are compounded by a creeping anxiety about the country’s economic prowess. Chapter 3 analyzes the crisis of overproduction and overcapacity underlying the stagnation that has overtaken most of the central capitalist economies. The chapter shows how speculative finance has replaced industrial and manufacturing activity as the prime source of profitability, how China is contributing to the crisis of global overproduction, and how the recent recessions and anemic, jobless growth in the United States suggest that the global economy is at the tail end of the long, fifty-year wave of capitalist expansion and decline.

One symptom of that underlying economic pathology is the overbearing position of finance capital. Chapter 4 reveals the way financial speculation increasingly drives global economic activity. The mobility of capital, facilitated by the elimination of capital and foreign exchange controls, has been extremely destabilizing for developing countries. They have watched themselves become the darlings of speculative investors at one moment and pariahs the next. With the liberation of finance, economic crises have become more and more frequent and serious, and most of them have occurred in the South.

Upheaval, both political and economic, south of the border preoccupies the imperial center. Chapter 5 discusses the various mechanisms deployed for the containment of the South over the last four decades. It focuses on the roles of the IMF, the World Bank, and the WTO. The dynamics of economic rollback and resubordination of the South are examined in detail. The chapter zeroes in on the disruptive consequences of structural adjustment programs and free-trade policies.

Over the past decade or so, the domineering behavior of northern governments and financial institutions has undermined their legitimacy in the South. Chapter 6 explores the reaction of the North to this crisis of legiti- macy. Multilateral institutions have engaged in lukewarm, incoherent reform efforts, not all of which have enjoyed universal support among northern elites; for instance,Washington scuttled an attempt by the IMF to set up a global bankruptcy mechanism (akin to Chapter 11 in U.S. commercial law) that developing countries might use temporarily to shelter themselves from their creditors. Not surprisingly, reform has foundered, accelerating the crisis of institutional credibility that the reform efforts were supposed to address in the first place.

The unilateralism of the Bush administration has exacerbated relations with the global South. Chapter 7 describes the economic program of the Bush regime. It argues that, under Bush, the U.S. approach to free trade, relations with its allies, and its dealings with the South are subordinated to strategic considerations. Never before has the White House so brazenly advanced double standards, as it arrogantly demands protectionist measures for the United States and free markets and free trade for the rest of the world.

In the end, what people believe to be true will determine the imperial future. Chapter 8 describes the empire’s profound ideological dilemma. Who believes any longer in the American promise of democracy—either abroad or at home—a promise that has accompanied the drive for economic expansion and strategic extension? The loss of legitimacy has many sources. Most significant were the subversion of fledgling democracies in the South in the 1980s and 1990s by draconian financial regimes imposed by the North, and the hijacking of the democratic process in the United States by the increasingly heavy-handed influence of corporate lobbyists over the electoral and legislative processes. Yet another factor has been the erosion of individual freedoms by nonconstitutional measures justified in the name of fighting terrorism.

In the conclusion, I explore how the crisis of empire may in fact translate into an opportunity for liberating change not only for marginalized nations but for the people of the United States as well.

Copyright © 2005 by Walden Bello