[R-G] fw: Interview with Leo Panitch conducted by Workers' Liberty

[Anthony Fenton]

~~~~~~~~~~~~~~(((( T h e B u l l e t ))))~~~~~~~~~~~~~~
A Socialist Project e-bulletin ... No. 186 ... February 16, 2009
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Interview with Leo Panitch conducted by Workers' Liberty

What is your assessment of the relationship between this serious  
financial crisis emerging foremost in the U.S. and American power and  
economic decline?

I don't think that U.S. hegemony has waned, and I don't think it's  
about to wane in the very near future, despite the current financial  
crisis.

In my view, the better term for the U.S. role in the world is Empire.  
That captures in my mind the way in which the American state plays a  
role of coordination and oversight and crisis-managing for global  
capitalism, in the absence of a global state.

It managed to do that in my hemisphere, on this side of the Atlantic,  
by penetrating other, independent states, in South America and North  
America, before the Second World War. Its capital penetrated those  
states and encouraged the restructuring of those states in a way that  
was consistent with fostering trade and the protection of the property  
rights of U.S. capitalists, or in fact of foreign capitalists in  
general.

That became generalised after the Second World War, not so much with  
the Third World as with Europe and Japan, which became increasingly  
Canadianised. European and Japanese capital, in different ways, were  
penetrated by American capitalists. Conditions for that were  
established politically. That penetration was very deep, and it was  
done in collaboration with the ruling classes of those countries. This  
was imperialism by invitation. The ruling classes saw the American  
state as the safest guarantor of capital's rights, especially in the  
countries where the labour movement was strong.

 From the 30s on, European capital had poured into the United States,  
even during the New Deal. So this has been a collaborative type of  
hegemony or Empire.

When Europe and Japan were put back on their feet after the Second  
World War, and became competitive in terms of trade with the United  
States, the notion arose that meant American hegemony was fading. It  
was a very common view, but fundamentally misleading. It failed to  
understand that the Europeans and Japanese wanted the Americans to  
play a more active role in managing the global economy, not a lesser  
role. To the extent that they were unhappy with American policy, it  
was mainly for that reason.

That has continued through the era of neoliberalism. There have been  
moments where in very economistic ways, based on the size of the trade  
deficit or the penetration of foreign direct investment into the  
United States, people have predicted U.S. decline as imminent. It has  
proved to be wrong in every case. The American state is still seen as  
the most important protector of global capital.

Many people think that the deficit means that the U.S. economy is a  
basket case; but, through the technological revolution we've just  
lived through, in information technology and so on, it has managed to  
maintain its dynamism as a capitalist power.

The deficit has reflected the fact that the United States has been the  
market for so much of what is produced in the world today. It has not  
reflected a decline in American exports, which over the last 15 or 20  
years have increased more than any other G7 country's.

To read off from the size of the trade deficit a problem in terms of  
American hegemony, I think, is not to understand the role that the  
United States, and New York as a financial centre, and American banks  
in London, play in terms of the glue of international capitalism. No- 
one is doing a favour to the United States by putting short-term  
capital into New York, or holding onto dollars. They are purchasing  
dollars and Treasury Bills because they remain the most stable store  
of value in a highly volatile capitalist world.

The volatile nature of international finance, in which free trade in  
currencies is a large factor, makes this a highly volatile set-up, and  
one that is prone to financial crises. Notably, not many financial  
crises have been dollar crises in the way that we saw sterling crises  
from the 1950s to the 1970s, when sterling was still a central  
currency. (London is still a big financial centre; but now it is  
essentially one of the great centres of American dollar finance).

What's been quite remarkable, at least since the 1979 Volcker shock,  
has been the extent to which, for all of the size of the deficit and  
the free floating of the dollar, there hasn't been a massive run on  
the dollar. Even in recent days, we've seen a rather managed decline  
of the dollar, and a decline which is functional to reducing the size  
of the U.S. trade deficit.

When the dollar got inordinately high, after the very high interest  
rates that established enormous confidence in the U.S. Treasury Bill  
and the dollar, you then had the meetings around the Plaza Accord  
which coordinated a readjustment.

People are constantly observing the level of the dollar, given the  
role it plays in the international capitalist economy. But what's  
astonishing is the exent to which the dollar has not suffered.

So it's like Keynes's comment that if you owe the bank $100, you have  
a problem, but if you owe the bank a million, the bank has a problem?  
The capitalists of the rest of the world have to keep the dollar up  
because so much of their interests are tied up with it.

Absolutely. And that reflects the degree of integration.

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