Because: Imperialism!

by Henry on April 4, 2012

Preliminary throat-clearing: as promised, a reply to David Graeber’s reply below, or rather, to the particular bits of it that concerned me. Before getting into the substance, let me briefly clear up that I won’t be talking at any length about what I think of his general conduct, style of argument in which he claims that serious critics are liars out to delegitimize him and so on. As you may imagine, I am very unhappy with his behavior – but I also believe that for purposes of analysis one ought to separate the person from the work. Worse people have written better books. I will, however, note (since Gabriel Rossman is too nice to do this himself) that Graeber’s account of their Twitter interactions is extremely tendentious, to the point of being more or less unrecognizable to me.

Warning: what comes below is rather long. The first section will look at the specific complaints in Graeber’s reply, each in its turn. The second will return to the book chapter in question. The third will look at broader issues of how to study imperialism.

PART I - RESPONDING TO THE RESPONSE, POINT BY POINT

Is my post, as Graeber claims, an example of deliberate delegitimization, a “case in point” of dismissing someone interested in “the actual connections between US military power, the banking system, and global trade … as a paranoid lunatic”

Hardly. And Graeber himself doesn’t seem to believe it – he later suggests that he isn’t sure what the difference is between our positions on imperialism. I have no problems at all with someone talking about the connections between US military power, the banking system and global trade. Nor do I think that the word ‘empire’ is at all provocative, contra Graeber’s suggestion – I regularly talk about the US imperium in class. My issue is with the specific mechanisms that Graeber claims to underlie imperial power – his particular account of empire is neither very plausible, nor supported by much in the way of evidence. More broadly, as I said in the post, I’m not interested in delegitimizing because I think that there is a lot of good material in the book. The chapter on exchange and the economists is excellent. The early history material is beyond my professional competences, but was fun and intriguing, and I’m happy to accept Neville Morley’s judgement that it’s an interesting and useful interpretation of the evidence.

Is it an “obnoxious rhetorical strategy” to cite to Graeber’s own description of what he claims to do in the book?

Graeber’s pique seems to be a bit over the top. If Graeber wants to pat himself on the back, for writing the kind of book that hasn’t been written in 100 years, and for “back[ing] up all his claims” (his words) with copious references, that is fine. Authors trying to create public interest in their books are under no obligation to be self-deprecatory. But if the book actually makes extremely strong claims which are inadequately footnoted, it seems to me to be entirely fair to point out that the author isn’t living up to his own stated standards.

Do I say, as Graeber claims, that one can’t and shouldn’t talk about ruling classes?

Demonstrably not. As I make quite clear in the post, the problem isn’t with talking about the ruling classes, or the consent they generate, or their use of violence. It is with seeing the architecture of world politics as a seamless product of deliberate design. I argue that Graeber radically overestimates the extent to which the system that we live in is a planned one, not that one shouldn’t talk about rulers, consensus and coercion. This is reasonably plain in the text, I think.

Am I “entirely oblivious” to one of the key arguments of the book – “one that in fact breaks dramatically with much leftist orthodoxy,” the “innovative” claim that “while markets are founded and usually maintained by systematic state violence, in the absence of such violence, they will quickly turn into something far less obnoxious—and can even come to be seen as the very basis of freedom and autonomy.

Actually, not so much. I certainly don’t see this claim as a substantial innovation that really gives Marx’s Capital a good talking-to; instead, I see it as a standard anarchist argument, and the main cause of the last chapter’s weaknesses. As I noted in my original post: “For Polanyi, the villain is long distance trading relations, while for Graeber it is the state (in a formulation which is somewhat reminiscent of Althusser’s Ideological State Apparatus and Repressive State Apparatus), which is the actor that keeps the corrupt system going through its ideological and coercive resources,” and later, “Graeber comes up with a theory which (like economists’) starts from a very simple claims – that behind the ubiquitous relationship of creditor to debtor lies the coercive power of the state. Unfortunately this theory, again just like the economists, doesn’t work very well outside the context where it was developed.” Graeber points to another reviewer, who he says got what I didn’t, in arguing that “[i]n the absence of state power, market exchanges tend … to be re-absorbed into a moral economy of a human society.” But the specific point that I was making is that sometimes individuals, in pursuit of autonomy, might prefer that these exchanges not be so reabsorbed, and, instead, remain disembedded. David Miller has a very interesting book, Market, State and Community which makes a similar argument at greater length (I don’t buy Miller’s reconstruction of Marx, but I think he makes some very interesting points).

Do I say that Graeber is “driven by [his] biases to become a bad scholar”?

Not only do I not say that, I don’t even hint it. I made it clear that my problem was with (a specific section) of the work, rather than with Graeber himself. I concluded by saying that I hoped and believed that Graeber could and should write something that took account of these criticisms, and that I felt that he could come up with something that was valuable and worthwhile. Most academics are capable of distinguishing between criticism (even tough criticism), of their work, and ad hominem or ad baculam criticisms of their intrinsic worth as scholars. My criticisms (which started with a genuine and detailed appreciation of the parts of the book that I thought were very good) were clearly of the former, rather than the latter sort.

Did I, “with consumate dishonesty,” ignore Graeber’s framing of the chapter around Hudson’s work?

Again, no. The problem, as I lay it out, is that Graeber is looking to establish that the US’s unparalleled military force is the lynchpin of its domination of the world economy. But Hudson – and here I repeat myself – is arguing that US domination of the world economy is the lynchpin of its unparalleled military force. Graeber is apparently good mates with Hudson, and has talked to him to confirm that Hudson believes that “the US government’s position come[s] down to ‘adopt our version of the free market or we’ll shoot you.’” But the issue is not what Hudson believes – Hudson may believe that he knows the song the Sirens sang, and the name that Achilles took among the women for all I know, or care. The issue is what Hudson provides evidence for in the book, Super Imperialism (not ‘Superimperialism’ – a minor nitpick I know) that Graeber is citing to. And, as I read it, it is about economic forms of domination, with some discussion of how this underpins military adventurism, rather than vice versa. Nor do I read the book, or the actual history, as providing evidence that the US was pulling the Delian League Switcheroo on its allies. The mechanisms were indirect, rather than direct gathering of tributes, and there wasn’t any threat of US military intervention against allies who were unhappy that the US was using its economic dominance to force its allies to bear the cost of adjustment. The closest thing that I can find to a Graeber style argument (there may be more that I have missed, and I would welcome correction so that I can evaluate the supporting evidence) is a brief mention in the context of military aid of how the US discourages “tendencies toward developing independent military forces capable of initiating acts that might not serve U.S. policy ends,” with an example from Yugoslavia, but this is pretty weak tea for a theory of general domination.

Hudson’s own conclusions in the book as to what underpins other countries’ acceptance of US imperialism are not especially satisfactory in themselves, but don’t support Graeber either.

Only America has shown the will to create global international structures and restructure them at will to fit its financial needs as these have evolved from hyper-creditor to hyper-debtor status. It is as if European and Asian society lack some gene for institutional self-programming for their own economic evolution, and have acted simply as the mirror image of America like a dancer following the partner’s lead.

I’m not seeing much to support claims about a militarized reign of terror here, myself. Perhaps Graeber reads it differently, but if this is the empirical cornerstone for Graeber’s arguments, it’s not a very good one. I should say that despite the book’s weak ending, and Hudson’s colorful claims about his own pivotal role in economic policy debate,1 I recommend this book, and am happy that this debate got me to read it. Insofar as a book about monetary policy, multilateral institutions etc can be a cracking read, it’s a cracking read, and while there are some claims that seem iffy to me, and others that I disagree with, there are some very interesting arguments too. You shouldn’t read only this book on these topics, but you should read it.

Am I setting impossible evidentiary standards?

Graeber claims:

For Fisk what I observed—that there’s a widespread impression of such a connection—is treated as simply self-evident. “Of course” people remember. This is what I assumed too. But Farrell wants documentation. Can Fisk’s essay be so considered? Who knows? No doubt if Farrell wanted to be stubborn, he could like some annoying six-year-old, play the game of “prove it!” forever, insisting that just because Fisk claims something, it doesn’t prove he’s right. If I then turned up a quote from a banker or statesman stating on the record they were intimidated, no doubt he would demand proof it was not an isolated case. If I got a grant and carried out a detailed survey of bankers and statesmen, he could always critique my methodology.

I’m sorry – but whether David Graeber likes it or not, this is the way that serious debate works. People who are making big assertions, and who want to get people to change their minds, usually are asked to produce strong evidence to back up those claims. He may believe, as he says, that I would refuse to accept any reasonable evidence. As a matter of fact, he’s wrong, but even if he were right, this wouldn’t be an excuse to pick up his marbles and go home. It would instead be a spur to him to do the research, and to produce sufficient evidence to convince other people that I am being completely unreasonable in refusing to accept it. I’ll talk to Graeber’s associated claim about ‘common sense’ in the next section.

PART II - THE ERRANT CHAPTER, REVISITED

Having gone through the final chapter again, and read Graeber’s arguments, my criticisms still stand more or less as they were. However, it’s probably worth developing them to make them clearer.

I briefly suggested in my original post that I thought that the weaknesses of this final chapter were a result of the weaknesses of Graeber’s theory of the state. I subsequently had a useful email exchange which helped me clarify what I think the key problem is. Briefly – for Graeber’s account of debt to work, you need a powerful and oppressive state apparatus, to provide the direct coercion that underpins the entire malign system of exchange. Without such a powerful apparatus, as he argues in his reply, you will see market relations becoming re-embedded again. And for Graeber, the means of oppression are less than subtle. They are direct ideological control, underpinned by brute force. Graeber suggests, in his reply, that military force is only one element in his explanation. I think that any fair minded reading of what he actually said would find that it is the central element of his explanation. To repeat the key quotes from my original post, when one argues that:

One element, however, tends to go flagrantly missing in even the most vivid conspiracy theories about the banking system, let alone in official accounts: that is, the role of war and military power. There’s a reason why the wizard has such a strange capacity to create money out of nothing. Behind him, there’s a man with a gun.

and

The essence of U.S. military predominance in the world is, ultimately, the fact that it can, at will, drop bombs, with only a few hours’ notice, at absolutely any point on the surface of the planet. No other government has ever had anything remotely like this sort of capability. In fact, a case could well be made that it is this very power that holds the entire world monetary system, organized around the dollar, together.

one is pushing very strongly for a military-power based explanation.

But here’s the problem (and this, I think, is why many people, as Graeber himself acknowledges, think that the last chapter is far less convincing than the rest of the book). The modern economy is now, for better or worse, a world economy. For Graeber’s thesis to apply he needs to find some kind of global equivalent to the national state, which can serve as the agent of oppression. Graeber looks to find it in the US, and in so doing, greatly exaggerates America’s ability to use military force in order to pursue its interests. His account of US dominance has more in common with vintage Charles Krauthammer, than Super Imperialism. Krauthammer, like Graeber, roots US power in its ability to project force, more or less unopposed, anywhere in the world, in untrammeled pursuit of its interests. Obviously, they disagree profoundly on the ethical consequences of this power. For Krauthammer, US military dominance allows the US to pursue its interests and global welfare simultaneously, as they are magically one and the same thing (Krauthammer is a moral monster, and his theory is of the US as a global cop, who also can and should beat the shit out of anyone who he doesn’t like). For Graeber (who is not, obviously, a moral monster), US military dominance is the lynchpin of a reign of global terror, what might be called (with apologies to Brian Stableford) an Empire of Fear.

But the problem is that what they agree on – the empirical claims about US power – have been pretty effectively discredited. The US ability to intervene abroad is limited both by financial costs, and by difficulties in maintaining domestic political support. This suggests that the US power to intervene militarily abroad is far more qualified than Graeber thinks it is. The current world order can very reasonably be described as an empire. But it is not an empire of crude coercion where the US can call all the shots, based on its military capacity, or where other countries can expect military intervention if they e.g. stop denominating important stuff in dollars, or fail to pay their debts. Military force is expensive and controversial. The US is quite prepared, as Graeber and others argue, to deploy it in pursuit of entirely self-centered aims, and to maintain its power position. But it is only usually prepared to do this in pursuit of what it considers vital national interests.

Unfortunately, for Graeber’s argument to succeed, the US has to stand in relation to oppressive economic relations within the world economy, more or less as traditional states stood towards oppressive economic relations within their domestic economies. And it really, really doesn’t – it simply doesn’t have enough resources.

This leads to most of the problems in Graeber’s final chapter. If I suggest that Graeber is caught up in a more complicated version of John Holbo’s Two Step of Terrific Triviality this is not to imply that Graeber is being deliberately dishonest in the way that Jonah Goldberg is in Holbo’s account. I don’t believe that he is. What Graeber is trying to do, I think, and not succeeding at, is to come up with an argument that is both what his theory needs and that has some empirical prima facie plausibility. And because he can’t really do this, the chapter lurches back and forth between three rather different arguments about empire.

The first are the strong claims that he really needs for his previous arguments to work. These are the bald claims that it is all about tribute and US willingness to use military power to keep other states paying their debts etc. Graeber states:

one effect of Nixon’s floating of the dollar was that foreign central banks have little they can do with these dollars except to use them to buy U.S. treasury bonds. This is what is meant by the dollar becoming the world’s “reserve currency.” These bonds are, like all bonds, supposed to be loans that will eventually mature and be repaid, but as economist Michael Hudson … noted, they never really do … What’s more, over time, the combined effect of low interest payments and the inflation is that these bonds actually depreciate in value – adding to the tax effect or, as I preferred to put it in the first chapter, “tribute.” Economists prefer to call it seignorage. The effect, though, is that American imperial power is based on a debt that will never – can never – be repaid. Its national debt has become a promise not just to its own people, but to the nations of the entire world, that everyone knows will not be kept (366-367).

When he talks about the seignorage which the US gets from having major transactions denominated in dollars, he brings in the famous suggestion that Hussein’s decision to “buck the dollar” helped precipitate the Iraq war. He acknowledges that it is “impossible to know” how much this played into the US decision, but shows no such hesitation when he suggests that restive East Asians and the Argentina debt default precipitated US militarism in the 2000s. To quote the relevant bit again:

By 2000, East Asian countries had begun a systematic boycott of the IMF. In 2002, Argentina committed the ultimate sin: they defaulted – and got away with it. Subsequent U.S. military adventures were clearly meant to terrify and overawe, but they do not appear to have been very successful: partly because, to finance them, the United States had to turn not just to its military clients, but increasingly, to China, its chief remaining military rival.

This isn’t hedged around with any maybes, one-might-says and it-is-plausible-to-thinks. It is a blunt assertion that the efforts of East Asian countries to buck the IMF, and the Argentinian default precipitated subsequent “U.S. military adventures” that were intended to “terrify and overawe” the world back into submission.

The problems with these claims are obvious. They’re wrong. Lots of private actors buy T-bonds without any US government pressure, especially during times of economic crisis, making them highly unlikely forms of tribute. Of course, the reasons why T-bills are regarded as a safe investment have a lot to do with US predominance, and the US did impose the adjustment costs on everyone else during the 1970s. But this is not tribute, a point I’ll return to in the third section. The claim that US foreign policy adventurism in the 2000s were motivated by US fears that it was losing its grip on Argentina and the boys not only has no evidence to support it, but seems to me to be completely indefensible. And let me be clear. These are Graeber’s own words that I’m quoting up there. They’re plain in their meaning, and they are entirely unqualified. In these sentences, he is making just the sort of crude reductionist argument that he later gets outraged at people for attributing to him.

Because such strong claims are unsustainable, Graeber veers between them and a somewhat less strong argument – that even if one cannot be sure that the US will invade you to retaliate for shifting currency, repudiating your debt or whatever, the mere possibility that it will is sufficient to terrify the rest of the world into submission. This requires less evidence. But it does require some. On Twitter, when I pushed him to provide this evidence, Graeber resorted to a rhetorical mode that Kieran described as ‘argument from wake up sheeple!’ – asserting that my demand for evidence of this showed how hopelessly sheltered I was from reality, and that no evidence was required to show that people in the developing world were terrified of the threat of US intervention. In his more formal response, he speaks a little more directly to this question. First, he provides a speculative quote from Robert Fisk, to show that someone believed that Iraq’s decision to change to the dollar might have helped precipitate the invasion. Second, he claims that “common sense” shows that this must be so, given the US’s coercive power.

The problems here are straightforward. A single quote from a journalist is sufficient to establish the most tentative form of plausibility – that someone around that time might have reached this conclusion. But it doesn’t do any more than that. It certainly doesn’t tell us anything direct about the beliefs of the people who are actually under discussion here. Nor does argument from “common sense” substitute for actual research. The first reason why this is so is that different people may reasonably have very different standards of what “common sense” is. A foreign ruler who notices that US military power is not unlimited, that lengthy foreign interventions etc are not usually popular with the American public is going to have a very different calculation of what he or she can get away with than the abjectly terror-stricken subject that Graeber assumes is inevitable. People also plausibly pay attention to what the US says and does. In my own “common sense” world, Saudi Arabian policy makers have no doubts that if e.g. they tried to organize an oil blockade against the US, the US would do whatever it felt it needed to, up to and including brutal military invasion and occupation, to stop this happening. The US has made it clear that it regards oil access as a ‘vital national interest’ – a codeword for something that it is prepared to go to war over. But in my “common sense” world, nobody is terrified that the US is going to invade in order to stop copyright violations in other countries, even though US policy makers frequently fulminate about this issue. They may of course fear other forms of retaliation, signalled through Special 301, primarily involving market access. This is less a world of complete terror, than variegated worry, shading from well-justified fear of military attack on some issues, through worries about non-military forms of pressure to complete indifference about US preferences on some topics.

So – there are different “common sense” accounts, each of which may have surface plausibility. The way that we figure out the relative explanatory usefulness of such “common sense” accounts of how the world may work is by appealing to evidence, or, where the evidence is lacking, doing actual research. As the sociologist Duncan Watts observes, everything is obvious – after you know the answer. Before you do the research to find the answer, a variety of equally “obvious” causal relationships, each with very different implications, may be true.

This is something that applies with especial force to anthropologists. I’m used to anthropologists giving the rest of us social scientists well-deserved grief for the ways in which we assume that we know what people think and believe in specific contexts, and can infer their systems of meaning from big structural theories without actually bothering to talk to them properly or to live with them. I think that Graeber, in other contexts, would recognize that the claim that one can tell what people (here – the people being non-US central bankers, finance ministers and their officials and the like) actually believe, on the basis of “common sense” is a non-starter. Obviously, the research project of finding out what everyone significant in the world of non-US economic policy making actually thinks about the US is an implausibly large one. But one could still generate useful findings by doing smaller, more localized work, and also (as a highly imperfect stop-gap perhaps, if you are a stone-hard anthropologist) using the kinds of methods that standard social scientists use to at least narrow down the likely range of beliefs. In the absence of such work, I think that a single journalist’s opinion, and appeals to “common sense” are very slender reeds indeed to carry a major theory about the workings of the world economic system. Hence, I think that even this somewhat more moderate version of Graeber’s argument fails to find good empirical support.

This leads to the third argument, which I’m not going to talk about at nearly so great a length – Graeber’s claim that it would be rather extraordinary if US economic dominance and military dominance were not somehow connected. On this level of generality, I have absolutely no argument with Graeber. I too think that they’re connected. But I don’t think that this very general claim does what Graeber needs it to do. It’s almost certainly empirically right (if underspecified), but it doesn’t map out the relationships that Graeber needs to see, if the thesis he develops in the historical chapters is to prevail in explaining the modern era too. In short – I don’t think that Because: Imperialism! works as a theory, because there are so many different ways in which imperial power might work, each of which has very different consequences for world politics, and many of which don’t invoke the specific causal relations that Graeber believes in.

In short then, I think that Graeber’s problem is that he needs the US state to have a very particular kind of role in the world system if his argument from previous chapters is to carry over easily. But I don’t think that the US state actually does have that role. Nor do I think that there is any good evidence that people believe it has this role (and “common sense” could go in a variety of different ways). This leaves a more general argument about imperialism, which is surely more supportable given the evidence, but doesn’t really provide support for the specific mechanisms that Graeber wants to invoke.

PART III - CONCLUSIONS: THINKING ABOUT IMPERIALISM

As the last bit of the final section makes clear, I do believe that imperialist and power-based explanations of the world economy are where we should start from. However, I don’t think that Graeber’s final chapter is a good place to jump off into this argument. In part, because as I’ve suggested above, the metaphors don’t travel well. Thinking about superficially anodyne relationships as forms of “tribute” has the useful and salutary effect of pushing us to think about them as being political, rather than something that just naturally happens. But it also pushes us – as Graeber’s line of argument suggests, to think about them as being exacted under the direct threat of military force in the event that they are not delivered. That’s what tribute is. This may explain some relationships in the world economy, but it doesn’t explain nearly as much, I don’t think, as Graeber argues.

More generally, as Graeber makes clear in his response, it focuses on the state as the primary locus of action. If it weren’t for the state’s military and ideological power, markets would be reabsorbed into society. But this radically underestimates the role that market actors and market integration play, independent of US interests. It used to be that countries which didn’t pay up their debts could expect to be invaded by major powers. Now, even in the absence of even an indirect threat of force from the US, they can expect to find themselves isolated from the world economy instead. And this is not because the US state orders it to happen, but because economic actors, who are largely autonomous of the US government, or of any other state, coordinate to make it so. Furthermore, if we look to the power of the EU, which does nearly as many bad things in the markets of developing countries as the US, we see a power that is exerted without anything very much in the way of force to back it up. The EU has no army itself, and the power projection capability of its member states ranges from limited to negligible. Yet it is able to shape global markets, not by military threat, but by using market access and other economic tools. Finally, there are excellent reasons to believe that the US state is the creature of economic actors in many ways rather than vice versa.

If it needs emphasizing again, let me emphasize it – vigorously disagreeing with Graeber’s take is not stating, or implying that he is a bad scholar. I think that his arguments in this particular chapter don’t work at all, but bad arguments happen even to the best thinkers. I would genuinely be interested to see what he had to say if he took some of these criticisms not as efforts to delegitimize him, but to push him to provide good evidence and more carefully developed arguments to support his main contentions in later work. If he doesn’t want to take my criticisms seriously, because he believes that I am a fundamentally dishonest person who is out to discredit him, I’d at least push him to imagine how he might respond if (purely for the sake of argument) I was genuinely interested in constructive dialogue, and in pushing him to do better rather than to tear him down.

Still, while I’d like to see more work on the American imperium, I would argue, contra Graeber, that it should pay at least as much attention to questions of market access as to military power, and that it should start from the basis that market actors can be largely autonomous of state power. The work that Marxists such as Claire Cutler have done on how market actors are creating their own private spheres of international governance should be part of this conversation. Equally, I’d like to see more work from my colleagues in international relations, who in general haven’t done nearly as much as they should to figure this stuff out. There is a little movement, especially after the financial crisis. Hartal in comments points to a recent book by Carla Norrlof which sounds interesting, especially as she is someone much closer to the game-theoretic heavy center of the discipline than I am. Thomas Oatley has a fascinating unpublished paper on the relationship between US military spending and global financial crises, which I can’t wait to see in the public domain so that I can blog about it. Economic sociologists are doing a lot of good work that I don’t have time to develop here (this post is already more than 5,000 words). Anthropologists have a lot to contribute. Most of the good work by IR scholars on these topics (as well as by the occasional rogue economist like Dani Rodrik) are footnotes to Polanyi. More Polanyi style grand analysis, that was really grounded in the specifics of the system, would be greatly appreciated.

Finally, what this work needs to do is to explain variation in imperial relations as well as constancy. As I argue above, there is prima facie evidence that the ways in which the US views threats to oil supplies is very different to the way in which it views threats to the music and movie industry. This is not to say that it doesn’t respond to the latter – but it responds in very different ways. This distinction is obvious, but there are also differences across a whole variety of intermediate areas, where the US is likely to respond with greater or lesser force, different tools, is better or worse able to influence others and so on.Explaining such differences is important, because it helps us to map out the actual power relations involved, and get some better understanding of the underlying causal mechanisms. This is important to academics – but I can’t help thinking that it’s also important to people who want to change the world rather than studying it. I think that they should be looking for a Gramscian mapping out of the territory – and a willingness ruthlessly to discard maps if they don’t actually describe this territory particularly well. “Because: Imperialism” helps to identify the problem, but it doesn’t provide any useful diagnosis for how to start remedying it.

1 As an aside, I’d like to see some evidence to back up Hudson’s “Chinese central bankers are trained using my book” claim. Hudson seems to have some quite emphatic beliefs about his own central role in various economic policy discussions. Elsewhere he tells us that he’s the guy who gave Nixon’s people the idea of using monetary policy to shaft the rest of the world. And in the introduction to Super Imperialism, he tells us about how “U.S. agencies were the main customers [in Washington for his book], using it in effect as a training manual on how to turn the payments deficit into an economically aggressive lever to exploit other countries via their central banks.” He’s been reliably informed (same link) that the Commerce Department changed the way it reported its statistics because of what he was able to do with them. This is not to mention the US diplomatic efforts to successfully stop his book being published in Japan, and the threats of two university board members and economic professors to resign if his books were published. I’m not claiming that any, or all of this is necessarily untrue (odder things have happened) – but given that the main expert on the global influence of Michael Hudson appears to be Michael Hudson, it might be nice to see some supporting external evidence from other sources. Also – to be clear, as per the distinction between author and work at the beginning of this post, even if a couple of these claims did turn out to be a wee bit overstated, it wouldn’t shift my assessment of his arguments all that much – people who have had a tough time in getting their ideas accepted by the more hidebound members of their profession sometimes react by overselling themselves in other ways.

{ 269 comments }

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William Timberman 04.04.12 at 5:57 pm

Henry, I do get how much you wish that you hadn’t felt obliged to write this reply, but I for one am glad that you did write it. It may feel like a negative on your personal balance sheet, but for me, it’s one more very good reason to pay attention to what appears on CT, and I thank you for it.

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geo 04.04.12 at 6:11 pm

Thanks, Henry, this is a model of civil, reasoned argument. Nevertheless, I’m vaguely (all too vaguely, I recognize) unconvinced by your contention that “market actors can be largely autonomous of state power.” In particular, I’m not sure that the fact that Europe has no air force but nevertheless does not appear to feel insecure or intimidated by the US is a clincher. For one thing, isn’t European business and finance so interconnected with their American counterparts that they are in effect fellow (if junior) members of the American ruling class — ie, coercion exerted against European economies would be unthinkable because the American economy would suffer intolerably as a result? Yes, to the extent that foreign ruling elites are integrated with, and not merely subordinate to, American ones, their economies are indeed safe from external military coercion. But if this is your main reservation about the traditional model of imperialism, it seems to me a minor one.

I’m also a little dubious about your call for more research into elite motivations. For one thing, the beliefs of policymakers simply are not related directly and unambiguously to their actions. You remember the famous Pentagon Papers classified memo from an assistant secretary of defense that listed the reasons for the US intervention in Vietnam: 70 percent to maintain US credibility; 20 percent to maintain access to Southeast Asian resources; 10 percent to save the Vietnamese people from Communist tyranny. Even if this were exactly the spectrum of motives within every US policymaker’s mind, probably 100 percent of them would have told a political scientist researcher — and in good faith — that the US was in Vietnam to preserve freedom against Communist tyranny. In any case, one can hardly presume good faith when dealing with “central bankers, finance ministers, and their officials.” Such people may have strong motives to deceive even tough-minded political scientists, just as legislators will regularly tell interviewers that campaign contributions and job offers have no effect on their votes. In a class society, what economic as well as political officials say is evidence only of what they want their hearers to believe, not of what they themselves believe. The only real evidence is their actions.

3

bob mcmanus 04.04.12 at 6:15 pm

Okay, in a very globalized international economy with global money, asset, commodity and speculation markets, the intimidating effects of potential military adventurism do not have to be direct or obvious. If there is one source for a rare earth an attack there can hurt economies on all continents. Historical parallels would involve decimation, the destruction of Jerusalem, or just the expenses in a province of providing for a legion for a year or two. So perhaps Egypt would be intimidated by Rome sending a legion to Spain, and try to make sure Rome never worried about Egypt. This would be a force multiplier, a way to gain the benefits of military force more efficiently and cheaply.

And so, research might look into whether the Iraq invasion created costs (or benefits) for far away nations, markets, elites. How or if were the economies (or whatever) Argentina, Australia, South Korea etc, or some internal but influential portion of those nations effected by the Iraq War?

Let me see:Brent Crude Jan 2002:looks like $22
Brent Crude Jan 2006: Approx $83

4

Sebastian 04.04.12 at 6:23 pm

Essentially Graeber needs to have answers to questions like:

If the Argentinian default was such a grave assault to reserve status, why didn’t the US attack Argentina?

Even more importantly, if switching to the euro for trade caused the US to call Iraq, Iran and North Korea the axis of evil, why did France, Germany, et al, switching to the euro fail to trigger an invasion, or at the very least some sort of serious adverse response from the US?

5

bob mcmanus 04.04.12 at 6:24 pm

So of course, the relevant current question, in the news:

Does Sweden (whoever) want the US & Israel to attack Iran? Really? Can they help us out here a little and do “x” for us?

6

Barry Freed 04.04.12 at 6:35 pm

A thoughtful and well-considered reply.

Here is what As’ad AbuKhalil, a political scientist and anarchist (IIRC) says about Robert Fisk: http://angryarab.blogspot.co.uk/2012/03/exposing-robert-fisks-fibs-i-just-hate.html

I’m not sure it means all that much to Graeber’s argument though. I think he’s right that there is/was a general impression that that was the case (I certainly remember it that way). That doesn’t however mean that that was the case. (Besides, IIRC the decision to invade was if not made, at least broached, within the White House before Iraq went to the Euro, and, in fact, even before Europe went to the Euro).

7

Neville Morley 04.04.12 at 6:39 pm

The phrase which stuck out for me on first reading (I’m certainly going to have to read this again more carefully) was this: “Briefly – for Graeber’s account of debt to work, you need a powerful and oppressive state apparatus, to provide the direct coercion that underpins the entire malign system of exchange.” Taking the long historical view, I don’t think this is true; in the Roman Empire, there is significant development of a system of exchange that certainly had the potential to be experienced as malign and coercive by many of the empire’s subjects, but while the state apparatus was pretty powerful by ancient standards there were serious limits to its power and reach by any modern standards, and more importantly it wasn’t terribly interested in anything we’d call economic except where that directly threatened its interests. The malign, or potentially malign, system of exchange develops in parallel and interdependence with the development of state power, rather than being solely its creation or solely an autonomous development.

More importantly, I don’t think that Graeber’s theory of debt posits this; if that’s the way it comes across in Chapter XII, that seems to me like a significant deviation from his interpretation in the rest of the book. This reinforces my frustration that he doesn’t say more about Rome, apart from the discussion of certain legal developments. I don’t think it’s just because I’m an ancient historian that Rome looks like it could be a really useful example (China likewise) of a emerging complex, transregional system being increasingly integrated through a confused range of state-led and semi-autonomous processes – it all tends to come back to the imperial power in the end (at least in the case of Rome), but not in this crude, direct coercion underpins everything sort of way.

I’ve dabbled a little in this area, e.g. exploring whether modern theories of globalisation have anything to offer ancient historians (for example, David Grewal’s work on networks, exploring how a free choice can nevertheless feel like compulsion), but need to think about this a lot harder when I have some spare time. I hesitate partly because the tradition of co-opting Rome as a means of making sense of modern imperialism is not a terribly impressive or attractive one…

8

Neville Morley 04.04.12 at 6:47 pm

@ bob mcmanus #3: Rome sending a legion to Spain to intimidate Egypt doesn’t work in an era of pre-industrial communications speed – it takes Egyptians several months to learn that the emperor’s died, let alone anything less important. The Romans do build up, over the course of centuries, a reputation for ruthlessness in the treatment of revolted allies that almost certainly then played a part in the calculations of any allies contemplating revolt, but I can’t think of any examples of the Romans themselves embarking on military adventures for this purpose (they always have plenty of other reasons).

9

Henry 04.04.12 at 6:58 pm

Neville – on the narrower point of what Graeber argues, I’d have to go back to look at the relevant chapters again, but he certainly makes the claim in his reply that:

bq. While markets are founded and usually maintained by systematic state violence, in the absence of such violence, they will quickly turn into something far less obnoxious—and can even come to be seen as the very basis of freedom and autonomy.

which seems to me to suggest that state power is indeed what underpins economic relations going bad. On the broader point of empires as more diffuse networks of coercion, you likely haven’t seen this piece by Dan Nexon and Tom Wright, which makes some very interesting arguments (it would be fun to see whether they extend backwards at all).

10

from the sideline 04.04.12 at 7:10 pm

Thank you to Henry Farrell, Gabriel Rossman, David Graeber and to various commentators on these two recent posts! I’ve learned quite a bit by reading it all. Though I’m sure those that have been closest to the flame would wish that several things had played out less heatedly and in some regards quite differently I think (hope) the messy parts fade fast while the constructive stuff lasts. I’ve put Debt on my to read list and bookmarked Rossman’s blog!

11

Watson Ladd 04.04.12 at 7:12 pm

Henry, what do you make of the export-lead industrialization strategies of South Korea and Singapore succeeding, while import substitution failed the South American countries that tried it? Given that countries the US exerted direct military control over succeeded massively, while less controlled and even hostile countries are basket cases, it seems odd to argue that Uncle Sam was using his military might to destroy successful economies.

12

bob mcmanus 04.04.12 at 7:13 pm

Now, granted re comment #3, perhaps the rise in oil prices wasn’t solely or largely caused by the Iraq Invasion. There was the growth in the Chinese economy and other New Economies, there was a lot of credit floating around, etc. It is all incredibly complicated and interrelated and moves at the speed of light. Literally.

So maybe you just look at what actually happens, who it benefits, and presume it isn’t all happy accident. Because as the guy said, by the time you understand the old or current reality, they are creating the next one. And since they have the money and the power, they can also buy the talent and skills. They are a whole lot smarter than you.

The US ability to intervene abroad is limited both by financial costs, and by difficulties in maintaining domestic political support. This suggests that the US power to intervene militarily abroad is far more qualified than Graeber thinks it is.

Goodness, Farrell, the powers that be barely broke a sweat in the last decade, either economically or politically. They could go a lot farther before the people starve and the riots start burning the capitol down. I honestly don’t know, given a plausible casus belli, what the limit is for American militarism, but I suspect it goes way past nuclear exchange.

And after GWB, Americans and the world understand this better.

13

david 04.04.12 at 7:37 pm

@Watson Ladd

South Korea and Singapore are a little more complicated than that – establishment ideology in the US during the 60s was American-Keynesian which wholly approved of import substitution; in fact US projections for South Korea predicted worse growth than North Korea. 60s Singapore was more of the UK’s ambit and during its independence there were serious American suspicions that the enthusiastically-socialist Lee Kuan Yew would either turn communist or lose power to the communist elements of the PAP; there were (apparently serious) suggestions that the US should ignore British support for Lee and arrange for intervention, a view that gained momentum when Singapore seceded from Malaysia (seen as a failure of Lee’s pet project). In large part Lee remained in power because the UK Labour government had similar ideological sympathies itself. You can see both of these concerns through a cursory stroll of mainstream foreign-affairs journals of the 60s.

Neither, in short, were overtly considered both effective US clients and successful economies prior to the fact of becoming so. Export substitution is a notion today because it was materially successful; prior to Tiger miracle, it was just a domestic political tactic for stabilizing crony support.

This point doesn’t militate in favour of Graeber either, though.

14

Dragon-King Wangchuck 04.04.12 at 7:37 pm

Let me start by saying that the majority of CT posts that catch my attention are written by Henry Farrell. That if the disagreements in question were to be decided solely on the delivery of arguments, there would be no question of the outcome. That said, I have some issues with this post – mostly re: the limits on US Military force.

I’m not sure this does anything to disproves the “Behind him, there’s a man with a gun” argument at all. Are we talking about the Grand Adventure in Iraq and how it demonstrates that the most powerful military force in the world can be stymied by enough guys with AK-47s and home-cooked bombs? Because if I was a tin pot dictator or a member of the policymaking elite of a small backwaters nation, I’d notice that the US still managed to get their invasion on and the tin pot dictator as well as plenty of his policymaking elites ended up most definitely not ahead in the deal. I’d notice that despite massive expense and unpopularity in the US, American troops remained stationed in Iraq for a long long time. I’d notice that while the US doesn’t have the capability to throw their military everywhere at once, they do seem to have the capacity to throw at least some of it at new targets quite readily.

IOW, it doesn’t matter if the US can really only make examples of a small number of less-than-compliant nations – no one wants to be the example. Also note that the Iraq Invasion demonstrates that the US can invade targets regardless of how little sense those targets make. That “pursuit of what it considers vital national interests” is a remarkably elastic criteria. I guess this is what you call Graeber’s second more moderate version of the argument. I don’t know anywhere near enough about international relations or money and reserves to have any firm positions on this. Heck I haven’t even read the book! But I do have to say that I don’t think the evidentiary bar has to be particularly high, given past behaviour. I guess you’re also saying that even with a low hurdle to clear, Chapter 12 doesn’t. Okay, I’ll see when I get there.

Finally, there are excellent reasons to believe that the US state is the creature of economic actors in many ways rather than vice versa. Absolutely. Totally in agreement. Not entirely clear on how this changes the nature of the use of force by the US. I mean, isn’t it possible that some of these private non-state actors might have a vested interest in a strong US dollar?

Anyways, I’m sorry that this has turned out to be about the unpleasantness so much and not just because of the unpleasantness of it. I am finding the discussion around the rest of it quite enlightening.

15

leederick 04.04.12 at 7:54 pm

“Essentially Graeber needs to have answers to questions like:… If the Argentinian default was such a grave assault to reserve status, why didn’t the US attack Argentina?”

Why does he? He seems to have weakened his point by unneccesarily overstating it. Does the US really have to have the sort of power that allows you to bomb anyone at any moment, regardless of the costs, for his theory of seignorage to work?

For example: part of the reason that the dollar is a reserve currency is that oil is sold in dollars and OPEC tries to maintain dollar price stability. The amount of force needed to maintain that isn’t really that large. Maybe it needs an overseas force projection ability few other countries have, but mostly it’s just based on the fact it’s propping up and could withdraw support for certain middle east regimes. That’s not the overt force of cruise missiles, but it’s still force that’s keeping these people in power. Once it’s achieved people still need dollars to buy oil – even if they can’t be bombed directly. But aren’t the cash flows still seignorage?

16

LFC 04.04.12 at 7:55 pm

It used to be that countries which didn’t pay up their debts could expect to be invaded by major powers. Now, even in the absence of even an indirect threat of force from the US, they can expect to find themselves isolated from the world economy instead. And this is not because the US state orders it to happen, but because economic actors, who are largely autonomous of the US government, or of any other state, coordinate to make it so.

OK, but imo the main reason major powers don’t invade debtor countries is that (per your colleague Marty Finnemore, and other writers) beliefs and understandings about what uses of force are legitimate have changed. Conquest for territorial seizure used to be routine and expected; it no longer is. Etc. The normative environment in which interventions are contemplated and carried out has changed quite radically over the past century or 150 years. (And to anticipate an objection from McManus: No, the Iraq war was not a war of conquest (it was, quite plausibly or arguably, an illegal war of aggression but the goal was not territorial seizure.))

17

Henry 04.04.12 at 7:56 pm

bq. Henry, what do you make of the export-lead industrialization strategies of South Korea and Singapore succeeding, while import substitution failed the South American countries that tried it? Given that countries the US exerted direct military control over succeeded massively, while less controlled and even hostile countries are basket cases, it seems odd to argue that Uncle Sam was using his military might to destroy successful economies.

Watson – Peter Katzenstein’s book on the American Imperium talks a bit to the Japan case, but is not entirely conclusive as far as I remember. What Katzenstein does argue (although he doesn’t look at Latin America) is that there is substantial variation in how the US has acted as an imperial power in different regions. My first approximation guess as a non-specialist in either of these areas is that to the extent that the US imperium made a difference, it was not because Singapore and South Korea were in its ambit, and Latin America was out, than because of the different ways in which it exercised its power in parts of the world that were under its sway. Hard to talk about Latin America without remembering US repeated sponsorship of coups, protection and support for extraordinarily vile regimes that massacred their citizens in large numbers, the School of the Americas etc. To put it a different way, “exercise of military control” can mean a whole lot of different things, depending.

18

Neville Morley 04.04.12 at 8:01 pm

@Henry #9: many thanks for the Nexon/Wright reference; no, I hadn’t seen it, and I dearly wish I had before I last wrote on this topic, as I ended up in a very similar place vis-a-vis Rome without some of their neat terminology (e.g. heterogeneous contracting). My one immediate complaint is that they seem to view the culture of imperialism solely from the centre, in terms of legitimating imperial rule, rather than balancing this with the view from the periphery, but it’s a very nice piece.

As far as the Graeber quote is concerned, it doesn’t square with my reading of most of his book – and I’m pretty sure that I have on occasion ended up arguing one point in a way that’s actually somewhat inconsistent with points made elsewhere – but if that really is his belief then it strikes me as remarkably optimistic. Yes, of course the market can be experienced as liberating for some people, some of the time, and even as the basis of freedom and autonomy, but that’s surely true regardless of whether or not it’s backed by state coercion. I’d want to italicise the come to be seen phrase, I think; it all depends on your specific position in the social order…

19

Doctor Slack 04.04.12 at 8:02 pm

LFC: Trying to forcibly set up a client state that’s answerable to your interests is still a war of conquest, actually.

20

david 04.04.12 at 8:02 pm

If one weakens Graeber’s theory of seignorage to just cash flows, there’s nothing it explains which standard Keynesian-flavored accounts of trade deficits can’t already explain. They can even do you one better on reducing the strength of one’s assertions about military power – why stop at dropping the argument that the US can take on anyone anywhere when you can merely invoke the undeniable point that it’s really freaking expensive? Thence high G, thence inflation, thence Triffin.

21

Henry 04.04.12 at 8:12 pm

leederick – a lot depends on whether you view seignorage as being a form of tribute, as Graeber does, or as something else. I think a far more sustainable argument is that it is an exercise of structural power that doesn’t depend directly on threats. People use USD and invest in T-Bills not because they fear the consequences if they do not, but because US power make those attractive currencies to use, and bonds to invest in. More broadly, much of the power that the US has is what you might call adjustment power – its economy is sufficiently big that it can force others in the world economy to adjust to painful changes while remaining relatively unscathed itself. Hence the famous John Connally anecdote.

Dragon-King – I think that the interesting question here is whether a state the size of Iraq would have much reason to fear a US invasion today. I don’t think so. More broadly, Graeber’s argument suggests that there is continued, unvarying terror among other countries, which seems not to be true. E.g. Iran was much more willing to talk about concessions right after the Iraq invasion, when it feared it would be next in line, than a couple of years later, when it saw what a clusterfuck the Iraq invasion had become, and calculated (correctly) that the US would not go to war with it and that it could hence return to business as normal.

George – your argument would explain why other states don’t want to attack the EU – but it wouldn’t explain how the EU can extend its influence abroad (including into the US in various market regulation issues) without having any army worth talking about. On the actual preferences and beliefs of policymakers – I am a little more optimistic than you are (you can actually tell quite a lot by talking to these people, and seeing what they don’t say as well as what they do), but I agree completely that one should look to what they do to temper your beliefs about what they say. On the narrower point – if these officials’ attitude is one, as Graeber suggests, of pervasive terror, this should not be difficult to establish I wouldn’t think, either on the basis of observing the officials themselves, or the consequences of what they do and do not do.

LFC – Marty’s book is great, and is where I learned about this obviously. I would however like to see her talking through changes in economic organization during the period in question, and whether these had consequences, as well as changes in norms. I think that one could push back a little on this (and will ask her about this when next I see her).

22

leederick 04.04.12 at 8:32 pm

I wouldn’t disagree with that. I would say trying to treat it as an either/or isn’t really needed. People can buy USD because it’s a nice currency to use and also because due to US military power in the middle east you have to use it if you want to buy oil.
Surely some seignorage is inarguable? We know US force shapes the middle east, and we know that has an effect on oil pricing and forces people to use USD, that’s a cause which will produce an effect. The argument’s really about relative sizes – I’m less clear about how you’d disentangle how much is caused by what though.

23

Dragon-King Wangchuck 04.04.12 at 8:32 pm

I think that the interesting question here is whether a state the size of Iraq would have much reason to fear a US invasion today. I don’t think so. More broadly, Graeber’s argument suggests that there is continued, unvarying terror among other countries, which seems not to be true.

That seems pretty reasonable. Bashar al-Assad continues apace despite what happened in Libya. But there’s also the point raised that nations aren’t monolithic entities. Certainly some people that make up the policymaking elite in potentially non-compliant states would be arguing that “look at how weak the mighty US war machine is!” but isn’t it also reasonable that others are saying “those guys are crazy and totally in the sway of the arms industry so they will bomb us even if it bankrupts them.” What I’m saying is that despite the limited nature of the massive military capabilities of the US, there’s room for the argument to be made. That the notion that a state the size of Iraq should consider the viability of being invaded by the US isn’t an unreasonable concept is basically proof of the coercive nature of imperial US military force.

That basically, yes – the debacle in Iraq certainly supports the argument that there are probably some serious limitations on US military might. But what would support those arguments even more would be actual serious limitations on US military might.

24

J. Otto Pohl 04.04.12 at 8:46 pm

This post suffers from the same basic problem I see in a lot of discussions about imperialism. Nowhere is the term defined that I can see in the post above. This is a problem because the meaning of the term is contested. While most CT commentators may agree that the US is an imperial power it still does not resolve exactly what that entails. Is imperialism primarily a set of economic or a set of political relations? Exactly what is entailed by the description of a relationship as imperial? Was the USSR an empire? Without a specific definition of what is meant by imperialism in the post it is hard for me to follow the argument. A short one line definition of imperialism would be very helpful in this regard.

25

Henry 04.04.12 at 8:48 pm

J. Otto Pohl – it is about as far from one line as can reasonably be imagined, but I think that the conceptualization of imperialism in the piece I link to in #9 is as good as I’ve seen.

26

geo 04.04.12 at 9:17 pm

Henry @21: wouldn’t explain how the EU can extend its influence abroad (including into the US in various market regulation issues) without having any army worth talking about

Oh, come. Hegemons set (and sometimes alter) rules in ways systematically advantageous to themselves, and then everyone, including the hegemons, has to follow those rules. (There is, of course, generally a benefit in having any rules rather than no rules, where it’s a matter of complex interactions extending through time.) If, to be crude, you mean something like: why don’t Europe’s creditors thumb their noses at Europe, the answer is surely because they would be thumbing their noses at rules that the US has, overall, a very strong interest in everyone following. Successful defiance would pose the threat of a bad example, just as it would if a group of shopkeepers refused to pay protection money to a particular Mafia family — of course all the families would combine to crush the plucky little shopkeepers.

And optimism, schmoptimism. I’m invincibly skeptical that economic or political running dogs (I mean officials) are capable of, much less willing to, describe their actions and decisions in objective, non-ideologically obfuscatory fashion nor, from what I’ve seen, that most political scientists are able or willing to gently or forcibly lead them to such admissions or understandings. But I admit that this is borderline ranting.

27

Z 04.04.12 at 9:30 pm

They’re wrong. Lots of private actors buy T-bonds without any US government pressure, especially during times of economic crisis, making them highly unlikely forms of tribute. Of course, the reasons why T-bills are regarded as a safe investment have a lot to do with US predominance, and the US did impose the adjustment costs on everyone else during the 1970s. But this is not tribute, a point I’ll return to in the third section. The claim that US foreign policy adventurism in the 2000s were motivated by US fears that it was losing its grip on Argentina and the boys not only has no evidence to support it, but seems to me to be completely indefensible.

But here I think is the crucial point of disagreement between you and Graeber. Graeber posits that actors buy T-bonds because the US has a central role in the world system and also notes that this central role is being contested; both by other industrial powers in the conventional economic sense and by a world movement in the political arena (I am not necessarily endorsing those claims, just trying to present Graeber’s thesis accurately). Confronted to these challenge to its central position, and seeing that its central position is crucial to the functioning of its economy (because it is in massive debt), the US has to maintain its predominance in one way or another. Now think about it as an economist: what is the one comparative advantage that the US has on the rest of the world? Obviously military power. So, on the short term, it might be tempting to US elites to try to organize the world around military power as a way to maintain their quite surprising position within the world economy. This, as I understand it, is Graeber’s thesis: not we buy T-bond because we fear we will be bombed but as long as the world is organized around geo-strategical lines, the US will be able to live off the rest of the world.

FWIW, far from being indefensible, these claims, properly understood, seem to me to hold some explanatory power. Take for instance Irak II. Graeber’s thesis is not that this was (primarily) to grab Irak’s oil nor is it that this was (primarily) to scare countries in not doing an Argentina or to stop selling oil in dollars, it is that this was primarily to realign the world along lines of military and geo-strategical power. And this worked surprisingly well: it did split the emerging EU into two antagonist blocks and thus struck a massive blow to the constitution of the EU as a meaningful political entity. This (at least in the short term) has certainly helped the US maintain its special role. Same with Afghanistan: the point is not to scare other countries, the point is to make yourself indispensable, quite literally a force to reckon with.

Now, as you say, military force is expensive and controversial, but this is not in contradiction to Graeber’s thesis: it well may be both that US elites have tried to play up their sole comparative advantage to preserve their central role in the world system and that this was a terrible failure (even from their point of view) in the middle to long term. This is actually what Graeber thinks (and I would tend to concur by the way).

One last word to conclude an already too long comment. Like many readers (and I venture contributors) here, I deeply regret the incidents which marred this otherwise very interesting book seminar.

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chrismealy 04.04.12 at 9:36 pm

China has nukes pointed right back at the US, so why would it pay tribute?

29

Bill Barnes 04.04.12 at 9:38 pm

George,
When you say

” I’m invincibly skeptical that economic or political running dogs (I mean officials) are capable of, much less willing to, describe their actions and decisions in objective, non-ideologically obfuscatory fashion nor, from what I’ve seen, that most political scientists are able or willing to gently or forcibly lead them to such admissions or understandings.”

you speak too broadly and definitively, thereby effectively discouraging what we most desperately need: to build a movement of political scientists, economists, etc, that will take it as their professional duty and routine practice to “forcibly lead them [normal scientists of the existing hegemonic order] to such admissions and understandings” — by making it impossible for them to have a moment’s peace in public or withion any profession unless and untiln they do so.

Bill

30

geo 04.04.12 at 10:41 pm

OK, Bill, I take back “able.”

Offhand, though, I’d say political scientists, economists, etc. would help more by speaking to ordinary people and demystifying economic and political processes for them, rather than pestering officials. To “speak truth to power” seems to me a non-starter, for all the reasons Chomsky’s always repeating. Much better to speak truth to the powerless, so they can speak power to power.

31

Eli Rabett 04.04.12 at 10:59 pm

You are surprised? Self praised genius does not accept criticism lightly.

32

Phil 04.04.12 at 11:13 pm

I’m invincibly skeptical that economic or political running dogs (I mean officials) are capable of, much less willing to, describe their actions and decisions in objective, non-ideologically obfuscatory fashion

geo – what’s your understanding of the mental processes of these officials? Are they consciously lying, are they brainwashed, are they transdimensional lizards, or what?

I guess what I’m jibbing at here is “objective”. Do you think they’re incapable of describing what they do in what you might call locally objective terms – in terms that are consistent, intersubjectively understandable and actionable? Because that would make for a very inefficient bureaucracy. Or are you just saying that they’ve got a different understanding of what they do all day than you have?

33

Paul Gottlieb 04.04.12 at 11:15 pm

Achilles, god damn it! Not Ulysses. If you’re going to be a pedant, then be a pedant!

34

Bill Benzon 04.04.12 at 11:17 pm

“Now think about it as an economist: what is the one comparative advantage that the US has on the rest of the world? Obviously military power. So, on the short term, it might be tempting to US elites to try to organize the world around military power as a way to maintain their quite surprising position within the world economy. This, as I understand it, is Graeber’s thesis: not we buy T-bond because we fear we will be bombed but as long as the world is organized around geo-strategical lines, the US will be able to live off the rest of the world.”

Interesting.

I’ve not read the chapter in question, but I’ve read, say, 95% of the discussion about it. And THAT statement is as interesting as any I’ve read, whether or not it’s what Graeber meant.

Whether or not it’s true, I can’t say. But, considered either as the deliberate result of conscious policy concocted in secret, or as the emergent result of interactions among various public and private actors, it’s interesting.

35

Aulus Gellius 04.04.12 at 11:32 pm

I’m about as far from an expert in any of this as one can get, but I was bothered by one detail in the post. First, you say that “[the US] is only usually prepared to do this [go to war] in pursuit of what it considers vital national interests.” But further down, you refer to “a ‘vital national interest’ – a codeword for something that [the US] is prepared to go to war over.” This makes the first claim circular: the US will only go to war over things it will go to war over.
And I don’t think this is just nitpicking; I think there really isn’t a very clear explanation of what you think the limits on the US’s willingness to fight are. Do you have a clearer explanation of this? Or is your position something like “I’m not sure what the limits are exactly, but there definitely are some”?

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William Timberman 04.04.12 at 11:53 pm

Bill Benzon @ 34

Funny, a couple of years ago I suggested — tongue in cheek as I thought at the time — that if geo’s U.S. running dogs foreign policy officials really wanted to save themselves a lot of grief, they’d hire out the entire all-American military-industrial complex to the Chinese. As the Mother-of-All-Hessians, we could put our eleven fast attack carrier battle groups to work protecting any and all oil tankers on their way to Guangdong, drop Special Forces paratroopers into Darfur to make sure that mineral extraction goes as planned, or into assorted other African countries to ensure that the deeds to land purchases in Mozambique, Malawi, Tanzania, etc. remain secure against rabid local subsistence farmers. If one does the math, Partner in Crime is likely to be a lot more profitable than Hegemonic Rival.

All we really need to do is to convince the Chinese government of our bona fides, and calculate their marginal cost of military goods production accurately enough to extract the maximum amount of profit from our fraternal association. (Is this a joke? Well, yes, but so is most of what David Petraeus or Tom Friedman has to say to us. Time to Suck. On. Something. Else?)

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Phil 04.04.12 at 11:54 pm

I think you’re looking for the wrong kind of precision, AG. The key words here are ‘considers’ and ‘regards’ (as in The US has made it clear that it regards oil access as a ‘vital national interest’). The limitation is self-imposed and arbitrary: the US will only go to war over things that US elites regard as being worth going to war over. But it’s still a real limit: any President planning to declare war over IP violations, say, would find it very difficult to do so.

38

Henry 04.04.12 at 11:56 pm

George – I’m talking about broader uses of market power here – i.e. efforts to get countries in the developing world to coordinate on EU regulatory standards that advantage EU companies. But to clarify the broader point about the independence of market power from military power – imagine a thought experiment under which aliens decide to intervene in human affairs by positioning death ray satellites such that if any US military personnel or US owned and directed materiel strays outside the US’s own national borders it will be instantly destroyed. What would happen to the US’s economic power? And what would happen to the power of large corporations with a US basis? In other words, what would happen if the US was identical to today’s US in all ways except its ability to project military force abroad? My first approximation guess is that this would have significant consequences for oil markets (which are obviously incredibly important) and military procurement, but that for most other areas of the economy, it wouldn’t actually have much direct impact.

On the question of whether one can figure out stuff from officials – you seem to be assuming that one would take what they say on good faith. But I don’t think that an assumption of good faith is needed to carry out a rough and ready ethnography. One can figure out a lot from how they are organized, the issues they talk about and the issues they are silent about, the kinds of cultural norms and unstated assumptions that they have and so on. Not quite on topic, but I would really, _really_ love to see a good ethnography of the US foreign policy community along the lines of what Karen Ho did for Wall Street. There’s stuff I can figure out myself from being on the margins of these discussions in DC, but a lot that I miss as well because I am not trained in this way.

Z – I think that this is a very interesting set of questions and way to start looking at things. I would respectfully disagree with the contention that this is Graeber’s set of questions though – he seems to be interested in a much broader form of analysis.

Paul – sorry – one of those things that is glaringly idiotic as soon as it is pointed out to you. Corrected.

Aulus – it isn’t circular so much as an observation in need of an explanation. US officials _do_ talk in different ways about different topics, and “vital national interest” is the usual codeword for ‘something we are willing to go to war over.’ This doesn’t tell you anything about what motivates them to describe some interests in this way, and others in less stark terms – figuring out a good account of this would require the kind of detailed mapping that I talk about in the post. Maybe someone has done this – if so, I’m unaware of it.

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Dave 04.05.12 at 12:00 am

But the specific point that I was making is that sometimes individuals, in pursuit of autonomy, might prefer that these exchanges not be so reabsorbed, and, instead, remain disembedded

Not sure I want all my relations embedded in some moral, reciprocal framework, but as a person with little money, I can say that money sucks, and so does dealing with people on that basis. Lots of human relationships are monetized by third parties (e.g. advertisers/Facebook) and I would say that also sucks.

40

purple 04.05.12 at 12:15 am

The areas in which the U.S still dominates the world, military and financial, are typically the last to go. And the limits of the U.S. military have been revealed in this last decade.

These debates seem backward looking, because in reality, the U.S. empire is over. It’s just that no one else in power around the world wants it to be.

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gordon 04.05.12 at 12:18 am

It would take another book to pull out the differences between Graeber’s and Henry’s world-views and critique them. I can only say that I won’t be throwing away Nearing and Freeman’s “Dollar Diplomacy” or Yergin’s “Shattered Peace” or Horowitz’ “From Yalta to Vietnam” or Guyatt’s “Another American Century?” or Sands’ “Lawless World” or Blum’s “Killing Hope” because of what Henry says.

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purple 04.05.12 at 12:19 am

The reason for this is because global capitalism requires a hegemon or it devolves in spheres of influence. And most well informed elites know what this meant last time, and they would prefer to be making money.

In reality were are coming to a much more interesting world than empire — a world with discredited ruling classes and openings for social change and unrest.

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Anderson 04.05.12 at 12:22 am

Henry thinks an author’s ethics are separable from his book. But seeing how incapable Graeber is of handling polite, informed criticism, I can’t imagine trusting his research. What does he do when he’s got a draft chapter and then finds sources implying he’s wrong?

(or perhaps I’m seizing an excuse not to add another book to my to-do list …)

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Tim Wilkinson 04.05.12 at 12:31 am

(The fuller passage from Debt, for reference: http://crookedtimber.org/2012/04/02/seminar-on-debt-the-first-5000-years-reply/comment-page-6/#comment-409532 )

I still see a certain amount of strawmannery and false dichotomising here, mainly centred on the classical Popper-Hofstadter territory of conspiracism-inflation. (Which reminds me, Hartal on the previous thread spoke much good sense, but WTF was ‘Anti-semitism has fully infused this tradition’ doing there? FWIW I too disagree with the market-anarchism position, notably Nozick-style capitalist utopianism.)

That point-by-point, point by point:

1. Is my post, as Graeber claims, an example of deliberate delegitimization, a “case in point” of dismissing someone interested in “the actual connections between US military power, the banking system, and global trade … as a paranoid lunatic”[?]Hardly. And Graeber himself doesn’t seem to believe it – he later suggests that he isn’t sure what the difference is between our positions on imperialism
1a: Emph. mine – this is to write conscious design into the position.
1b: But Graeber says in that passage that he thinks it’s more a case of vocab and emphasis than substantive disagreement (but of course emphasis – or rather de-emphasis is very important, as is vocab, esp. for public understanding – empire/imperium, anyone?). So the reasoning fails.
1c: HF (and hence Graeber in responding) actually starts out addressing the ‘hopelessness machine’ imagery.

Graeber: He suggests this is borderline paranoid conspiracy theory, since, apparently, ruling classes don’t really rule or come up with strategies of domination. (This is another of those interesting taboos: when speaking of the past, one can speak of “ruling classes” pursuing strategies of rule, but when speaking of the present, this is crazy talk.)

Referring to:

HF: the language here suggests a seamlessness, and a level of shared intention and planning on the part of the “rulers of the world” who have “constructed” and “designed” this system that seems to me implausible. Many of the most important features of modern capitalism have less to do with conscious coordination than with unconscious synchrony. Graeber, it seems to me, radically overestimates the extent to which monetary systems and debt arrangements are the product of conscious design.

2. Is it an “obnoxious rhetorical strategy” to cite to Graeber’s own description of what he claims to do in the book? well, unnecessary, esp. at such length.

3. Do I say, as Graeber claims, that one can’t and shouldn’t talk about ruling classes? But Graeber doesn’t claim that at all. He claims – at most – there is something like a taboo about discussing how the ruling class rules in the present, which HF observes. Since saying ‘don’t talk about [x]‘ would be to talk about x, that’s just what Graeber is not claiming. But that’s ‘at most’ – he could perhaps have described it as a kind of bias. And – speaking in general terms, rather than specifically about HF – I’d certainly say that this moving window separating the bad old conspiratorial days from contemporary times does seem to exist.

4. Am I “entirely oblivious” to one of the key arguments of the book – “one that in fact breaks dramatically with much leftist orthodoxy,” the “innovative” claim that “while markets are founded and usually maintained by systematic state violence, in the absence of such violence, they will quickly turn into something far less obnoxious—and can even come to be seen as the very basis of freedom and autonomy

Well, in the relevant passage, the supposition seems to be that Graeber views state power as underlying market exchange tout court rather than a particularly pernicious form of it:

…Graeber’s particular take on the power relations underlying money and debt. Graeber is at pains throughout the book to stress the ways in which state coercion and market exchange fit together. This presumably has a lot to do with his anarchism. For Polanyi, the villain is long distance trading relations, while for Graeber it is the state (in a formulation which is somewhat reminiscent of Althusser’s Ideological State Apparatus and Repressive State Apparatus), which is the actor that keeps the corrupt system going through its ideological and coercive resources.

And the approving quote from a review says:

the arc of Marx’s Capital begins with commodities and shows how commodification implies class society. There’s a tendency to deduce therefore, that any time anything exchanges for a price, capitalism will be reproduced, rising vampire-like from the dead to once more suck the blood of the living. Graeber sees it very differently. In the absence of state power, market exchanges tend not to give rise to the inhuman monster of capital … but rather tend to be re-absorbed into a moral economy of a human society, a society to which Marx’s account doesn’t apply

So maybe; certainly Graeber (if the review does indeed reflect what HF could be expected to glean from Debt) seems to think that market exchanges for price need not itself be a problem, and that these – which seem to be ‘disembedded’ in the sense at issue – are consistent with what the reviewer calls being ‘reabsorbed into a moral economy’. And in fact this idea does seem unusual for left ‘anarchist’ thought – it’s more like Nozick and similar anarcho-capitalists (N. after all tends very much not to emphasis actual capitalist production and instead go on about basketball playing and home-made machines and moving to the neighbouring village where the terms of association are more to one’s taste, etc.). Which is a point against it, I’d say – and I’d have thought this must be the least defensible part of the book, but then perhaps that’s just down to a background in political philosophy and specifically Noz – also not having read the whole thing.

Do I say that Graeber is “driven by [his] biases to become a bad scholar”?

Pass

Did I, “with consumate dishonesty,” ignore Graeber’s framing of the chapter around Hudson’s work?

Again, pass on the specific question, but I think HF is
* wrong to treat the causal relation between military and financial power as though it works only in one direction, rather than in a spiralling relationship of mutual reinforcement (and in ch 12, Graeber does in fact acknowledge the finance->war direction at least as much as war->finance).
* right that Hudson in Super Imperialism does not get to the man with the gun, stopping at ‘diplomatic pressure’, largely via the IMF and World Bank as the means of enforcing dollar hegemony and all the goodies it brings (apparently).

But to address the more general issue, in Graeber’s The essence of U.S. military predominance in the world is, ultimately, the fact that it can, at will, drop bombs, with only a few hours’ notice, at absolutely any point on the surface of the planet.11 No other government has ever had anything remotely like this sort of capability. In fact, a case could well be made that it is this very power that holds the entire world monetary system, organized around the dollar, together.

the word ‘ultimately’ is of some importance – ‘this very power’ is US military predominance, not just threats of ‘we will bomb you’ (HF recognises this). And As I’m flagging a bit, I’ll just add that stopping at ‘diplomatic pressure’ seems unsatisfactory as a fundamental explanation of US clout – and leaves out of account all the military interventions short of bombing, such as coups proxy terrorism, other black ops (as seen in postwar Western Europe, as well as throughout the US’s own neighbourhood and various spots around the world); also the Cold War in general, the Gulf I occupation of Saudi Arabia and Kuwait, and the disputed Axis of Evil business. I think the key point is that the US does not primarily wield its military might by issuing ad hoc threats to influence policy, but instead by ‘regime change’, whether by proxy, covertly, under some contrived pretext, or by provoking confrontation. I don’t think this contradicts Graeber, and certainly not Hudson, esp. in the essay Graeber cites in his response to HF’s first piece (though does not reference in Debt).

On that last one, Sebastian: if switching to the euro for trade caused the US to call Iraq, Iran and North Korea the axis of evil, why did France, Germany, et al, switching to the euro fail to trigger an invasion, or at the very least some sort of serious adverse response from the US?

For one thing, if you look at news stories from the time, it appears that the US didn’t take the Euro seriously – even (and one or both of these might have been bluster of course) Saddam’s move was initially derided as foolish as the Euro plummeted in value (not for long though). Also, being able to bomb anyone in the world doesn’t mean having unlimited capacity nor will to start a war against Europe. There are limits to US military power, and Graeber doesn’t seem to deny this; he only says it is of unprecedented reach.

In very general terms: using force generally means the threat of force has failed, so a successful threatener of force would be expected not to have to use it much.

I do think HF is correct that Graeber does not do very much in Debt to substantiate his thesis. I think he certainly could have (i.e. he is basically correct), and I’m not sure he should have (it is unclear how central the man-with-a-gun thesis actually is to his wider project – perhaps the aside about air power is actually an aside within an aside – after all, the book is about debt, and while he seems to think that the backing of the state (ultimately backed by force) is what turns monetised relations between persons into commoditised and thus inhumane ones, or something, it’s not clear that he supposes military might to be what makes financial relations between the US and other governments so pernicious. It’s just what gives – or gave – US diplomats, officials and appointees and the financial arrangements they maintain such sway in general terms. In fact Graeber argues that this is failing, that the finance-military interdependence is now spiralling downward rather than up. Here’s another longish passage from the book:

(Just seen Z’s suggestion, and it is very much along the lines I read, charitably, perhaps, in Graeber’s comment about the recent spate of US belligerence being a somewhat desperate attempt to shock and overawe)

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Tim Wilkinson 04.05.12 at 12:31 am

Insofar as overarching grand cosmic institutions have been created that might be considered in any way parallel to the divine kings of the ancient Middle East or the religious authorities of the Middle Ages, they have not been created to protect debtors, but to enforce the rights of creditors. The International Monetary Fund is only the most creditors. The International Monetary Fund is only the most dramatic case in point here. It stands at the pinnacle of a great, emerging global bureaucracy—the first genuinely global administrative system in human history, enshrined not only in the United Nations, the World Bank, and the World Trade Organization, but also the endless host of economic unions and trade organizations and non-governmental organizations that work in tandem with them—created largely under U.S. patronage. All of them operate on the principle that (unless one is the United States Treasury), “one has to pay one’s debts”—since the specter of default by any country is assumed to imperil the entire world monetary system, threatening, in Addison’s colorful image, to turn all the world’s sacks of (virtual) gold into worthless sticks and paper.

All true. Still, we are speaking of a mere forty years here. But Nixon’s gambit, what Hudson calls “debt imperialism,” has already come under considerable strain. The first casualty was precisely the imperial bureaucracy dedicated to the protection of creditors (other than those that were owed money by the United States). IMF policies of insisting that debts be repaid almost exclusively from the pockets of the poor were met by an equally global movement of social rebellion (the so-called “anti-globalization movement”— though the name is profoundly deceptive), followed by outright fiscal rebellion in both East Asia and Latin America. By 2000, East Asian countries had begun a systematic boycott of the IMF. In 2002, Argentina committed the ultimate sin: they defaulted—and got away with it. Subsequent U.S. military adventures were clearly meant to terrify and overawe, but they do not appear to have been very successful: partly because, to finance them, the United States had to turn not just to its military clients, but increasingly, to China, its chief remaining military rival. After the near-total collapse of the U.S. financial industry, which despite having been very nearly granted rights to make up money at will, still managed to end up with trillions in liabilities it could not pay, bringing the world economy to a standstill, eliminating even the pretense that debt imperialism guaranteed stability.

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Vladimir 04.05.12 at 12:44 am

So the first Iraq war was caused by the argetinean default?!? Look, you can demonize american elites as much as you want. But, if you want to make the case that they have the world under their thumb, you cannot say that those elites are stupid or ill-informed. And anyone who is not a fool or ill-informed knows that the end of the “conversibilidad” and, thus, the default was inevitable. It was never a matter of not being willing to pay (as is the case with most defaults). They simply could not pay, a fact that certainly was not ignored by the masters of the universe at the time…Do you want an example of a country that has defaulted and where it was not that clear that it was inevitable? Brazil. And, as far as I remember, that default not only did not cause any war but eventualy the country was brought back on its feet with the help of…the US Treasury!

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Watson Ladd 04.05.12 at 12:53 am

Tim, got away with it is an interesting description for what just might be the worst years ever in the Argentinian economy. The government has seized retirement funds and is criminalizing publication of the inflation rate. Furthermore both Yugoslavia and Russia defaulted on their debt quite recently, and military action was not considered in either case.

The recent financial crisis has not actually brought the world economy to a standstill: Brazil, India, Russia, and South Africa continue to grow. Europe was heavily affected, and China had slight dip in a still extremely positive growth rate. Germany had a mild recession: Greece is in the doldrums.

Lastly, the US almost defaulted this summer. You could see the panic in the eyes of the bankers that this was even being discussed. That default is a remote possibility for the US explains why people want to loan us money far more then our military power.

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Henry 04.05.12 at 1:01 am

Just a note to say that I will probably only be dipping into this conversation over the next couple of days – writing this post took two days of work, leaving me with a lot of other responsibilities that are suddenly yelling at me. So if I don’t respond, or only respond briefly to further arguments, that’s why.

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lupita 04.05.12 at 1:04 am

People use USD and invest in T-Bills not because they fear the consequences if they do not, but because US power make those attractive currencies to use, and bonds to invest in.

If T-bonds are such an attractive investment and using USD so convenient, that is, if having the USD as the world’s reserve currency is something most countries and institutions support, then why is all this happening?

Mar 16, 2009 – Russia proposes creation of global super-reserve currency
Mar 24, 2009 – China called for the creation of a new international reserve currency to replace the U.S. dollar
Sep 7, 2009 – UN wants new global currency to replace dollar
Feb 10, 2011 – The International Monetary Fund issued a report Thursday on how the dollar could be replaced as the world’s reserve currency
Feb 14, 2011 – France, as current head of the Group of 20 countries, will help the transition to a global financial system based on ‘several international currencies’, French Economy Minister Christine Lagarde said today.
Feb 19, 2011 – Brazil calls for currency system overhaul – FT.com
Apr 14, 2011 – The Brics called for a broad-based international reserve currency system “providing stability and certainty”.
6 days ago – BRICS agree to local currency credits to ease dollar dependency

So, why do so many countries keep accumulating reserves in dollars? The answer is because the US, the emitter of said currency, has not agreed to cooperate in the transition from the current system to a new one, despite so many important countries and institutions calling for it. Since the transition would be much more chaotic without the US on board that with it, the US, in effect, is stalling this sought-after transition simply by not agreeing to it. This situation cannot be interpreted as the rest of the world voluntarily supporting the current system. It can very easily be interpreted as the US using its power to impose its will on the rest.

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Nickzi 04.05.12 at 1:05 am

@Henry

“I won’t be talking at any length about what I think of his general conduct, style of argument in which he claims that serious critics are liars out to delegitimize him and so on. As you may imagine, I am very unhappy with his behavior – but I also believe that for purposes of analysis one ought to separate the person from the work. Worse people have written better books. I will, however, note (since Gabriel Rossman is too nice to do this himself) that Graeber’s account of their Twitter interactions is extremely tendentious, to the point of being more or less unrecognizable to me.”

If you are going to use the rhetoric of virtuous praeteritio, it would be better not to give the game away by making some extremely unpleasant allegations and insinuations of your own. How, specifically, is Graeber unfair about the Twitter interactions? Would you care to substantiate the “worse people have written better books” gibe? Even if you feel that Graeber has been deeply unfair to yourself and others, surely responding like this does nothing to elevate or aid discussion.

@Neville Morley

“while the state apparatus was pretty powerful by ancient standards there were serious limits to its power and reach by any modern standards, and more importantly it wasn’t terribly interested in anything we’d call economic except where that directly threatened its interests.”

It seem to me that the modern state also is interested in matters economic primarily when it perceives its own interests as being involved. I am not sure that ancient states were very different in this regard. I suspect that a list of what ancient and modern states saw as their own, vital interests would be notable more for similarities than differences, allowing for different ways of expressing ideas and so forth.

“it takes Egyptians several months to learn that the emperor’s died, let alone anything less important”

Not necessarily. It depends on when the emperor dies, what ships are leaving say Ostia for Alexandria – and, of course, where in Egypt our hypothetical Egyptians are located. I note that Pliny mentions a two day voyage from Ostia to Africa, and a six day voyage to reach Alexandria.

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shah8 04.05.12 at 1:07 am

Well, *Henry*, do the Archipelago of Bases (as explained by Chalmers Johnson) fall under the Death Ray Scheme? I would suppose so.

Surprising lack of discussion of Chalmers Johnson’s oeuvre aside, running a simulation in my mind was interesting. Most bases are fundamentally about keeping leaders friendly to the US atop the local political scene. They are not in the least useful as forward bases in service of regime change goals, and in fact, are most useful as sources of demand for the local economy, in the spirit of military Keynesianism. They also deter regional rivals from attacking the host. If things weren’t this way, the Phillipines would still have an operational Subic Bay, and KSA would still have a number of bases (aside from air-bases). So forth and on. So actually, if aliens started killing all US personnel outside of the US and wrecking the equipment, what would generally happen is that many countries would lose a lot of GDP points, have greater governmental turnover, and various regional wars start up almost instantly, absent some hurried treaty-making.

Sometimes, it might be better to think of the actions against Iraq or Iran more as being a bribe for Israel and KSA to be friends, friends for a long time, than any fury of any specific thing.

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geo 04.05.12 at 1:09 am

Henry @38: Thanks, fascinating thought experiment. (I assume when you say “strays outside US national borders” you mean “or outside the 800-odd US foreign military bases.”) My first-approximation guess is that if this constraint were permanent, it would have an enormous impact, and not merely on oil markets. I’m on a tight deadline tonight (and also feeling lazy), so I hope others will jump in and speculate.

One can figure out a lot from how they are organized, the issues they talk about and the issues they are silent about, the kinds of cultural norms and unstated assumptions that they have and so on.

I confess I don’t see why any of that is interesting in the slightest for a critic or even analyst of US foreign policy. What one should want to identify are the operative constraints on policy. To do that one needs to locate the institutional structures of domestic power and describe their goals, then look at the actual actions of policymakers, historically and at present. One finds, to a brutally simple first approximation, that the corporate and financial elite hold fundamental power in the society through their power over investment, employment, and credit, and that they want what are loosely called “business-friendly” policies and a “favorable investment climate.” One then notices that this is consistently what the US acts to bring about abroad, from Woodrow Wilson through Obama, and that substantial, non-rhetorical action to promote democracy and human rights are practically never undertaken, and never at all when there is any possible conflict with the far more important goal of favorable investment/ business-friendly etc. See: Haiti, Philippines, Cuba, Nicaragua, Guatemala, El Salvador, Chile, Argentina, Paraguay, Indonesia, Turkey, South Korea, Thailand, Zaire, Iran, Iraq, South Africa, Angola, Egypt, and post-World War II Italy, France, Japan, among other examples, along with all the places where US “security assistance” has effectively undermined (or tried to) economic nationalism or even mild reform efforts. What more does one need to know?

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lupita 04.05.12 at 1:27 am

@Neville Morley #7
My one immediate complaint is that they seem to view the culture of imperialism solely from the centre, in terms of legitimating imperial rule, rather than balancing this with the view from the periphery

If I may. Here in the periphery the issue of foreign reserves is much discussed. After traumatic financial crises, many vowed “Never again!” and many countries accumulated vast amounts of dollar reserves as protection against speculative attacks. However, others have begun to question the wisdom of having so much money parked in Treasurys at such a low interest rate given the many needs in our countries.

So, does the periphery buy Treasurys because they are such a good investment? Definitely not. They are accumulated as protection. Build a much needed hospital or buy a T-bond? So far, the answer is mostly buy the T-bond. That is how afraid we are.

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Watson Ladd 04.05.12 at 1:39 am

lupita, why dollars and T-bills as opposed to Deutschmarks and Francs? The problem isn’t why countries want reserves, but why they hold the reserves they do hold in the way they do. (Although the fear countries have of currency fluctuations is due to the risk of a sudden inflationary spike: reserves enable a slower, more orderly transition)

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lupita 04.05.12 at 1:55 am

why dollars and T-bills as opposed to Deutschmarks and Francs?

Because of liquidity; speculative attacks occur all of a sudden, though certainly some percentage of reserves are held in other currencies. However, the vast majority is held in USD. At the moment, there is no alternative.

(Although the fear countries have of currency fluctuations is due to the risk of a sudden inflationary spike: reserves enable a slower, more orderly transition)

That is not the reason. We actually discuss these things. The reason, openly stated by central banks, governments, and economists, is protection. That is why reserves are so high despite serious needs in many countries. Furthermore, unstable times such as the current one, demand even higher reserves as protection.

Given that the core countries have such a high level of debt, it is clear that the global system is unstable. This is why so many countries and institutions clamor for an orderly transition. The US has not budged. Alternatives, such as agreements for currency swaps in case of attack and regional monetary unions, are starting to emerge.

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Peter T 04.05.12 at 3:24 am

Henry at 38

Interesting thought experiment. What makes us certain that, over a decade or so, the resulting perception of the US as powerless beyond its borders would not have major economic impacts? EG as Latin American countries found one of the arguments against more national economic policies missing? And as the EU, worrying about the lack of backstopping US military power, moved to strengthen its central foreign policy and defence institutions, and then moved to strengthen (localise) some industries and capabilities in support of that increased military power? And as countries worried about international trade moved to build their own shipping and aircraft industries?

One move a lot of countries made in the 30s was to move away from free trade in so far as it impacted their broad defence capabilities – which included eg food supply, energy, resources, defence industries and so on. EG the British “shadow factories”, US subsidies to aircraft production (disguised as mail contracts) and even more so, the Soviet push to build a heavy industry base beyond the Urals.

I don’t think you can argue that such a major military shift would NOT have major economic effects – although these would certainly not be immediate.

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Watson Ladd 04.05.12 at 3:41 am

lupita, let’s say someone sells a lot of pesos quickly. The Mexican government can sell dollars for pesos to make people want to hold pesos, propping up the price. But it could be anything: gold, other currencies, foodstuffs. Dollars are convient only because everyone wants to hold them: the need to have a reserve isn’t the explanation for the use of the dollar in global trade.

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Peter T 04.05.12 at 3:41 am

On Iraq – Clauswitz likens battle (actual fighting) to cash settlement in trading – it showed who was really solvent. The perception of US power pre-Iraq was one of overwhelming dominance. The cash settlement showed that, in certain crucial areas, the US reality fell well short of the perception. It also (again) sorted the anti-US world into two camps – those with the political strength to ride out a short sharp shock, and those without it. The second presumably remain worried about US strength, the first much less so (and some are seeking to build the first sort of capacity). I think part of the US response is to play up the areas where it remains strong, but Graeber has it a bit wrong – reliance on airpower is a sign of weakness, at least in relation to firmly-based regimes.

I would be surprised if the less vulnerable were not seeking to exploit US economic weaknesses – Iran certainly is, buy playing up the threat of oil shocks. Switching to different reserve currencies would be another move. Are there others?

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lupita 04.05.12 at 4:49 am

the need to have a reserve isn’t the explanation for the use of the dollar in global trade.

No, it is not, although both uses of USD reinforce each other. My point is, countries do not accumulate reserves in dollars specifically because it is so strong and stable and Tresurys are such a magnificent investment. That is, central banks do not weigh all their options of foreign currencies and then decide that the USD is the best. The reality is that there are no options. China has been asking for the allocation of more SDRs but the IMF has not acceded. As is known, the US holds veto power at that institution which has its headquarters in Washington, DC.

It seems that, since the US will not participate in an orderly transition to a new financial system and will not cede power at the IMF, the BRICS countries have had to come up with their own bank and have agreed to conduct trade in their own currencies. One hopes that this initiative will bear fruits and ultimately liberate us from Anglo-American financial dominance.

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Jake 04.05.12 at 5:09 am

lupita – so other countries say that they want a different reserve currency system. Talk is cheap.

China intervenes massively to stop its currency from appreciating, and as far as I know they don’t even let anyone outside of China hold RMB. Not the behavior of someone who really wants their currency to be used as a reserve. The Germans want a single currency but won’t give money to the Greeks or let the Euro appreciate, so people are worried that the Euro is going to fall apart. Not the behavior of someone who really wants their currency to be used as a reserve.

When are any of them actually going to start taking action?

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Jake 04.05.12 at 5:13 am

Henry – a very interesting thought experiment. I think that in your case the effects would be sudden and noticeable. But if your experiment was altered so that the US could not exercise military power within another countries borders but could in the open ocean – I think that the changes would take much longer to manifest and be much less severe.

If this difference exists, does it matter to anything?

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Colin Danby 04.05.12 at 5:24 am

Here’s a little data and discussion.

http://www.cfr.org/content/publications/ForeignOwnershipofUSAssets.pdf
http://www.federalreserve.gov/pubs/ifdp/2012/1041/ifdp1041.pdf
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

Just to echo Watson L., the basic arguments for whether a central bank should accumulate foreign reserves are independent of the asset in which reserves are held. You do indeed need reserves you can sell in order to “defend” a fixed exchange rate — but any liquid asset will do. If one chooses a floating rate, there is no need to buy up lots of reserves. So one has to start with the political economy of exchange rate policy — why particular governments choose the policies they do. You can find wide variation in policies across space and time.

I do think there’s a solid argument that the centralized structure of the international financial system imposes financial turmoil on the periphery … I’ve discussed this in some of my own work, and I think you can see this globally from the late 1800s on. But this happens without a single gunboat or intentional act by a national government.

Indeed one of the things you notice if you track the history of the world financial system, including central banking, from the mid-1800s on is how clueless Prime Ministers and Presidents have been about how the thing worked or the implications of their policies. This is not a defense of either the financial system, or governments! But we should consider the possibility that the world is not tidy or tightly-structured, that a lot of things may be going on at once, and that even when policymakers say bold things about what they are up to, they may be ineffective and even ignorant.

63

Colin Danby 04.05.12 at 5:53 am

Even more data, this time on the composition of reserve holdings:

http://www.imf.org/external/np/sta/cofer/eng/cofer.pdf

I can’t figure out if there is data by country, but I this is enough to show that dollar-denominated debt is not the only option. In general, the property you want in a reserve asset, especially one held to defend a fixed exchange rate, is *liquidity.* (In the nature of things, highly liquid assets will have low returns.) And there really is no more liquid asset than U.S. gov’t debt. One of the standard criticisms of fixed exchange rate policies is that they tie up wealth in a sterile form.

Discussion of SDRs and liquidity: http://elsa.berkeley.edu/~obstfeld/SDR_Obstfeld.pdf

64

Colin Danby 04.05.12 at 7:02 am

A final note and then off to bed. Re Henry’s “Now, even in the absence of even an indirect threat of force from the US, they can expect to find themselves isolated from the world economy instead.” — I’m not sure even this is true. Examples? One of the puzzles of international political economy is that default does not seem to get punished much. Defaulters return to financial mkts with careless alacrity; panics hit diligent repayers and deadbeats alike.

We need to look hard at the political economy of policy of particular places, and think of governments a little more as contingent projects, a little less as things representing a coherent national interest.

65

heckblazer 04.05.12 at 7:16 am

“So, does the periphery buy Treasurys because they are such a good investment? Definitely not. They are accumulated as protection.”

I’d say that’s about right, they’re not a good investment, they’re a *safe* investment that will preserve the principal. Part of that is that from the end of the American Revolution the US government’s policy has been to not default on it’s debt (that’s why last summer was such a big shock). Having the economic and political stability to back up that intent helps a whole lot too, plus there’s the network effect of everyone wanting dollars because everyone else also wants dollars.

I’d want more detail on the reasons for a push for a new international reserve currency. It could be those countries fear the dollar is unstable, but it could also mean that they don’t like the lousy low interest rates recent demand on the main reserve has created, or even wounded nationalism that *their* currency isn’t the big reserve currency. Or even all of the above, or something I’ve overlooked. Now if Equador, Zimbabwe and El Salvador ever switch their official currency from the US dollar to something like the euro or the yuan, then we’ll know for certain that US economic power is in decline.

66

Phil 04.05.12 at 8:36 am

One finds, to a brutally simple first approximation, that the corporate and financial elite hold fundamental power in the society through their power over investment, employment, and credit, and that they want what are loosely called “business-friendly” policies and a “favorable investment climate.” One then notices that this is consistently what the US acts to bring about abroad, from Woodrow Wilson through Obama, and that substantial, non-rhetorical action to promote democracy and human rights are practically never undertaken, and never at all when there is any possible conflict with the far more important goal of favorable investment/ business-friendly etc. … What more does one need to know?

What I want to know is who the “corporate and financial elite” are, how their “fundamental power” is articulated, by what mechanisms and in what forms it translates into government policy, what it looks like when translated and how the final government-driven action can be traced back to elite demands. I’d also like to know how this process varies between nations on the US’s periphery and nations on the other side of the world, between strategic resource-rich nations and nice-to-have trading partners, and between all the myriad forms US intervention takes, from propaganda to economic pressure to bribery and corruption to death squads to irregular warfare to illegal invasion.

Saying that US elites get what they want is generally true, and it’s generally a good starting-point for understanding US foreign policy. But it doesn’t actually say very much, beyond – well, beyond “Because: Imperialism!”.

67

Adam Roberts 04.05.12 at 9:06 am

“ad baculam” >> “ad baculum”

Not a very substantive contribution to this interesting discussion, I’m afraid.

68

Ostap Bender 04.05.12 at 10:03 am

Hnry, y crtnly tdd yrslf wth ths n!

Nw y mply sm prvrtd vrsn f yr rgnl dlgtmzng mthdlgy s dscrbd n Grbr’s pst bt ths tm gnst hs src Mchl Hdsn “s n sd” n 300 wrds smr cmpgn ftnt!

By n gt n fr!

Y g t f yr wy wth pctrsq lngg t pnt pctr f Mchl Hdsn — slf-ggrndzng lr. ll, f crs, wth prtxt f dmndng “t s sm vdnc t bck p Hdsn’s [...] clm” nd thn prcd gssng tht “Hdsn sms t hv sm qt mphtc blfs bt hs wn cntrl rl“ (whl rprhndng Grbr rlr bt mxng p blfs wth vdnc). Bt y r stll gnrs wth Hdsn bcs y ndrstnd tht “ppl wh hv hd tgh tm n gttng thr ds ccptd by th mr hdbnd mmbrs f thr prfssn smtms rct by vrsllng thmslvs.”

Th prps f ths clrly d hmnm 300 wrds ftnt, s nt nly t spprt yr pdntc nbls dstrtns bt Hdsn’s nd Grbr’s wrk nd t flfll yr schlrly blgtn t prvd “vdnc” f “Hdsn’s clrfl clms” bt ls, f crs, t “rcmmnd [Hdsn’s] bk” bcs y r “hppy tht ths dbt gt [y] t rd t”.

Wht rmrkbl hnsty!

nd th wrst prt s tht y r flly wr f wht y r dng nd knw tht bcs y nd wth yr cstmry dbl bnd (< hrf="http://bt.ly/39lySc" rl="nfllw">http://bt.ly/39lySc). — “t b clr, s pr th dstnctn btwn thr nd wrk t th bgnnng f ths pst, vn f cpl f ths clms dd trn t t b w bt vrsttd, t wldn’t shft my ssssmnt f hs rgmnts ll tht mch “

Bt wt thn, Hnry, wht ws th prps f ths 300 wrds ftnt, gn? r ths lng ntcptd 5500 wrds rtcl?

h, ys, “t clrfy th brdr pnt bt th ndpndnc f mrkt pwr frm mltry pwr” bst xmplfd by “ thght xprmnt ndr whch lns dcd t ntrvn n hmn ffrs by pstnng dth ry stllts…”

Y wll pls xcs m nw frm sch xmplry schlrshp nd ny frthr cmmntry.

69

rf 04.05.12 at 11:45 am

This is very interesting, as has been the whole discussion, so thanks. I’m just going to lay out my incoherent thought process below, so make of them what you will.

It seems reasonable to argue that US military policy the past three decades has been primarily concerned with maintaining a ‘stable’ pro US Middle East and the steady flow of oil to the global economy. But this policy was born in reaction to a crisis (the OPEC crises of the 70s?) and was by no means predestined. So perhaps a new military policy will evolve in reaction to this crisis, and what might come to be perceived as the primary interest of a deficit running United States in a struggling global economy underpinned by massive trade imbalances. (ie ‘tribute’ for want of a better word)

If US ‘influence’ declines, relatively, in those organisations that can pressure debtor countries to pay up in full, and if US Treasury bonds don’t look so attractive an investment a decade or two down the line, then is it so difficult to imagine the US developing a military policy explicitly concerned with pressuring countries to buy its bonds? We know what a US policy concerned with a stable oil producing Middle East looks like, (selective alliances, mass troop deployments to bases on land or at sea, endless war), so, out of curiosity, what would it look like if the US military was concerned with pressuring countries into buying US Treasury Bonds? (We must have historical examples) (These questions are directed at no one in particular)

It would be a shame if David Graeber’s well received book, which patiently explains 5,000 years of history, was diminished because he tried to rush too much into the last 30. A speculative ‘what will be’ might have been useful, explaining that we’re laying the foundations for a new global military order, and would have the added benefit of not having to be heavily sourced.
Or perhaps not.

70

Agog 04.05.12 at 12:13 pm

‘m Sprtcs

(That footnote was unnecessary I think).

71

Ethan 04.05.12 at 12:58 pm

OK, so am I the only one for whom all of the vowels suddenly disappeared from Ostap’s comment?

72

Barry 04.05.12 at 1:53 pm

Henry disemvolled it. It’s a technique used to keep trolls from bothering people – with effort, you can figure out what’s being said.

73

Barry 04.05.12 at 1:57 pm

Phil: “What I want to know is who the “corporate and financial elite” are, how their “fundamental power” is articulated, by what mechanisms and in what forms it translates into government policy, what it looks like when translated and how the final government-driven action can be traced back to elite demands.”

Your comment said that you wanted to know a lot of stuff. I’d suggest starting out with the Crash of ’08, and Goldman-Sachs’ role both in causing it and profiting from it [note - GS is not *the* elite of the USA, but it's sitting high up at the table when that elite meets, so to speak]. Start with Matt Taibbi’s Rolling Stone work, and work out from there.

Other good starting points would be Halliburton and the Carlyle group, whose board included at various times both the Bush family and the Bin Laden family.

In the oil side, start with ExxonMobil.

74

LFC 04.05.12 at 2:06 pm

Peter T @54
And as countries worried about international trade moved to build their own shipping and aircraft industries?

But there’s already the Airbus, and in the mil. sphere several European countries produce their own aircraft. Indeed France sells a lot of its mil. planes to other countries. And Germany and France built the Tiger helicopter together: see Ulrich Krotz, Flying Tiger [here].

75

Phil 04.05.12 at 2:42 pm

Barry – that’s all good, but I don’t think we’re going to get at how the influence turns into policy without some of the ethnographic work Henry talked about upthread. (Investigative journalism and ethnography aren’t that far apart, though.)

76

skidmarx 04.05.12 at 2:45 pm

@70 – Just so it’s clear to Ethan, I’ll correct your spelling of “disemvowelled”.

77

Geoffrey de ste. croix 04.05.12 at 3:21 pm

Wow,

Book II of “Finnegan’s Wake” has just escaped and appeared in comment @70. Could someone give James Joyce’s estate a call and tell them its here?

78

Geoffrey de ste. croix 04.05.12 at 3:22 pm

Or indeed comment @66…..it’s a slippery little thing.

79

R.Mutt 04.05.12 at 3:30 pm

It’s a technique used to keep trolls from bothering people – with effort, you can figure out what’s being said.

In this case, I would rather say it’s a technique to make criticism look like trolling.

80

Ethan 04.05.12 at 3:31 pm

Ah, I see. I saw it beforehand anyways, so I know what it said. Not sure what the virtue is of not just deleting it if you want to, but whatever works for you.

81

Henry 04.05.12 at 3:50 pm

R. Mutt – this particular claim that I am dishonest comes after several previous comments from the individual in question where I was accused of doing this to further my career, boost my public profile etc by taking on someone bigger than me, of being (!??) offensive to my audience at Crooked Timber because I said that I found this entire debate a pain in the arse etc. You will appreciate that given recent history, I am not feeling particularly patient at the moment with people who repeatedly insinuate that I am a dishonest careerist, and will likely demonstrate my impatience accordingly. I’ve had it up to here with personalized allegations. If Bender wishes to make any substantive criticisms without accompanying claims as to my sekrit motives, he is welcome to, as is anyone else.

82

Henry 04.05.12 at 4:14 pm

Tim@44 – sorry – I just saw this in the automoderation queue and rescued it. In general, feel free to alert us when a comment has gotten automoderated, usually because it is long or has lots of links (esp. the latter, as if it gets autospambinned, it can disappear forever). In turn – but with further apologies for the brevity of the reply (I am preparing for class).

1a – but Graeber is clear throughout that he believes that this is deliberate dishonesty and nastiness on my part, right?
1b – as above. He thinks I am deliberately trying to delegitimize anyone who believes that there are connections between military and financial might as a paranoid loon – at the same time as sort-of-acknowledging that I myself think there are such connections.
1c – key question here is whether a ruling class has to be conscious of itself as a collectivity (a “class-in-itself” or whatever – can’t remember the vocab as well as I should), and fully organized in order to design institutions accordingly, in order to be a ruling class. I don’t think so – and I think that this is an entirely legitimate take on ruling classes.
2. Don’t think I talked about it at any greater length than was needed to establish the case. You may of course reasonably disagree.
4. Fair enough. And an interesting take.
Causal arrows question – Disagree – I think that the military power-finance direction is the key claim in this chapter, and Graeber himself emphasizes the power-projection/bombing anywhere in the world stuff. You could come up with a “modified-Graeber” along these lines that would be more convincing, but it’s not what’s in this chapter, as I read it.

As an aside on the euro question – Graeber’s source, Hudson, surely saw EMU as a potential threat to dollar hegemony (again, his work doesn’t fit with Graeber here).

83

Substance McGravitas 04.05.12 at 4:31 pm

The post was a good read. Thank you.

84

geo 04.05.12 at 4:33 pm

Phil @66: What I want to know is who the “corporate and financial elite” are, how their “fundamental power” is articulated, by what mechanisms and in what forms it translates into government policy

I take it you don’t want individual identities — I don’t know why you would.
Clearly I was talking about functions. The corporate and financial elite are whoever holds decision-making power in whatever are the largest and most central industries and financial institutions in any given country at any given time. Their power is articulated through the decisions they make about investment and employment, which are the essential life-functions and life-signs of a capitalist economy. If they decide the environment is not business-friendly enough, they can and will cease hiring and investing, thus making life intolerable for the population and (therefore, and more important) for elected officials, who know this and preemptively capitulate by keeping the environment business-friendly. Moreover, in a capitalist society, information and expression are commodities, and therefore unequally available to wealthy institutions and ordinary unorganized individuals — in other words, they own the media. Still another mechanism of control, now that our elections have effectively been turned into auctions, is simply to buy up candidates.

If, for example, a government decided to encourage union membership, prosecute union-busting, put workers on corporate boards, sharply increase taxes on corporations and wealth, rigorously regulate financial transactions, and in other ways throw down the gauntlet to business by doing what a majority of the population would probably like to see done (and may even have said, in one or another poll, that they would like to see done), then the corporate and financial elite would take this as a declaration of war. There would be a capital strike, or even capital flight. Employment and output would plummet, and a ceaseless barrage of propaganda would issue forth. At that point, the government and population could seize power (ie, control over the means of production, and hence of investment, and employment), or they could surrender.

You’ll have noticed that what I’ve described is pretty much what has happened, in slow motion, in response to the New Deal. Globalization and Fox News are simply the business class’s response to the New Deal. They won; we surrendered.

85

adam.smith (was Sebastian(1)) 04.05.12 at 5:10 pm

I was so annoyed after reading the first 3 paragraphs from Graeber (the CT post not the book) that I stopped, so I don’t have a lot to contribute, but:
‘argument from wake up sheeple!’ is my new favorite logical fallacy, big props to Kieran.

86

LFC 04.05.12 at 5:31 pm

On the dollar, etc.:

Hyoung-kyu Chey, “Theories of International Currencies and the Future of the World Monetary Order,” International Studies Review 14:1 (March 2012): 51-77.

(long bibliography; missed Norrlof)

87

Ostap Bender 04.05.12 at 5:35 pm

Ws my pst #68 CNSRD?

Hr s nthr try:
Hnry, y crtnly tdd yrslf wth ths n!

Nw y mply sm prvrtd vrsn f yr rgnl dlgtmzng mthdlgy s dscrbd n Grbr’s pst bt ths tm gnst hs src Mchl Hdsn “s n sd” n 300 wrds smr cmpgn ftnt!

By n gt n fr!

Y g t f yr wy wth pctrsq lngg t pnt pctr f Mchl Hdsn — slf-ggrndzng lr. ll, f crs, wth prtxt f dmndng “t s sm vdnc t bck p Hdsn’s [...] clm” nd thn prcd gssng tht “Hdsn sms t hv sm qt mphtc blfs bt hs wn cntrl rl“ (whl rprhndng Grbr rlr bt mxng p blfs wth vdnc). Bt y r stll gnrs wth Hdsn bcs y ndrstnd tht “ppl wh hv hd tgh tm n gttng thr ds ccptd by th mr hdbnd mmbrs f thr prfssn smtms rct by vrsllng thmslvs.”

Th prps f ths clrly d hmnm 300 wrds ftnt, s nt nly t spprt yr pdntc nbls dstrtns bt Hdsn’s nd Grbr’s wrk nd t flfll yr schlrly blgtn t prvd “vdnc” f “Hdsn’s clrfl clms” bt ls, f crs, t “rcmmnd [Hdsn’s] bk” bcs y r “hppy tht ths dbt gt [y] t rd t”.

Wht rmrkbl hnsty!

nd th wrst prt s tht y r flly wr f wht y r dng nd knw tht bcs y nd wth yr cstmry dbl bnd (< hrf="http://bt.ly/39lySc" rl="nfllw">http://bt.ly/39lySc). — “t b clr, s pr th dstnctn btwn thr nd wrk t th bgnnng f ths pst, vn f cpl f ths clms dd trn t t b w bt vrsttd, t wldn’t shft my ssssmnt f hs rgmnts ll tht mch “

Bt wt thn, Hnry, wht ws th prps f ths 300 wrds ftnt, gn? r ths lng ntcptd 5500 wrds rtcl?

h, ys, “t clrfy th brdr pnt bt th ndpndnc f mrkt pwr frm mltry pwr” bst xmplfd by “ thght xprmnt ndr whch lns dcd t ntrvn n hmn ffrs by pstnng dth ry stllts…”

88

Bill Barnes 04.05.12 at 5:56 pm

Phil 66 & Geo 84 & others. You might want to take a look at Fred Block’s classic articles “The Ruling Class Does Not Rule,” and “Beyond Relative Autonomy: State Managers as Historical Subjects,” gathered with others in his Revising State Theory.

89

geo 04.05.12 at 6:09 pm

Thanks, Bill. Till we can get to the library, how about a quick rundown of his argument? (A chip off old Block?)

90

Substance McGravitas 04.05.12 at 6:13 pm

91

Substance McGravitas 04.05.12 at 6:19 pm

“Beyond Relative Autonomy: State Managers as Historical Subjects” seems to be readable via the “Quick Look” option in Google, provided you sign in to Google Docs. PDF link at the Socialist Register seems broken for now.

92

Henry 04.05.12 at 8:14 pm

Nickzi@50 – when I was thinking about worse people and better books, I was thinking about Rousseau in particular, who seems to have been a profoundly unpleasant individual. Also, Ernest Gellner, whose work I hold in the highest regard, but seems to have been pretty dreadful in aspects of his personal life. I thought that _Debt_ was (with the exception of the last chapter) a very good and engaging book, but not a genuine classic.

On the Twitter thing: Graeber says:

bq. Both he and Rossman went after me on twitter, accusing me of claiming that central bankers only used T-bonds for a reserve currency for fear of military attack. I had been bedridden with flu that day, and avoiding the Crooked Timber seminar, but I did get up briefly to check my twitter account, and couldn’t allow such a statement to pass unchallenged. So I demanded Rossman find me a passage where I suggested anything of the sort. Of course he couldn’t, since there isn’t any, but Rossman insisted I had claimed exactly that and cited a specific paragraph in chapter 12. The passage in question says nothing even vaguely like he claimed. In fact it doesn’t refer to treasury bonds at all, but to Saddam Hussein’s announcement that he would start using euros, instead of dollars, for trading oil, noting that while there’s no way to know whether rumors that this played into the US decision to attack Iraq were true, it’s significant a lot of people thought it did, and that some oil producers who might have otherwise considering switching to the euro were surely intimidated. Rossman basically says “whatever. Then you say the only reason anyone uses the dollar in the oil trade is for fear of being blown up.” So I had to point out the passage didn’t say that either. This is the remarkable thing: the fact that he had now been caught twice wildly misstating my position gave him no pause whatsoever, but he continued flailing away, acting as if whatever I did say could be treated as equally extreme as the ridiculous extremist positions he falsely attributed to me…

The Twitter argument actually began when Gabriel cited to my post to politely disagree with Graeber’s claim that seignorage was tribute. He did, as Graeber says, later on mix up Graeber’s arguments about T-bills and Iraq’s shift away from the USD. He then pointed to the passage in question, suggesting that it would be good to see some fleshing out of the footnote with evidence to support the claims (not, as Graeber says because Graeber demanded it). Graeber fails to mention that Gabriel acknowledged the mistake straightforwardly within two minutes of Graeber pointing this out to him, saying “OK, not t-bills but selling oil, fair enough, but the point is you said we (maybe) went to war over it.” This is the tweet that Graeber glosses as Gabriel claiming “whatever. Then you say the only reason anyone uses the dollar in the oil trade is for fear of being blown up. ” I’ll leave it to you to judge whether that’s a fair representation or not. After which, contrary to Graeber’s claims that he “continued flailing away,” he immediately signed off, saying that the conversation was clearly at a dead end, but reiterating that he had in fact loved most of the book.

Gabriel did nothing more offensive than to ask Graeber, in a non-confrontational way, for evidence to back up his arguments (as did I, although I was definitely more direct and pushy than Gabriel was). In return he got repeated insults, ranging from the broad statement that he (and I) were “angry illiterates” if we weren’t in fact deliberately dishonest, to the more specific claim that he “lived a sheltered life” and was the “beneficiary of a system of global terror” because he (and I) asked for evidence to back up Graeber’s claim that “elites running many small countries thought” that one reason why Iraq had been bombed was the currency switchover. Also, lots in there that makes it quite clear how central the US threat of military force is to Graeber’s argument. I really don’t want this thread to become another “David Graeber – Much-Maligned Hero or History’s Greatest Monster?” special, so am going to try to avoid further comment on his behavior, either positive or negative, (and discourage others from engaging in it either – if you want further clarification though, that’s reasonable). But since you asked for the specifics of why I said what I said at the beginning of the post, those are they.

93

Stephen 04.05.12 at 8:31 pm

This may be an extremely naive question, but: are the CT community convinced that imperialism is always, in all circumstances, compared to the alternatives, undesirable?
If not, where on the desirable-to-undesirable scale does post-BigMistakeII USAimperialism lie?

Reserving the right to argue that creation of USA was (a) imperialism (b) a Good Thing.

94

Stephen 04.05.12 at 8:45 pm

Adding: Henry is in my opinion, in this and previous threads, an entirely admirable example of erudite and logical argument.
Unlike some.

95

RPM 04.05.12 at 9:10 pm

@76 disemvolling is best left for other circumstances.

96

Anderson 04.05.12 at 9:43 pm

Ws my pst #68 CNSRD?

Ys. Ys, t ws.

97

parsimon 04.05.12 at 9:51 pm

92: I really don’t want this thread to become another “David Graeber – Much-Maligned Hero or History’s Greatest Monster?” special, so am going to try to avoid further comment on his behavior

For god’s sake, Henry, do that. Referring to people’s “behavior” is bad enough.

98

TR 04.05.12 at 11:56 pm

Whew, been quite a week, hasn’t it? Every time that I manage to convince myself that it is maybe, possibly (finally) safe to enter the blogosphere for the purposes of “academic” discussion and debate, a fantastic crazy meltdown like this happens, one in which _everyone_ comes off looking the fool. So, yes, I will refuse all bait luring me into discussion of my own work on the blogs for at least another year. Thanks, but no thanks. My undying gratitude to all of the protagonists for helping me (again) see the light!

99

mattski 04.06.12 at 12:47 am

Globalization and Fox News are simply the business class’s response to the New Deal. They won; we surrendered.

Fox News yes. Globalization I don’t think so. It’s good for people to trade with each other. (I’d replace globalization with ‘Clarence Thomas’ in your formulation.) But seriously, geo, I enjoy your comments but I do think you’d be more persuasive if you lost that Chomskyesque edge.

100

geo 04.06.12 at 2:30 am

Sorry to irk you, mattski, but it’s hard being a prophet crying out in the wilderness …

101

Freddie deBoer 04.06.12 at 2:31 am

The title of this post isn’t really helping.

102

geo 04.06.12 at 4:46 am

More seriously, mattski, globalization Washington-consensus-style is not simply a matter of lots of nice-for-everybody trade. It’s also a matter of international financial institutions, free trade agreements, intellectual property conventions, etc., often exploiting financial crises affecting less developed countries, to break down the policy-making autonomy of the latter in matters of labor, regulation, capital flows, resource ownership, taxation, etc., so that multinational business can move there and leave behind a more unionized, regulated, progressively taxed environment, viz. the New Deal. In that sense, globalization is business’s answer to the New Deal.

103

Data Tutashkhia 04.06.12 at 6:24 am

@101, geo, I get your drift, but, really, the New Deal was a US-specific, small and rather stingy set of social programs back in the 1930s. It’s certainly a part, or, rather, a small manifestation of what you’re talking about, but is it really the main phenomenon that explains globalization?

104

robotslave 04.06.12 at 6:24 am

@28

Graeber doesn’t argue that nukes generate tribute, he argues that the threat of bombing generates tribute. China has nuclear-armed ICBMs, but it does not have aircraft carriers, long-range bombers (+ fueling support), or vast stockpiles of conventional warheads.

With that said, Graeber is flat wrong when he claims [emphasis added]:

[the US] can, at will, drop bombs with only a few hours’ notice, at absolutely any point on the surface of the planet. No other government has ever had anything remotely like this sort of capacity.

The Soviet Union is a thing that actually existed.

It really did have a military just as gargantuan as that of the US, and it was every bit as imperialist. The question, then, is: If floating a substantial portion of the world’s reserve currency is a clear advantage to the issuer, and if this can be accomplished by military threat, then why aren’t (or weren’t) the governments of major trading nations sitting on great bulging sacks of CCCP-bonds?

More generally, if economic hegemony is derived from military power (or so derived merely in substantial fraction) then how on earth could it have been possible for the Soviet Union’s economy to collapse as completely as it did?

105

Random Lurker 04.06.12 at 9:54 am

I think that, from the point of view of economic elites the best thing is to be a net exporter: this way you have big profits without being limited from the wages you pay in terms of demand.
also from the point of view of workers to be an exporting country is a second best choice since it lowers unemployment.
in this sense the US A used economic policy as a tool for military policy (having deals advantageous to the neighbours of their rivals, such as in europe post ww2 or in Taiwan)
workers in usa get some advantage s through low prices but their bargaining power is reduced from globalization.
unrelatedly, the Iraq war proved that the Usa can blast to dust any medium sized country on earth as a matter of weeks, and likely major countries too, and that Usa population can be easily duped by aggressive nationalism (remember the freedom fries?).
third:
Y Yg Shtht y! Y Shb Ngghrth y!

106

J. Otto Pohl 04.06.12 at 11:56 am

103

The simple answer to your question is that the USSR was not capitalist. It was not even state capitalist. That is just a term invented by post-Trots like the SWP to avoid associating their brand of Leninist revolutionary socialism with what the USSR became under Stalin and later. But, the economic commissariats in the USSR did not operate like state owned firms in places like France or Norway. The Soviet Union was an administrative command economy and as such did not participate in the global economy in the same way as the capitalist economies of the US, Europe, and Japan.

Making things more complicated and the reason I wanted a definition of imperialism is the question as to whether imperialism and also the related idea of colonialism is primarily a political or an economic form of domination. Most scholars seem to think that economics trumps politics in this case and that economic exploitation to the benefit of the metropole and detriment of the periphery is required for the label. Political control being only important as a facilitating element.

I don’t necessarily agree. But, if economic exploitation rather than political control is the determining factor than the Soviet status as an empire is ambiguous. Yes, a classic colonial situation of exploitation existed with regards to the Baltic states, but Central Asia received far more economic benefits from being part of the USSR then it could ever achieve on its own. The net flow of resources was from the center to the periphery in the case of places like Uzbekistan. This also occurs with Soviet allies in South East Asia, Africa, and Latin America. Soviet assistance in the form of arms, oil, and other aid to places like Cuba, Vietnam, and Ethiopia far exceeded any economic benefits the Soviets got from these countries. The Soviets lost a lot of money on the Cuban sugar for oil deal. Soviet political control and influence over territory was not geared towards securing the generation of profits. So the comparison between the US and USSR breaks down. Many people argue that the USSR was not in fact an empire on this basis. I would say it was imperial, but the type of empire was radically different from the US sphere of influence.

So maybe now somebody can provide a brief definition of imperialism and whether we are talking primarily about political control and influence or economic domination and exploitation?. The two do not always go together. The whole idea of neo-colonialism was that economic domination and exploitation could continue long after the loss of political control. In contrast in the USSR there is the case of political control in Central Asia and political influence in the Third World without economic exploitation.

107

LFC 04.06.12 at 3:37 pm

J. Otto Pohl:

When you asked for a definition of imperialism upthread, Henry referred you to Nexon & Wright 2007, who think of ‘imperial relations’ in terms of a certain kind of ‘network structure’ (as an ideal-typical model which the real world may approximate to one degree or another). Don’t have time to go into the details, but one of their conclusions is that some U.S. policies have more ‘imperial’ features than others. At the end, e.g., they contrast the post-’45 US approaches in W. Europe and in Asia, with the latter, they argue, being more divide-and-rule, fewer ‘routine ties’ betw. the ‘segments,’ i.e. the US clients/allies, therefore a more ‘imperial’ strategy. (But what about SEATO, which was supposed to be the S.E. Asian analogue of NATO — granted it didn’t work as well.)

108

geo 04.06.12 at 4:11 pm

DT @103: US-specific? Unionization, regulation, and a social safety net? And offshoring and unrestricted capital flows don’t tend to erode those things in other countries besides the US?

109

robotslave 04.06.12 at 4:18 pm

@106 (or whatever it is after moderated comments get through…)

Otto, “economic hegemony” is not a synonym for “capitalist domination,” and to use profit as the measure of hegemony is to implicitly adopt a specifically capitalist, rather than generally economic, frame of reference. If we instead choose a communist frame of reference, then a net flow of resources from the means-biased center to the needs-biased periphery is a strong sign of success, no?

The Soviet Union was engaged in the project of increasing its international economic power by propagating its economic system, not by “maximizing its profits.” There are fewer appropriate comparisons for this, but I’d suggest looking at something like the attempt to impose the Washington Consensus, rather than instances of colonial resource extraction.

The USSR, as you note, devoted considerable resources to their grand effort; it seems a bit questionable to assess the intent of the program by looking at the cost of the attempt, rather than the end economic state it hoped to achieve. At any rate, if I accept your reply in broad terms (and I think I do), then it would appear that the crucial means of advancing a nation’s economic interest internationally is choosing (or adjusting) the structure of its economic system, rather than building and projecting its military force.

One might object “but that’s politics, not economics.” Perhaps, but I think that objection will need to be checked every time it’s raised to make sure it’s not implicitly equating “economics” with “twiddling the knobs on capitalism’s control panel and measuring the results using capitalist definitions of success and failure.”

110

William Timberman 04.06.12 at 4:57 pm

One thing I would say about #103 is that the Soviet ability to project military power beyond its borders, except in continental European terms, and in the rarified calculations of strategic nuclear delivery systems, was never the equal of America’s. No aircraft carriers, amphibious forces, or overseas bases of consequence, no AWACs, JSTARS or JDAMS, no fleet of armed drones, etc.

Of course, you might argue, as some have, that flooding the world with cheap AK-47s worked almost as well, but even though those scared a lot of people, it’s hard to attribute the consequences to a single, rationally-guided imperial policy. (Admittedly, the jury is still out on our approach.)

111

Salient 04.06.12 at 5:56 pm

are the CT community convinced that imperialism is always, in all circumstances, compared to the alternatives, undesirable?

Dunno if you mean to include random commenters too, but fwiw I’d say the kind of hypotheses you’d need to entertain in order to make imperialism desirable are unrealistic. A state that declares a monopoly of violence over a group of people, but denies them the adequate representation and protection that would be due to that state’s own citizens, is inherently pretty exploitative.

where on the desirable-to-undesirable scale does post-BigMistakeII USAimperialism lie?

USA imperialism is a poorly envisioned poorly executed mess, as empires go. (It doesn’t help that being perpetually on the verge of failure at empire actually creates a more financially remunerative environment for mercenaries and contractors.) Since the principal benefit an empire can attempt to promise its territories is the reliable enforcement of a reasonable rule of law that was largely absent in the absence of empire rule, I give the US maybe… a 3 out of 10? We’re not even reliably fulfilling the various secondary benefits an empire can attempt to provide (infrastructure, modernization, works projects, employment…).

112

lupita 04.06.12 at 5:57 pm

So maybe now somebody can provide a brief definition of imperialism and whether we are talking primarily about political control and influence or economic domination and exploitation?

I do not think that the definition of imperialism is the starting point. Rather, we must part from the fact that the US is being accused of being imperialist. These accusations should be taken very seriously, as would accusations of rape or bullying. That is, the quest for justice should lead the way, not the quest for definitions.

113

robotslave 04.06.12 at 6:09 pm

@110

There’s a good argument to be made there, but it’s best made without reference to technologies that weren’t available before the Soviet Union collapsed, like smart bombs and computerized drone systems.

They did have spy satellites, recon aircraft, intercontinental-range bombers, cruise missiles, quite a few submarines, and vast supplies of conventional warheads. The Soviet Union didn’t have today’s American military. Obviously. But they unquestionably had something “remotely like” it, particularly if we restrict discussion to the ability to swiftly (and perhaps sloppily) blow up any undefended patch of Earth one might fancy. Graeber is as every bit as wrong in his assertion of American military exceptionalism as he (or his editor) was in the infamous Apple sentence.

And when we accept the fairly uncontroversial idea that the USSR had a large but limited force projection range, we’re still left with the question of why major trading nations well within that range (e.g., Japan, all of Europe and the Middle East) aren’t (or weren’t) holding noticeable reserves of CCCP-bonds.

114

Salient 04.06.12 at 6:16 pm

Seconding robotslave’s point and amplifying it, not only is exploitation a broader category than exploitation of resources, but also forcibly using a territory’s land as a place from which to launch weapons really is exploitation of resources. Land’s a resource. And using that land as a remote weapons site invites other countries to attack and disable it, endangering the people who live in that territory, or to in effect lay siege to that territory by refusing to trade with the people who live there, who, of course, had no meaningful political input into the weaponization decision. [This line of argument could probably be used as an antiweaponization argument more generally, but that's just because a more general antiweaponization argument is entirely reasonable.]

115

robotslave 04.06.12 at 6:22 pm

are the CT community convinced that imperialism is always, in all circumstances, compared to the alternatives, undesirable?

A short but surprisingly comprehensive discussion of this can be found here.

116

Tom Bach 04.06.12 at 6:33 pm

Alternative video here:

117

Tom Bach 04.06.12 at 6:34 pm

view, I meant, not video, although it is one

118

More Dogs, Less Crime 04.06.12 at 6:44 pm

I once heard Victor Davis Hanson use the argument that the U.S doesn’t economically exploit its conquests, therefore it isn’t an empire, and critics used the Soviet Union in reply. Me, I just call hegemony/the whole thing off.

The U.S.S.R may have internally had a command economy, but it still traded on international markets for resources. That might have been mostly during periods of severe shortages, I’m not sure. Charles Kenny argued that the cold war split many countries into “trading blocs” and much of the perceived harm from communist economics was actually the result of countries being placed in a more disadvantageous trading bloc. Disadvantageous for some countries though, he argues that the Russia benefited from being slotted with eastern europe but those eastern european countries were made worse off having to trade with Russia rather than western europe.

119

J. Otto Pohl 04.06.12 at 6:44 pm

I still think the whole discussion of imperialism does not get anywhere without a definition of imperialism. A definition being a few lines of text not pages upon pages of political science jargon accompanied by weird drawings. If imperialism is merely the net flow of resources from countries in the periphery to countries in the center that is one thing. If imperialism is the establishment of political control over territories regardless of the economic relationship between the center and the periphery that is something else again. You can call them both imperialism just as 1776 and 1917 are both revolutions. But, they are fundamentally different things.

120

J. Otto Pohl 04.06.12 at 6:58 pm

118

As a general rule less developed regions benefited the most from being associated economically with the USSR and more developed ones the least. Within the USSR there was a net flow of resources from wealthier regions such as the occupied Baltic states, Ukraine, and Russia itself to Central Asia and the Caucasus. Nove who was quite good on Soviet economics co-wrote a very short, but still valid book in 1968 on this called “The Soviet Middle East: A Model for Development?” The same thing generally applied to the ‘external empire’. East Germany and Czechoslovakia lost out by being tied to the Soviet trading bloc despite heavy subsidies in the form of oil from the USSR. But, there were not really any such penalties for Ethiopia or Mozambique both of which continued to trade primarily outside the Soviet bloc. They got Soviet aid on top of western assistance and trade. Cuba and Vietnam were under US sanctions for political reasons and Soviet aid came after the sanctions were imposed and helped lessen their economic impact. The Soviet role in the international market was limited. Much of Soviet international trade was either barter including with capitalist countries, the Pepsi-Stoli agreement for instance, or particularly in the 1970s the importation of goods with money generated from oil exports.

121

robotslave 04.06.12 at 7:06 pm

@119

You want a definition of imperialism that has 1) brevity, 2) no specialist jargon, and 3) enough specificity to be useful?

Pick any two.

More seriously, just come up with whatever definition of imperialism you find agreeable, and use it. Others might quibble with your definition, but at least you’ll be past this “but what are we even talking about” part of the analytical process that seems to have you flummoxed.

122

mattski 04.06.12 at 7:13 pm

but it’s hard being a prophet crying out in the wilderness …

Prophets are so… tedious!

:^)

I’m fishing around for a point that–I could swear–I misplaced somewhere. Partly it’s the “Imperialism”! thing, partly it’s the way we sometimes get lost in the “analysis” part of the problem. We look at an extremely complicated problem like ‘why is there so much injustice in the world’ and we analyze it. And we look at a long and distinguished history of such analysis, and we come up with what seems to be a pretty decent formulation. And we fall in love with our conclusions, slap a label on them–Imperialism!–and get on our soapbox. You’ve heard of ‘moral hazard’, well I’m concerned with ‘Chomsky hazard’ which I would describe as a love affair with a tale of outrageous injustice. “They won.”

Chomsky’s analyses are often brilliant, but only up to a point. He alienates people because he is so in love with his narrative he’s lost the capacity to actually listen to different points of view. He doesn’t understand human nature and he doesn’t resonate with most people because, frankly, he’s missing something. It’s not enough to analyze a situation and come up with a thesis. The next part of the problem is persuasion, and that requires empathy, the ability to ‘feel’ where another person is coming from. So, borrowing from what I believe JW Mason said on either another thread or another blog, the burden is on us to come up with a more appealing progressive vision. I think that gets to the heart of it.

123

J. Otto Pohl 04.06.12 at 7:28 pm

Here I will list the main definitions of imperialism and you tell me which one you are using.

1) The creation of a multi-ethnic state politically dominated by a single central dominant ethnicity and ruling in the name of an established royal house. Examples include the Austro-Hungarian Empire, the Ottoman Empire, and the Russian Empire under the Romanovs.

2) The establishment of direct political rule over overseas territories populated by people of a different race by a more powerful state. Examples include the British, French, and Portuguese empires.

3) The economic exploitation of overseas territories by economic firms so that the net flow of resources is to the home country of these firms to the detriment of other areas. This does not require any direct or even indirect political control over these territories by the government of the home country. This is the definition most often given by scholars here in Africa.

4) The creation of a multi-national system of political control and influence dominated by a single central nation. The chief example here is the USSR in which a Russian core dominated the non-Russian periphery and the USSR then dominated Eastern Europe. A third circle of influence extended to countries like Cuba, Vietnam, and Ethiopia.

124

geo 04.06.12 at 7:32 pm

No disagreements, mattski. Though it may occasionally appear otherwise, I don’t believe that channelling Chomsky is the sole useful form of political activity.

125

robotslave 04.06.12 at 7:50 pm

@123

I would not agree that those are “the main definitions of imperialism,” but I am perfectly willing to accept them as your main definitions of imperialism, as you progress past your definitional hangup and on to discussion of the topic at hand.

126

Tom Bach 04.06.12 at 8:07 pm

Robotslave,
If J Otto Pohl has no idea what you or Henry Farrel or whomever means when they say/write imperialism and he wants to understand the argument it not only does him no good but is counter productive to use his own.

I would make that point, related to JOP’s mention of the American and Russian Revolutions being different, that a definition of imperialism that avoids the contextual and contingent is going to misrepresent the reality of this or that specific imperial system or act.

Does this matter? Well, yes. At least in part, the Graeber/Farrel dispute turns on how imperial and in what manner the US is imperial and how far the military might the US possesses explains a global economic system dominated by the US dollar.

One aspect of Graeber’s Chapter 12 that isn’t, I think, getting enough discussion is his clearly stated desire to move beyond stale debates that, he thinks, go nowhere and start to think about the world, its wife, and their problems differently.

127

LFC 04.06.12 at 8:20 pm

J Otto Pohl
A definition being a few lines of text not pages upon pages of political science jargon accompanied by weird drawings.

Well, that’s not how I would describe the Nexon & Wright piece. (Though the line did make me smile, I must confess.)

Try this for a rough definition (along their lines, though my version of course):

Imperialism is an ideal-typical set of arrangements whereby one dominant state/entity exercises substantial influence (at a minimum) over other entities’ policies by: using local elites as its agents, striking different kinds of bargains with different subordinate groups, and playing off one subordinate entity against another, thereby ensuring that strong relationships among the subordinate entities do not develop.

So as to your #3, economic exploitation may or may not accompany such arrangements. Your #4 is partly talking about client states and spheres of influence, which the US has, so it wasn’t just the USSR.

128

nb 04.06.12 at 8:26 pm

“As you may imagine, I am very unhappy with his behavior “.

Good lord man! What do you expect when you start mixing with such an obviously unsavory lumpen?

129

J. Otto Pohl 04.06.12 at 8:28 pm

Okay so it is definition number 4 not the more frequently given here in Africa definition number 3.

130

LFC 04.06.12 at 8:42 pm

J Otto Pohl @129

I can’t speak for Henry, obviously, but it seems to me that Nexon & Wright are talking about forms of influence/control; so #4 would be closer.

131

robotslave 04.06.12 at 8:56 pm

@126

I strongly disagree that it is counterproductive for anyone to use their own definition, provided they actually state that definition. I believe this is a rather good way to identify mutual misunderstandings, and begin sorting them out.

I also don’t think Otto’s struggle is necessarily that of trying to understand what others mean when they use the term he finds so problematic; his flat rejection of a graciously referenced external definition suggests it’s something else that’s got him stuck on the meaning of the word.

132

Tom Bach 04.06.12 at 9:06 pm

Are you sure you mean “ideal typical”? Isn’t imperialism the actual mechanisms used by actually existing groups and individuals. An ideal typical definition is all well and good if we are discussing something in the abstract as opposed to discussing something that actually is.

Robotslave,
So next time I try and figure out what X means by Y, I get to say that Y means whatever I’d like it to mean? Relatedly if someone say read this and you will understand what I meant by Y; and a well educated professional historian reads and say gee, that’s not all that helpful. There refusing to be accept material graciously forwarded?

133

robotslave 04.06.12 at 9:17 pm

@132

Of course not. You get to tell people what Y means to you, and no more.

Alternately, you can of course reference Z, and provide your interpretation of Z’s explanation of Y. X will now have a better understanding of your own view of Y, and can agree or disagree with this or that aspect of your definition or reading, which in turn ought to help you understand what X means by Y.

134

Andrew F. 04.06.12 at 9:26 pm

Persuasively done.

Perhaps Graeber could examine how prices for US government bonds reacted to the Argentinean default. I’m sure that the commission of “the ultimate sin” increased the perception that perhaps the US would allow other nations to do the same without suffering military strikes. Obviously, a massive sell-off of US bonds followed. Right?

Or if not, perhaps there are other predictions that Graeber’s argument would yield, that we could test?

135

robotslave 04.06.12 at 9:35 pm

Also, what Otto said was less “I’ve carefully read the explanation provided, and don’t find it helpful,” and more “I have no patience for the sort of definition you’ve referenced.” This can be an entirely legitimate reaction (e.g., if one has a moral objection to defining imperialism in the dry mathematical language of network theory) but it is not one born of a frustrated attempt to understand Henry’s argument on its own terms.

136

LFC 04.06.12 at 10:03 pm

T. Bach
Are you sure you mean “ideal typical”? Isn’t imperialism the actual mechanisms used by actually existing groups and individuals. An ideal typical definition is all well and good if we are discussing something in the abstract as opposed to discussing something that actually is.

Well, a la Weber, you build a kind of distilled, exaggerated, simplified version of a messy empirical reality and say: this is an ‘ideal type’. It’s a device to help understand “what actually is” by helping to clarify the degree to which ‘what actually is’ does or does not conform to an exaggerated model and by helping one perceive aspects of empirical reality that might otherwise escape attention. At least, that’s how I think it’s supposed to work and I had to read a fair bit of Weber in college, though I’ve forgotten probably three-quarters of it, that having been a long time ago. (In my entire time in grad school I don’t recall ever using the words “ideal type” or “ideal typical” in anything I ever wrote, fwiw. Maybe I should have, although at this point I really don’t care much, to be frank.)

Moreover, I’m not necessarily endorsing N&W. I was trying, no doubt much less well than the authors themselves would have, to boil their view down for J Otto Pohl into a reasonably concise definition, which is what he was rather insistently requesting. I don’t mean to be flippant, but at this point I don’t tremendously care what definitions one adopts, and if ‘ideal-typical’ strikes you as out of place, sure go ahead and remove it. It’s really no skin off my nose: I didn’t write the article, after all. Nor did I write the main post.

[I would finally note, fwiw, that N&W say (last line of their abstract): "the US is, overall, less of an imperial power than it was during the Cold War." (Again, not necessarily endorsing, just noting.)]

137

Watson Ladd 04.07.12 at 4:40 am

J. Otto Pohl, I have a big issue with definition number 3. Let’s say the kelplocratic dictator of a small diamond exporting country buys the company that used to run the mine. Now we no longer have imperialism, but the people are just as bad off. It’s also the case that not having resources is better then having them: Saudi Arabia can afford to waste the potential of its young people while Singapore and Japan cannot because one has oil and the others don’t. So the best thing you can do with a diamond mine in the backyard is lose a war to give it to someone else, and failing that sell it wholesale!

138

Data Tutashkhia 04.07.12 at 5:29 am

Imperialism is simply a practice of domination of one polity by another.

139

Steven Tran-Creque 04.07.12 at 6:32 am

I’ve finally finished reading the entire seminar (including all the comments! the frequently terrible comments!), and I really think something needs to be done to redirect the discussion here. Whether that’s Chris quietly resolving things between David and Henry or something else, I don’t know, but this stupid shitfight has driven all of the actually interesting responses in the seminar off the table. Some of them were really fucking good! Half of David’s response was about them! All gone!

All anyone wants to talk about is this incredibly boring debate about which came first, t-bonds or the bomb, and now people want definitions of imperialism? Really? Henry wrote a decent reply here (with which I almost entirely disagree, incidentally), but PLEASE STOP.

140

geo 04.07.12 at 6:58 am

Steven: I really think something needs to be done to redirect the discussion here

After you …

141

Chris Bertram 04.07.12 at 7:03 am

Steven. Thanks for your comment. I can’t go into the behind-the-scenes attempts I made in anticipation of this going bad, but I did make some. However, DG was clearly very angry at HF and was determined to have his say, as was his right. In retrospect, I wish I had advised him to split his reply into two separate posts. But I didn’t think of that at the time. Too late to fix things now, I think.

142

Agog 04.07.12 at 11:00 am

Regarding the absence of holdings of CCCP government bonds, I would suggest reminding oneself of the nature of the economic system of the Soviet Union.

Perhaps this might help for starters.

” No Soviet enterprises, and no administrative districts from republics to municipalities,were permitted to issue securities. Instead, a centralized administration redistributed funds as it saw fit. The only government bonds available to the public were long-term lottery bonds distributedby the retail outlets of the Savings Banks of the USSR. These bonds paid no interest, but offered a holder the chance to win 10,000 rubles. Soviet ideologists routinely condemned interest and dividends because they were “unearned income,” and Soviet citizens were expected to understand that their savings should not be used in such a “capitalistic” way.

Bond issues in the USSR were actually compulsory saving and were relatively rare. The government, when faced with a budget deficit, usually simply authorized the State Bank to print money. Treasury bills are unknown to the Soviet Union.”

143

Agog 04.07.12 at 11:01 am

(Yes, the second paragraph of the quotation was within the italic tags…..)

144

Henry 04.07.12 at 12:27 pm

Steven – as per George’s suggestion, maybe the best way to do this is to pick up on something else that you thought was interesting in this debate, and say why you think it is interesting, agree or disagree with it, spin off from it or whatever. Consider yourself very much encouraged to do this if you like.

145

LFC 04.07.12 at 12:42 pm

Steven:
I commented, albeit rather briefly, on the other thread about some of the other parts of DG’s post.

146

Henry 04.07.12 at 2:24 pm

Agog, there is a great brief discussion of this in Francis Spufford’s novel Red Plenty – a cynical apparatchik telling a story about burning bonds when they had become politically inconvenient and what this means for the role of money in the USSR.

147

mattski 04.07.12 at 2:28 pm

Though it may occasionally appear otherwise, I don’t believe that channelling Chomsky is the sole useful form of political activity.

Thanks, geo. Here is the other part of this garbled demon I was trying to spit-up: When we talk about what is wrong with the world it helps if we’re sensitive to the fact (I believe this is a fact) that the same impulses which shape the behavior of the “bad actors”–greed, anger, fear–are always and ever present in ourselves as well. So it will never do to disassociate ourselves from those we consider ignorant, cruel, evil, etc.

And in a related way, it is misleading to take the results of our analysis, let’s say “Imperialism” and speak as if it is the cause of injustice. It’s an abstraction, it’s a description of what happened, but it isn’t the cause of anything. The cause is human nature, the feelings of greed, fear and anger that in greater and lesser amounts all of us feel all of our lives.

148

Stephen 04.07.12 at 2:51 pm

J Otto Pohl @123

I’m not sure that any of your four definitions really fits the later Roman Empire (except that economic benefits tended to flow towards the seat of government, at Rome or elsewhere: but by that criterion almost all states are empires).

And your third definition reduces to “foreigners are making money out of us”: and seems to rule out non-overseas empires.

149

Agog 04.07.12 at 3:04 pm

Thanks Henry – it’s on my to-read list.

Regarding US monetary imperialism or pseudo-imperialism, I remembered Yanis Varoufakis’ quote from Paul Volcker from the late ’70s about the desirability of a ‘controlled disintegration’ of the world economy. Varoufakis was talking about the destruction of the structures of the West’s ‘Golden Thirty’-era economies. But I wonder whether in the context of the Cold War Volcker had rather more in mind.

I think the quote originates from a speech that is written up here. Volcker writes:

“I was tempted to take as my text today one of Fred Hirsch’s last dicta: ‘A controlled disintegration in the world economy is a legitimate objective for the 1980′s . . . .’”

and

“Perhaps in the circumstances, the objective of ‘controlled disintegration’ – modest as it may seem to be – is indeed a legitimate goal. Yet the phrase leaves me uneasy.”

The reader is left to judge the tone of voice that he used. Later instead of talking about disintegration he settles, no doubt with an ostentatious wink, on ‘managing integration’ (he uses quotation marks around the phrase – to indicate the wink, I assume).

The piece is devoted on the face of it mostly to international monetary policy in the context of changes that were ongoing since the end of Bretton Woods. And he doesn’t mention the Soviet Union at all. But he later goes on to say:

[The system of floating exchange rates] “offers the most promising framework for ‘managing integration’ as far ahead as we can see. It seems to me particularly suited to a world in which the major adjustments, in trading patterns and in political thinking and organization, required by the dispersion of economic and political power have not yet been completed.”

150

robotslave 04.07.12 at 3:45 pm

@142

There were, of course, a few minor inconveniences with using the ruble as a reserve currency, too.

This is why I used “bonds” in my example instead, and I thought I was clearly implying that they were of unhelpfully imaginary issue. The USSR did trade with capitalist nations, and while bonds were outlawed internally, there was nothing* preventing the republic from issuing some sort of foreign note, for the purpose of glorious economic triumph over the running dogs (assuming, again, that a large float of reserve currency is a clear economic advantage to the issuer).

 * apart from internal backstabbery over who would be in charge of the thing.

151

dsquared 04.07.12 at 3:52 pm

Russia had a couple of import-export banks which did issue bonds. Restructured Vnesheconomobank loans were a staple of the emerging market bond investment universe in the 1990s

152

dsquared 04.07.12 at 3:54 pm

… and a check on Wikipedia reveals that Vnesh was actually created in 1988. As you were.

153

Agog 04.07.12 at 4:49 pm

So, isn’t the question something like: “If the Russians had acted with the benefit of Michael Hudson’s strategic advice in the early 1970s, what would have happened in a counterfactual 1980s?” (assuming for the sake of fun that the Soviet sphere of influence was big enough to set up a Global-Minotaur-type-of-thing, so let’s include the Indian subcontinent and big chunks of S. America…)

154

robotslave 04.07.12 at 5:06 pm

@153

Yes!

Well, obviously you’ve stretched it quite a bit, but you’ve definitely got the gist there.

155

robotslave 04.07.12 at 5:33 pm

Stretches would include:

1) If it’s a clear economic advantage, nobody needs a particular scholar to point it out. Graeber would surely tell us that the British Empire imposed a global currency at gunpoint without the benefit of Hudson’s advice, no?

2) The Soviet Union was a military superpower somewhat before 1970

3) This is “counterfactual” in the sense that the Soviets did not in fact do the thing that we are wondering about them not doing

4) There’s no need for global minotaurism; mere hemispheric minotaurism would do just fine. Even smaller spheres of influence were sufficient for many less-than-global historical minotaurs to impose international currencies, right?

But yes, the rest is spot-on.

156

john c. halasz 04.07.12 at 6:00 pm

Agog @149:

You are aware that Paul Volcker was the Treasury Under-secretary operationally in charge of managing the break-up of Bretton Woods when Nixon pulled the plug, eh?

157

JJ 04.07.12 at 6:22 pm

Steven Tran-Creque @ 139:

“All anyone wants to talk about is this incredibly boring debate about which came first, t-bo[mb]s or the [t-]bomb…”

That’s usually the way things work around here, Steven. All the interesting topics eventually get swept off the table by the lawyers and economists who substitute their mystifying mumbo-jumbo which, even when they’re right, requires a post-graduate degree in law or economics to follow the argument. Geo’s admonition that intellectuals speak truth to the powerless in order to allow them to speak truth to the powerful is lost here.

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robotslave 04.07.12 at 7:11 pm

@157

Perhaps there is some variance within the commentariat as to which topics are considered as “interesting?”

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Steven Tran-Creque 04.07.12 at 7:16 pm

I wasn’t suggesting that the comments here take a different direction (well, ok, I was, but only because “define imperialism” / “but x empire doesn’t fit your definition” / “are empires even bad guys because I was just reading Niall Ferguson and he said” is possibly the lowest form of intellectual discourse in human history). What I had in mind was more someone posting a new blog post on Debt and pushing discussion in a different direction entirely (or just back towards some of the other posts), because I think this line of debate is pretty thoroughly exhausted.

For what it’s worth, I am fairly certain I agree with David that Henry has Hudson completely backwards with regards to the t-bonds/military hegemony/circulating war debt/military bases/t-bonds stuff (I haven’t read Super Imperialism yet, but he did come speak at my school and I’ve read a bunch of his recent articles; he is pretty explicit about this relationship). But if people really want to debate this, though, why focus on Graeber? The parts of chapter 12 that have been obsessively picked over are basically all Hudson (aside from the stupid Apple thing, which is Rick Wolff), so why not just (say) organize a seminar on Super Imperialism? Invite David and Henry to write something about it (not each other!), I don’t know, whatever; just about anything other than this would be more fruitful and hopefully less nasty.

Anyway, all of this is so touchy now that I don’t really want to say more for fear of setting off another terrible shitstorm (people seemed pretty hostile towards me just for being unhappy with the discussion), so I’ll stop here.

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LFC 04.07.12 at 8:02 pm

people seemed pretty hostile towards me just for being unhappy with the discussion

on the contrary: no one was hostile towards you. quite the reverse.

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J. Otto Pohl 04.07.12 at 8:06 pm

148

The Roman Empire is a variation of definition number one. But, I only put out those four definitions because nobody else would provide any definitions. You and everybody else are free to provide your own definitions. But, nobody has done so.

Number three is the definition most widely given in the literature on imperialism and colonialism in Africa in the last forty years as far as I can see. People like Walter Rodney greatly stressed that imperialism was fundamentally an economic rather than a political relationship. I believe that the literature on Latin America and dependency theory also largely follows along the path of definition number three.

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rf 04.07.12 at 8:08 pm

“so why not just (say) organize a seminar on Super Imperialism? “

I’m with you, completely reliant on two different interpretations of “Super Imperialism”, so any ‘neutral’ perspective would be appreciated.

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LFC 04.07.12 at 8:27 pm

J.O.P.

But, nobody has done so

Hello? 127, 138?

Isn’t it pretty obvious that this discussion has little or nothing to do with dependency theory? It’s nice that people in Ghana and elsewhere are reading Rodney’s How Europe Underdeveloped Africa and I’m sure it’s a learned book. Not too relevant here that I can see, unless I am missing something, which is quite possible. But your comments are on the verge of becoming, well, a bit trying.

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Henry 04.07.12 at 9:18 pm

Hi David – really, I am not sure why you are picking up vibes that people here (or at least Chris and me and others) are hostile to you for this suggestion. It would be great if you want to push discussion in a new direction – the more useful discussion that can be salvaged from this, the better, I think, and I’m not seeing there being much chance of you re-igniting the shitstorm (to horribly but deliberately mix a couple of metaphors) by so doing.

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JJ 04.07.12 at 9:56 pm

robotslave@158:

“Perhaps there is some variance within the commentariat as to which topics are considered as ‘interesting?’ “

Well, since I rarely comment on this blog for fear of exposing my abject ignorance, I can hardly be accused of any membership in the commentariat to which you refer. But what the hell: better to open my mouth and dispel all doubt than to keep it shut and simply imply its inference.

Despite all the passionate debate about a global reserve currency and military dominance and which came first: the T-bond or the A-bomb, can we at least agree that there’s a correlative relationship between the two? Evidently not, since most of you appear to believe that Graeber assumes the existence of a causal relationship. But while most of you appear to praise him for his premises, you continue to condemn him for his conclusions. You agree with him that historically military dominance causally precedes economic dominance but that currently the two are not so obviously related.

If if struts like a rooster and it crows like a rooster then it must be an egg…

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Steven Tran-Creque 04.07.12 at 10:01 pm

Wait, what? I’m not David Graeber.

It was just a comment about everyone seeming rather on edge (maybe understandably, but it doesn’t matter; it’s still bad). Anyway, I do think organizing something like a seminar around Super Imperialism (or something more recent that Hudson’s written that covers relevant stuff) is worth considering, but commenters don’t make new blog posts or organize seminars, so that’s up to you guys.

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Henry 04.08.12 at 1:02 am

Yikes! I _swear_ that’s not a Freudian slip (was writing in a 2 minute break between episodes of kid-herding). Anyway, I’m probably not going to be able to organize anything soon – next up is a seminar on Spufford’s _Red Plenty_, then in September will be doing something on Jim Johnson’s _Priority of Democracy_ and there’s another couple of suggested books already in the queue for consideration after that. Anyway, if you do want to draw conversation in a different direction in this comments thread, floor is open (there were a lot of interesting possible debates which, as you note, got overshadowed). And if not, that’s fine too of course.

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robotslave 04.08.12 at 1:11 am

@161

You and everybody else are free to provide your own definitions. But, nobody has done so.

This is completely untrue. Henry provided the definition, via reference, that he had in mind when writing the post, in comments #9 and #25. You, Otto, rejected that definition.

What you mean, I think, is that nobody has provided a definition of imperialism that you are willing to accept. And since you refuse to accept the definition of imperialism that Henry had in mind when writing the article, I’m mystified as to why you’re still commenting on it.

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robotslave 04.08.12 at 1:16 am

You agree with him that historically military dominance causally precedes economic dominance

No, we don’t.

I distinctly remember arguing in the Debt seminar that when there is in fact a causal relationship there, it usually points in the other direction. I more vaguely remember not being a lone voice beating my head against the consensus, when arguing in that vein.

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JJ 04.08.12 at 5:16 am

rs@169:

“I distinctly remember arguing in the Debt seminar that when there is in fact a causal relationship there, it usually points in the other direction.”

Oh. Sorry. My mistake.

I assumed you accepted Graeber’s thesis that military dominance precedes economic dominance, because without military dominance or, at the very least, the credible threat of military dominance, the prospect of economic dominance is impossible.

If you place the cart before the horse, then of course the horse no longer pulls the cart.

It pushes it.

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robotslave 04.08.12 at 5:58 am

@170

If you consider it impossible for economic superiority to produce military superiority, then it looks to me like the argument is over.

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Agog 04.08.12 at 7:57 am

J.C.H:

Now that you mention it, I do recall reading that somewhere. Clearly a good guy to have around. Here’s Hudson (S. I. p308):

‘Europe was forced to choose between permitting the dollar to devalue further or
acquiescing “voluntarily” in the U.S. tariff and quota offensive. American officials were
quite open in acknowledging how the crisis situation favored their maneuverability. “In an atmosphere of presumed crisis,” Mr. Shultz explained, “one often finds that one can get something done if you know what it is you want to get done. The Administration has found a crisis it took an initiative, and it obtained results.” His assistant Paul Volcker echoed these comments, observing that the monetary crisis and dollar devaluation had helped “to reinforce the thrust of a constructive reform of the international monetary system.” This view was echoed throughout the Wall Street community. Sam Nakagama, chief economist for Kidder Peabody & Co., reflected that “The so-called crises of the past two months appear to have been almost deliberately induced by the Nixon Administration in order to achieve its monetary goals. Treasury Secretary Schultz appears to have almost everything he wanted in the way of creating a more flexible monetary system.’

The old ‘never waste a “crisis”‘ thing never gets old….

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Agog 04.08.12 at 8:03 am

(Ha – maybe ignore the fist ‘old’ in that last sentence…)

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JJ 04.08.12 at 8:18 am

Economic dominance, without the threat of military dominance to back it up, is impossible.

You don’t rob a liquor store by saying, “Hand over the money, or I’ll be forced to go home, get my gun and shoot you.” More likely, you might say, “Pay me what you owe me, or I’ll sue you. ” But even then, you rely upon the legal system, and the police who uphold it, to back up your claim.

Without the application or threat of violence, economic dominance cannot exist.

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Agog 04.08.12 at 8:33 am

robotslave:

Point 1 (and 2). I’m assuming that the advantage is not actually ‘clear’ in the sense of ‘obvious ex ante‘. And that there has actually been an advantage in the way Hudson argues specifically after the breakdown of the Bretton Woods system. Not talking about having a widely-used currency in a broader sense. It doesn’t seem obvious to most people that deliberately running huge capital account surpluses year after year might be a sane policy.

Point 3. Yes. It still seems a very unlikely thing to do for a group of people ideologically opposed to the concept of a ‘capital account’. Or so I imagine anyway.

Point 4. I honestly don’t understand enough about international monetary hydraulics to know how it scales.

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Watson Ladd 04.08.12 at 1:16 pm

JJ, sure it can: Economic dominance is nothing but the ability to provide others with things that they want. The idea that this stems from theft rather then creation is an example of resource fetishism: ignoring the fact that people do work that is useful and makes things that others want. A doctor gets money for saving lives, not pointing a gun at others and saying “pay me or I shoot.”

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bob mcmanus 04.08.12 at 1:25 pm

Economic dominance is nothing but the ability to provide others with things that they want.

+ limiting the action of competitors that also want to do the above. I don’t have to list the ways empires have done this, from unequal trade treaties to colonies and spheres of influence to I/P

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Tim Wilkinson 04.08.12 at 3:35 pm

Henry – thanks for rescuing #45 from moderation. I’ve been away from my work station for a disgracefully long time; I wasn’t suffering in silence. (I knew it was in the moderation queue rather than the spam trap, because in eth former case the comment shows up as if successfully posted, with a notice at the top saying it’s awaiting moderation.)

—-

Having just caught up, can I just say how very unwelcome all those comments are that consist solely of whingeing?

—-

A lot is being read into the last sentence of Nixon’s gambit, what Hudson calls “debt imperialism,” has already come under considerable strain. The first casualty was precisely the imperial bureaucracy dedicated to the protection of creditors (other than those that were owed money by the United States). IMF policies of insisting that debts be repaid almost exclusively from the pockets of the poor were met by an equally global movement of social rebellion (the so-called “anti-globalization movement”— though the name is profoundly deceptive), followed by outright fiscal rebellion in both East Asia and Latin America. By 2000, East Asian countries had begun a systematic boycott of the IMF. In 2002, Argentina committed the ultimate sin: they defaulted—and got away with it.

and the fact that it is immediately followed by

Subsequent U.S. military adventures were clearly meant to terrify and overawe, but they do not appear to have been very successful… etc.

The juxtaposition of two sentences having been elevated to the status of some bold claim, it’s pretty rich that we then have Andrew F. asking archly ‘perhaps there are other predictions that Graeber’s argument would yield, that we could test?’ Yes, and perhaps those who are keen to find some sweeping claim here – one that is clearly wrong – could do the work of actually getting this grand solecism into a form in which it would yield such predictions. (Maybe that was Andrew F.’s point, but I don’t think so.)

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Tim Wilkinson 04.08.12 at 3:37 pm

On the USSR: this whole diversion seems utterly misconceived.

First, it requires that the USSR really did have the kind of – ahem – militarily unchallenged military predominance that the US has.

Second (even, arguendo, magicking away that point) it requires converting Graeber’s comments about the US into a general thesis about how all military hegemons behave.

Third, J. Otto Pohl really didn’t need to be so accomodating in offering a choice of definitions of ‘imperialism’ (and getting back one that involves the handily chameleonic and distinctly feeble ‘exerts influence over, er, subordinates’). Robotslave’s remarks exhibit a stunning lack of comprehension of the USSR and how it operated – selling government bonds on the international money markets? A strategy of ‘economic domination’? Even imputing Trotskyist political ambitions has some pretty obvious problems (he got an ice pick that made his ears burn). Political philosophy (‘ideology’ as it’s often mislabelled) may pretty clearly be a byproduct of (elite) economic self-interest when it’s used by the US to justify its various interventions, from WW2 (+segue into a resumed and intensified Cold War) onwards (and before), but in the USSR, it did actually underpin everything the government got up to – Russian ‘oligarchs’ in those days were not plutocrats, even if pepole are always going on about the rather tame perks they got. I’m reminded of an LRB piece I read but can’t track down, claiming that the US imperialist defence of apartheid-era South African forces in Angola etc. failed because US game-theoretic models could not predict Cuba intervening against its self-interest, out of solidarity.

In general, the idea that the USSR either had world military supremacy, or that it sought, or even might have sought financial-economic hegemony – is a non-starter (and just to repeat – the perks enjoyed by upper-echelon officials cannot hold a candle to the profit motive in a capitalist system in which the accumulation of personal fortunes is unlimited.

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Tim Wilkinson 04.08.12 at 3:37 pm

re: Fred Block –

In a capitalist economy the level of economic activity is largely determined by the private investment decisions of capitalists. This means that capitalists, in their collective role as investors, have a veto over state policies in that their failure to invest at adequate levels can ,create major political problems for the state managers. This discourages state managers from taking actions that might seriously decrease the rate of investment, It also means that state managers have a direct interest in using their power to facilitate investment, since their own continued power rests on a healthy economy. There will be :t tendency for state agencies to orient their various programs toward the goal of facilitating and encouraging private investment. In doing so, the state managers address the problem of investment from a broader perspective than that of the individual capitalist. This increases the likelihood that such policies will be in the general interest of capital. (p. 15)

The emphasised sentence doesn’t follow at all.

The ‘dynamic of business confidence as a constraint on the managers of the state apparatus can be grasped by tracing out a scenario of what happens when left-of-center governments come to power through parliamentary means and attempt to push through major reforms. The scenario distills a number of twentieth-century experiences including that of Chile undcr Allende[1.]. From the moment that the left wins the election. business confidence declines. The most important manifestation of this decline is an increase in speculation against the nation’s currency. Reformist governments are always under suspicion that they will pursue inllationary policies; a higher rate of inflation means that the international value of the nation’s currency will fall. Speculators begin to discount the currency for the expected inflation as soon as possible[2.]. (p. 17)

1. Chile under Allende doesn’t seem a great example of a leftist government brought down by impersonal market forces.

Block supposes heads of giant corporations to exhibit rather simple-minded ‘market’ behaviour (when they’re not attending Bilderberg meetings, presumably – cue delegitimisation moves from taboo-enforcing VSPs).

Of the many politically-motivated interventions in Allende’s Chile, one that might be mistaken for a straighforward business decision is Kennecott’s retaliatory assault on the Chilean state copper industry – http://books.google.co.uk/books?id=qmMUCxSlugYC&pg=PA426&lpg=PA426#v=onepage&q&f=false.

2. Block does not of course take the Chicago Boy route of blaming reformist left governments for actively bringing about inflation through their own miscalculations. So instead we have runaway discounting by speculators.

For Block this is not literally a speculative attack on the currency -but note that in analysing the causes of market-irrational panic selling, some serious emprical psychology would be required to disentangle reflex distaste for leftist governments from a more or less choate desire on the part of currency traders – carefully selected for and socialised into a range of political attitudes – to undermine them (and we’d also need to factor in the expectation by market actors that political destabilisation will be carried out by the CIA etc).

The CFR ( http://www.tfasinternational.org/ila/academics/The_invisible_blockade.pdf ) certainly claims that initial discussions with business about economic sabotage are not linked by extant records with their being put into operation. It also takes a similar ‘market-inevitability’ position to Block – but unlike Block it supposes that the Allende govt was economically incompetent: The lesson, if there is one, in the relations between the United States and the Allende government is that a government which is determined to nationalize U.S. companies without compensation and to carry out an internal program which effectively destroys its ability to earn foreign exchange cannot expect to receive a subsidy to do so from either the U.S. government or from U.S. private banks. It may, however. receive some assistance from other countries either for political (aid to a fellow “socialist” country) or economic (encouragement of exports) reasons-at least for a time. What it cannot do is blame all its problems on foreign imperialists and their domestic allies, and ignore elementary principles of economic rationality and effective political legitimacy in its internal policies. No amount of foreign assistance can be a substitute for these, and no amount of foreign subversion or economic pressure can destroy them if they exist (emph. mine – Nothing Succeeds as Planned, indeed.)

Note the spin put on the acknowledged phenomenon of US private banks withholding ‘subsidy’ to Chile – a strong dose of ‘even if it was political, it’s fair enough, what do you expect’, diluted with a bit of the market rationality spiel.

However, even if Block is right to reject any intentional or similar functional explanation for speculative attack on a currency such (presumably) as the escudo in the early 70s, we are left with just another arbitrary manifestation of the speculative pathology in capitalism: self-reinforcing trends which can depart from ‘fundamentals’ (however interpreted) without limit. But Block’s point is precisely that

This association between reformist governments and inflation is not arbitrary. Reformist policies-higher levels of employment, redistribution of income toward the poor, improved social services -directly or indirectly lead to a shift of income from profits toward the working class. Businesses attempt to resist such a shift by raising prices so that profit lcvcls will not be reduced. In short, price inflation in this context is a market response to policies that tend to benefit the working class.

This is all a bit just-so-storyish. It’s far from clear that a business seeking to maintain profit levels in the face of increased taxation, costs etc. would necessarily do so by raising prices.

if the government is committed to defending its programs, it will have to act to insulate its economy from the pressures of the international market by imposing some combination of price controls, import controls, and exchange controls.
Escalation in the government’s attempt to control the market sets off a new chain of events. These new controls involve threats to individual capitalists. Price controls mean that firms lose the ability to manipulate one of the major determinants of profit levels. Import controls mean that a firm may no longer be able to import goods critical to its business. Ex-change controls mean that firms and individuals no longer are able to move their assets freely to secure international havens. The fact that assets are locked into a rapidly inflating currency poses the possibility that large fortunes will be lost. These are the ingredients for a sharp decline in domestic business confidence. Why should business owners continue to invest if they must operate in an environment in which the government violates the fundamental rules of a market economy?
(p. 19)

The supposed inflation + ‘personal fortune’ type of concern obviously operate, but for Block do so in a way that is ‘screened off’ from wider, politico-economic strategies for maintaining capitalism. But just looking at the need to maintain profit levels mentioned above (and supposedly inevitably leading to price rises, but more obviously to capital flight &c) – notice that the decision to shut down operations in response to reduced profitability relies on a lack of competition, on the fact that these big companies have oligopoly power which is how they have supernormal profits in the first place, and why there are unexploited alternatives available to them in other countries, which means they can shut down operations in one country and start up somewhere else instead. And this kind of power is certainly understood and sought by businesses, in part because it allows capital flight – or better, the threat of it – to be used to protect profits. Why should business owners continue to invest if they must operate in an environment in which the government violates the fundamental rules of a market economy? has a distinctly plaintive flavour to it and seems to reflect what I suspect is probably a commpoon enough attitude – that, never mind the fact that there still might be (lesser) profits to be had, we simply shouldn’t have to put up with this kind of thing, and will jolly well go somewhere else where we’re appreciated.

The key point in elaborating this scenario is that the chain of events can unfold without any members of tile ruling class consciously deciding to act “politically” against the regime in power- Of course, such a scenario is usually filled out with a great deal of editorializing against the regime in the bourgeois press, much grumbling among the upper classes, and even some conspiratorial activity. But the point is that conspiracies to destabilize the regime are basically superfluous, since decisions made by individual capitalists according to their own narrow economic rationality are sufficient to paralyze the regime, creating a situation where the regime’s fall is the only possibility. (p. 19)

Yeah, and if only the CIA would stop jumping the gun and funding coups all over the place, we could see this fundamental explanation actually operating, instead of relying on Block’s chosen narrative.

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Tim Wilkinson 04.08.12 at 3:38 pm

1 in the moderation queue…

182

Agog 04.08.12 at 3:53 pm

Here’s one last piece of Volcker-related gossip just in case anyone’s still not tired of it. It comes courtesy of Allen J. Matusow in the seemingly excellent journal Diplomatic History (Journal of The Society for Historians of American Foreign Relations), DOI: 10.1111/1467-7709.t01-1-00394.

Talking about the ‘Volcker Report’ on international monetary affairs of 1969, Matusow notes some hints of what was to come a few years later:

‘In the analytical sections of the report, Volcker conceded that the American payments deficit imposed a real cost on surplus countries because the deficit was a mechanism for exporting U.S. inflation. But the system also conferred real benefits on the United States. Other nations running payments deficits had to impose painful austerity measures at home to restore equilibrium. But because the dollar was a reserve currency, the United States could print up as many dollars as it wanted in order to sop up imports, acquire foreign businesses, and pay for foreign adventures such as Vietnam, leaving its partners no choice but to absorb dollars they did not want. As one French critic of American dollar domination wrote with no little bitterness, the American payments deficit was “a deficit without tears.’

So maybe the advantage was obvious to some.

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robotslave 04.08.12 at 3:56 pm

JJ, it sounds to me as if you’re talking about tribute relations exclusively (which, of course, rest on military force by definition) and not about the many other possible relationships between economic superiority and military superiority.

I would remind you that the title of Henry’s original contribution to the Debt seminar was The world economy is not a tribute system.

There are many ways that economic superiority can lead to military superiority. The simplest is via economic triumph specifically in food production, leading to increase in population and/or free time, a larger recruiting pool, forces that outnumber those of rivals, and finally military dominance.

Relationships can work in other directions as well. For example: the cost of maintaining military superiority might be so high that it weakens or even collapses a nation’s economy, thereby ending its economic superiority.

If you only had tribute systems in mind, fair enough; but there is nothing approaching agreement, at least in these parts, that any observable disparity in international trade must be a consequence of tribute relations.

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robotslave 04.08.12 at 4:06 pm

@179

I would agree that the idea of the USSR imposing substantial international currency reserves at gunpoint is every bit as ill-conceived as the idea of the US doing the same.

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JJ 04.08.12 at 4:15 pm

Economic dominance, at the global level, depends upon military dominance. At the local level, it depends upon your ability to back up your economic claims with the application or threat of violence. And your grossly understated observation that “a doctor gets money for saving lives” is laughable in the extreme. My doctor charges $20 for the application of a $.20 blood sugar test strip. Doctors may well get money for saving lives, but they make much more money by limiting access to their services through private health care insurance corporations and their corporate clients. And, believe me, they don’t discriminate between their employed and unemployed clients.

And finally, since I have to spell it out for you, the threat of dominance, for whatever reason, is an empty threat unless you, or the people who pretend to represent you, possess the material means, the power, to dominate. Economic dominance depends military dominance.

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robotslave 04.08.12 at 4:38 pm

bq. Political philosophy (‘ideology’ as it’s often mislabelled) may pretty clearly be a byproduct of (elite) economic self-interest when it’s used by the US to justify its various interventions, from WW2 (+segue into a resumed and intensified Cold War) onwards (and before), but in the USSR, it did actually underpin everything the government got up to – Russian ‘oligarchs’ in those days were not plutocrats, even if pepole are always going on about the rather tame perks they got.

When reading this, I feel I am being asked to pretend that “free-market capitalism” (or “neoliberalism,” for those who prefer it) is not a political philosophy.

…the idea that the USSR either had world military supremacy…

Graeber’s argument is not that the US accomplished its currency machinations via “world military supremacy”— he can’t, because much of what he’s talking about happened in the ’70s and ’80s, when the USSR was still a thing that existed. He claims only that financial arrangements are the result of US military capability, and that, in his words, “No other government has ever had anything remotely like this sort of capacity.” Which is simply not true.

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Colin Danby 04.08.12 at 4:39 pm

Yes, re Tim’s latest, Graeber’s discussion of empire seems built to be immune from evidence: (a) if a foreigners fall in line then look, the power of teh empire is revealed. (b) if foreigners don’t fall into line then hey, it’s resistance to teh empire. I became suspicious many years ago of this glib line when I realized its purveyors just slotted every event into category (a) or (b).

There *is* serious literature on imperialism going back a century — Hobson, Lenin, Luxemberg, Schumpeter et alia actually refer to evidence and work out arguments. In our time, Braudel, Frank, Amin, Wallerstein have contributed serious work — one needn’t find all of it persuasive, but these are all folks who take their history seriously, develop evidence, and make relatively careful arguments. All of this is available, surely, to Graeber and the folks chanting Proudhonist slogans above.

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robotslave 04.08.12 at 4:40 pm

Argh, teh CT ate my formatting. The first paragraph there is a quote from Tim Wilkinson at (currently) #179

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LFC 04.08.12 at 5:40 pm

Wilkinson:

I’m reminded of an LRB piece I read but can’t track down, claiming that the US imperialist defence of apartheid-era South African forces in Angola etc. failed because US game-theoretic models could not predict Cuba intervening against its self-interest, out of solidarity.

Was it against Cuba’s self-interest to intervene in Angola? Perhaps in the sense that it was going to cost Cuban lives in a conflict that had little to do with Cuba’s ‘vital interests’, defined in the way a US policymaker might see them. OTOH, maybe the USSR made some of its aid to Cuba conditional on Cuban intervention in Angola, which would have directly implicated the Cuban regime’s ‘self-interest’. I don’t know, but it wouldn’t be surprising, would it? This has less to do btw with the failure of ‘game-theoretic’ models than w/ the point that ‘the national interest’ of a state is not an objective, self-defining thing.

On a more central pt: The notion that ideology/philosophy underpinned everything the USSR got up to seems like a pretty considerable overstatement to me. At some pt the superpower competition took on a life of its own, ISTM, and ideology became secondary. The pt was to deny geopolitical or other gains to “the adversary”. Thus the USSR supported mvts in the Third World whose ideological coloration was malleable: Angola is a good example. The MPLA govt parroted Marxist-Leninist rhetoric to get USSR support, just as UNITA pretended to be great democrats to get US support. Previously UNITA had gotten support from the Chinese. The conflict among the Angolan mvts was not primarily about ideology.

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LFC 04.08.12 at 5:54 pm

p.s. Of course in some times and places there were ideologically committed Communists in the groups the USSR or China supported (Ho Chi Minh, for ex.) but in other times and places it was just people mouthing the correct rhetoric who really didn’t care about ideology.

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JJ 04.08.12 at 6:02 pm

rs@183:
“JJ, it sounds to me as if you’re talking about tribute relations exclusively (which, of course, rest on military force by definition) and not about the many other possible relationships between economic superiority and military superiority.

I would remind you that the title of Henry’s original contribution to the Debt seminar was ‘The world economy is not a tribute system’.”

Well, no. I’m referring to systems of economic domination, and the systems of military domination required to enforce them. This is so obvious to me that I’m amazed you don’t get it. The banker may threaten to repossess your home, but in the end it’s the Sheriff who drags your furniture to the curb and evicts you. Multiply that by a million evictions and you have the macroeconomic definition of a recession. All that intervening economic verbiage to disguise the obvious fact that another million families are currently and forcibly rendered homeless.

If that’s not a “tribute system” then nothing is.

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J. Otto Pohl 04.08.12 at 6:05 pm

LFC:

The Cuban intervention in Angola was Cuba’s idea and the USSR at first was against it. The Cubans eventually convinced the Soviets to go along with it, but the idea initially came from Cuba. Likewise Brezhnev initially told Amin he thought Soviet intervention in Afghanistan was a bad idea. It was in Cuba’s ideological interest to support the MPLA, but quite clearly it had serious risks to its state interests . One of which was straining their relationship with the USSR if things went badly.

The MPLA was originally formed in the late 1950s by Angolan students returning from Portugal who had worked with the Portuguese Communist Party in their underground struggle against Salazar. They were quite serious about their Marxism-Leninism. But, due to the existing factors on the ground after 1975 they found themselves forced to make some pragmatic compromises such as allowing Chevron-Gulf to continue to operate in Angola and inviting skilled Portuguese colonials to return from Europe. Implementing socialist policies does nothing to further world revolution if you can not keep the state and economy from completely collapsing. The war against UNITA mandated a number of NEP style policies to keep the MPLA in power. It is only in the 1990s that MPLA voluntarily moved away from Soviet style economic policies. It is true, however, that Savimbi was no democrat. He was a rather meglomaniac who supported an ideology that included elements of ‘Black Supremacy’ against Angola’s Metsitzo’s and remaining Whites. Ironically his chief backer was apartheid South Africa. Pretoria supported UNITA mainly to prevent SWAPO from using Angola as a base to fight against the occupation of Namibia.

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JJ 04.08.12 at 6:22 pm

Sorry. Didn’t mean to be so melodramatic there. Well, yes I did, but never mind.

Here, Henry. Try this on for size: “The world economy is not a corporate tribute system”.

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robotslave 04.08.12 at 6:41 pm

@191

JJ, if you believe all capitalist relations are tribute relations, then no, not everyone in this neighborhood agrees with what you consider blindingly obvious.

More immediately, we clearly don’t have anything left to say to each other. This argument is basically finished.

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LFC 04.08.12 at 7:11 pm

J Otto:
Thanks, esp. for the first point on intervention being Cuba’s idea. I am going to assume that you know what you are talking about here; in any case, you obviously know more about this history than I do.

I think my broader point, however, about the USSR sometimes supporting mvts that were not ideologically serious but opportunistic may stand. If MPLA does not fit that bill, then I should think it would not be impossible (or even too difficult) to find others that do. Caveat: I don’t claim to be an expert on the history of the Cold War as it played out in what was then called the Third World. I have not read O.A. Westad, now regarded I believe as the definitive English-language work on this subject.

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JJ 04.08.12 at 7:23 pm

Gd grf! rbtslv hs jst dsmvwld m.

More to the point, what does it take to convince you that capitalist relations are basically corporate tribute relationships? Another million homeless families? Lower corporate taxes? Higher prison populations?

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LFC 04.08.12 at 7:41 pm

J.O.P.
“Brezhnev initially told Amin…”
Do you mean Idi Amin?? (B/c the Afghan leader’s name was more like Aminullah, I think. Have no time to look this up now.)

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robotslave 04.08.12 at 8:10 pm

JJ, I’d agree that things are fucked up and bullshit. I just don’t agree with the notion that the current state of affairs is the inevitable end-product of Capitalism, which in turn is mere pernicious rhetorical drapery over brutal systems of coercive appropriation. I don’t know what it takes to convince someone of that who doesn’t already believe it, but what you’re doing isn’t it. Not for me, at any rate.

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Random Lurker 04.08.12 at 10:04 pm

My two cents about imperialism.
First, I think that imperialism is something different from empire: in imperialism, we have different geopolitical entities, one of wich is in some way preeminent on the others; empire on the other hand is a situation where one geopolitical entity annexes the others, though citiziens of the other entities have not the same rights of citiziens of the imperial entity.
In this sense, both Rome and the Austro-Hungarian empire were empires, not imperialist systems. I think that also the USSR was something more similar to an empire than to an imperialist system.
Second, with regards to economic dominance, I think that there is some confusion on this because depending on the perspective who is taking advantage of who can change: for example, from Graeber’s point of view the fact that China is a net exporter to USA is an advantage to USA, since USA gets to live beyond its means, but from another perspective it is China that has an advantage because it gets economic growth and pushes unemployment to the USA. There is also a difference between economic supremacy (usually due to superior technology) and economic exploitation.
In my opinion, the “ideal typical capitalist imperialism” works this way:
1) Capitalist country A has an economic supremacy over other countries, and thus has an economic surplus. It then uses the military supremacy to secure export markets, that it needs to recycle the surplus (or it would have an economic crisis of overproduction).
2) The export market countries then are forced to trade with goods that have a lower added value. This usually means low tech stuff like natural resources, wich creates the “exploitation of resources” thing; however the main point is that nation A wants export market for his high tech stuff, natural resources exploitation is in some sence a consequence.
3) In this sense, nation A could well have a trade surplus within its sphere of influence, since the economic domination comes from retaining the high added value fields of production.
4) However, sooner or later the economic flows reverse, for various reasons: there is a limit to the quantity of export the export market countries can absorb, so that nation A sooner or later has to subsidize consumption at home; also consumption at home is important for political reasons; also the elites of the export market countries have to aquiesce to the situation, and if the other countries are also capitalist they need an export market too; the better technology spills over to export market countries, reducing the initial economic supremacy; also to compete with other imperialist countries nation A has to spend a lot on the military. Thus at the end nation A becomes a net importer, with other nations geared to exports, and can mantain its status only through “seniorage”.

Speaking of USA, the story IMHO went this way:
Initially (before WW2), the USA had an economic supremacy on the rest of the world.
Because of this supremacy the USA emerged as the main winner of the contest for global power that was WW2, with USSR as a not so close second. Note that before WW2 USA had a positive trade balance vs the rest of the world.
But then USA had to spend a lot on the military to contrast the USSR, and also had to win the ideological war against it, so it treated very well the nations that could go communist, becoming their main export market, and also used keynesian policies at home to satisfy the home population. This way home population was happy because of hig standard of life, population in satellite countries was happy because of good economy, and ruling classes in satellite countries were happy because they could have profits. Ruling classes at home had to put up with being an importing countries, a disadvantage for them, in order to mantain the “empire”, and had finally to resort to financialisation to get profits.

The history of post-WW2 world in just one comment! OK it is a huge oversemplification but I think this was the basic story.

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Tim Wilkinson 04.09.12 at 12:53 am

Agog – thanks for the Volker stuff. V interesting to see some actual evidence about US policy makers’ attitudes to the issue. I would expect VSPs to greet this data with eery silence, much as they do the fact that the US rather blatantly tricked Saddam into Kuwait. (I keep mentioning this, just because it really does seem to be wilfully ignored – the best basis I’ve heard for denying that what happened really happened is that the relatively junior diplomat to whom the task fell was not openly treated as a hero or something. And it’s rather important in the context of discussing the distribution of US ‘occupation-lite’ military bases over the Grand Chessboard.)

robotslave – Graeber’s brief allusion to aspects of the US’s (undeniable) military supremacy refers to the present – we can even allow that ‘present’ to extend back 25 years or so without the need to elaborate further. But even in the 70s, Soviet military power and ambition was nowhere near the levels that the US Cold Warriors claimed.

(The Cold War, on the back of the USSR’s ‘purely defensive move’ to consolidate the buffer zone in Czechoslovakia (and Berlin) – see e.g. http://www.amazon.co.uk/Harry-Truman-War-Scare-1948/dp/0312123299#productDescription – has to be understood along similar Strauss/Orwell lines as the subsequent War on Terror and that unsatisfactory stopgap in maintaining the permanent state of phoney war, the War on Drugs. This involves both exaggeration of threats and the attempt to provoke real ones.)

[cont., in effort to avoid moderation...]

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Tim Wilkinson 04.09.12 at 12:54 am

The USSR was far more threatened by the US than the other way round, and was far less concerned with world domination. See, for a couple of fairly arbitrary Google hits, http://news.google.com/newspapers?nid=1291&dat=19840130&id=-S5UAAAAIBAJ&sjid=-IwDAAAAIBAJ&pg=6754,8656904 and http://www.gwu.edu/~nsarchiv/nukevault/ebb285/index.htm

As for neoliberalism as a political philosophy, not really – and as an ideology to which US decision-makers are subject or feel themselves bound to conform, really not. The CT archive is replete with discussions emphasising these points.

Colin Danby – Graeber’s discussion of empire seems built to be immune from evidence: (a) if a foreigners fall in line then look, the power of teh empire is revealed. (b) if foreigners don’t fall into line then hey, it’s resistance to teh empire. I became suspicious many years ago of this glib line when I realized its purveyors just slotted every event into category (a) or (b).

I don’t see this at all. You need to elaborate your position beyond an abstract and unsubstantiated assertion. No doubt the situation seems obvious to you but that is, if anything, a reason to distrust your assessment.

To me this looks exactly like the usual kind of vacuous delegitimation move. The conspiracists (or imperialism-theorists, etc), refuse to adopt an idiotically simplistic Everything Succeeds as Planned thesis – so continue to attribute to them sole reliance on a crude inference from coarse-grained outcome to intent, and accuse them of trying to have it both ways.

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Colin Danby 04.09.12 at 1:01 am

I don’t understand your last para, Tim. On the previous, what would be disconfirming evidence for Graeber?

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Henry 04.09.12 at 1:13 am

Tim – on the Volcker stuff, it’s actually worse than that – the infamous John Connally quote that it’s “our dollar and your problem” (in its reportedly bowdlerized version – am not quite sure what the more profane original is supposed to be). Here, my analytic point is that this isn’t tribute or any form of military coercion – except in the very thin sense that the US’s military power mean that no-one was likely to invade it in protest. The ability to use the dollar to push everyone else to adjust is based on economic power, not military. On Block – haven’t had a chance to do more than skim the chapter in question (class prep plus visiting family) but my guess is that the two things that have you annoyed reflect his specific interest in this piece in contributing to Marxist theories of the state (speaking to the sometimes arcane disputes between Poulantzas, Milliband pere etc over whether the state had any autonomy from the class struggle, and if so why and under what circumstances). I can’t imagine that he’d have disagreed with you for a moment about the direct involvement of the US in Allende’s overthrow – if the piece seems apolitical, it is apolitical in the sense that it is trying to come up with a kind of master theory of the role of the state in Marxist and post-Marxist accounts, rather than in that it disputes the specific nastiness of particular capitalist regimes like the US in fomenting coups. In other words, may not be your cup of tea, but Block’s leftist credentials back then aren’t to be doubted (I get the sense that he has moved closer to standardsocial democracy over time, but haven’t read enough of his recent work to be able to say more than that).

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Colin Danby 04.09.12 at 1:44 am

Re Block, I might start with _Origins of International Economic Disorder_ (UCLA 1977) which is very carefully referenced and footnoted – what you’re seeing in the above-linked article is a sort of precis of a much larger body of work. Much of the discussion of capital flight and the behavior of business-owners can be sourced to a long tradition of work in and about Latin America, including figures like Prebisch and Furtado and many people since – there really is concrete research on what capitalists do! A number of Furtado’s works have been translated and they all repay reading.

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Agog 04.09.12 at 10:20 am

Try again with the tag fixed…

Re ‘idiotically simplistic Everything Succeeds as Planned’ theses, wouldn’t it be more intelligent for both sides to argue on the basis of boundary conditions? So, rather than expecting a full causal analysis of the actions of Nation X (a difficult task), you address specific cases and ask how they might be expected to limit the possible outcomes. For instance, take the Plaza Accords. The official justification (see wikipedia for a short discussion) says one thing, one heterodox view (and references therein) says another. On the face of it, it’s not easy to say who’s right, especially since apparently the details of the agreement were “spelled out’ in a ‘nonpaper’, which was never released”. (Source). But I can imagine how one might go about arguing about how the stated aims of the agreement might constrain the possible outcomes. If anyone could point me to examples of these kinds of arguments I would be grateful (I’m sure there must be lots of examples).

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J. Otto Pohl 04.09.12 at 12:05 pm

The leader of Afghanistan was Hafizullah Amin.

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Watson Ladd 04.09.12 at 12:38 pm

Tim, explain why Czech democracy was so problematic for the USSR. The lead to the Iron Curtain speech was a series of broken promises about power sharing in Eastern Europe, and then China intervened in the Korean War. The Soviet Union was interested in consolidating power over most of Eurasia, as well as extending it to client regimes in the third world.

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Agog 04.09.12 at 12:54 pm

(Reposting with modification a comment with broken html tags I tried to submit earlier; I’m sorry if it gets through more than once)

Re ‘idiotically simplistic Everything Succeeds as Planned’ theses (and avoidance thereof), wouldn’t it be more intelligent in such such cases for both sides to argue on the basis of boundary conditions? So, rather than expecting a full causal analysis of the actions of Nation X (a difficult task), you address specific cases and ask how they might be expected to limit the possible outcomes. For instance, take the Plaza Accord. The official justification (see wikipedia for a short discussion) says one thing, one heterodox view (and references therein) says another. On the face of it, it’s not easy to say who’s right, especially since apparently the details of the agreement were “spelled out’ in a ‘nonpaper’, which was never released”. (see http://www.nber.org/papers/w16345). But I can imagine how one might go about arguing about how the stated aims of the agreement might constrain the possible eventual outcomes. If anyone could point me to examples of these kinds of arguments I would be grateful. I’m sure there must be lots of examples.

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Tim Wilkinson 04.09.12 at 1:12 pm

Colin Danby – yes that was an especially impenetrable sentence; never mind that though, let’s take this one step at a time. I repeat – can you substantiate the bare claim that Graeber’s discussion of empire seems built to be immune from evidence: (a) if a foreigners fall in line then look, the power of teh empire is revealed. (b) if foreigners don’t fall into line then hey, it’s resistance to teh empire, or is this just an empty formula?

Henry – with the dollar stuff, I was thinking back to recent reactions to the idea that Gulf II was to some degree a case of dollar warfare. Some even denied, with an air of judicious sagacity, that the US elite gains anything from $ heg./petro$ recycling, and more relevantly that it would lose anything from its abrupt end.

So that was of more interest as rebuttal than evidence in chief for the military -> finance edge of the causal network (as briefly alluded to in general terms in The U.S. military, unlike any other, maintains a doctrine of global power projection: that it should have the ability, through roughly 800 overseas military bases, to intervene with deadly force absolutely anywhere on the planet. In a way, though, land forces are secondary [...] a case could well be made that it is this very power that holds the entire world monetary system, organized around the dollar, together.)

Gulf I, though, (unless anyone feels like explaining why I should reject the evidence of transcripts showing the US giving Saddam a green light) looks very much like a classic protection racket – a first move in the post Cold War consolidation of military dominance, perhaps – converting Kuwait and Saudi into US military protectorates. And that would at least be of some interest in the context of the special role of petrodollars in maintaining the US’s ability to ‘export inflation’.

On Block – yes, I don’t suppose Block would have particularly wanted his capitalist-sheep thesis to be useful to CFR apologists, and especially not to be detached (it is detachable) from his state-shepherds thesis. But it can be and is, and more relevantly in the first instance, IMO unwarrantedly downplays the class-consciousness (and ‘subconsciousness’) of individual capitalists.

I was deliberately ignoring the context, because I think it’s largely irrelevant, and in fact attending to the factions, rivalries and motivations generally tends to distract from the actual content. In this genre some staggeringly silly things got said at times, and taking the viewpoint of the author and appreciating how various commitments forced them into such a position tends to mask the silliness a bit. Not that most of what Block says is silly – just that aspect, but it’s wrong factually and was debilitating politically. I have the same reaction to a lot of doctrinaire Marxist theorising, esp. of that vintage – there’s a considerable commonality between the Invisible Hand of market forces and the Materialist Dialectic of forces of production.

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Tim Wilkinson 04.09.12 at 1:57 pm

Watson Ladd – explain why Czech democracy was so problematic for the USSR

Because they thought the communists were about to lose the election, of course.

The point is that, at this paramilitarised phase of divvying up Europe, the CIA, Marshall, Kennan and Truman administration strategists in general regarded Soviet satellite status for Czechoslovakia as a foregone conclusion, and before during and after the fact regarded the USSR’s assistance to the coup as a ‘defensive move’. (Same with Berlin. The US meanwhile took Greece and Italy without objection from Stalin, and of course Italy was kept from ‘going communist’ by a programme of false-flag terrorism by NATO ‘stay-behinds’.)

Outrage and scaremongering about Soviet expansionism, nuclear armageddon, etc were strictly for the military headbangers and the -suckers- citizenry.

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Agog 04.09.12 at 5:43 pm

Rereading part of ‘The Global Minotaur’, I see that I misrepresented Yanis Varoufakis’ position in one of my posts upthread. He actually makes the connection between Volcker, ‘controlled disintegration’, interest rates, and the defeat of the Soviet Union in chapter 4. I added nothing to it – just didn’t remember he made the argument, so thought I was being insightful.

Apologies to Prof. Varoufakis for the error.

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Stephen 04.09.12 at 7:46 pm

RandomLurker @ 199

If I have understood you rightly, you distinguish between “imperialism, [with] different geopolitical entities” and “empire … where one geopolitical entity annexes the others”. Is your point that if one geopolitical entity annexes its geographical neighbours, that is empire (possibly cheers) but not imperialism (boo)? In short, that imperialism involves only overseas annexation?

If so, I can see how that would be comfortable for interpreters of US history: English imperialism (boo) creates the Eastern colonies, they become independent and expand the American Empire (cheers) westward and contiguously.

Pity about Hawaii and Alaska, of course.

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Tim Wilkinson 04.09.12 at 8:54 pm

TBH, Italy was kept from ‘going communist’ by a programme of false-flag terrorism by NATO ‘stay-behinds’ is a simplification, but not one that materially misrepresents the situation.

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Watson Ladd 04.09.12 at 9:15 pm

Tim, the Czechs would probably have disagreed with any deal selling them to Stalin. Imperialism doesn’t stop being imperialism because the other power agrees to it. By that logic, the Sudetenland was a defensive move as well.

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LFC 04.09.12 at 9:32 pm

J.O.P. re Hafizullah Amin:

Yes, thks. That was dumb on my part. Well, I’m sure it won’t be the last time.

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Colin Danby 04.09.12 at 10:09 pm

Tim:

1. Again, I invite you to meditate on the question of what would be disconfirming evidence for Graeber.

2. Chapter 12 has an extremely thin scholarly apparatus, and standard sources are unmentioned. It is also sprinkled with howlers about central banking and money — the more Graeber purports to explain stuff e.g. fn9, the worse he gets. He hasn’t done the basic homework to understand how these institutions work. (Indeed, he seems to mock himself, beginning the chapter with a couple of word-salady pages about gold and conspiracy theories.)

3. Nonetheless the chapter is long on big claims e.g. that credit money rests on military power (364). (He footnotes Braudel a few lines down, but if he actually read Braudel he would find ample evidence of credit money emerging in merchant-and-finance circuits that circumvented state power.)

4. Key claims like the Iraq-dollar theory were defended *by Graeber* as being mere rumors, free of substantiation — a wholly circular argument that if enough people suspect something, their belief is grounded.

5. The discussion on 372 is symptomatic of the relations between evidence and assertion. We get in succession a weird claims that only certain U.S. “tributaries” were “allowed to catapult themselves out of poverty and into first-world status.” (what countries are we talking about? no evidence, not even names) and then “after 1971, as U.S. economic strength reltive to the rest of the world began to decline, they were gradually transformed back into a more old-fashioned sort of tributary.” I’m trying to think of any countries for which that might be the case, or whom even this sequence of events applies. But no referencing. What Graeber is doing, however, is clear: China (then and now) represents several obvious counterarguments to his glib claims about how U.S. power works. So he’s doing a bit of hand-waving around the idea of “tribute” to try and contain this.

6. So yes, the text of chapter 12 tells us that this is a deductive rather than inductive account, enlarging on Graeber’s pet ideas (some of which are good) and ornamenting them with a few details about international finance and the U.S. financial system, some of them wrong. This is not an account that starts by mastering the relevant literature or evidence, it is not even an account that takes the time necessary to get basic stuff right.

7. I would again invite you to read Block 1977 and indeed at any of the classic works of Amin, Frank, Furtado et al. because they are not just “theorizing” but actually attend to evidence about the world. I do hope people realize that Graeber’s shoddy drive-by is not typical of the lit on imperialism.

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Tim Wilkinson 04.09.12 at 10:28 pm

Watson Ladd – yes, they were all absolutely horrid. But once the post-war jockeying had settled down, the buffer and and the curtain, the USSR was not notably expansionist. See all the previous comments; they have links and everything. I am not even sure why this was at issue in the first place. Something about the USSR issuing bonds on the meney markets?!

Colin Danby – well, OK, thanks, now there is something tangible to address. I’ll porbably come back to it in the morning as it looks fairly substantial and I am drfiting into the arena of the unwell.

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Phil 04.09.12 at 10:36 pm

TBH, Italy was kept from ‘going communist’ by a programme of false-flag terrorism by NATO ‘stay-behinds’ is a simplification, but not one that materially misrepresents the situation.

I agree that it’s a simplification. As far as I can see, NATO stay-behinds were one element in the ‘black’ terrorism of the anni di piombo, which was one element in the strategy of tension, which was one of the reasons why the Communists were kept out of government, which in any case is very different from preventing Italy from “going Communist”, which was never a realistic possibility (most of the Italian Communist Party didn’t even aspire to taking power, and the USSR wouldn’t have supported them if they had done).

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James 04.10.12 at 1:20 am

Here is a study showing that seignorage provides between 1 and 2 percent of U.S. government revenue. It seems unlikely that this rather small amount of money could be driving U.S. foreign policy.

http://research.stlouisfed.org/publications/review/92/03/Seigniorage_Mar_Apr1992.pdf

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LFC 04.10.12 at 1:54 am

Colin Danby @216 w/r/t your #7

Apart from T. Wilkinson’s criticism of Block, has anyone here used this discussion to cast any aspersions on Braudel, I. Wallerstein, Samir Amin, Andre Gunder Frank, Celso Furtado, Raul Prebisch, Hobson, Lenin, Schumpeter, and whatever other names you have been mentioning? The answer, from what I can tell, is no.

I have not read Graeber nor have I defended what I gather he says in the disputed chapter. However, your implication that someone proposing to write about U.S. “imperialism” or “empire” has to master the entire corpus of work on world-systems analysis and/or dependency theory is really excessive. For one thing, there are other bodies of literature that are relevant and much depends on one’s priors (I hate that word, btw) and the approach one decides to take. I’ve read some, certainly by no means all, of the lit you’re mentioning and I agree it’s important but that doesn’t mean all of it is relevant here.

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Colin Danby 04.10.12 at 2:48 am

Sorry to have annoyed you, LFC! I would however ask to be read on what I say directly (I am not subtle), not on what you take something to imply. I would also suggest reading the Graeber chapter in question to get a better sense of the issues.

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Tim Wilkinson 04.10.12 at 2:49 pm

Phil – Yes, we’ve been over this elsewhere, but there may be a cause and effect issue about the PCI not wanting power (reluctance v reticence? And who were these spoilers anyway?).

We also differ on the likelihood that the BR were ‘instruments of a larger political framework’ where certain terrorist events are concerned (notably the Moro affair which has many highly dodgy aspects), whether there was a bloodless coup or only an aborted attempt, to what extent the US should be said to have ‘bought’ the 48 election, etc.

But PCI in control would have been regarded as a loss to the US sphere of i. even if it would not automatically have been a gain to the USSR (you know much more about the politics seen from the inside than I, but if we can counterfactualise a PCI-led government, I wonder how unlikely it really is that it and the USSR would have come to some kind of understanding).

But yeah, the whole thing is incredibly intricate, and opinions may reasonably differ about the various terror events. But a sidetrack anyway.

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hartal 04.10.12 at 3:12 pm

What does this mean, US dollar on a downward trend in international currency markets since 2002

http://research.stlouisfed.org/fred2/series/TWEXB

H/t to Justin Fox at his blog over at Harvard Business Review

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JJ 04.10.12 at 4:47 pm

James@219:
“It seems unlikely that this rather small amount of money could be driving U.S. foreign policy.”

What’s driving US foreign policy is an international post-industrial economy which remains petroleum-based and which therefore relies upon a dollar-denominated currency of exchange. In other words, the country which controls access to the most essential nonrenewable industrial resource of an economy controls the economy, regardless of any minor collateral benefits acquired from seignorage.

So, yeah, Graeber’s thesis is not only valid but glaringly obvious: behind the Wizard fiddling with the monetary knobs of economic dominance there stands the Man with the Gun, fiddling with the martial knobs of military dominance.

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Walt 04.10.12 at 5:08 pm

JJ, it’s not obvious to me. Could you be so kind to explain it to me? How does having oil quoted in dollars cause the US to control the oil supply? What is it would happen, exactly, if everyone switched to euros, and the US failed to take military action to reverse the action?

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JJ 04.10.12 at 5:38 pm

Would I be so “kind”? Goodness gracious, Walt. I’ve been accused of a variety of crimes in my miserable, misanthropic life, but kindness was never one of them.

Figure it out for yourself.

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Walt 04.10.12 at 5:45 pm

I will take that as an admission that you’ve been caught out, and have no idea what you’re talking about.

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hartal 04.10.12 at 5:54 pm

I don’t get this, Walt. Let’s say crisis of confidence in the US (political gridlock, widespread accounting fraud discovered), oil exporters dump dollars and accept other currencies, exacerbates crisis of confidence in the US, interest rates rise and US financial sector loses source of strength, US implodes and starts a few wars or arms races.

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Data Tutashkhia 04.10.12 at 5:55 pm

I don’t see how having oil quoted in dollars affects anything at all. It’s not like the price is fixed in dollars; price goes up and down (well, up, mostly) in dollars, determined by supply/manipulations/demand. I imagine the price would be exactly the same if the euro was used instead of the dollar. So, what’s the significance?

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JJ 04.10.12 at 6:03 pm

You can take it any way you like, but I seriously doubt that you have no idea what I’m talking about.

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JJ 04.10.12 at 7:13 pm

I mean, you knew exactly what I was talking about on Graeber’s post when you forcefully expressed your opposition to his ideas, until you ran into some equally forceful and much more informed opposition to your own opinions, at which point you diplomatically disappeared.

I don’t possess the economic expertise which would allow me to obfuscate the issue as authoritatively as yourself, but I do have few intuitively-derived opinions and some semblance of a method by which I might integrate them into a coherent account of the issue at hand, and will continue to express them until Henry decides to disemvowel me or ban me from the blog.

Cheers!

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Substance McGravitas 04.10.12 at 7:19 pm

JJ, please don’t invite bans. The Graeber threads have been pretty good without the personal stuff (in which Graeber’s contributions embarrassed me as an enthusiastic booster of the book). You’re not gonna be banned for disagreeing, but there’s a more personal assumption involved in assuming our hosts are shits enough to get rid of you just because you’re making a good argument.

Not that I want to speak for those in charge, but I’m reading the threads and god help me I’m still interested.

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Walt 04.10.12 at 8:05 pm

JJ, did I politely disappear? Honestly, I just got depressed that we were arguing about this, since it seems so obviously wrong-headed to me. If there’s some totally awesome argument in a previous comment I should respond to, I’d be happy to know the comment number.

And what’s my motive? I have not at any point defended US foreign policy, or challenged that the US is an imperial power. I’m aware of the US’s history in Latin America, etc. I just hate to see a misunderstanding of how the global economy works become so widespread so quickly.

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Walt 04.10.12 at 8:10 pm

hartal, yes if a bunch of other bad things happen, then bad things will happen to the US. But none of them have anything to do with whether the price of oil is quoted in dollars or in euros.

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JJ 04.10.12 at 8:28 pm

I don’t think our hosts are shits enough to get rid of anyone who disagrees with them. My last remark was directed to Walt, not Henry. I mean, wtf, would I be so “kind” as to enlighten him on a few topics of dispute? I know exactly where that’s coming from.

As for David and Henry, they’re both academics. I don’t know about Holbo, but as an anthropologist I’m sure that Graeber is acutely aware of the social function of an academic as someone who legitimates the political authority of his or her leaders, and delegitimizes anyone who disagrees with them, and that may the source of some of their disagreement. Moreover, any casual review of the comments found on Gabriel Rossman’s blog (who is a shit) will quickly disabuse anyone of his apparent absence of animosity for Graeber.

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Walt 04.10.12 at 8:33 pm

JJ, it’s funny that you’re so offended. Your position seems the exact opposite of obvious to me, so I assumed that you would be able to defend it. But you just admitted that you don’t actually know what you’re talking about in #231, which answers my question of whether or not you can defend it.

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Henry 04.10.12 at 8:41 pm

JJ – if you want to make arguments on the substance of your debate, you can – but if you just want to jump up and down calling Gabriel Rossman a “shit,” you are cruising for a temporary ban at the very least.

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hartal 04.10.12 at 9:24 pm

Pricing in dollars is just part of holding dollars, and it gives the dollar added international legitimacy. I don’t see what you are getting at. Of course a decision to price in euros (or accept a basket of currencies) could signal collapsing confidence in the dollar, and make the condition worse. The US state and financial industry would not like it. Are you denying that there is additional confidence in the dollar because oil is priced in it and some of the most successful exporters in the world seem to committed to the dollar due to previous investments in the US and security deals with the USG?

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JJ 04.10.12 at 9:27 pm

My apologies to both John Holbo and Henry Farrell, for the inadvertent transposition of your last names:

“As for David and Henry, they’re both academics. I don’t know about Farrell, but as an anthropologist I’m sure that Graeber is acutely aware of the social function of an academic as someone who legitimates the political authority of his or her leaders, and delegitimizes anyone who disagrees with them, and that may the source of some of their disagreement. Moreover, any casual review of the comments found on Gabriel Rossman’s blog will quickly disabuse anyone of his apparent absence of animosity for Graeber.”

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JJ 04.10.12 at 10:14 pm

Walt, stop it. You win. You’re right. I don’t know what I’m talking about, and I’m happy to have answered your question concerning my inability to defend my position. Let’s make up and move on.

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John Quiggin 04.10.12 at 11:28 pm

It’s probably a bit late to come in to this, but, from memory, standard estimates suggest that the US government earns around $50 billion a year (about 0.5 per cent of national income) from seignorage, that is, the ability to print dollars and have them taken as legal tender in the US and a reserve currency elsewhere. Again, from memory, about half of this gain is derived within the US, and the rest depends on the reserve currency status.

As a comparison item, the lifetime operational cost of a warplane (the technical distinctions between fighters and bombers are pretty much irrelevant these days) is of the order of $1 billion. So, if you give them a life of 20 years, the benefits of reserve currency status are about the same as the cost of maintaining a force of 500 planes.

I don’t know that this proves anything, but I always like to have some numbers.

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rf 04.10.12 at 11:47 pm

I wasn’t going to post this, as I was unsure of the relevance, but from Andrea Boltho’s NLR review of Eichengreen’s “Exorbitant Privilege”:

“In addition, there is, of course, the time honoured privilege of ‘seignorage’….At the simplest level, this is shown by the fact that dollar bills to the tune of perhaps $500 billion have been accumulated abroad……The annual gain to the US of this continuing foreign demand…..has been estimated at some 0.1 per cent of Americas GDP. This is nice to have, but hardly seems overwhelming. As Eichengreen puts it, seignorage ‘is about number 23′ on the list of factors determining the place of the US in the world….America is rich and powerful not because of the international role of the dollar. Causation clearly goes in the opposite direction.”

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Bruce Wilder 04.11.12 at 12:09 am

Is seignorage simply a matter of the “profit” associated with issuing actual currency (of which, I guess, there’s a bit less than $1 trillion)? Wikipedia, which I checked, for the definition, gave some estimates, without much analysis, of U.S. seignorage, which were a bit lower than $50 billion annually.

How would one account for the benefits of issuing the much larger stock of “risk-free” securities, so valued as instruments by the financial sector, and by sovereigns, wishing to control their exchange rate vis a vis the reserve currency?

It seems to me that many casual references to the alleged benefits of issuing “the reserve currency” are actually references to either the interest rate or exchange rate benefits of issuing sovereign debt in the reserve currency, which sovereign debt is in demand as a financial instrument, in a way analogous to the demand for currency, but extending to a much larger stock. One interpretation of the etiology of the GFC identifies the use of residential mortgage-backed securities, particularly those issued by Fannie and Freddie, as close substitutes for Treasuries, in satisfying demand for “risk-free” dollar securities, after the Asian central banks began accumulating dollar reserves (which are large portfolios of financial securities, not currency, per se) as part of foreign exchange rate and risk management policies.

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John Quiggin 04.11.12 at 12:53 am

Certainly, the ability to issue debt at low interest rates is a big benefit, but it’s not amenable to direct control through military power in the way that has been claimed for reserve currency status.

For example, when (expected) US inflation is high, the rate of interest on US debt goes up, and the USAF can’t do anything to change that.

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john c. halasz 04.11.12 at 3:39 am

The ability to borrow long and cheap and re-invest abroad at much higher returns is the issue, not narrow “seignorage”. And, of course, if you’re going to be investing extensively abroad, then having military power to back up the security of your investments might be of some help. (The term “invisible hand” only occurs in Smith’s WoN once, when he discusses the home-bias of merchants’ investments, which renders mercantilist restrictions nugatory). Though also having productive economy is a pre-condition of being able to sustain such military power. (The capacity of British public finance to sustain military commitments was a key factor in its ascendancy). So much should really be just common sense, not warranting endless comments in a nitpicking dispute. The real point is the “identity” of the U.S. and its “national interests”, since the fruitful discussion would be around how corporate and financial interests inter-twine with and capture the global exercize of state power. Or not.

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JJ 04.11.12 at 7:13 am

Perhaps the distinction between economic dominance and military dominance is fictitious to begin with. If the social effect of capitalist development is to disrupt or destroy traditional networks of social cohesion, from tribal kinship to extended families to nuclear families to rational, self-interested individuals, then economic dominance becomes as socially explosive as military dominance is materially explosive.

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J 04.11.12 at 9:33 am

“market actors can be largely autonomous of state power”. It can be, but it seldom has been. British Industrialization has had much to do with Britain’s Maritime power and its exercise of Imperialism in India, among other colonies.

There is an interesting talk on this subject (which is a critique of Rober Allen’s take on Industrial revolution:
http://vimeo.com/22127810

I think Marx has been wrong about colonialism. He viewed it as integral for creating the conditions for capitalism. He failed to recognize its cost (to the colonies), which was the biggest legacy of colonialism.

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Tim Wilkinson 04.11.12 at 10:36 am

Hegemon Fund

http://whatmatters.mckinseydigital.com/file_download/11/McKinsey_MGI_Reserve_Currency.pdf

McKinsey prefer to dismiss the issue of the US leveraging its cheap borrowing (as a benefit of reserve currency status, rather than of politico-military dominance), relegating it to Box 2 (p.21), on what look like rather slim grounds that others can/could do something similar too (but shurely others don’t have the benefit of cheaper borrowing that is said to be due to monetary hegemon), and because of effishunt markits (the risk-adjusted return should be 0, yeah right) the neat balancing of cost and benefit is proved because of a loss in 2008.

Their headline figure for annual incremental benefits of reserve currency status also doesn’t include a GDP effect, also chucked into a box (box 3, p.24; rather like the ‘bottom drawer’). As a distinctly non-expert observer, I’d have thought this perverse given that the headline figures are given as % of GDP. With GDP effects in the model, the benefit (sans leverage as above) goes from 0.3-0.5% (p.19) to 0.9-1.4% of GDP.

Also of interest I suppose would be the distribution of costs and benefits – this would be relevant when we take into account that ‘the US’ is not a unitary subject or agent. ‘Exhibit’, or figure, 5 on p.23 says that the reduced cost of borrowing mostly benefits those on higher incomes.

In more general terms (to refer back to Debt as an organising principle for discussion) recall Graeber says a case could be made that US military pre-eminence holds the global system of finance together – not just that it is used to maintain monetary hegemony. I should think that this would include the World Bank and IMF, which would presumably bring in the kind of stuff that Naomi Klein, Mark Curtis, possibly that ‘economic hitman’ guy, etc talk about.

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Tim Wilkinson 04.11.12 at 10:38 am

risk-adjusted return -> risk-adjusted excess return, over some notional baseline

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Walt 04.11.12 at 11:59 am

Eyeballing these charts, it looks like the interest rate on 10 year Japanese government debt has been lower than the interest rate on 10 year US government debt every single year of the last 20 years. Germany has also been frequently lower.

(You have to click on the “20Y” button to make the comparison, since the series all have different starting points.)

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Random Lurker 04.11.12 at 12:26 pm

@ Stephen 212
What I mean is that, historically, we had two different recurring situations:
1) Something like the Roman empire, where the empire was a somehow unified geopolitical entity, but were a geographical sub-entity ruled the others (since not all subjects of the empire were also “Roman citiziens”, who had additional rights). (Boo)
2) Something like the republic of Venice, where Venetian merchants had various outposts through which they controlled traffic in the adriatic sea and in a big part of the mediterranean. I think that their purpose was not political domination, they just wanted to make a lot of money from trade, although they exerted a lot of political influence in their heyday. This also is “Boo”.

I think that what we call “imperialism” today is something like 2 (more economic than politic), whereas what the USSR did was something more similar to 1 (more politic than economic), and that mixing the two things is a mistake.
I also believe that the “purpose” of imperialism is to help “merchants” (nowadays businesses) of the imperial country in their trade, and thus that a negative trade balance of the imperial country (that is the other face of seignorage) is an unwanted consequence of imperial policies.

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Colin Danby 04.11.12 at 5:24 pm

jch: There’s plenty of high-return foreign investment in the U.S., direct and portfolio.

I fully agree that the larger issue of security of investment and returns on investment warrants investigation and that it’s way more interesting and important than seigniorage.

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John Quiggin 04.11.12 at 7:49 pm

I agree, and I think most of us in this conversation do, that there’s a complicated interaction between the status of the US as a (particular kind of) imperial military power, and the role of the US in the global economy, particularly with respect to financial flows. (As an aside, though, it’s worth noting that London has maintained quite a central role, despite the decline of the UK as a global power.) The fact that the US dollar is a reserve currency is part of that story, along with the power of Wall Street and the role of Washington-based institutions like the IMF.

If you take seignoirage as a highly visible symbol of that, and rejection of the US dollar as symbolic of hostility to the US-dominated order in general, then you can certainly draw a link of the kind that started this debate. On the other hand, the idea that seignoirage is a central element of the system in its own right doesn’t stand up, as we’ve seen.

I suspect that if things hadn’t run out of control on Twitter etc, we might have been able to reach something close to agreement on all of this.

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William Timberman 04.11.12 at 8:54 pm

JQ @253: the perfect summation. Surely we can now say our prayers for a more civil future, put this exhausted thread to bed, and turn off the lights.

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Tim Wilkinson 04.12.12 at 8:02 am

Talking of prayers, looks like Susan Rice’s have gone unfulfilled, for the moment.

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robotslave 04.12.12 at 8:02 am

@253, 254

That is indeed a nice summary of most of the general comment-discussion here, but unfortunately I don’t think it ends the debate.

The critique Henry has advanced is that Graeber is arguing something far beyond the idea that US T-bill reserves are “a highly visible symbol” of the position of the US in the global political economy. For all of Graeber’s “I wasn’t actually saying” qualifiers in his response, he hasn’t stepped back one millimeter from the stronger, narrower argument to which Henry objects.

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Stephen 04.12.12 at 8:01 pm

RandomLurker @251

I think it’s more complicated than that.

Your definition of empire would have to cover:

The Roman empire after some time in the 2nd century AD (Commodus’ time I think but haven’t checked) when all free people in the Empire became Roman citizens. Oddly, they went on calling it an empire, thinking of it as an empire, and defending it (even when led by emperors of very non-Roman lineage) as an empire for long while after that,

French imperialism in Algeria which was in principle a part of metropolitan France, and many non-French inhabitants did become citizens.

Possibly US imperialism: I’m not certain when all inhabitants of the US became full US citizens.

And if you think the verdict of history on the US is likely to be “they just wanted to make a lot of money from trade, although they exerted a lot of political influence in their heyday”; well, I don’t think the consensus of this thread is favourable to you.

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Agog 04.12.12 at 8:47 pm

JQ (12.53am)

Re interest rates: you don’t think power differentials have any effect on interest rates? That a very very powerful government could never dictate terms to the market for its debt? There is nothing resembling ‘financial repression’ ever?

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Agog 04.12.12 at 8:51 pm

Relatedly, if you choose not to honour your debts, ICBMs might be useful.

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John Quiggin 04.13.12 at 4:19 am

@Agog – I think my post #253 answers these questions

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Agog 04.13.12 at 6:31 am

Fair enough. So we’ll say we agree, only that I agree with fewer reservations.

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JJ 04.14.12 at 2:34 am

machin, thanks for the heads-up on Arrighi’s Adam Smith in Beijing, sub-chapter The Changing Nature of US Protection, and the difference between a military umbrella and a protection racket.

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Dr Octogon 04.14.12 at 4:07 am

Adam Shatz in the LRB from 2010. “Mubarak’s Last Breath”
“Steven Cook at the Council on Foreign Relations has published a ‘contingency planning memorandum’ in favour of continued support to the regime, which, as he describes it, ‘has helped create a regional order that makes it relatively inexpensive for the United States to exercise its power’. “

Israel recently asked the US to renew it’s 60+ year old guarantee of safety to the Saudi regime.

HF: “imagine a thought experiment under which aliens decide to intervene in human affairs by positioning death ray satellites such that if any US military personnel or US owned and directed materiel strays outside the US’s own national borders it will be instantly destroyed. What would happen to the US’s economic power?”

Assuming that includes the CIA and USG licensed sales of military equipment to client states, then the result is the end of the US military umbrella. It means the end of the Monroe Doctrine, and of any support for Israel, Taiwan, Saudi Arabia, Bahrain, the Egyptian SCAF (contact now is daily). The impact would be huge.

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JJ 04.14.12 at 2:31 pm

In other words, the US creates the GWOT, by supplying military and monetary support to Saddam Hussein and Obama bin Laden, and then proceeds to protect the world from the global violence it inspired to begin with.

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JJ 04.14.12 at 4:09 pm

So now we’ve got the threat of a global financial collapse, inspired by an American financial collapse, inspired by the inability of the US to pay for the second phase of a war with extorted tribute as it had with the first phase of the war.

So I suppose, strictly speaking, you’re right. The world economy is not a tribute system. At least, not for the moment.

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JJ 04.15.12 at 4:47 am

Dr Octagon@263″
“Assuming that includes the CIA and USG licensed sales of military equipment to client states, then the result is the end of the US military umbrella.”

If nothing else, it would result with the end of an innocuous, misleading metaphor created to convey the image of Mary Poppins decked out in her dress blues.

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JJ 04.16.12 at 3:44 am

Graeber … apparently … believes that “the US government’s position come[s] down to ‘adopt our version of the free market or we’ll shoot you.’”

That’s exactly what it was. The first century of its existence is the history of American military conquest of the continent and its gradual incorporation of the conquered territories into a Union of Semi-autonomous State Republics. The second century is the history of its military dominance of the Atlantic and Pacific trade routes, punctuated by its delayed and decisive entries into the First and Second World Wars, after which it assumed military control of what remained of an aborted proto-European Empire. The PRC and the USSR completed their accelerated transition from agricultural to industrial economies, spurred by military conflicts and technological competition with Europe and the US.

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hellblazer 04.16.12 at 4:48 am

The typo in comment 264 seems unfortunate.

Also, I don’t see how the GWOT led to the financial collapse in the US. Exacerbated, yes; but “inspired”? Really?

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JJ 04.16.12 at 7:30 am

Outsourcing non-military production generates fewer jobs, lower wages and less revenue. Greater reliance on financial deregulation and military industrial production to pick up the slack generates even fewer jobs than civilian industrial production, unless one is inclined to radically expand military industrial production.

Sorry about the typo.

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