Leo Panitch

Finance and American Empire

Despite the hubris that has attended the global ambitions of American financiers for over a century, the actual rise to world dominance of American finance was far from smooth or inevitable. The goal of ‘building the world’s capital for all time to come’ in New York, already articulated in the late nineteenth century, looked set to be realized by the end of the First World War. Yet it was only a decade later that the Wall Street crash triggered the Great Depression and the breakdown of the international financial order. And while New York took its place as the world’s principal financial centre at the end of the Second World War, this seemed much less important when the new Bretton Woods order had supposedly marginalized finance relative to production and trade. As the story of twentieth-century capitalism is usually told today, only the neoliberal ‘revolution’ of the 1980s and 1990s finally unleashed the forces that made Wall Street the central location of the world economy. But far from this marking the end of history, the scandal that enveloped Richard Grasso in 2003 over his

American empire and the political economy of global finance

150 million salary not only epitomized the venality of New York as the capital of global finance, but it also appeared to symbolize its fragility. And Hank Paulson’s bold statement of confidence in New York as the financial capital of the world — expressed in the midst of the global credit crisis that had its roots in the collapse of the US domestic subprimemortgagemarket (with Paulson’s ownWall Street firm Goldman Sachs having played a large role in making that market) — could be taken as yet another example of whistling in the dark (Stein 2007).

Euro-Capitalism and American Empire

Preface Introduction L.Panitch & M.Konings PART I: CONTOURS AND SOURCES OF IMPERIAL FINANCE Finance and American Empire L.Panitch & S.Gindin American Finance and Empire in Historical Perspective M.Konings PART II: CONSTRUCTING THE PILLARS OF IMPERIAL FINANCE US Structural Power and the Internationalization of the US Treasury D.Sarai Neo-Liberalism and the Federal Reserve E.Newstadt US Power and the International Bond Market: Financial Flows and the Construction of Risk Value S.Aquanno Towards the Americanization of European Finance? The Case of Finance-Led Accumulation in Germany T.Sablowski Accounting for Financial Capital. American Hegemony and the Conflict over International Accounting Standards T.Sablowski From Bretton Woods to Neoliberal Reforms: The International Financial Institutions and American Power R.Felder The Role of Financial Discipline in Imperial Strategy C.Rude Conclusion M.Konings & L.Panitch

US Financial Power in Crisis

For some two decades now, progressive American, British and Canadian intellectuals, determined to resist neoliberalism’s ‘there-is-no-alternative’ mantra, have looked to continental Europe for an alternative model. One virtue of this academic and political project — which within the field of comparative political economy has now come to be known as the ‘varieties of capitalism’ or VoC approach — has been that it challenged the notion that capitalist globalization inevitably needed to take the form it has, apparently entailing, as so many of its proponents imagined, the growing impotence of nation states and the increasing homogenization of social formations. The insistence on variety among states has meant trying to refocus attention on the continuing salience of institutional arrangements and social relations specific to particular social formations and their histories, the very dimensions largely ignored in the equations of neoclassical economics and the policy prescriptions of the International Monetary Fund (IMF). Above all, this approach has suggested that whether and how societies adapt themselves to global competition remains an open and important question.

Giovanni Arrighi in Beijing: An Alternative to Capitalism?

This essay examines the questions raised by the present financial crisis through an enquiry into the institutional foundations of American finance. We view with some scepticism strong claims concerning the disastrous outcome for the structural dynamism of the global financial system and Americas position in it. Many critical political economists tend to take the system of global financial markets as their point of departure and then locate the US in this system. Such approaches, however, generally fail to do justice to the decades-long build up of US financial power and do not capture many of the organic institutional linkages through which the American state is connected to the world of global finance and which are responsible for its imperial sprawl. In many ways, financial globalisation is not best understood as the re-emergence of international finance but, rather, as a process through which the expansionary dynamics of American finance took on global dimensions. Because the present system of global finance has been shaped so profoundly by specifically American institutions and practices, it will not do to evaluate the changes and transformations of this system on the basis of either an abstract, generic model of capitalism or mere extrapolations from conjunctural crises. Crisis and instability are part and parcel of the dynamics of imperial finance and so are the managerial capacities developed by the US state. The most important questions that should occupy critical political economists therefore have to do not with what appear to be external challenges to US financial power (or the putative opportunities for progressive change opened up by them), but, rather, relate to the ways in which the imperial network of intricate, complex and often opaque institutional linkages between the US state and global finance is managed and reproduced.

The Political Economy of the Subprime Crisis

Giovanni Arrighi made a remarkably broad-ranging and original contribution to comparative political economy and historical sociology over five decades. His last book shares these qualities. But Adam Smith in Beijing is unfortunately not mainly about the origins and dynamics of Chinese capitalism over the past three decades. It presents Adam Smith not as the apostle of free-market capitalism, but rather of a ‘non-capitalist market society’; and it uses this to make the case that since China’s economic development takes place outside the European/North American capitalist ‘core’, it must, almost by definition, not be capitalist. Markets are conceived here as the instruments of states, yet the theory of the state advanced is severely undeveloped. Arrighi’s argument that China’s economic development is part and parcel of the demise of the US project for establishing itself as the ‘world state’ misinterprets the nature of the US empire as well as misses the extent of China’s integration with US-led capitalist globalisation.

The globalization decade : a critical reader

The current financial crisis has forcefully, if perversely, demonstrated the centrality of the US in the global capitalist system. It is difficult to make any sense of recent events without emphasizing the imperial dimension of America’s relationship to the rest of the world. The crisis began in the US, rapidly spread to other parts of the world and continues to be shaped by American political and economic developments.

Forum the current crisis: a socialist perspective

Over the past decade the Socialist Register has been widely recognised as providing the most distinctive investigations on the left today of the contradictions of globalisation, the internationalisation of the state, progressive competitiveness, the new imperialism and popular global mobilisations against it. Among the well known writers whose essays have built the Registers reputation for this are Robert Cox, Harry Magdoff, Andrew Glyn, Bob Sutcliffe, Immanuel Wallerstein, Stephen Gill, Leo Panitch, Manfred Beinefeld, Gregory Albo, Arthur MacEwan, Frances Fox-Piven, Jim Crotty, Gerald Epstein, Elmar Altvater, Doug Henwood, David Harvey, Hugo Radice, Ursula Huws, Constantine Tsoukalas, Wally Seccombe, David Coates, Joachim Hirsch, Boris Kagarlitsky, Colin Leys, Henry Bernstein, Beverly Silver, Giovanni Arrighi, Gerard Dumenil, Naomi Klein, Birgid Mahnkopf and Brigitte Young. This anthology provides: - The most searching analyses of the political, economic and cultural contradictions of globalisation available - essential reading for students in troubled times - The best set of readings on the role of states - and especially the American state - in making globalisation happen, and on the problems they now confront in trying to keep it going.

Demystifying Imperial Finance

They say they won’t intervene. But they will.” This is how Robert Rubin, Bill Clinton’s Treasury Secretary, responded to Paul O’Neill, the first Treasury Secretary under George W. Bush, who openly criticized his predecessor’s interventions in the face of what Rubin called “the messy reality of global financial crises.” The current dramatic conjuncture of financial crisis and state intervention has proven Rubin more correct than he could have imagined. But it also demonstrates why those, whether from the Right or the Left, who have understood the era of neoliberalism in terms only of ideology — i.e., a hegemonic ideological determination to free markets from states — have had such a weak handle on what really has been going on over the past quarter century. Clinging to this type of understanding will also get in the way of the thinking necessary to advance a socialist strategy in the wake of this crisis.

The Politics of Imperial Finance

To a large extent, the discipline of international political economy (IPE) emerged in response to the perceived tendency of economic and financial globalization to undermine the power of nation-states, including that of the US state. The Bretton Woods system of fixed exchange rates was seen as the high point of American power in international finance. The decade of the 1970s saw international and domestic confusion, with several countries pursuing policies that were little to the liking of the US, while at home stagflation produced great regulatory perplexity. Not surprisingly, then, IPE scholars saw the end of Bretton Woods and the subsequent globalization of financial markets as signifying the decline of America’s power in international finance. In this perspective, America’s neoliberal policy turn during the late 1970s and early 1980s was seen as giving it some short-term advantages, but doing little to halt the decline: the huge inflows of capital that followed the artificially high interest rates were seen as serving to finance American indulgence (the hallmark of an imperial power in decline) as the American people and government borrowed more than ever before. While American banks continued their slide in the international rankings, and as the US’s financial woes were complemented by troubles in other areas, theories of hegemonic decline flourished.