The American war on global capitalism

Dec 30, 2023
A word cloud featuring

In January, 2023, Ezra Klein from the New York Times interviewed Yuen Yuen Ang. Professor Ang is a widely published, China scholar at Johns Hopkins University in the US. Towards the end of this long interview, Ang provided an acute summary of what US-China competition came down to. What matters most, she argued, is: Which of these two countries is going to make the best use of their political system to solve the problems of capitalism? Less than a year after Professor Ang laid out her concise test, America has verified that it is currently the one least able to measure up to this challenge.

China faces an array of serious economic problems today, post-COVID, including a stubbornly depressed property sector, weak consumer demand and rising unemployment. However, as the last four decades confirm, Beijing has a long, ultimately positive, track record of managing huge internal economic difficulties over time. Moreover, it has, based on any comparative measure, demonstrated remarkable political impulse control.

The American military-industrial complex is operating, today, with massive profitability at the limits of its capacity, and high-tech developments and the dominant finance-sector keep powering ahead in the US. But much of the rest of the core economy operates far more sluggishly. Moreover, on a scale of one to ten, dysfunctional Washington’s impulse-control today might score five, with the needle clearly set to edge lower.

America has, as we know, a track record with respect to waging wars on things rather than places: remember the war on drugs and the war on terrorism. President Jimmy Carter reminded us in 2019, that the US is also exceptionally experienced in waging war on places right around the globe.

The evidence is briskly building that this propensity to go to war is now manifesting itself as a new war on global capitalism. The leading British weekly, the Economist, tip-toes around using a term like the war on global capitalism – but its commentaries over the last year, essentially message this concern.

In January 2023, an editorial entitled, The destructive new logic that threatens globalisation, argued that the US was pioneering an alarming combination of measures, including export controls, subsidies and general protectionism, all of which threatened the free market. More recently, in October, a fresh editorial fearfully wondered, Are free markets history? Soon after, the anxiety meter at The Economist flashed code-red, as another editorial shuddered about the nightmare return of Donald Trump to the White House.

This highly influential British weekly has esteemed key components of modern, globalised capitalism including free markets and minimal market, financial and regulatory intervention by governments worldwide, for close to 200 years – hence this forceful ringing of alarm bells.

And it is true: Washington is increasingly intervening here, there and everywhere in the economy, frequently at huge cost, as it tirelessly pursues the remaining, single bi-partisan core of the contemporary, American dream: containing the rise of China. And as it does so, it is meddling in the operation of markets locally and globally in an unprecedented manner. This is bad for market efficiency and global performance – and bad for global capitalism. Importantly, the proximate context within which this is happening is the exceptional level of brutal warfare – ultimately fostered significantly by the US-led Global West – in Ukraine and, still more horrifically, in the Middle East.

In the meantime, the respected British, economic historian, Adam Tooze, in a wide-ranging, economically-focused analysis, has argued that the US elite contention (articulated, inter alia, by President Biden and Secretary of State Blinken) that it is American leadership which “holds the world together” is a “silly and self-deluding” metaphysical proposition. Tooze is most worried about major global public goods like climate and public health that are being left systematically unaddressed. But both he and The Economist appear to see the pivotal source of what they perceive is going wrong in the dysfunctional US political system.

Numerous other recent commentaries stress the same or similar risks, including:

The US Has a New Set of Tools for Bullying the World (New York Times)

How Biden’s foreign and trade policy flip-flops are confusing US allies (South China Morning Post)

Overuse of financial sanctions risks dollar’s role (East Asia Forum)

US Credit-Rating Outlook Changed to Negative by Moody’s (Bloomberg)

Paralysis in Congress makes America a dysfunctional superpower (The Economist)

The Self-Doubting Superpower (Foreign Affairs)

The Return of the Monroe Doctrine (Foreign Policy)

For decades after the last war, the American approach to the development of global capitalism had, put rather simply, two primary parts:

• Part A: The US vigorously supported the growth of free trade and global capitalism provided that America led this project and that it was a plus for American business. Other countries that understood this could also benefit.

• Part B: For those countries who plainly declined to be so led, the US had many ways and means to add sand to their economic-gearboxes.

The aggressive, tariff-wall response of President Trump to the rise of China in 2018 signalled the accelerated unravelling of this broad understanding. Under President Biden that unravelling has been fast-tracked. Part B, above, has effectively been prioritised over Part A: the world must be encouraged insistently to recognise continuing American pre-eminence – and the exclusion of any challenger (see: https://www.nytimes.com/1992/03/08/world/us-strategy-plan-calls-for-insuring-no-rivals-develop.html).

Alex Lo aptly argued in October that: A divided US needs an ‘enemy’ like Beijing more than it ever did. Shortly after, he captured where this new American war on global capitalism may be leading: America the irresponsible is a threat to everyone and itself. Despite the continuing array of acute problems facing Beijing, China does not, today, pose any sort of remotely comparable, active threat to the world economic order.

In less than a year after Professor Ang laid out her concise test for the New York Times, America has verified that it is now the one least able to meet the challenge she set.

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