From the Mandelite Trots... http://www.3bh.org.uk/IV/IV350/IV350%2001.htm IV350 - June 2003 - War Drive
War drive: the dubious victory Jan Malewski *
> ...These inequalities, while reducing the demand of wage earners, have
> produced an explosion of services of a certain type: "In the United
> States, the development of services is no longer that of a modern
> tertiary sector, but the return to the old chaos of the aristocratic
> societies of the past", comments Emmanuel Todd.(41) The structure of US
> GNP reflects this: in 2000(42), manufacturing industry contributed only
> 15.9% of GNP, extractive industries 1.4%, construction 4.7% and
> agriculture 1.4% - in other words productive activities as a whole
> represented only 23.4% of GNP. If one adds services essential to the
> realization of surplus value - transport (12.3%) and wholesale and retail
> (15.9%) - the total barely exceeds 51.6% of GNP. And the remainder? 21.9%
> is accounted for by 'personal services', 19.6% by finance-insurance-real
> estate and finally 12.3% by the state. "Personal services", or domestic
> services, relate largely to the "chaos" stigmatized by Todd. The state,
> in addition to the productive activities that it ensures, plays 'yoyo'
> with its Treasury bills and thus imposes a world tax. As for finance-
> insurance-real estate, it relates in part to the financial bubble whose
> virtual character has been exposed by the collapse of Enron and other
> jewels of the 'new economy' and in part to the effects of the
> redistribution (the word 'plundering' would be more suitable) of social
> product (in the US but also the world) to the profit of financial and
> speculative capital. The biggest army in the world is not there to deal
> with Bin Laden, but in the final analysis to maintain a world order that
> allows this plundering.
Between 1994 and 2000 however, the growth of this virtual sector (finance- insurance-real estate) was more than twice as fast as that of industry, largely masking the accumulated backwardness in the productive sector, in particular in the area of productivity. This was testified to recently by the decision of the Bush administration to establish tariff barriers for iron and steel products, the American iron and steel industry being unable to deal with competition, in particular from Europe. The US trade deficit is the symptom of this weakness. America needs more than one billion dollars of financial income per day to cover its trade deficit. Emmanuel Todd again: "It is the movement of financial capital that ensures the equilibrium of the US balance of payments... If one takes account of the fact that the majority of the goods bought outside are intended for consumption, corresponding to an infinitely renewable demand in the short run, whereas the financial capital invested in the United States should correspond in its majority with investments in the medium and long term, it must be admitted that there is something of the paradoxical, not to say the structurally unstable, in the mechanism."(43) Indeed, "foreign investors hold more than 18% of the stock exchange capitalization of American long term credits and 42% of the stock of Treasury bills". However, "these sums could leave the country instantaneously at the flick of some keys on a computer keyboard"(44) During the 1990s there was a slow evolution of foreign investments: for example in 1993 Japan invested 17,500 billion yen in the United States and only 9,200 in Europe, but in 2000 the proportions were reversed - 13,500 in the US and 27,000 in Europe.(45) The continuation of such a tendency and its generalization would put an end to the financing of American growth by the rest of the world.
The appearance of the euro - a potential currency of refuge - complicates the handling of the exchange value of the dollar, which until now made it possible for the US economy to 'regulate' according to its needs the variations of the trade deficit and foreign investments. One thus understands why Bush does not look favourably on the possibility of the entry of Great Britain within the monetary union - to which the City of London in its majority aspires and which was one of the projects of the Blair government. "The rise of the euro - writes Emmanuel Todd - can symmetrically support American industry in the long run, but on the other hand drain the supply of financial capital of the United States, brutally, in the very short term".(46) The safeguarding of a field of negotiation and co-operation with the secondary, Japanese and European imperialisms, thus appears crucial. But this does not seem to be Bush's way.(47)
Faced with these issues, the policy of the neocons in Bush's administration is to increase the US deficit through a simultaneous increase in (in particular military) expenditure and a national tax cut for the richest (Congress voted for a tax cut of 550 billion dollars, but Bush initially wanted a reduction of 725 billion!) - a doubtful means of attracting foreign investment, because the increase in the deficit and the consequent fall of the dollar are likely to reduce to nothing the possible net benefits, but a form of redistribution of income to the benefit of the 'upper middle class' to which the neocons largely belong.
One however should not confuse tendencies of average and long duration and a completed process. The structural weakening of the US economy in the world economy is compensated for by the strategic domination of the United States. Political-military victories can contain contradictions, make it possible to mark points against competitors, delay certain processes and even overcome certain contradictions. The long-term tendencies are not written in stone. There are times of crisis, where History can take different roads, or be diverted from its course...