[lbo-talk] faith in the US Empire

[Yoshie Furuhashi]

On 12/12/06, James Heartfield <Heartfield at blueyonder.co.uk> wrote:
> Yoshie writes:
>
> "What makes them [China etc.] invest in the USA?  It seems to me that it
> comes down
> to faith in the US Empire, past and present (past faith is important,
> too, because of high costs of transition for countries like Japan and
> China that have accumulated lots of dollar reserves), and absence of
> an alternative."
>
> Absence of an alternative is most to the point. If China did not extend
> credit to the US, the US would not be able to buy back China's goods. It was
> the same relationship that Japan had with the US in the eighties, or indeed
> that the US had with Europe throughout much of the twentieth century. On any
> model of capitalism it is always worth remembering that it has to perform as
> a distribution of goods to function. But this is to fix on the most
> superficial aspects. The essence of America's credit rating is the prospect
> that they will continue to generate wealth out of the phenomenally large
> labour force that is put to work there every day; just as the essence of
> China's output is the exploitation of its own workforce.

The essence of China's output is the exploitation of its own
workforce, for sure, but the essence of America's ability to keep
consuming while running a huge current account deficit is not just the
exploitation of its own workforce but also the willingness of overseas
savers, especially Japan, China, and the Middle Eastern oil producers,
to buy US treasury securities, without which the US government would
have to raise rates to finance the budget deficit, to the point that
will push many risky mortgage holders over the edge.  Major upheavals
in domestic politics in any of those three areas would therefore
create a big problem for the US economy.  Fortunately for the
Americans, Japan is the world's most stable and longest-standing de
facto one-party state, always governed by the most loyal
pro-Washington power elite after WW2; and the CPC's hold on power
looks pretty solid by the standard of the developing world, too, at
least for the time being.  So, Washington has little to fear from
these two for now.  Not so with the Middle East, however.

Conversely, any major trouble in the US economy would have a very
large impact on China and Japan, too.  Even in that case, the
proletariat in Japan will probably be still somnolent (I'm sorry to
say, but my countrymen and countrywomen are probably the least
rebellious people in the world or at least they have been for the last
several decades, even in the midst of dire deflation), but China's
peasants and workers may not be.


> If anything, the recent record of US militarism would tend to undermine
> rather than reinforce its credibility, and bad news in Iraq often
> corresponds to poor NYSE performance.

Yes.  But losing in Iraq would also undermine Washington's credibility
-- it will embolden the Arabs, both good and bad Arabs (you know my
definition of relative goodness and badness), and contribute to
instability.  It seems to me that neoconservatives may eventually get
what they wished for, a new Middle East, except perhaps not in their
image.
-- 
Yoshie
<http://montages.blogspot.com/>
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