The Dilemma of Over-Production

[don]

hard not be nostalgic over the daze of production, before the economy was financialized . . . .

THE DRIVE FOR FOREIGN MARKETS

William Appleman Williams summarized the lesson of the 1890s in this way: "Because of its dramatic and extensive nature, the Crisis of the 1890's raised in many sections of American society the specter of chaos and revolution." (78) American economic elites saw it as the result of overproduction and surplus capital, and believed it could be resolved only through access to a "new frontier." Without state-guaranteed access to foreign markets, output would be too far below capacity, unit costs would be driven up, and unemployment would reach dangerous levels.

The seriousness of the last threat was underscored by the radicalism of the Nineties. The Pullman Strike, Homestead, and the formation of the Western Federation of Miners (precursor to the IWW) were signs of dangerous levels of labor unrest and class consciousness. Coxey's Army marched on Washington, a small foretaste of the kinds of radicalism that could be produced by unemployment. The anarchist movement had a growing foreign component, more radical than the older native faction, and the People's Party seemed to have a serious chance of winning national elections. At one point Jay Gould, the mouthpiece of the robber barons, was threatening a capital strike (much like those in Venezuela recently) if the populists came to power. In 1894 businessman F. L. Stetson warned, "We are on the edge of a very dark night, unless a return of commercial prosperity relieves popular discontent." (79)

Both business and government resounded with claims that U.S. productive capacity had outstripped the domestic market's ability to consume, and that the government had to take active measures to obtain outlets. In 1897 NAM president Theodore C. Search said, "Many of our manufacturers have outgrown or are outgrowing their home markets, and the expansion of our foreign trade is our only promise of relief." (80) In the same year, Albert J. Beveridge proclaimed: "American factories are making more than the American people can use; American soil is producing more than they can consume. Fate has written our policy for us; the trade of the world must and shall be ours." (81) As the State Department's Bureau of Foreign Commerce put it in 1898,
It seems to be conceded that every year we shall be confronted with an increasing surplus of manufactured goods for sale in foreign markets if American operatives and artisans are to be kept employed the year around. The enlargement of foreign consumption of the products of our mills and workshops has, therefore, become a serious problem of statesmanship as well as of commerce. (82)
In 1900, former Secretary of State John W. Foster wrote, "it has come to be a necessity to find new and enlarged markets for our agricultural and manufactured products. We cannot maintain our present industrial prosperity without them." (83)

Ohio governor McKinley emerged as spokesman for this new American consensus, proposing a combination of protective tariffs and reciprocity treaties to open foreign markets to American surplus output with help from the state. (84) As keynote speaker at an organizational meeting of the National Association of Manufacturers in 1895, he said:
We want our own markets for our manufactures and agricultural products.... [W]e want a foreign market for our surplus products.... We want a reciprocity which will give us foreign markets for our surplus products, and in turn that will open our markets to foreigners for those products which they produce and we do not. (85)
The imperialism of McKinley and Roosevelt, and the resulting Spanish-American War, were outgrowths of this orientation. They were not, however, the only or obvious form of state policy for securing foreign markets. Much more typical of U.S. policy, in the coming years, was the orientation outlined in John Hay's Open Door Notes (the first was written in 1899), which Williams called "Open Door Empire."

Open Door imperialism consisted of using U.S. political power to guarantee access to foreign markets and resources on terms favorable to American corporate interests, without relying on direct political rule. Its central goal was to obtain for U.S. merchandise, in each national market, treatment equal to that afforded any other industrial nation. Most importantly, this entailed active engagement by the U.S. government in breaking down the imperial powers' existing spheres of economic influence or preference. The result, in most cases, was to treat as hostile to U.S. security interests any large-scale attempt at autarky, or any other policy whose effect was to withdraw a major area from the disposal of U.S. corporations. When the power attempting such policies was an equal, like the British Empire, the U.S. reaction was merely one of measured coolness. When it was perceived as an inferior, like Japan, the U.S. resorted to more forceful measures, as events of the late 1930s indicate. And whatever the degree of equality between advanced nations in their access to Third World markets, it was clear that Third World nations were still to be subordinated to the industrialized West in a collective sense.

This Open Door system was the direct ancestor of today's neoliberal system, which is called "free trade" by its ideological apologists but is in fact far closer to mercantilism. It depended on active management of the world economy by dominant states, and continuing intervention to police the international economic order and enforce sanctions against states which did not cooperate. Woodrow Wilson, in a 1907 lecture at Columbia University, said:

• • Since trade ignores national boundaries and the manufacturer insists on having the world as a market, the flag of his nation must follow him, and the doors of the nations which are closed must be battered down.... Concessions obtained by financiers must be safeguarded by ministers of state, even if the sovereignty of unwilling nations be outraged in the process. Colonies must be obtained or planted, in order that no useful corner of the world may be overlooked or left unused. Peace itself becomes a matter of conference and international combinations. (86)
  
  

Wilson warned during the 1912 election that "Our industries have expanded to such a point that they will burst their jackets if they cannot find a free [i.e., guaranteed by the state] outlet to the markets of the world." (87)

In a 1914 address to the National Foreign Trade Convention, Secretary of Commerce Redfield followed very nearly the same theme:
...we have learned the lesson now, that our factories are so large that their output at full time is greater than America's market can continuously absorb [which, by he way, is the very definition of "over-accumulation"]. We know now that if we will run full time all the time, we must do it by reason of the orders we take from lands beyond the sea. To do less than that means homes in America in which the husbands are without work; to do that means factories that are shut down part of the time. (88)
Under the Open Door system, the state and its loans were to play a central role in the export of capital. The primary purpose of foreign loans, historically, has been to finance the infrastructure which is a prerequisite for the establishment of enterprises in foreign countries. As Edward E. Pratt, chief of the Bureau of Foreign and Domestic Commerce, said in 1914:
...we can never hope to realize the really big prizes in foreign trade until we are prepared to loan capital to foreign nations and to foreign enterprise. The big prizes... are the public and private developments of large proportions, ...the building of railroads, the construction of public-service plants, the improvement of harbors and docks, ...and many others which demand capital in large amounts.... It is commonly said that trade follows the flag. It is much more truly said that trade follows the investment or the loan. (89)
It was, however, beyond the resources of individual firms or venture capitalists, or of the decentralized banking system, to raise the sums necessary for these tasks. One purpose of creating a central banking system (the Federal Reserve Act, 1914) was to make possible the large-scale mobilization of investment capital for overseas ventures. Under the New Deal, the mobilization began to take the form of direct state loans. (90) The state's financial policies, besides promoting the accumulation of capital for foreign investment, also underwrite foreign consumption of U.S. produce. As John Foster Dulles said in 1928, "We must finance our exports by loaning foreigners the where-with-all to pay for them...." (91) These two functions were perfected in the Bretton Woods system after WWII.

The second Roosevelt's administration saw the guarantee of American access to foreign markets as vital to ending the Depression and the threat of internal upheaval that went along with it. Assistant Secretary of State Francis Sayre, chairman of Roosevelt's Executive Committee on Commercial Policy, warned: "Unless we can export and sell abroad our surplus production, we must face a violent dislocation of our whole domestic economy." (92) FDR's ongoing policy of Open Door Empire, faced with the withdrawal of major areas from the world market by the autarkic policies of the Greater East Asia Co-Prosperity Sphere and Fortress Europe, led to American entry into World War II, and culminated in the postwar establishment of what Samuel Huntington called a "system of world order" guaranteed both by global institutions of economic governance like the IMF, and by a hegemonic political and military superpower.

In 1935, a War Department memorandum described the emerging Japanese threat in primarily economic terms. Japanese hegemony over Asia, it warned, would have "a direct influence on those people of Europe and America who depend on trade and commerce with this area for their livelihood." Germany, likewise, was defined as an "agressor" because of its trade policies in Latin America. (93)

After the fall of western Europe in the spring of 1940, Assistant Secretary of State Breckinridge Long warned that "every commercial order will be routed to Berlin and filled under its orders somewhere in Europe rather than in the United States," resulting in "falling prices and declining profits here and a lowering of our standard of living with the consequent social and political disturbances." (94)

Beginning in the Summer of 1940, the CFR and State Department undertook a joint study to determine the minimum portion of the world the U.S. would have to integrate with its own economy, to provide sufficient resources and markets for economic stability; it also explored policy options for reconstructing the postwar world. (95) Germany's continental system was far more self-sufficient in resources, and more capable of autarky, than was the United States. The study group also found that the U.S. economy could not survive in its existing form without access to the resources and markets of not only the Western Hemisphere, but also the British Empire and Far East (called the Grand Area). But the latter region was rapidly being incorporated into Japan's economic sphere of influence. FDR made the political decision to contest Japanese power in the Far East, and if necessary to initiate war. In the end, however, he successfully maneuvered Japan into firing the first shot. (96) The American policy that emerged from these struggles, to secure control over the markets and resources of the global "Grand Area" through institutions of global economic governance, resulted in the Bretton Woods system after the war.

The problem of access to foreign markets and resources was central to U.S. policy planning for a postwar world. Given the structural imperatives of "export dependent monopoly capitalism," the fear of a postwar depression was a real one. The original drive toward foreign expansion at the end of the nineteenth century reflected the fact that industry, with state capitalist encouragement, had expanded far beyond the ability of the domestic market to consume its output. Even before World War II, the state capitalist economy had serious trouble operating at the level of output needed for full utilization of capacity and cost control. Military-industrial policy during the war increased the value of plant and equipment by two-thirds. The end of the war, if followed by the traditional pattern of demobilization, would result in a drastic reduction in orders to this overbuilt industry at the same time that over ten million workers were dumped back into the civilian labor force. And four years of forced restraints on consumption had created a vast backlog of savings with no outlet in the already overbuilt domestic economy.

In November 1944, Dean Acheson addressed the Congressional committee on Postwar Economic Policy and Planning. He stressed the consequences if the war were be followed by a slide back into depression: "it seems clear that we are in for a very bad time, so far as the economic and social position of the country is concerned. We cannot go through another ten years like the ten years at the end of the twenties and the beginning of the thirties, without having the most far-reaching consequences upon our economic and social system." The problem, he said, was markets, not production. "You don't have a problem of production.... The important thing is markets. We have got to see that what the country produces is used and is sold under financial arrangements which make its production possible." Short of the introduction of a command economy, with controls over income and distribution to ensure the domestic consumption of all that was produced, Acheson said, the only way to achieve full output and full employment was through access to foreign markets. (97)

A central facet of postwar economic policy, as reflected in the Bretton Woods agencies, was state intervention to guarantee markets for the full output of U.S. industry. The World Bank was designed to subsidize the export of capital to the Third World, by financing the infrastructure without which Western-owned production facilities could not be established there. The International Monetary Fund was created to facilitate the purchase of American goods abroad, by preventing temporary lapses in purchasing power as a result of foreign exchange shortages. It was "a very large international currency exchange and credit-granting institution that could be drawn upon relatively easily by any country that was temporarily short of any given foreign currency due to trade imbalances." (98)

The Bretton Woods system by itself, however, was not nearly sufficient to ensure the levels of output needed to keep production facilities running at full capacity.
First the Marshall Plan, and then the permanent war economy of the Cold War, came to the rescue.

The Marshall Plan was devised in reaction to the impending economic slump predicted by the Council of Economic advisers in early 1947 and the failure of Western Europe "to recover from the war and take its place in the American scheme of things." Undersecretary of State for Economic Affairs Clayton declared that the central problem confronting the United States was the disposal of its "great surplus." (99) Dean Acheson defended the Marshall Plan in a May 1947 address:
The extreme need of foreign countries for American products is likely... to continue undiminished in 1948, while the capacity of foreign countries to pay in commodities will be only slightly increased.... What do these facts of international life mean for the United States and for United States foreign policy? ...the United States is going to have to undertake further emergency financing of foreign purchases if foreign countries are to continue to buy in 1948 and 1949 the commodities which they need to sustain life and at the same time rebuild their economies.... (100)
One New Deal partisan implicitly compared foreign economic expansion to domestic state capitalism as analogous forms of surplus disposal: "it is as if we were building a TVA every Tuesday." (101)

Besides facilitating the export of capital, the Bretton Woods agencies play a central role in the discipline of recalcitrant regimes. There is a considerable body of radical literature on the Left on the use of debt as a political weapon to impose pro-corporate policies on Third World governments, analogous to the historic function of debt in keeping miners and sharecroppers in their place. (102) But one of the most apt statements of the process was by a Rothbardian, Sean Corrigan:

Does he not know that the whole IMF-Treasury carpet-bagging strategy of full-spectrum dominance is based on promoting unproductive government-led indebtedness abroad, at increasingly usurious rates of interest, and then--either before or, more often these days, after, the point of default--bailing out the Western banks who have been the agents provocateurs of this financial Operation Overlord, with newly-minted dollars, to the detriment of the citizenry at home?

Is he not aware that, subsequent to the collapse, these latter-day Reconstructionists must be allowed to swoop and to buy controlling ownership stakes in resources and productive capital made ludicrously cheap by devaluation, or outright monetary collapse?

Does he not understand that he must simultaneously coerce the target nation into sweating its people to churn out export goods in order to service the newly refinanced debt, in addition to piling up excess dollar reserves as a supposed bulwark against future speculative attacks (usually financed by the same Western banks' lending to their Special Forces colleagues at the macro hedge funds)--thus ensuring the reverse mercantilism of Rubinomics is maintained? (103)

The American economy could have had access to the resources it was willing to buy on mutually satisfactory terms, and marketed its own surplus to those countries willing to buy it, without the apparatus of transnational corporate mercantilism. Such a state of affairs would have been genuine free trade. What the American elite really wanted, however, has been ably stated by Thomas Friedman in one of his lapses into frankness:
For globalism to work, America can't be afraid to act like the almighty superpower it is.... The hidden hand of the market will never work without a hidden fist--McDonald's cannot flourish without McDonnell Douglas, the designer of the F-15. And the hidden fist that keeps the world safe for Silicon Valley's technologies is called the United States Army, Air Force, Navy and Marine Corps. (104)
It was not true that the American corporate economy was ever in any real danger of losing access to the raw materials it needed, in the absence of an activist foreign policy to secure access to those resources. As many free market advocates point out, countries with disproportionate mineral wealth--say, large oil reserves--are forced to center a large part of their economic activity on the extraction and sale of those resources. And once they sell them, the commodities enter a world market in which it is virtually impossible to control who eventually buys them. The real issue, according to Baran and Sweezy, is that the American corporate economy depended on access to Third World resources on favorable terms set by the United States, and those favorable terms depended on the survival of pliable regimes.
But this [genuine free trade in resources with the Third World on mutually acceptable terms] is not what really interests the giant multinational corporations which dominate American policy. What they want is monopolistic control over foreign sources of supply and foreign markets, enabling them to buy and sell on specially privileged terms, to shift orders from one subsidiary to another, to favor this country or that depending on which has the most advantageous tax, labor, and other policies--in a word, they want to do business on their own terms and wherever they choose. And for this what they need is not trading partners but "allies" and clients willing to adjust their laws and policies to the requirements of American Big Business. (105)
The "system of world order" enforced by the U.S. since World War II, and lauded in Friedman's remarks about the "visible hand," is nearly the reverse of the classical liberal notion of free trade. This new version of "free trade" is aptly characterized in this passage by Layne and Schwarz:
The view that economic interdependence compels American global strategic engagement puts an ironic twist on liberal internationalist arguments about the virtues of free trade, which held that removing the state from international transactions would be an antidote to war and imperialism....

....Instead of subscribing to the classical liberal view that free trade leads to peace, the foreign policy community looks to American military power to impose harmony so that free trade can take place. Thus, U.S. security commitments are viewed as the indispensable precondition for economic interdependence. (106)
Oliver MacDonagh pointed out that the modern neoliberal conception, far from agreeing with Cobden's idea of free trade, resembled the "Palmerstonian system" that the Cobdenites so despised. Cobden objected, among other things, to the "dispatch of a fleet 'to protect British interests' in Portugal," to the "loan-mongering and debt-collecting operations in which our Government engaged either as principal or agent," and generally, all "intervention on behalf of British creditors overseas." Cobden favored the "natural" growth of free trade, as opposed to the forcible opening of markets. Genuine free traders, in MacDonagh's words, "hunted down confusions of 'free trade' with mere increases of commerce or with the forcible 'opening up' of markets." (107)

I can't resist quoting Joseph Stromberg's only half tongue-in-cheek prescription "How to Have Free Trade":
For many in the US political and foreign policy Establishment, the formula for having free trade would go something like this: 1) Find yourself a global superpower; 2) have this superpower knock together the heads of all opponents and skeptics until everyone is playing by the same rules; 3) refer to this new imperial order as "free trade;" 4) talk quite a bit about "democracy." This is the end of the story except for such possible corollaries as 1) never allow rival claimants to arise which might aspire to co-manage the system of "free trade"; 2) the global superpower rightfully in charge of world order must also control the world monetary system....

The formula outlined above was decidedly not the 18th and 19th-century liberal view of free trade. Free traders like Richard Cobden, John Bright, Frederic Bastiat, and Condy Raguet believed that free trade is the absence of barriers to goods crossing borders, most particularly the absence of special taxes - tariffs - which made imported goods artificially dear, often for the benefit of special interests wrapped in the flag under slogans of economic nationalism....

Classical free traders never thought it necessary to draw up thousands of pages of detailed regulations to implement free trade. They saw no need to fine-tune a sort of Gleichschaltung (co-ordination) of different nations labor laws, environmental regulations, and the host of other such issues dealt with by NAFTA, GATT, and so on. Clearly, there is a difference between free trade, considered as the repeal, by treaty or even unilaterally, of existing barriers to trade, and modern "free trade" which seems to require truckloads of regulations pondered over by legions of bureaucrats.

This sea-change in the accepted meaning of free trade neatly parallels other characteristically 20th-century re-definitions of concepts like "war," "peace," "freedom," and "democracy," to name just a few. In the case of free trade I think we can deduce that when, from 1932 on, the Democratic Party - with its traditional rhetoric about free trade in the older sense - took over the Republicans project of neo-mercantilism and economic empire, it was natural for them to carry it forward under the "free trade" slogan. They were not wedded to tariffs, which, in their view, got in the way of implementing Open Door Empire. Like an 18th-century Spanish Bourbon government, they stood for freer trade within an existing or projected mercantilist system. They would have agreed, as well, with Lord Palmerston, who said in 1841, "It is the business of Government to open and secure the roads of the merchant." ....

Here, John A. Hobson... was directly in the line of real free-trade thought. Hobson wrote that businessmen ought to take their own risks in investing overseas. They had no right to call on their home governments to "open and secure" their markets. (108)
And by the way, it's doubtful superpower competition with the Soviets had much to do with the role of the U.S. in shaping the postwar "system of world order," or in acting as "hegemonic power" in maintaining that system of order. Layne and Schwarz cited NSC-68 to the effect that the policy of "attempting to develop a healthy international community" was "a policy which we would probably pursue even if there were no Soviet threat."
Underpinning U.S. world order strategy is the belief that America must maintain what is in essence a military protectorate in economically critical regions to ensure that America's vital trade and financial relations will not be disrupted by political upheaval. This kind of economically determined strategy articulated by the foreign policy elite ironically (perhaps unwittingly) embraces a quasi-Marxist or, more correctly, a Leninist interpretation of American foreign relations. (109)
It is worth bearing in mind that the policy planners who designed the Bretton Woods system and the rest of the postwar framework of world order paid little or no mind to the issue of Soviet Russia's prospective role in the world. The record that appears, rather, in Shoup and Minter's heavily documented account, is full of references to the U.S. as a successor to Great Britain as guarantor of a global political and economic order, and to U.S. global hegemony as a war aim (even before the U.S. entered the war). As early as 1942, when Soviet Russia's continued existence was very much in doubt, U.S. policy makers were referring to "domination after the war," "Pax Americana," and "world control." To quote G. William Domhoff, "the definition of the national interest that led to these interventions was conceived in the years 1940-42 by corporate planners in terms of what they saw as the needs of the American capitalist system, well before communism was their primary concern." (110)

Considering the continuity in the pattern of U.S. Third World intervention during the Cold War with its gunboat diplomacy of the 20s and 30s, or with its actions as the world's sole superpower since the fall of communism, should also be instructive. Indeed, since the collapse of the USSR, the U.S. has been frantically scrambling to find (or create) another enemy sufficient to justify continuing its role as world policeman.

If anything, the Cold War with the Soviet Union appears almost as an afterthought to American planning for a postwar order. Far from being the cause of the U.S. role as guarantor of a system of world order, the Soviet Empire acted as a spoiler to U.S. plans for acting as a sole global superpower. Any rival power which has refused to be incorporated into the Grand Area, or which has encouraged other countries (by "defection from within") to withdraw from the Grand Area, historically, has been viewed as an "aggressor." Quoting Domhoff once again,
....I believe that anticommunism became a key aspect of foreign policy only after the Soviet Union, China, and their Communist party allies became the challengers to the Grand Area conception of the national interest. In a certain sense..., they merely replaced the fascists of Germany and Japan as the enemies of the international economic and political system regarded as essential by American leaders. (111)
Likewise, as Domhoff's last sentence in the above quote suggests, any country which has interfered with U.S. attempts to integrate the markets and resources of any region of the world into its international economic order has been viewed as a "threat." The Economic and Financial Group of the CFR/State Department postwar planning project, produced, on July 24, 1941, a document (E-B34), warning of the need for the United States to "defend the Grand Area," not only against external attack by Germany, but against "defection from within," particularly against countries like Japan (which, along with the rest of east Asia, was regarded as part of the Grand Area) bent on "destroying the area for its own political reasons." (112)


78. William Appleman Williams, The Tragedy of American Diplomacy (New York: Dell Publishing Company, 1959, 1962), pp. 21-22.
79. Ibid. p. 26.
80. Ibid. p. 27.
81. Ibid. p. 17.
82. Ibid.
83. Williams, Contours, op. cit., p. 368.
84. Stromberg, "Role of State Monopoly Capitalism," op. cit., pp. 61-63.
85. Williams, Contours, op. cit., pp. 363-64.
86. Williams, Tragedy, op. cit., p. 66.
87. Martin J. Sklar, "Woodrow Wilson and the Political Economy of Modern United States Liberalism," In Rothbard and Radosh, eds., op. cit., p. 27.
88. Ibid. p. 40.
89. Ibid. p. 62n.
90. Williams, Tragedy, op. cit., p. 179.
91. Ibid. p. 123.
92. Ibid. p. 170.
93. Robert Freeman Smith, "American Foreign Relations, 1920-1942," in Barton J. Bledstein, ed., Towards a New Past: Dissenting Essays in American History (New York: Vintage Books, 1967, 1968), p. 247.
94. Ibid.
95. The rest of this paragraph, unless otherwise noted, is based on Laurence H. Shoup and William Minter, "Shaping a New World Order: The Council on Foreign Relations' Blueprint for World Hegemony, 1939-1945," in Holly Sklar, ed., Trilateralism: The Trilateral Commission and Elite Planning for World Management (Boston: South End Press, 1980) pp. 135-156.
96. Robert Stinnett, Day of Deceit: The Truth About FDR and Pearl Harbor (New York: Free Press, 1999).
97. Williams, Tragedy, op. cit., pp. 235-36.
98. Domhoff, The Power Elite and the State, op. cit., p. 166.
99. Ibid. p. 271.
100. Leonard P. Liggio, "American Foreign Policy and National Security Management," in Rothbard and Radosh, eds., op. cit., p. 249.
101. Williams, Tragedy, op. cit. p. 272.
102. Cheryl Payer, The Debt Trap: The International Monetary Fund and the Third World (New York: Monthly Review Press, 1974); Walden Bello, "Structural Adjustment Programs: 'Success' for Whom?" in Jerry Mander and Edward Goldsmith, eds., The Case Against the Global Economy (San Francisco: Sierra Club Books, 1996) ; Bruce Franklin. "Debt Peonage: The Highest Form of Imperialism?" Monthly Review 33:10 (March 1982) pp. 15-31.
103. Sean Corrigan, "You Can't Say That!" August 6, 2002. http://www.lewrockwell.com/corrigan/corrigan13.html
104. Thomas Friedman, "What the World Needs Now," New York Times, March 28, 1999.
105. Baran and Sweezy, op. cit., p. 201.
106. Christopher Layne and Benjamin Shwartz, "American Hegemony Without an Enemy," Foreign Policy 92 (Fall 1993), pp. 12-13.
107. Oliver MacDonagh, "The Anti-Imperialism of Free Trade," The Economic History Review Second Series, vol. XIV, No. 3 (1962).
108. Joseph R. Stromberg, "Free Trade, Mercantilism and Empire" February 28, 2000. At http://www.antiwar.com/stromberg/s022800.html
109. Layne and Shwartz, op. cit., pp. 5, 12.
110. Domhoff, The Power Elite and the State, op. cit., p. 113.
111. Ibid. p. 145.
112. Ibid. pp. 160-61.
113. J. A. Hobson, Imperialism: A Study (London: Archibald Constable & Co. Ltd, 1905), pp. 75-76.
114. Rudolf Hilferding, Finance Capital. Edited and translated by Tom Bottomore (London and Boston: Routledge & Kegan Paul, 1910 (1981)), p. 297.
115. Ibid.
116. Ibid. p. 308.
117. Ibid. p. 309.
118. Ibid. pp. 317-18.
119. Ibid. p. 321.
120. Ibid. pp. 319-20.
http://www.mutualist.org/id10.html?source=patrick.net

[Dave Stratman]

Re: The Dilemma of Over-Production

Don--

Thanks for this excellent piece which explains so much of the history of the past 100 years or so. It is not for nothing that the US maintains more than 750 military bases around the world--and it's not even to bring "democracy" to the oppressed.

One sentence leapt out at me as particularly relevant today: "Indeed, since the collapse of the USSR, the U.S. has been frantically scrambling to find (or create) another enemy sufficient to justify continuing its role as world policeman." Boris Yeltsin famously said in 1989, "We are going to do something very terrible to you. We are going to deprive you of an enemy."

The U.S. has found--or one might say created--the perfect enemy to fill the role vacated by the USSR: political Islam. Not only does political Islam have magical powers (for example, they managed to get the US Air Force to stand down on 9/11); they also just happen to be living on top of our oil. (for my take on this see http://www.newdemocracyworld.org/old...ting-enemy.htm)

Dave Stratman

[chr5648]

Re: The Dilemma of Over-Production

The U.S. has found--or one might say created--the perfect enemy to fill the role vacated by the USSR: political Islam.

What the US elites and policy makers espouse is really a strong adherence to the Tabula Rasa theory of man and making sure all societies in the world are injected with it. Any society that is or dares to be a hierarchical, patriarchical, or non-democratic, is seen as an 'enemy'. Look what has happened in the west, America and Europe. You have governments that are trying to engineer this 'tabula rasa' society. Education systems are falling apart, cultural aspects, social aspects, quality of life aspects, economic aspects, family aspects, etc. Almost every single article on itulip is some sort of complaint about the west. The west has already been beat down, now its time to beat the rest of the world with the tabula rasa.

[Dave Stratman]

Re: The Dilemma of Over-Production

What the US elites and policy makers espouse is really a strong adherence to the Tabula Rasa theory of man and making sure all societies in the world are injected with it. Any society that is or dares to be a hierarchical, patriarchical, or non-democratic, is seen as an 'enemy'. Look what has happened in the west, America and Europe. You have governments that are trying to engineer this 'tabula rasa' society. Education systems are falling apart, cultural aspects, social aspects, quality of life aspects, economic aspects, family aspects, etc. Almost every single article on itulip is some sort of complaint about the west. The west has already been beat down, now its time to beat the rest of the world with the tabula rasa.

I guess I'm not sure what it means to say that "The west has already been beaten down." One could list dozens of countries that have received the gentle attentions of the U.S. or its NATO puppets, from predator loans to Predator drones, which are no doubt feeling rather beaten down by the experience. So far we've not been on the receiving end of any such attentions, unless one adheres to the bizarre theory that 19 men directed from a cave in Afghanistan pulled off 9/11.

It's only natural that people on this site should do their complaining mainly about the West. After all, this is where we (most if us, I assume) live, and this is where we have our voice, however unheeded it may be. Not to mention the fact that the West dominates the world. There may be some cracks in the Empire, but until it is replaced it remains the reigning Empire.

[don]

Re: The Dilemma of Over-Production

It's only natural that people on this site should do their complaining mainly about the West. After all, this is where we (most if us, I assume) live, and this is where we have our voice, however unheeded it may be. Not to mention the fact that the West dominates the world. There may be some cracks in the Empire, but until it is replaced it remains the reigning Empire.

Those are two great points, Dave. To critique and hopefully improve one's own political/economic milieu is what people should do, regardless of what their line of reasoning. The exercise in and of itself should be beyond reproach. Secondly, and frequently overlooked, Empires have often been missed when they finally exited the world's stage.

[c1ue]

Re: The Dilemma of Over-Production

So far we've not been on the receiving end of any such attentions, unless one adheres to the bizarre theory that 19 men directed from a cave in Afghanistan pulled off 9/11.

I don't see why 9/11 is so hard to believe.

Islamic hijacked airliners are nothing new - these were occurring as far back as the '80s; before that there were actually more hijacked airplanes albeit due to 'freedom' reasons.

The only new wrinkle with 9/11 is flying them into a building. It doesn't take a rocket scientist to understand that a multi-ton object filled with thousands of gallons of jet fuel can do some serious damage itself.

You might as easily say that semi-literate Afghan tribesmen couldn't possibly understand how to create and deploy IEDs - which are fairly sophisticated remote detonation devices.

But in reality, once someone does something, it is generally pretty easy to duplicate.

[Starving Steve]

Re: The Dilemma of Over-Production

I wade through this mush, and I re-call the mind-set of Samuelson and Keynes: i.e, the problem of unemployment and depression as being one of too much production and not enough of a market for product. And I think to myself, what idiots these economists were and still are.

The problem to-day is NOT ENOUGH PRODUCTION and not enough exports, and too high of prices. TOO HIGH OF PRICES means too much paper money and too much debt around with too little production to support the standard of living and the lifestyle in America and Europe. The problem is that interest rates are too low, and there is not enough savings.

And I wonder about the phrase, "not enough production", and I think of not enough energy produced. I think of too high of energy prices which make it impossible to manufacture and compete with China and India. Then I think of too high of land costs in cities and too high of housing costs in cities, and I think of city planners and their games to stifle urban development.

The problem to-day is inflation and outrageous prices for everything. The economists are wrong, as usual. Interest rates are too low, and debt formation is too high. Producers can't produce, and people can't develop or even survive in cities......How could the economists be so wrong about everything, even to misunderstand the cause of The Great Recession?

The cure for The Great Recession is de-flation, higher interest rates, more production, more jobs, productivity, lower prices, lower wages, and honest money.... Why is this so abstract for the economists to comprehend???????? A development permit in a city should take five minutes and cost five dollars. Why is this so abstract for planners to comprehend???????

Manufacturers who manufacture the highest quality products at the lowest price in the world will have the world beat a path to their door. And that is all there is to know.

[leegs]

Re: The Dilemma of Over-Production

Steve - energy is not 'produced'. That's the problem.

[Starving Steve]

Re: The Dilemma of Over-Production

Yes, to be more precise in English: electrical energy is generated, and oil is pumped and later, up-graded or refined. So, I used the verb, to produce in a very sloppy sense. My point was that not much is being produced in Europe and America because of the mis-guided policies of central-bank economists and the mis-guided policies of city/regional planners. There is not over-production, but just the opposite: there is under-production of almost everything. We are living off of imports and debt. The price level is too high because central-bankers have held interest rates too low.

When I think of the so-called "foreclosure crisis" in America, interest rates were held too low by the Federal Reserve Bank, so the price level of homes was held too high. The problem was (and still is) not enough home construction, not too many homes constructed. Prices have to fall. The unwillingness of the Fed to let prices fall is exactly what created the foreclosure crisis in the first place.

Now the Fed defends the housing market with a ZIRP for savers, so the result is that lenders lend money to the Fed and channel money away from the mortgage market. Lenders don't trust the prices for homes to hold at this level. Again, prices have to fall.

When prices fall, the market for foreclosed homes will clear, and then construction of new homes can begin again. The Fed mis-identified the problem as one of over-production of homes, but the problem or dilemma was one of under-production of homes because prices were too high.