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Two Cheers for the Nation State

by Frank Lee

NATO HQ, Brussels

The capitalist/imperialist system has dominated the world for at least two and half centuries, and perhaps even longer. This much is known and this much is clear. The system has been volatile and dynamic, transmuting into different forms with changing fundamental structures and institutions as well as different agents. It is patently evident that the imperialism which was the object of analysis of V.I.Lenin, [1] N.Bukharin, [2] R.Luxemburg, [3] as well as J.A.Hobson, [4] and Leonard Woolf, [5] is fundamentally different from the present configuration.

One of the previously salient and defining features of the former imperialism was the multi-level conflict which existed between the rival great powers: Britain, France, Germany, Japan, Spain and Portugal, and latterly the United States. The conflict had been the cause of a number of highly destructive wars. This period of inter-imperialist rivalry pretty much ended in 1945 with the emergence of the USSR, the pre-eminence of the US, and setting up of NATO and the Bretton Woods Agreement on world trade policy and economic development. Attempts by Britain and France to re-establish their pre-WW2 global pretensions were unceremoniously slapped-down by the US during the Suez crisis in 1956.

From this time on western imperialism (including Japan and south Korea) took on different contours. The prime power which stood in the command-centre of the new dispensation was the United States. With the ending of the World War 2 the US took control of Europe through an occupation force, NATO, in which Britain, Germany, Italy, Denmark, Norway, Turkey and Greece became vassal states. This subaltern European position was further cemented by the inclusion of these states into the economic institutions set up during the Bretton Woods Conference, namely, the IMF, the International Bank for Development and Reconstruction (IBRD or World Bank) and GATT (now the WTO). There was some resistance to this integrating process from France during the Gaullist period, but this disappeared with the ascendency of Sarkozy, Hollande and now Macron.

This the new imperialism resembled a tiered structure. The hegemon – the US – was the undisputed leader at the top of the pyramid, next came western Europe and Japan and South Korea (both virtual semi-colonies of the US) and then the developing world. The exceptions to this were those states who were then outside of this system: The USSR and its east European satellites as well as China North Korea and in turn Indo-China and Cuba. However, during the post-Berlin Wall period, nearly all Eastern Europe, outside of Russia, has been absorbed into the US unipolar empire, becoming dual members (apart from Ukraine and Georgia) of both the EU and NATO.

The US rules this empire politically, economically, militarily and culturally. This is not a creation of a multi-cultural world, it would be more accurately described as being an increasingly mono-cultural world; the world is to be, and in part already is, Americanised. And like any empire the US demands tribute from its vassals. Apart from military dominance US rule is crucially buttressed by the possession of the world reserve currency – the $.

One of the benefits of the dollar’s international currency status is the real resources that other countries provide the US to obtain our dollars. It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries must pony up actual goods and services to obtain one. The difference of what it costs the US government to print the note and a foreigner to procure it is known as ‘seignorage’ after the right of the mediaeval lord or ‘seigneur’ to coin money and keep some of the precious metal from which it was made … Even more important is that foreign firms and banks hold not just US currency, but also bills and US Treasury Bonds which are convenient for international transactions and at the same time have the attraction of bearing interest.

– Barry Eichengreen, ‘Exorbitant Privilege’ 2011*

Moreover in 1973 Henry Kissinger cut a deal with the Saudis (at the time the world’s largest oil exporter and de facto leader of OPEC) to have oil exclusively priced in US dollars. This of course pushed up the value of the dollar helping to maintain US financial and economic dominance as countries needed the dollar to pay for their oil. This also meant that foreign goods became cheaper to US consumers and the strong dollar also kept inflation under control – a sweet deal. The pre-eminence of the overvalued US currency has amounted to what became an almost permanent subsidy by the rest of the world to the United States.

The US economy lives as a parasite off its partners in the global system, with virtually no savings of its own. The world produces whilst North America consumes. The US is a predator whose deficit is covered by what others agree or our forced to contribute … the bulk of the American deficits (budgetary and trade) is covered by capital inputs from Europe and Japan, China and the global South, the rich oil-producing countries and comprador classes from all regions, including the poorest, in the 3rd World, to which should be added the debt-service levy that is imposed on every country in the periphery of the global system. The American super-power depends from day-to-day on the flow of capital that sustains the parasitism of its economy and society. The vulnerability of the US, therefore, represents a serious danger to Washington’s project.

‘Beyond US Hegemony’ – Samir Amin

Thus, the destruction of both Libya and Iraq become explicable. Gaddafi wanted to exit from the US dollar having intended to introduce a new gold backed currency for Africa, the dinar. For his part, Saddam Hussein had wanted to invoice Iraq’s oil in euros rather than US$. These policies – which appeared quite reasonable – were in effect a death sentence for both men and the destruction of both their respective nations. The US was not going to tolerate any meddling with its currency which would result in the beginning of the end for the great American free lunch.

What seems to clearly have emerged, therefore, is a collective imperialism under the aegis and leadership of the US. Such national sovereignty that the vassal states enjoy are strictly conditional on US permission and control. But it is rare for the US to actually rein in any uppity vassal since the leaders of the Euro bloc seem only too eager to comply with US occupation and hegemony. These wretched Euro Petainist/Quisling ruling elites serve as the template for a comprador class. The UK has, of course, been the market leader in comprador Atlanticism, but this rather dubious honour is not restricted to the British:

The continental European States are no less Atlanticist, despite their seeming intention to construct a political Europe. Proof of this is given by the central position of NATO in this political construction. That a military alliance with a country outside of the EU has been integrated de facto into the EU Constitution constitutes an unparalleled anomaly … The persistence of Atlanticism and the globalization of NATO’s field of operations … result from what I have analysed as the emergence of the collective imperialism of the US, Europe and Japan.

The Implosion of Capitalism – Samir Amin

Unquestionably, the United States pursues its national interests and hegemonic project by dragooning other states into a type of imposed (and apparently willing) conscription which means that these states have been basically stripped of their sovereignty. This is particularly the case in the EU. At one time, sovereign European countries could decide whether unilaterally to go or not go to war, defend their borders, print their own currency and trade with whom they pleased – this is now no longer the case. These policies will be decided by the US via Brussels and working through those global institutions already mentioned. Crucially, what needs to be borne in mind is that the US is still a sovereign state whereas its Euro vassal states are not.

This notwithstanding, it is also important to consider that this may not necessarily always be the case. Germany, traditionally an Uber-Atlanticist state, has, in the shape of Frau Merkel, recently made noises about Europe going its own way as a result of Donald Trump’s recent visit to Europe and his maladroit barbs directed at NATO, which he has already described as being ‘obsolete’ which didn’t go down at all well with the European audience. Where this apparent schism will lead is as yet unknown.

Importantly in terms of national sovereignty and the existence of nation states, it has become fashionable in certain circles to pour scorn on the notion of national self-determination; these beliefs being seen as misguided as well as hopelessly passé. Max Keiser for one keeps in insisting in his own inimitable, overstated and parrot-like fashion that: “The Nation State is Dead” X3. But Max should know that demagogy is no substitute for analysis. (Thank goodness for Stacy!)

In what is a highly readable book [6] Takis Fotopoulos argues along similar lines. He postulates that a new stage of imperialism has emerged – I agree though for different reasons – and the that the nation-state system has given way to a New World Order based upon the rule of a systemic globalization enabled by ‘Transnational Elites’(TE) a cosmopolitan stateless ruling class spread across both core and peripheral regions of the world. The rule of capital has, it is argued, become de-centred and replaced by a horizontal system of shared power between what were formerly national elites.

…transnational power is dispersed as a result mainly of the fact of transnational economic power – which in a capitalist market economy system is the dominant for of transnational power – is spread among hundreds of transnational corporations. Therefore, it is meaningless … to talk of economic power in terms of what part of the global output a country produces when the TNCs which take the important decisions and not the host countries, which usually exercise very little, if any, control over them.” Fotopoulos – pp.64/65

It should nonetheless be stated that from the outset that economic development in the 19th and 20th centuries was enabled and promoted by significant, top-down structuring by highly interventionist states; this was the case both in Germany and the US during the late 19th century, and most recently in East Asia. This has not changed, nor is there any evidence that it is likely to. Unquestionably, and hyper-globalist rhetoric notwithstanding, nation states remain the most significant force in shaping the world economy. Moreover, the more powerful states have used globalization as a means of increasing their national power.

“States actively construct globalization and use it as soft geo-politics and to acquire greater power … over their national economies. The US and G-7’s other members design and establishment the international trade agreements, organization and legislation that support and govern trans-border investments, production networks, and market penetration constitutive of contemporary economic globalization. Advanced capitalist states, particularly, use these political instruments to shape economic international decision making and policy in their interests.” [7]

– Maria Gritsch, “The Nation State and Economic Globalization”

‘Hyper-globalization’, ‘Market Fundamentalist’ theses, are predicated on the highly questionable postulates that we live in a borderless world, where states no longer matter, and which has been brought about by combination of revolutionary technologies of transport and communication and the increasing presence and power of Trans National Corporations (TNCs); this it is argued has shifted power out of the nation states into the market. This became the fashionable economic mantra of state-denialism established during the 1980s, particularly in the Anglo-American world, and given voice by its arch-apostles, Reagan and Thatcher; it has since hardened into a type of religious orthodoxy which brooks no examination

Nevertheless, the world turns and the neo-liberal hegemony eventually foundered on the rocks of the 2008 downturn. Perhaps indicative of this existing state-market relationship was the meeting which took place during the height of the crisis between Obama and the Wall Street gurus of high finance. Prior to this meeting it was an article of faith that the government, as Reagan once argued, was not the solution but the problem. Now it could be seen that the reverse was true. Speaking with a candour usually reserved for closed door audiences Obama blithely informed the shakers and movers of Wall Street that he was the only one who stood between these estimable gentlemen and the pitch forks. It was the public money of the state which rescued the reputedly infallible markets. The same was to happen in the UK. In some instances, the bail-outs of Royal Bank of Scotland in the UK and General Motors in the US came quite close to being outright nationalizations. In a capitalist economy, the state not the market is the institution of first and last resort.

It now seems evident that the hyper-globalist project has in fact stalled or is in actual retreat. World government without borders, based upon a mono-culture of consumption, and completely free movement of capital, labour and commodities is beginning to look like the liberal utopianism it always was.

Suffice it to say the New World Order is a vertically integrated structure with US national interests’ paramount and with the necessary occupation and vassalisation of the older imperial states, Britain, France, Germany, and the semi-colonization of the periphery of southern and eastern Europe plus Japan and south Korea. In western Europe, many have come to accept without challenge the primacy of the US over the affairs of their states and give little thought to NATO except as a foundation to their security architecture. They have been raised and socialised into this as being part of the natural order of things. In many instances, it is not only a normal part of the status quo for them, but it is also invisible to them.

This is why the post-cold-war continuation of NATO went mostly unchallenged at the societal level in member states leaving the US to slowly consolidate its influence in each and every member state.

The extent that this strategy has succeeded is evinced by the fact that none of these states have neither an independent foreign and/or economic policy. The US consolidates its power through the post WW2 Institutions, NATO, WTO, IMF, World Bank and its control of the world’s reserve currency. In short, the US is an empire (putatively benign – yeah right!) and is disposed to expand this empire until total global dominance is assured. The main obstacle to this, however, is the continuing rise of the Eurasian bloc of China, Russia the Shanghai Co-operation Organization which stands like a brick wall to America’s hegemonic ambitions. Hence the present geopolitical standoff.

The primary progressive struggle today is for national sovereignty and independence. A goal which the US imperial project will do almost anything to prevent, as has been seen in country after country. In terms of the Anglo-Zionist empire, there will only be one sovereign state; the rest of the world will simply be provinces at various levels of pseudo-sovereignty not in any real sense sovereign nations. Well that’s the plan. But as the great Scottish poet Robbie Burns once wrote:

There’s many a slip, twixt cup and lip.”

In the meantime: Two Cheers for the Nation State.

*The term ‘Exorbitant privilege ‘was first used by the French politician/diplomat Valery Giscard D’Estaing.
NOTES:
[1] Imperialism: The Highest Stage of Capitalism.
[2] Imperialism and the World Economy
[3] The Accumulation of Capital
[4] Imperialism: A Study
[5] Empire and Commerce in Africa
[6] The New World Order in Action
[7] Gritsch M, The Nation State and Economic Globalization. 2005. Review of International Political Economy 12: 1/25

15 Comments

  1. Frank says

    Some interesting replies. Actually, the topic isn’t new, it was all the rage in my student days. It boils down to this: Does the state determine the economy, does the economy determine the state or is there a shifting symmetry between the two. First, the great American social theorist C Wright Mills argued that the ruling (or at least dominant elite) was comprised of three separate groups. (1) The Political Directorate, (2) The Corporate Rich and (3) The Warlords (which we would now call the Military Industrial Complex). We may now add the media to this configuration. There was a great deal of lateral movement between these groups, politicians becoming investment bankers and vice versa, military men becoming politicians, film stars becoming politicians and so forth. A virtual revolving door between say the US Treasury Department and Goldman Sachs, see Rubin and Paulson. At the present time, E.Marcon moves from Investment banking to the Elysee Palace, and, in his own words and the fullness of time, back to investment banking.

    At one time it was supposed that the economic base determined the political superstructure, but this 19th-century notion doesn’t really stand up to serious scrutiny; there was some distance between and a considerable measure of relative autonomy between the ruling class factions. Nicos Poulantzas famously elaborated a lot on this notion. The relative autonomy means that the state has the capacity to be at a distance from the different factions of the ruling class and of the balance of class forces in society. The state often intervenes to constitute the overall outcome of those class forces and it is constituted itself as the condensation of that balance between class forces and class relations.

    There are a number of examples of this throughout history. During the great depression in the US in the 1930s, the Roosevelt administration faced bitter opposition from the economic ruling faction. Not that this bothered him, he ‘enjoyed their hate’ as the history books recall. In his Inaugural address he opined:

    ”Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men … The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values nobler than mere monetary profit.”

    Does this sound like an unprincipled lackey of capitalism and economic vested interests? Can we imagine any mainstream politician talking like this today?

    It will be argued of course that he, like Keynes, was saving capitalism from itself. But is this how he saw it? It could be argued that he was saving America from itself.

    To add weight to this point we need to examine what happened to the American economy when the US entered WW2 in 1941. The US war economy did not stimulate the private sector, it virtually replaced it and became a command economy.

    ”In many industries there were many objections by corporate executives to their being converted to wartime production. Conversion, however, became a goal pursued with some alacrity by public officials and labor leaders. The auto-vehicle industry was converted to war production in 1942 and only began contributing to aircraft production in 1943. From the beginning of preparedness in 1939 through the peak of war production in 1944, the war economy could not be left to the capitalist sector alone … the federal government created an array of mobilization agencies, which often purchased goods, often purchased those goods, closely directed those goods manufacture, and heavily influenced private companies and whole industries.” (The Long Depression – Michael Roberts)

    It should be added that income tax was massively expanded (as were bond sales) in order to finance the war. Those subject to income tax rose from 4 million in 1939 to 43 million in 1945.

    Again was the Roosevelt simply saving capitalism – the capitalists didn’t seem to think so – or was he saving America?

    Finally, when the Bolsheviks took power in Russia their object was to build a socialist economy and a socialist society. Thus in this instance, the political sphere was determining the economic.

    I think this topic has some way to run …

    Like

  2. John says

    I would have liked to see more analysis of the composition and role of trans-national elites (TNEs).
    I think they are the ones calling all the shots, not necessarily nation-states or governments.
    People like Trump, May, Macron and even Putin are just the office managers for the TNEs.
    The merry dance Trump and his minions are being led on Capitol Hill must surely indicate that?
    In reality, we probably have absolutely no idea as to who is really running our world.

    Like

  3. rtj1211 says

    As long as we let bankers make money financing both sides of wars, little will change.

    The day you make that a death sentence, some things can start to change….

    And they always ensure death of thousands to millions through those wars, why should their lives be spared?

    Like

  4. Did I miss a tip of the hat to James Scott who wrote “Two Cheers for Anarchism”? Also “Seeing Like a State”. Well worth a look.

    Like

  5. Dead World Walking says

    Methinks the psychopaths in the West have met their match with the Chinese.
    Both sides fear nuclear war because there are no winners and a ground/sea war is bad for business in one of the busiest trade regions on the planet.
    The US is imploding and when catastrophic climate change hits I suspect they will have to declare martial law, which will also be bad for business.
    The Universe seeks balance amongst all things.

    Like

  6. I agree with the article’s author up until this point:

    “Nevertheless, the world turns and the neo-liberal hegemony eventually foundered on the rocks of the 2008 downturn. ”

    Unless we’re doing interstellar trade with an Exo-Planet, a “downturn” for The Many is always a Profit for The Few and these “downturns” are usually (if not always) engineered. I can remember LMAO in 2008, in fact, when it was said that even the Queen was “tightening her belt”. Ah, yes: beans on toast, for breakfast, for a season, Your Majesty… times are tough! And though quite a few upper-level Serfs lose their fortunes every time The Gods decide to shake the game’s board (a great way to maintain monopoly conditions at the Top), does anyone think the Rothschilds, Rockefellers, Mellons, et al, sweated The Great Depression? Who is naive enough to believe that the Bankers responsible for the “mess” that BHO “bailed them out of” did not foresee exactly what every single consequence of their sinister maneuvers years before the story of the story broke? They all ended up with bonuses; many of the Serfs they ruined committed suicide. Certainly: a “downturn” for those hanging Serfs and all the rest of us Not-Entirely-Useless-Eaters.

    Ignore the arcane (and ever-shifting) “laws” of the pseudoscience called “Economics”: if the Laws aren’t “natural” (eg, those governing chemical reactions, the speed of light, the force of gravity and the abiotic generation of hydrocarbon fuels) but, rather, Man Made, that means they will always bend, twist, break or stretch to favor TFIC. It’s a closed system, in any case, and, as I said, unless we’re the victims of Robber Barons from Mars, Real Planetary Wealth does not ebb and flow like the tides. It’s just like that cruel Playground Game of your youth: the tall kids tossing your prized possession back and forth among themselves, over your head, laughing their psychopathic asses off. Well, it never stopped, did it?

    Like

    • Oh damn, erratum:

      “Who is naive enough to believe that the Bankers responsible for the “mess” that BHO “bailed them out of” did not foresee, exactly, every single consequence….”

      Like

      • BigB says

        If they didn’t foresee the first time (which they did): TFIC – some of whom now form Trump’s cabinet – are well placed for round two!

        Liked by 1 person

  7. “This period of inter-imperialist rivalry pretty much ended in 1945 with the emergence of the USSR, the pre-eminence of the US, and setting up of NATO and the Bretton Woods Agreement on world trade policy and economic development.” Yes, but the late Ellen Meiksin Wood cautions us that we are not to think that because the imperialists powers do conquests via free trade deals and other capitalist means, they will not resort to force in the conventional way. And she also points out when they use conventional force and label it as something good or nice (humanitarian intervention), it isn’t what it is. I haven’t read her (Todd Gordon for example), but authors I’ve read point this out.

    Liked by 1 person

  8. pywacket says

    I don’t think globalist bankers have particular allegiance to any one country. The living standard of average US workers is steadily declining. We don’t even have universal health care in the US. What the US does possess, is military power, which is used by bankers and oligarchs to orchestrate profitable wars and violence in the world. Western intelligence agencies, complicit in the international drug trade, use criminal profits to stage soft coups in countries that become “troublesome.” You can usually figure out what is going on here or there, with this issue or that one, by “following the money.” If and when the dollar does collapse, the money powers will emerge holding far greater assets than ever before, and us peons will be left scrambling in the dirt for bread crumbs.

    Like

  9. Anna Zimmerman says

    Yes, thank god indeed for Ms Herbert. She really is the cool head in that partnership.

    Like

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