Bu-lat-lat (boo-lat-lat) verb: to search, probe, investigate, inquire; to unearth facts
Volume 3, Number 14 May 11 - 17, 2003 Quezon City, Philippines
U.S. President George Bush’s only solution to the economic crisis is military spending and tax cuts for the wealthy. While military spending is inadequate, tax cuts for the wealthy only concentrate capital further in the hands of elite who are already awash in money for which there are severely limited investment opportunities.
U.S. imperialism’s superstructure is ultimately only as strong as its economic
base. And that base is creaking.
military build-up is partly premised on the budget surplus built up during the
Clinton administration. This
surplus has been rapidly dissipated by Bush’s war spending, turning into
budget deficit of 3.6% of GDP last year and is expected to increase even further
to 4.6% of GDP this year.
the war on Iraq is “too small a war” to stimulate the flagging U.S. economy
because of conditions of severe overproduction and overcapacity.
It has merely drawn down existing stocks and induced some production but
not to the extent of expanding investment and employment by any significant
fact, investment has been falling since the bubble economy of the 1990s
collapsed. Since the recession
began in March 2001, the U.S. economy has lost more than two million jobs.
This year alone, capitalists eliminated 357,000 jobs in February and
108,000 jobs in March. Yet manufacturing capacity utilisation is still down to
73.8%, close to a record low according to the Economist.
spending is the only item propelling the U.S. economy today.
But this is on the basis of debt. Households
are borrowing against the equity of their homes which are overvalued to begin
with because of a housing bubble. This
housing bubble can burst like the stock market bubble in 2001 which virtually
halted corporate investment thereafter. A
collapse of the housing market in the US would bankrupt even more households and
would likely usher in deflation and prolonged recession similar to Japan’s
worrisome for the U.S. economy is the runaway current-account deficit that has
been growing since the 1980s when the world’s biggest lender became the
world’s biggest debtor country. It
is already at 5% of GDP and expected to rise to 7-8% of GDP in the next few
years. This deficit is financed by
borrowing huge amounts of money from abroad including virtually every other
government that invests its dollar reserves in US securities.
Foreign investors now have claims on the United States amounting to about
20% of GDP. In recent years,
foreign investors in the U.S. have been switching to shorter-term lending which
is more volatile and requires higher interest payments in the near future.
and runaway current account deficits can undermine confidence of foreign
investors in the U.S. economy. Capital
flight or even a significant reduction in capital inflows from abroad and a run
on the dollar (say, in favor of the euro) may yet lead to the collapse of the
U.S. financial house of cards triggering a global recession deeper than the
1930s. Indeed, a shift
towards the euro as the preferred medium for international transactions was
already underway when Iraq decided in 2000 that its oil exports would be bought
in euros instead of dollars (adding fresh incentive for the US invasion).
A senior OPEC official had already expressed last year that such a shift
to the euro for all of OPEC’s oil transactions would not be outlandish.
If and when this transpires, the dollar would surely lose its pre-eminent
place in international trade and accelerate U.S. imperialism’s strategic
U.S. is also unable to export its way out of its deficits crisis.
Multilateral trade talks are stalled.
As the Economist laments, “Global economic stagnation and U.S.
unilateralism will lead to a further weakening of the IMF and WTO and a
strengthening of trends towards protectionism and regionalism. Regional economic
arrangements, combining trade preferences, capital controls, and technological
cooperation will become even more attractive in opposition to both multilateral
free trade arrangements and bilateral trade deals with the U.S. and the EU.
Trade wars will become more frequent and more destabilizing.”
only solution to the economic crisis is military spending and tax cuts for the
wealthy. While military spending is
inadequate, tax cuts for the wealthy only concentrate capital further in the
hands of elite who are already awash in money for which there are severely
limited investment opportunities. Meanwhile
the broader majority are further being impoverished as a result of budget cuts
in social spending, thus worsening the crisis of overproduction.
matter where U.S. imperialists turn, they are hemmed in by crisis and
The relative ease of the U.S. military victory in Iraq coupled with its unresolved crisis in the domestic front will no doubt embolden the Bush administration to further acts of aggression and plunder around the world. But this risks imperial overstretch because this territorial expansionism is increasingly disproportionate to its relative economic strength -- which has been diminishing since the 1970s. In any case, this would also heighten people’s resistance to US imperialism and inspire progressive and revolutionary forces throughout the world to further advance the struggle against imperialism. All these validate Lenin’s proposition about modern imperialism as the last and moribund stage of capitalism. Posted by Bulatlat.com
*Paul Quintos is the deputy executive director of Ecumenical Institute for Labor Education & Research, Inc. (Eiler) and a fellow of the Center for Ant-Imperialist Studies (CAIS). This paper was delivered at the 19th International Solidarity Affair, The Pearl Manila Hotel, Manila, Philippines May 7, 2003.