___________________________________________________________ GLOBAL TRANSFORMATION : WHY WE NEED IT AND HOW WE CAN ACHIEVE IT (C) 2004 Richard K. Moore Part II : THE STORY OF AMERICA ________________________________________________________ Chapter 5: 1945-2001: PAX AMERICANA AND COLLECTIVE IMPERIALISM * The postwar regime: Pax Americana and Bretton Woods As mentioned in the closing of the previous chapter, the Council on Foreign Relations (CFR) carried out a series of secret economic studies between 1939 and 1941. The purpose of these studies was to align American war policy with America's anticipated postwar economic requirements. These studies not only determined the timing of America's entrance into World War II, but they also laid out an architecture for the postwar world order. This architecture called for the establishment of a United Nations organization and for certain international economic arrangements. In 1944, an international conference was held at Bretton Woods, New Hampshire. An agreement was reached, signed by 45 nations, establishing the World Bank and the International Monetary Fund (IMF). The agreement also established fixed exchange rates between national currencies, pegged to the dollar and to gold. These arrangements became known as the Bretton Woods system, and they collectively implement the CFR design. During the war, the USA, UK, and USSR adopted a United Nations Charter, again modeled on the results of the then-secret CFR studies. In 1945 a conference was held in which 51 nations agreed to establish the United Nations, based on the UN Charter. Thus by 1945, the world was operating under a system that had been secretly designed by the Council on Foreign Relations, on behalf of the U.S. government, prior to America's entrance into the war. On the PR surface, this international system appeared to be yet another act of benevolence on the part of liberator Uncle Sam. After saving the world from fascism, the U.S. was now sponsoring a new era of peace and stability. Nations would sit down in the UN and work out their problems instead of settling them by warfare. International finances were to be stabilized and democracy was to be spread throughout the world as the old colonial empires were gradually disbanded. The reality, however, was quite different. In Holly Sklar's anthology, "Trilateralism", Laurence Shoup and William Minter examine the discussions that went on in those world-shaping CFR planning sessions: "Recommendation P-B23 (July, 1941) stated that worldwide financial institutions were necessary for the purpose of 'stabilizing currencies and facilitating programs of capital investment for constructive undertakings in backward and underdeveloped regions.' During the last half of 1941 and in the first months of 1942, the Council developed this idea for the integration of the world.... Isaiah Bowman [territorial advisor to the Department of State and President of John Hopkins University] first suggested a way to solve the problem of maintaining effective control over weaker territories while avoiding overt imperial conquest. At a Council meeting in May 1942, he stated that the United States had to exercise the strength needed to assure 'security,' and at the same time 'avoid conventional forms of imperialism.' The way to do this, he argued, was to make the exercise of that power international in character through a United Nations body". Whereas European imperialism had typically been colonialist--enforced by military garrisons and administrative bureaucracies--American imperialism had typically been based on selective interventionism to protect American investments. Thus when Bowman talks about "programs of capital investment for constructive undertakings in backward and underdeveloped regions", he is talking about a systematic program of imperialism--American style. He confirms this interpretation when he refers to "maintaining effective control over weaker territories". He envisions the UN as a cover for US imperial management. Significantly, he does not talk about joint management. The UN is to provide an illusion of "international character", but the U.S. is to "exercise strength" unilaterally. But within this U.S.-managed system, there is no mention of exclusive American access to investment opportunities. America is to provide imperial security, but investment is to be open to all capitalist powers. In fact, Bretton Woods and the rest of the postwar architecture was a design for a new regime of global imperialism. The old regime was one of competitive, partitioned imperialism. France, Britain, Germany, and the other players each had their own private colonial realm. Economic opportunities for each nation could be measured by the size of its colonial realm, and competition over realms was the cause behind the frequent wars among the European powers. The U.S. vision was to convert competitive imperialism into collaborative imperialism. Instead of partitioned realms, there would be one global market where all players could seek their fortunes. European nations would no longer need to compete militarily for territories, but could instead compete in a business sense for the opportunities opened up by the global market. The U.S. would provide a level economic playing field to its European counterparts, but it preserved certain prerogatives to itself. Furthermore America was in a far better position to exploit the new investment opportunities, given its significant advantages in terms of available investment capital and industrial infrastructure. As regards prerogatives, the U.S. was to be the primary policeman, the supreme arbiter of imperial stability. This prerogative was challenged just once, when Britain and France launched the Suez War--the kind of thing they had been doing for centuries. The U.S. promptly put an end to that and Pax Americana has reigned supreme ever since as the international military order. For centuries it seemed that European wars would never end. But once Pax Americana was established, the idea of France, Germany, or Britain fighting one another became as unimaginable as Arizona and California fighting one another. Credit is commonly given to European integration for ensuring this peace, but in fact it was the removal of the economic motivation for inter-sibling warfare that led to both European peace and European integration. The Cold War had nothing to do with an imagined Soviet expansionism--it was simply a matter of the U.S. excluding the Communist World, in so far as possible, from interfering with or participating in the global imperial regime that the U.S. had established. Despite the wartime alliance-of-convenience between America and the USSR, American elites had always considered the USSR to be an enemy. Not because it is an imperial competitor--but because it isn't! U.S. elites know how to deal with competitors, but they cannot tolerate opposition to capitalism--their golden goose. In a very real sense, it is possible to characterize the European theater of Word War II as being a joint invasion of the USSR by Germany and America. The Nazis supplied the troops and the industrial plant, while the USA supplied the necessary funding and additional industrial support. This collaboration continued even after American bombers had joined the British in bombing German cities. When British and American troops invaded Italy, for example, they intentionally allowed several German divisions to escape to the Eastern Front to fight against the Soviets. And as mentioned in the previous chapter, American-owned war factories continued operating in Nazi Germany throughout the war. We were presented during the Cold War with a propaganda myth of an expansionist Soviet empire, threatening the Free World. What we actually had was a global American empire, with the Soviets more concerned about their internal economic and national development than with any kind of expansionism. So, in the end, the Cold War stands only as a side chapter in the story of the Twentieth Century, a temporary distraction to the main story--the continual growth of American wealth and power. In addition, the Cold War provided an excuse for large U.S. military budgets--necessary to fund imperial policing interventions. As a result, the end of the Cold War did not bring the great relaxation of tensions that everyone had hoped for. The Soviet "threat" turned out to be irrelevant the real business of America, the business of imperial management. Let's review these developments in terms of America's growth cycles. Recall that Tyrannosaurus Americanis' most recent predation had been in 1898. The ensuing boom phase ended in 1929, and was followed by a very effective consolidation phase during the Great Depression. Based on previous averages, a new growth cycle would have been needed somewhere around 1934. The usual way of achieving a growth cycle--predation--was out of the question at that time. Just imagine trying to launch a major invasion in the middle of the Great Depression! Instead, in order to keep the American economy going, a kind of holding action was undertaken. By investing heavily in Japan and Germany during the 1930's, American corporations and investors were able to experience a minor boom phase without the need of a predation. And then when America began mobilizing after Pearl Harbor--and supplying its new-found allies--its economy moved into a major boom phase, lasting right up to the end of the war. The rise of Hitler and Tojo (Japan's wartime leader) turned out to be critical to America's growth plans in both a short term and longer term sense. In the lead-up to the war their rise provided a needed minor boom, and in the aftermath of the war enabled by their rise, America ended up king of the mountain. We now reach a discontinuity--a paradigm shift--in world affairs and in the American economy. Ever since the Treaty of Westphalia (1648), European affairs had been dominated by territorial rivalries among the major nations. Originally, the rivalries were over European territory and over external realms, based on mercantile considerations (basically, how much gold could be extracted). After the Industrial Revolution (c. 1800), the rivalries became increasingly focused on satisfying the growth needs of capitalism. As a consequence of this imperialism, European affairs became world affairs, and European national rivalries became embedded in a new global game called geopolitics. With Pax Americana, geopolitics was eliminated as a major force in world affairs, and a three-century paradigm was broken. The architecture of the "Free World" became reminiscent of the days of the Roman Empire, except that the management was to be carried out using higher-leverage techniques. A small number of Legions could be transported when needed to any trouble spot, vastly reducing the relative requirement for garrisons and administration. The paradigm shift in the American economy was that its realm was now the entire globe, less the Communist hold-outs. Earlier I said the European theater of World War II could be characterized as a joint attack by Germany and the USA against the USSR. Similarly, America's postwar architecture can be characterized as a scheme by the USA to rob Europe of its imperial territories. America claimed the moral high ground so convincingly, and held such a dominant geopolitical position, that Europe had little choice but to go along. America's greatest predation of all time was accomplished mostly by proxy. While untold millions died in China, the USSR, and in Germany--and lesser numbers in the other participant nations--America suffered very minor casualties, relatively, and experienced no damage at all on its own soil--apart from the initial single attack on Pearl Harbor. To be sure America was sharing its new realm, rather than monopolizing it in the tradition of previous geopolitical victors. But what did that sharing really amount to? In the initial years of the postwar era, American elites knew they would get the lion's share of benefit from the new global market. Indeed, the Marshall Plan was needed to enable European nations to become viable economic players. And if growth problems were to arise later, America could always change the rules--that's why it insisted on a Pax Americana regime. American elites succeeded in leveraging America's temporary postwar dominance into long-term hegemony--while appearing to be peace keepers. Up until 1918, America had for the most part stayed out of geopolitical affairs. As I said before, it tended its own (rather sizable) patch and kept more or less to itself--as compared to the intense rivalries going on continually amongst all the other great powers. But what a formidable geopolitical player the USA turned out to be once it decided to sit down at the table! Perhaps this is related to the popularity of the game of poker, reflecting something about the national psyche. More likely, it's the fact that America was able to refine its imperial management techniques for a century without needing to ward off competitors. In its first century (up to 1898), America's realm came to embrace the Pacific - half the area of the Earth's surface. In the next half century (up to 1948), America came to dominate the other half of the globe as well, except for the Communist areas, which it successfully contained and eventually destabilized. And in all of this the most costly war it ever fought was the one it fought against itself--the Civil War. Everything else was gained either as easy pickings, or else by leverage which made the cost insignificant compared to the gains. I challenge anyone to find an historical precedent for so much gained by so little effort. * 1945-1980: The global postwar boom With geopolitical affairs stabilized under Pax Americana, economic affairs stabilized under Bretton Woods, and a global market open for business, 1945 saw the beginning of a global capitalist growth cycle. Instead of a single nation experiencing a growth cycle within its imperial realm, all capitalist nations were beginning a growth cycle in the same shared imperial realm--what came later to be known as the "third world". And as with all growth cycles, this one began with a boom phase. America, with its available capital and production capacity, was able to get an early start on the boom, launching development projects and capturing market share in the third world. Europe and Japan had to deal first with their own internal reconstruction needs. But they also had advantages as the boom phase unfolded. Their destroyed industries gave them the opportunity to start anew, building around the latest technologies--many of which had advanced considerably as a result of wartime research and development. As Europe and Japan began to compete in the global market, they were able to employ efficient, modern production methods and their labor costs were much less than in the U.S. As a result, Germany experienced an "Economic Miracle", and Japan rose to become a first-rank capitalist player. There were opportunities enough for all, and the boom was more a shared feast than a competition. As is typical of boom phases, the profits were shared relatively widely within capitalist societies. This was an era characterized by high employment, rising standards of living, improved working conditions, low crime rates, increased social services, a growing middle class, and gains in civil rights and civil liberties. From a social perspective, one might call these first three decades of the postwar era the "Great Era of Liberal Democracy". While capitalist populations were enjoying domestic prosperity, international capitalism was experiencing dramatic evolution. The scale of the market was global and corporations were becoming global enterprises. Raw materials could be sourced globally, markets for products were distributed globally, and operations needed to be optimized and coordinated globally. A new species of corporation evolved in response to these conditions - the transnational corporation (TNC). To be sure there were a few earlier precursors of this species, such as the British East India Company, the Hudson Bay Company, and the Seven Sister Oil Majors. But in the postwar era, TNC's proliferated dramatically and became the dominant players in all global markets. This development was analogous to the speciation that occurs in nature after a dramatic change in environmental conditions. In the post-dinosaur world, for example, the little nocturnal mammals rapidly evolved into a proliferation of much larger and bolder mammals in response to the feeding niches that had become available. The same dynamic led to the postwar proliferation of TNC's. Every boom phase must come to an end, and this grand global boom phase was no exception. In the early 1970's, about 25 years after the beginning of the postwar growth cycle, the boom began to run out of steam. The scale of the global market was unprecedented, but it was finite. Even global markets can eventually be saturated and stop growing at sufficient speed to feed the engine of global capitalism. The continued growth of global capitalism--and hence the continued operation of the global economy--now required the beginning of a consolidation phase. A boom phase is characterized by "all boats rising" as they "ride the boom". It's a fraternal, share-the-wealth kind of time. A consolidation phase, on the other hand, is a push-and-shove kind of time. So that some boats can continue rising, other boats must be driven onto the shoals. In the Great Era of Liberal Democracy, we had come to believe that all boats were equal. In the consolidation phase we were to find out that some boats were more equal than others. In order to assure that their own boats would be the most equal, American elites would need to change the rules of their own Bretton Woods game. In 1971 Nixon took America off the gold standard. With growth declining, that was the only way America could finance the Vietnam War. His action removed the underpinnings of the Bretton Woods regime of international financial stability. With the dollar floating, the fixed exchange rates between major currencies had to be abandoned. Currency speculation became possible, and it became possible for currencies to collapse. The stage was being set for the push and shove of international money markets and financial raiders. In 1973, using the Arab oil embargo as an excuse, the major petroleum companies boosted oil prices dramatically. This "push" by these gigantic TNC's ensured that their own boats would keep rising. These developments were precursors of bigger changes to come. * Elite Planning and Global Management Recall that the whole postwar global scenario was orchestrated with some considerable precision way back before Pearl Harbor by a study group of the Council on Foreign Relations. Their blueprint was implemented, and it led to the kind of results it had aimed for. The U.S. government showed itself to be capable of shepherding the project along and keeping it close enough to a true course--through the effective use of money, diplomacy, and force of arms, both overt and covert. And the U.S. government, along with the elite-run media, was able to maintain adequate public support through the twists and turns of the project--creating cover stories and spin at every juncture to mask the fist of imperialism, hiding behind the smoke screen of the Cold War. Although the original Bretton Woods blueprint was remarkably comprehensive and showed considerable foresight, there remained the day-to-day business of managing the global imperial system. The system required monitoring, the identification of dangers and opportunities, and the application of selective and high-leverage interventions to deal with those. In the postwar years a huge intelligence & analysis apparatus--a planning community--arose around the Washington beltway to carry out such required tasks of empire. The CIA and related intelligence agencies, countless think tanks, consulting firms, law firms, and the Council on Foreign Relations all play a role in this elite-serving community. When things were booming in the postwar era, the job of the planning community was to keep things booming, and to alert the political apparatus whenever intervention was needed. And when things began to stop booming, the attention of this community sensibly turned to re-considering the founding blueprint. One particular document stands out as a pivotal and candid expression of the kind of thinking that was going on in U.S. elite circles in preparation for a new economic regime. In 1975 Harvard Professor Samuel P. Huntington, a prominent member of the Council on Foreign Relations, published his now-infamous essay on the topic of "The Crisis of Democracy". In this passage, also taken from "Trilateralism", Huntington describes in his own words the U.S. elite and its role: "To the extent that the United States was governed by anyone during the decades after World War II, it was governed by the President acting with the support and cooperation of key individuals and groups in the executive office, the federal bureaucracy, Congress, and the more important businesses, banks, law firms, foundations, and media, which constitute the private sector's 'Establishment'". Huntington's view of how the U.S. is governed, evidently, is in complete alignment with the perspective I have been presenting to you. He makes no mention of the electorate or the political process as providing input to the policy-making process. Instead he identifies a constituency that is more or less the same as what I have been calling the "elite community" and the "planning community". Elsewhere in his essay, Huntington tells us that democratic societies "cannot work" unless the citizenry is "passive". The "democratic surge of the 1960s" represented an "excess of democracy," which must be reduced if governments are to carry out their traditional domestic and foreign policies. In order to understand what is implied by Huntington's words we need to do a bit of decoding into practical language. By "democratic" societies, Huntington is actually referring to capitalist societies. If he thought they were fundamentally democratic, then it would make more sense for him to speak of an excess of capitalism rather than an "excess of democracy". Clearly, in his mind, democracy is the expendable item. By "carry out their traditional domestic and foreign policies", Huntington refers to the ongoing need to manage the continued growth of the capitalist system. We know this because that is what "traditional domestic and foreign policies" have always been about since the time of the Industrial Revolution. What Huntington is actually saying is that liberal democracy must be curtailed in order to enable the capitalist system to continue operating. The democratic surge of the sixties led to various activist movements, including the Anti-War Movement and the Environmental Movement. Such popular activism interferes with corporate profits and capitalist growth. In a boom phase, such interference can be tolerated. But in a consolidation phase such obstacles to growth must be systematically undermined and removed. In a consolidation phase elites achieve capital growth by increasing their relative share of a comparatively stagnant economic pie. Freeing corporations from regulatory intervention contributes to this process, and so does freeing the military to to pursue profit-enabling interventions. Achieving public passivity, or acquiescence, in such regulatory and foreign policies becomes a political necessity, as reflected in Huntington's essay. But there are also many other ways by which elites can increase their share of the pie, and these are reflected in the new blueprint American elites came up with to replace the Bretton Woods system. There are a variety of elite publications available, such as CFR's "Foreign Affairs", in which it is possible to trace elite thinking and decode the implied agendas. I included Huntington's essay as an example of that genre. And there are many useful independent publications, such as Sklar's "Trilateralism", which present valuable research for those of us interested in what goes on behind the scenes. But for our purposes here, we have only occasional need of such sources. We can see the elite agenda simply by following the headlines in the daily news, and watching the spin and selection of media stories. We can then decode that information by correlating it to the known requirements of the capitalist growth machine. The blueprint developed by U.S. elites during the 1970's, as the boom was winding down, was clearly revealed in 1980 by the programs of Ronald Reagan and his tag-along British counterpart, Margaret Thatcher. * 1980-2001: The neoliberal project and global consolidation In any nation which pretends to be a democracy, a major shift in government policy must always be accompanied by an appropriate shift in official rhetoric. At the end of World War II, the new policy focused on exploiting the third world, and the supporting rhetoric talked about "spreading democracy" in the "free world". The rhetoric provided a framework which could be used to justify the actions that are required by the policy. If an intervention was needed to suppress a democratic movement, that could be explained as "protecting democracy from rioters". And as usual, it would in fact be capitalism that was being protected from democracy. Similarly, 1980 brought a major shift in policy and a major shift in rhetoric to the USA and to Britain. The rhetoric was about "getting government off our backs", "freeing business to be more efficient", and "eliminating wasteful bureaucracies". The policies focused on deregulation of corporations, privatization of public infrastructures, cutbacks in social services and benefits, and reductions in corporate and capital gains taxes. In the 1900's, such policies went under the name of "laissez faire capitalism". In the 1980's the policies came to be known as "neoliberalism". Neoliberal policies are precisely what we would expect for a consolidation phase. They are designed to facilitate the systematic transfer of wealth from the population and the national coffers to wealthy elites and to large corporations--to increase the elite share of the economic pie. The most direct and obvious transfer of wealth was seen in the reduction of corporate and capital-gains taxes. Every dollar not paid in such taxes was one more dollar for the elite, one more dollar to feed the capitalist engine, and one less dollar to run the affairs of the nation and to provide public services. This drain on the national treasury forces a government to choose between borrowing and cutting back programs. To the extent it borrows, it provides an investment opportunity for big bankers, increasing yet again the elite share of the pie. The pressure on national budgets is raised still higher because military budgets--required to support imperial interventions--are generally protected from budget cuts. In Reagan's case military budgets were dramatically increased. Ever since 1980, as a consequence of this tax regime, Britain and America have been experiencing a relentless decline in public services and in quality of life generally--and the American government in particular has gone heavily into debt in order to keep operating and to expand military operations. Privatization transfers wealth in two ways. In the initial transfer of ownership, a valuable public infrastructure is signed over to a private operator--and typically the valuation assigned reflects neither the public investment in the infrastructure nor the true value of the infrastructure. Such transfers are insider deals, between governmental elites and their corporate old boy brethren--a legalized form of embezzlement. Additional wealth is transferred through the operation of the infrastructure. Under public ownership, all proceeds from operations go back into providing the service, or else to fund other government operations. Under private ownership, profits must be siphoned off, and that must come either from price increases or else from cutbacks in service and maintenance. The profit stream is a form of wealth transfer, and the cutbacks in service and maintenance represent a decline in the social value of the infrastructure. Besides transferring wealth to elites, tax reductions and privatization also transfer power and control over society from democratic institutions to corporate operators. While governments struggle under tight budgets to provide essential services, private operators are in essence being subsidized to go out and run society their own way. MacDonalds hamburgers and TV advertisements in the schools, inadequate public transport and dangerously un-maintained rail networks, exploitive conditions and increasing unemployment for the service workers--such matters under privatization are determined by profit-hungry corporate executives rather than by elected officials. Deregulation creates wealth for corporations and banks by reducing or eliminating the ability of governments to ensure that those private entities operate in the public interest. Deregulation is a direct transfer of power from democratic institutions to private corporations, and that power enables corporations to increase their profitability in a wide variety of ways--at the expense of society generally. Some of these ways are direct and immediate, the obvious increased profitability that arises from exploiting workers, polluting the environment, ignoring worker safety, and producing unsafe or unhealthy products. But deregulation also enables corporations to achieve longer term benefits by more indirect means. As a consequence of neoliberal deregulation, elites and corporations have been able to transform the very structure and nature of national economies and of international commerce and finance--for the benefit of elites and at the expense of national sovereignty and prosperity. Under neoliberalism, we see the following kinds of trends. Corporations move their manufacturing facilities to the third world, exploiting workers there while causing massive unemployment back home. Corporations hide their profits in offshore tax havens, transferring still further tax benefit to elites. Governments lose control over their own currencies, and speculative international markets develop in currencies and in various financial instruments. Instability in these various markets brings further pressure and instability to national budgets and economies. Meanwhile those speculative markets generate profits to feed the capitalist engine, without contributing to the productive economy. Corporations loot pension funds, and speculative investors raid formerly protected industries--such as the American Savings & Loan industry-- looting them and leaving economic havoc in their wake. It would take several pages to enumerate all the scams by which elites and corporations have managed to fleece the people and their governments under neoliberalism. Neoliberalism came to the USA and Britain first because those nations were the most thoroughly capitalistic of the major powers. The Continental European and Japanese economies tended to mix capitalist enterprise with a strong dose of government ownership and participation. These governments were better able to buffer the effects of the declining postwar boom. Furthermore, neoliberal rhetoric would have been nearly impossible to sell to their more socialist minded populations. America's elite planning community manages the global system on a daily basis, and it is only natural that they would be the first to design and implement a replacement to the Bretton Woods system. Britain, continuing in its close relationship with America in geopolitical and economic affairs, naturally followed suit. American and British populations were wooed by the promises of economic revival, lower taxes, and less government bureaucracy. Except for those few who knew the history of the 1900's and the Robber Baron era, the people had little reason to suspect that these promises were encoded, and that the people were to experience a declining quality of life while the big corporations were to get the benefit of the promised lower taxes and experience a monumental economic revival. The people did not understand that regulatory bureaucracies had been established expressly to protect them from corporate abuses and from economic instability. As a result of neoliberalism, American and British corporations enjoyed a competitive advantage, in comparison with their European and Japanese rivals. Deregulation and tax reductions lowered the Anglo corporations' cost basis, and they were able to lower their prices on international markets and still make a profit. This is part of the push and shove of a consolidation phase. By adopting neoliberal policies, Anglo elites were increasing their share of the global economic pie, at the expense of competing elites in Europe and Japan--while at the same time the Anglo elites were increasing their share of their domestic economic pies at the expense of their populations and nations. Throughout most of the 1980's European elites suffered under this competitive disadvantage. They wanted to emulate the Anglos, but they faced certain opposition from their populations if they tried to directly adopt neoliberal rhetoric and policies. European politics included significant socialist and communist constituencies, and labor was relatively well organized and able to wield political influence. European elites needed a more devious means to achieve neoliberalism, and they found that means by smuggling in neoliberalism under the cloak of European integration. I happened to be in France in the summer of 1988, just after Denmark had rejected the Maastricht Treaty, and in the midst of a massive PR campaign in France selling the Treaty to the French people in the run up to a national referendum on the matter. The issues under discussion publicly, and among people privately in my experience, were mostly about the political problems of unification. What would be the effect on sovereignty? How would subsidiarity be interpreted in practice? To the extent economics was seen as an issue, the concerns had mostly to do with the threat posed to traditional national industries by potential outside competition. And people were enthusiastic about the ability to compete economically with America and Japan, since businesses could operate on a bigger, European-wide scale. The topic of neoliberalism was not under discussion, and I doubt if many people would have found it relevant to the Big Question on the table: "Shall we integrate or not?". And yet, if you look at the Maastricht Treaty, you find that it implies a lot about neoliberalism, and contains little substance about European integration--those details were left to be settled later. The treaty was not drafted by heads of state, nor by diplomatic ministers, but by financial ministers, in secret session. This gathering, representing elite financial interests, and laying down the foundations of European unity, was in many ways analogous to the elite gathering at the American Constitutional Convention, which laid down the foundations of Colonial unity. Just as the Founding Fathers ensured that the new Constitution would serve the interests of the wealthy elite, so did the European finance ministers ensure by the Maastricht Treaty that Europe would begin its journey down the neoliberal path. Under the rubric of "conservative fiscal policies" the Treaty incorporated the basic neoliberal paradigm into the proto-constitution of the new European Union. European governments were to have less flexibility in managing their economies, and there would be greater reliance on market forces to deliver economic results. This was a trade-off that Anglo populations had been ready to accept, not understanding the consequences, but in Europe the trade-off was made without the population even knowing it was under discussion. Maastricht established the foundation for European neoliberalism in two ways. The emphasis on fiscal conservatism enshrined the basic principles of neoliberalism. That was a start. In addition, the structure of the EU government, laid down by Maastricht, is highly undemocratic--in comparison to American or European standards. Power is centered in the European Commission, an unelected body--that would be the equivalent of the American President or the British Prime Minister being appointed instead of elected. The Commission represents wealthy elite interests, and once enthroned in Brussels, it's power has been used to pursue the neoliberal line. The Commission has been able to accomplish what national European governments would have been politically unable to accomplish. The EU represents a triple blow against democratic accountability in Europe. The first blow comes from scale itself--Brussels cannot help but be remote and unresponsive, in comparison to the smaller and closer national governments. The second blow comes from the lack of a Bill of Rights. Although the EU has tended to wear a liberal face--in response to current public pressures--there are no firm constitutional guarantees as regards civil liberties and protection from government invasiveness. The third blow comes from the undemocratic structure of the EU--a structure that would not be politically acceptable to Europeans if it were proposed at the national level. In the 1990's, with the Anglos a decade into the neoliberal project, and the new EU elite leadership now empowered to pursue a similar agenda, Western elites launched a coordinated diplomatic campaign to implement neoliberalism on a global scale. The GATT process (General Agreement on Tariffs and Trade) was hijacked for this purpose and in 1993, at the Uruguay Round of GATT, the World Trade Organization (WTO) was established. That marked the world's entry into the era of free trade treaties and globalization--the global neoliberal project. "Free trade" treaties are designed to transfer power from national governments to corporations. Under the rubric of "anti-protectionism", these treaties reduce the ability of governments to set product standards, protect the environment, or to otherwise regulate corporate activities. "Free trade" represents a wholesale version of deregulation, affecting all member nations of the WTO. The WTO began to take on an increasingly active role in global affairs, seeking to extend corporate power ever further in a regular series of treaty conferences, each one adopting more thoroughgoing deregulation measures than the previous. Although the actions of the WTO have profound political consequences, delegates to the WTO are selected from elite financial circles in each nation, and are in no way representative of the populations. While the WTO was pursuing its deregulation agenda, the IMF and World Bank began to radically shift their roles in the global economy. Under the Bretton Woods system, the purpose of the these institutions had been to stabilize international finance and to provide credit for development projects. Under globalization, these institutions began to use the power of debt to force third-world nations to adopt neoliberal policies which were even more radical than those promulgated by the WTO. In order to obtain urgently needed credit, third-world nations were forced to adopt "structural adjustment programs" which removed regulations, privatized infrastructures, drastically curtailed social programs, and dedicated national budgets to the repayment of outside debts. While under Bretton Woods the IMF and World Bank acted as bankers to imperialist nations, under globalization these institutions became direct agents of imperialist intervention. As the Twentieth Century drew to a close, the world had become a quite different place than it had been during the postwar boom era. Instead of governments regulating corporations, corporations now regulated governments through the authority vested in the World Trade Organization and IMF by so-called "free trade" treaties. The WTO, the IMF, the World Bank, and the related corporatist institutions were becoming to some extent a de facto world government. Instead of prosperous nations and improving living conditions in the West, governments were struggling to manage their budgets and living conditions were continually deteriorating. The overall pattern of the consolidation-phase elite blueprint was now becoming clear: the world was being corporatized. TNC's were becoming the primary unit of power and wealth in the global society, while the nation state was in decline. Political power had become subservient to corporate power. Capitalism had triumphed over democracy. The Enlightenment vision of sovereign and democratic republics had been covertly replaced by corporatism--Mussolini's preferred name for fascism. ________________________________________________________ -- ============================================================ If you find this material useful, you might want to check out our website (http://cyberjournal.org) or try out our low-traffic, moderated email list by sending a message to: •••@••.••• You are encouraged to forward any material from the lists or the website, provided it is for non-commercial use and you include the source and this disclaimer. Richard Moore (rkm) Wexford, Ireland _____________________________ "...the Patriot Act followed 9/11 as smoothly as the suspension of the Weimar constitution followed the Reichstag fire." - Srdja Trifkovic There is not a problem with the system. The system is the problem. Faith in ourselves - not gods, ideologies, leaders, or programs. _____________________________ "Zen of Global Transformation" home page: http://www.QuayLargo.com/Transformation/ QuayLargo discussion forum: http://www.QuayLargo.com/Transformation/ShowChat/?ScreenName=ShowThreads cj list archives: http://cyberjournal.org/cj/show_archives/?lists=cj newslog list archives: http://cyberjournal.org/cj/show_archives/?lists=newslog _____________________________ Informative links: http://www.globalresearch.ca/ http://www.MiddleEast.org http://www.rachel.org http://www.truthout.org http://www.zmag.org http://www.co-intelligence.org ============================================================
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