Creating Neo-Liberal Globalisation: The U.S.

and Symbiotic Power Relations in the

Post-World War Two Era

Half of the worlds inhabitants are in poverty millions without jobs, without adequate food
or clean water, without decent homes, without much if any chance of an education, without
health or dental care, without a political voice and without hope for the future. [Meanwhile]
modern communications have spread the word to these masses that the privileged few who
rule them are living in luxury that exceeds all measure. Across the seas the poor observe
others with wealth, military might, comfort and pleasure that overwhelm the imagination.

None of this can ever justify the mass killings of innocent people. But the stubborn realities
of global hunger and poverty that fuel hatred exist. [Thus] is it possible that the cruel and
fanatical upstarts who strike at symbols of wealth and power are heroes in the eyes of some
the downtrodden? Is it possible that desperate young men rebelling against their
powerlessness saw in the collapse of American skyscrapers a sign that that they are not wholly
powerless?. 1

It has been widely argued that, after September 11, globalisation per se is no longer the most
important issue on the contemporary political and analytical agenda terrorism is. 2 In this
paper I beg to differ, maintaining that, spectacular and horrific as the events of September 11
were, it would be a mistake to interpret them as anything but intrinsic to the political,
economic and systemic issues at the core of the larger globalisation debate. They were, after
all, a direct and violent assault upon the most powerful symbols of global capitalism (the
WTC) and of politico-strategic power in the world (the Pentagon) And, unless one accepts the
spurious claims to religious faith attached to such acts by their Islamic perpetrators, they are
best understood, I argue, as an assault upon a global politico-economic system which creates
untold millions of losers around the world, some of whom are willing and capable of
striking back in a manner which seeks to salve the humiliation, disenfranchisement and
festering anger felt toward that system.

This is not for a moment to condone such violent striking back. Nothing can. But it is to try
and provide a context in which to understand the savagery of September 11 in order that the
global community as a whole might find ways of preventing its recurrence. This context, I
suggest, must include the fact that at the beginning of the 21st century there is a huge and
growing global underclass hundreds of millions of whom are Muslims who feel alienated
from and resentful towards a global agenda based upon neo-liberal principles emphasising

1
These are the insights of former Democrat presidential nominee and American Ambassador to the
UNs Food and Agriculture Agency, George McGovern in The Healing in Helping the Worlds Poor
Editorial Op Ed The New York Times, January, 1, 2002
2
For a studied response to this view of events see S. Hoffmann, On The War in The New York
Review of Books, November, 1, 2001
free-markets, western cultural and institutional hegemony and a political hierarchy centred on
the global power and influence of the United States.

It is this alienation and resentment, I suggest, which provides the supportive oxygen for
violent extremists such as those involved in the al Qaeda networks, who feed off this support
and who exploit it for their own strategic ends. The suggestion, more precisely, is that neither
the destruction of the Taliban nor global confrontation with al Qaeda, will effectively cut off
the supportive oxygen to extremist groups unless something is also done about the social and
economic conditions which daily indicate to great masses of Islamic peoples and others,
around the world, that the contemporary global system, headed by the US, is designed to
impoverish and exclude them. 3

Indeed, this is precisely what a leading neo-liberal spokesperson, Thomas Friedman, has
concluded, proposing that if we [the USA] are going to be stomping around the world
wiping out terrorist cells from Kabul to Manila, wed better make sure that we are the best
country, and the best global citizens we can be. Otherwise we are going to lose the rest of the
world.4 Credit is due to Friedman here for acknowledging what it seems the majority within
the US elite refuse to acknowledge after September 11, that there is an intrinsic connection
between the global behaviour of the United States and the emergence and destructive
responses to it of extremist groupings around the world.

In Friedmans folksy style this is a matter of remembering that after September 11 if you
dont visit a bad neighbourhood, it will visit you. The point, he suggests, is that what

3
The tragically ironic point is that bin Laden and his al Queda network nowhere indicate that their
goal is to create a better world for the Islamic poor of the world only for some vague globalising of
the viciously ignorant Taliban regime. Nor is there any indication that his small band of killers would
respond positively to political overtures designed to placate them. The point, nevertheless, is that many
of the poor Islamic masses and indeed many middle class educated Islamists (e.g. the September 11
murderers) continue to support and be attracted by their cause. This, I suggest, is where the context of
global poverty, powerlessness, corruption and cultural humiliation becomes the key to understanding
this attitude, and to cutting off the longer term supportive oxygen to the next generation of bin Ladens.
For a detailed discussion on this issue, and its implications for Mohammed Attta, see The Road to
Ground Zero: Continued in The Sunday Times, January 6, 2002.
4
Friedman, Editorial/Op-Ed, The New York Times, Dec. 9, 2001 at
www.nytimes.com/2001/12/09/opinion/09FRIE.html?todaysheadlines Neoliberalism here relates
both to a theory of globalisation and a regime of policy practices derived from it. Its primary themes
are outlined by J.A. Scholte in Globalisation: A Critical Introduction (London: Macmillan, 2000:34-
35) They are: (i) an updated commitment to the classical liberal view that market forces will bring
prosperity, liberty, democracy and peace to the whole of humankind; (ii) the view that state borders
should not form artificial barriers (e.g. tariffs) to the efficient allocation of resources in the world
economy; (iii) the abolition of most state-imposed limitations on movements between countries of
money, goods, services and capital; (iv) the removal of state controls on prices, wages and foreign
exchange rates and the privatisation of the states productive assets; (v) the reduction in state provision
of welfare guarantees with markets becoming the major actors in the provision of pensions, health care,
matters, in the long term, is the perception the world has of US values and global strategic
aims. A perception that will not be changed by victory in the war on terrorism but, more
generally, by what we do at home and abroad. And what the US must do, argues
Friedman, is to re-concentrate its efforts on its globalisation project - via a strategy which
includes the doubling of US foreign aid to the poorest sectors of the global community, the
intensification of democracy programmes, the increasing of contributions to world
development banks and particularly to micro-lending programmes for women, and the
lowering of trade barriers in order that the poorest exporters might gain fairer access to US
markets for their textile and farm products.

These are laudable goals and all well within the capacity of any US Administration to
achieve. And yet, as Friedman concedes, they are unlikely to be met primarily, he suggests,
because George W. Bush is intent on stapling his narrow, hard right Sept. 10 agenda onto the
September 12 world rather than thinking seriously about some of the fundamental reasons
for the atrocities of September 11. Sadly, I suspect, Friedman is correct in this regard and in
this paper I want to explain why I think this is so and why, moreover, I consider Friedmans
neo-liberalism to be very much part of the problem rather than the basis of any solution to the
present terrorist crisis.

In so doing I argue that it is not just a matter of the current US President and any inclination
toward hard-right agendas that is at stake here, but a much broader and deeper inclination
toward global systemic dominance on the part of the major (mainly Western) states and their
corporate allies in the global financial sectors. An inclination predicated upon and directed by
neo-liberal market principles. In this sense, the issues at stake go well beyond their current
articulation in the conflicts between al Qaeda and the US, and they call into serious question
the benign association Friedman invokes between neo-liberal globalisation and the
democratic and inclusivist project he recognises as crucial to US attempts to retain its position
in the world in the 21st century.

In short, the issues at stake are those at stake in the larger debate over globalisation issues of
systemic power relations and the more specific relations between advanced, globalised forms
of capital accumulation and the politically and culturally excluded - those who must pay the
costs of a contemporary symbiosis between the political and the economic at the apex of
the neo-liberal global system. Which begs the question of what globalisation actually means,
in these terms.

social services, and education.

Globalisation: The Question of Meaning

The conventional view within the Anglo-American heartland of global political analysis is
that globalisation represents a historical and systemic watershed. The moment when the
pessimism of the Cold War years was rendered redundant by the triumph of liberal-capitalism
and the advent of a new, more peaceful and prosperous age of Western (read US) global
hegemony. An age in which the politico-economic, cultural and institutional principles and
practices of the Western liberal-democracies - the victors of the Cold War are to be
proliferated worldwide.5

There are a number of variations on this theme, some of which place less emphasis, directly,
on the Cold War triumph of liberalism and more on globalisation as the moment at which old
ideologies and old geo-strategic principles per se become effectively irrelevant to the new
world order and its global community. From this vantage point the era of globalisation marks
a crucial historical and conceptual watershed in the development of human relations, in which
the capacity for positive, innovative and cooperative interaction between the worlds peoples
is finally to be released after centuries of structural and intellectual constraint intrinsic to the
Westphalian state-system. Most commonly this sense of release is associated with the
perception of an irresistible dynamic in global economic relations, destined to break-down
traditional barriers to free trade and usher in a new age of global capitalism and systems of
Western (neo) liberal governance.6

Less frequently, but importantly, one also finds reformist voices within the (broad) liberal
orthodoxy who take more critical and reflective stances on the question of how such release
might best be managed.7 Critical reflection is more explicit, however, within a literature with
a somewhat different attitude to globalism than that invoked by (neo-liberal) triumphalists,
global free-marketeers and/or liberal reformers. Here, analysis is characterised by a genuine
ambivalence towards many aspects of globalisation and its present and future implications.
Globalisation, perceived this way, becomes the contemporary catalyst for unfulfilled radical

5
See, F.Fukuyama, The End of History and the Last Man (London: Penguin, 1992)
6
See, K. Ohmae, The Borderless World (New York: Harper Books, 1990); and T. Friedman, The Lexus
and the Olive Tree (London: Harper/Collins, 1999)
7
This takes various forms, most commonly perhaps via the new Keynesianism of those who argue for
the need for a more responsive and responsible state in the face of global forces. See, R. Boyer and D.
Drache, Eds. States Against Markets: The Limits of Globalization (London: Routledge, 1996). A
different kind of critical liberal (internationalism) is to be found in The Report of the Commission on
Global Governance, Our Global Neighbourhood (Oxford University Press, 1995); and a broad critical
liberal tradition is evident in the work of M. Gurtov, Global Politics in the Human Interest (Boulder,
Colorado: Lynne Rienner, 1994); and R. Falk, Predatory Globalization: A Critique (Cambridge: Polity
Press, 1999)
potential, for the kinds of social and political freedoms consistent with a universal human
community, with counter-hegemonic theory and practice, and with resistance to traditional
power politics and market relations. The optimism at the heart of this globalisation stems,
in the main, from conventional dialectical perspectives and from images of an ailing
hegemonic process in which the ruling powers sow the seeds of their own destruction, and
hasten their supersession by more democratically inclined forces. 8

From related but less conventional sources too (e.g. amalgams of Critical Theory and
postmodern themes) globalisation has been represented as a historical opportunity for
fundamental social transformation, the emergence of an ultimately liberating sense of global
community, an ethic of political tolerance and a respect for cultural difference. In this context
the promise of globalisation is often bound up with questions of identity or, more precisely,
with the possible freeing-up of (cultural, ethnic, religious, gender) identities, as the traditional
obligations and loyalties of the Westphalian system give way to a more flexible, more
inclusivist global matrix of social meaning.9

Conversely, there are significant and influential sectors within the (broad) globalisation
debate who are either dismissive of these positive, optimistic perceptions of its processes and
implications, or who, in acknowledging some of its liberalising features (e.g. its market-
relations) insist on the primary role of states, and of traditional forms of power politics as the
defining and still necessary features of global life in both the present and future. From this
general perspective, consequently, one can find explicit rejection of the historical watershed
notion popular among liberal and critical commentators, and a re-articulation of a traditional
(realist) pessimism regarding the vicissitudes of inter-state conflict, of the (Westphalian)
security dilemma, and of patterns of self-interested behaviour at the core of an effectively
unchanged, anarchical system.10

The perception of globalisation as systemic-continuity is also visible, often in more nuanced

and flexible form, in the analysis of a large number of traditionally grounded scholars who

8
See S. Gill ed., Gramscis Historical Materialism and International Relations (Cambridge:
Cambridge University Press, 1993); and J. Mittleman ed., Globalization: Critical Reflections (Boulder,
Colorado: Lynne Rienner, 1997). See, also the various contributions of Robert Cox, e.g. Power,
Production and World Order (New York: Columbia University Press, 1987)
9
See, in particular, A. Linklater, The Transformation of Global Community (Cambridge: Polity Press,
1998) On identity in this broad context, Y. Lapid and F. Kratochwil eds., The Return of Culture and
Identity in IR Theory (Boulder, Colorado: Lynne Rienner, 1996)
10
See, for example, J. Mearsheimer, Back to the Future: Instability in Europe After the Cold War, in
International Security, 15, 1990:7-57 and C. Maynes, The New Pessimism in Foreign Policy, 100,
1995: 35-45. For a peek at the theoretical underpinnings see K. Waltz, Theory of International Politics
(Reading, Mass: Addison-Wesley, 1979)
recognise the rise of corporate and other non-state actors in the global economy as a
significant challenge to the systemic status quo. The tendency here, accordingly, is not to
dismiss the possibility of systemic change per se, but to emphasise how the major structural
constraints of the Westphalian system still, and indeed must apply, if order and structural
coherence are to be maintained in the era of an interdependent global economy. From this
(neo-realist) perspective, the major states, and the major (Western dominated) institutions of
political and economic control (IMF, World Bank, WTO) are regarded as crucial agencies of
global order and potential future prosperity. Agencies which must be sustained and supported
if the Westphalian security dilemma is to be successfully adapted to meet the demands of a
current (market-oriented) form of systemic anarchy.11

None of this is to suggest that the burgeoning literatures on the meaning and implications of
globalisation, are reducible to the simplistic dichotomies between optimism and pessimism, or
realism and idealism that, all to often, have been utilised by IR specialists in lieu of serious
analysis. Nor does Anthony Giddens recent distinction between globalist radicals and their
sceptical counterparts adequately address the issues at stake in this context.12 Rather, as this
introductory discussion has sought to emphasise, globalisation, as both a body of knowledge
and as a set of everyday social practices, is a complex and multifaceted phenomenon which
resonates with highly contested meaning.

This complexity is only enhanced, I suggest, if one recognises that globalisation, as a vital
issue of present-day theory and practice is actually situated at the intersection of a number of
other inherently contentious sites in the contemporary lexicon of meaning regarding political
life and social change. When we seek to speak meaningfully about globalisation, for
example, we are to one degree or another engaging the question of whether we live in a
modern or post-modern world; of whether we are experiencing a Westphalian or post-
Westphalian systemic reality, whether International Relations or Global Politics is a more
realistic rubric under which we might best understand the way the world works at the
beginning of the 21st century.

At a more profound level still the question of globalisation impinges on some of the most
contested and unreconciled tensions within modern history and (in particular) Western social

11
See, S. Krasner, ed. International Regimes (Ithica, New York: Cornell University Press, 1983); R.
Keohane ed. Neorealism and its Critics (New York: Columbia University Press, 1986); D. Baldwin, ed.
Neorealism and Neoliberalism: The Contemporary Debate (New York: (Columbia University Press,
1993); and K. Oye, Cooperation Under Anarchy (Princeton University Press, 1985).
12
See A. Giddens, Runaway World (The 1999 Reith Lectures No. 1)
http://news2.thls.bbc.co.uk/hi/english/static/events/reith_99/week1/week1.htm
theory. Tensions concerning age-old the attempts to reconcile freedom and order, agency and
structure, the particular and the universal. Tensions concerning the identity conundrums - of
individual and society, of citizen and state - of attempts to install structural and conceptual
unity in the face of the fragmentation of everyday (cultural, ethnic, linguistic, religious) life.
Tensions associated with the modern philosophical attempt to overcome the uncertainties and
contingencies of human thought and behaviour with certain knowledge (e.g. of economic
utility, of rational action, of political behaviour). Tensions associated with the tendency
toward dichotomy (domestic state v global market) and determinism (e.g. the globalisation as
irreversible theme).

It is with this complexity in mind that my own understanding of globalisation and its
contemporary implications is focused upon that crucial intersection of theory and practice
which, since the 17th century, has seen the dynamism and global reach of capitalism
intersecting with the Westphalian state system to produce modern forms of society and
modern ideas about the nature and possibilities of human life in the global future. The
intersection I have in mind concerns that ongoing historical tension between the modern state
system which emerges after 1648 - the development of an expansionist capitalism during this
Westphalian period - and a philosophy of modern political agency in this era which has
powerfully complimented the central international political economy project of the modern
age. A philosophy centred on the modern individual as sovereign actor in an anarchic realm
of states and markets.

This is not deny the obvious implications of an accelerating process of globalising finance in
recent years which has produced the sense that there now exist different, demarcated and
precise agendas for (politico-strategic) internationalism and (economic) globalism. My
argument, however, is that these two discrete agendas are actually much more closely
integrated than they often appear within the broad globalisation literature, and that a more
comprehensive understanding of their relationship requires that we re-engage these agendas in
terms of some deceptively simple (albeit old fashioned) questions concerning real world
issues - e.g. in whose interests does the new global system actually work?.

And when one begins to answer questions such as these one finds some pretty traditional
patterns of power and influence being replicated in the ostensibly new techno-economic age
of globalisation. One finds, for example, that real power in the current era has not dispersed
very much at all that geo-politics and geo-economics still matter and that a traditional
pattern of structural hierarchy is still largely in place. More specifically one finds that
political and economic power remains embedded within a small and already privileged sector
of the worlds peoples, in particular those who live in the most powerful states. A useful way
of summarising this continuing pattern of wealth and power, which later I will adopt in this
paper, suggests that the current and foreseeable future world order is that dominated by a
power-Triad of states and corporate actors centred in North America, Western Europe and
Japan.

Again, this is not to deny the extraordinary happenings of the contemporary age, in which the
extreme fluidity of short term money markets and the enormous flows of global finance
associated with corporate business practices and electric money have led many to the
conclusion that a new age of global (techno-economic) autonomy has arrived. Suffice for now
to say that if one concentrates less on the quantity on those flows, and more on their direction,
and again asks some old fashioned but entirely relevant question of them e.g. where is the
money actually coming from and where is it actually going? one finds an answer that is
more complex than the global flows literature often allows. An answer, which points to
historical and systemic continuity, alongside significant global change.

It is in this context that a central issue concerning the meaning of globalisation becomes that
of whether or not globalisation has, as many globalists propose, produced a fundamental
discontinuity in modern global history. My argument is that it has not and that there is, at
best, problematic evidence that such fundamental discontinuity is likely to take place in the
foreseeable future. On the other hand, it is imperative for critical scholarship, in particular,
that issues of historical continuity and discontinuity remain open to questioning in the
globalisation context.

Above all it is imperative that critical scholars do not (unwittingly) close off such questioning
by leaping upon the globalisation bandwagon - in simply assuming an end to the traditional
system in order to move (cognitively and politically) beyond it. There might well be, as
Judith Sklair puts it a real psychological need for a global society among critical analysts -
as the basis for democratic, ethical and just human relations in the future but this paper
urges caution in regard to the (understandable) temptation toward analytical short cuts in the
pursuit of such an outcome. 13

It does so in addressing the globalisation phenomenon in the terms outlined above - which
recognise it as part of a much larger historical and philosophical project central to the
development of a modern world of states and capitalist markets, and of a philosophy of the

13
See J. Sklair, Competing Conceptions of Globalisation in Journal of World Systems Research, 5, 2,
modern individual and social identity integral to that project. A world order and global
identity, which serves a particular kind of systemic interest. The interest it has, in effect,
served since the 17th century that, primarily, of the most powerful states and those sectors
within them most advantaged by capitalist modes of production and exchange. A world order
predicated upon the secularism, individualism and market rationality of western modernity.

It is in this broadened and deepened context, I suggest, that the immediate questions of
continuity and discontinuity, and the larger question of meaning, are more appropriately and
effectively asked. And it is in this broadened and deepened context that I think we need to
locate and engage the dreadful events of September 11, as a reaction to a global order
dominated by secularism, individualism and market rationality, which appears to so many in
the current age to have nothing to offer those who do not fit its parameters of progress and
identity. Accordingly, this paper understands the events of September 11 as a tragic but
intrinsic dimension of a contemporary globalisation project centred on principles and
practices that have attended the historical development of the modern state system, of its
intrinsic relationship with global capitalism and modern philosophical identity.

In this paper I can only deal with one dimension of this relationship, one that seeks to unravel
something of that process by which major states become active participants in the global
(economic) forces which ostensibly determine their domestic nature and policy options. In
this context (and with due deference to Bagehot) the state can be seen as the buckle, which
binds the philosophies, interests and ambitions of various actors (individuals, political groups,
firms, economic corporations etc) to domestic and global structures in the contemporary
political economy.

This too is an issue of great complexity, which I can only touch on in this paper in
rudimentary terms. But in the discussion to follow I will try and indicate some of the
symbiotic linkages between the political and the economic, the (state) inside and (market)
outside which have created globalisation in the current era. In so doing I will reformulate the
globalisation question in a way that, it seems to me, is most appropriate for this task from
one which asks what globalisation means per se to that which asks: (i) what historical
conditions, political practices and social knowledge forms had to be in place before
globalisation could take place?: (ii) what interests were/are served by these political
practices and knowledge forms?: (iii) Do these historical, political and intellectual conditions

Spring, 1998:10
leave room for resistance to them?. (iv) If so what are some of the likely outcomes of this
resistance?

In a larger work now in progress I seek to ask these reformulated questions in a number of
historical, political and intellectual contexts. In this paper I will concentrate, primarily, on
questions one and two, and what I consider to be the crucial symbiotic relationship of the
current globalisation era that between elite (political, economic and military) actors within
the United States (US) - and the structure of the international-cum-global political economy in
the period since WW2.

This again is a difficult, multifaceted and highly contentious area of analysis. Consequently,
what I offer here is, necessarily, only a brief sketch rather than a deeply etched portrait of a
complex relationship. It is a sketch, nevertheless, which retains a critical edge in largely
repudiating the way in which this portrait has been painted in recent times by those walking
the fine line between neo-liberal and neo-realist commitments to hegemonic stability theory.

In this paper my argument is more prosaically inclined. It is, simply put, that the
phenomenon we know as globalisation emerged from a project of good old-fashioned
systemic opportunism on the part of the US after WW2, albeit on a grand scale. More
specifically, I argue, tensions evident in the process by which the US sought to create political
and economic hegemony at Bretton-Woods, in particular, are intrinsic to the phenomenon we
now refer to as globalisation.

In this context, I suggest, the current phase of globalisation actually emerged from these
tensions as they were played out in the period since the 1970s, as the US sought to retain its
hegemonic status amid a crumbling Bretton-Woods framework. More specifically, the US
helped create globalisation as it sought to enhance its (Cold War) strategy of global
preponderance by integrating its politico-strategic interests more explicitly with the global
economic interests of (mainly) US MNCs, and a financial marketplace that, by the 1980s,
was operating, to all intents and purposes, beyond the traditional parameters of (state) control.
In the Reagan and Clinton eras, in particular, this (shaky) symbiosis of US politico-strategic
power and multinational economic leverage became the keystone of a globalisation project
designed to best serve the interests of the most powerful actors in a global political economy
dominated by neo-liberal premises and structural principles.

This is not to suggest for a moment that the US has remained invulnerable to the many costs
of the ascent of neo-liberalism in global affairs, nor that it has been the only global actor
driving the neo-liberal agenda. US workers, for example, have clearly experienced some of
the vicissitudes of a free-market ideology and of structural adjustment policies, which US
governments have supported elsewhere with such enthusiasm over the years. And this is a
legacy that will remain a significant factor in the lives of great numbers of US citizens long
after the post-September 11 patriotic fervour has abated.

I will say something in more detail shortly about some of the costs of creating globalisation
for many US citizens. For the most part though it has been the US and its major (primarily)
Western allies at the apex of the global hierarchy that have reaped the benefits of the neo-
liberal age and of a new/old global system based on free-market principles. And, for the most
part, this is because the post-1970s age of neo-liberal globalisation has been characterised by
organising principles which have been integral to the larger story of the rise of the west in
modern global affairs.

In this sense the neo-liberal agenda is actually predicated upon a crucial truism in the modern
global story, which is that the hidden hand of the market will never work without the hidden
fist. Or, in a more immediate context that, McDonalds cannot flourish without McDonnell
Douglas, the designer of the F15. This was a truism repeated in more sober terms by
Clintons Secretary of Defence William Cohen in 1998 when addressing the executives of
Fortunes 500 leading US corporations, via his insight that, Business follows the flagwe
provide the security. You provide the business. 14

It was always thus, for all the insistence upon a separation between the political and the
economic that characterised the neo-liberal ascendency in the 1970s and 1980s. As Karl
Polanyi illustrated, the shift to a self-regulating market society in the 19th century was never
the spontaneous or (economically) natural occurrence invoked by the precursors of present-
day neo-liberals, but one dependent upon the power of the major capitalist states to enforce
and (institutionally) naturalise market relations. 15
Likewise, Jacob Viner in his broad
ranging accounts of political and economic factors in the development of modern inter-state
relations concluded that political interests particularly those concerned with national
security have always been crucial and intrinsic factors in the nature and direction of
economic policy. 16
This was a theme acknowledged by George Kennan also, who

14
The hidden fist theme is that of Thomas Friedman, both citations are from D. Schirmer, President
Clinton, A Corporate Offensive and Okinawa Bases at
zmag.org/zmag/zarticle.cfm?Url=/articles/july00schirmer.htm p.1
15
See, Polanyi, The Great Transformation (Boston: Beacon Books, 1957)
16
See, G. Crane and A. Amawi, The Theoretical Evolution of International Political Economy 2nd
Edition (New York: Oxford University Press, 1997:178)
understood well before the event that were the Soviet Union to sink tomorrowthe
American military-industrial establishment would have to go on, substantially
unchangedAnything else would be an unacceptable shock to the American economy.17

The point, in the present context, is that whether one is speaking of the early post-
Westphalian expansionism of the (Western) European states, the more systematic symbiosis
of the mercantilist era, the initial breakout of global finance capital in the 19th century
industrial revolution, or the casino capitalism of the contemporary Cold War age,
multinational economic actors have been able to have a significant impact upon
international/global relations because their activities have coincided with the interests of the
major political actors - the major states. Or, in more direct terms, as Robert Gilpin puts it,
the multinational corporation exists as a transnational actor today because it is consistent
with the political interests of the worlds dominant power, the United States. 18

This does not mean that a realist state determinism underscores globalisation any more than
does its Marxian economic alternative. Nor, as indicated, does it imply that the most
powerful states can always control the activities of economic actors working to enhance their
shared global interests. What it means, more precisely, is that the modern global market place
like all markets is an intrinsically political phenomenon that was conceived and nurtured
in a historical context resonant with conflict, contestation and struggles for power, and that
its processes, dominant ideas and structural principles reflect the outcome of these struggles.
More immediately, it reflects the way in which the struggles for strategic, economic and
philosophical dominance have shaped the global system since WW2 and the advent of Pax
Americana.

It is to this context, consequently, that I now turn to sketch out something of that process by
which the US effectively created globalisation in the BrettonWoods era. A process that saw
the systemic conditions for what we now describe as globalisation laid down at the core of a
Bretton-Woods agreement which, for all its Keynesian internationalist sensitivities, was
driven by a US desire to advance its own systemic and symbiotic interests in the emerging
new world order following World War Two. 19

17
This is from Kennans Forward to The Pathology of Power (New York: W.W. Norton, 1987)
18
See, Gilpin, The Politics of Transnational Economic Relations, in G. Crane and A. Amawi eds.,
The Theoretical Evolution of International Political Economy 2nd Edition (New York: Oxford
University Press, 1997:180)
19
Elements of Keynesianism remained, of course, in the legacy of New Deal politics within the US,
which saw the manipulation of fiscal and monetary mechanisms to assure stable economic growth and
peaceful relations between big labor and big capital, and in the pump priming role of the US economy
vis--vis the rest of the world after WW2 - and in the support for state led regeneration of the European
Creating Globalisation in the Post WW2 Era (1) Cold War Preponderance Logic and its
Economic Dimension

In this context, I suggest, it is a mistake to perceive of Bretton Woods and its subsequent
demise, in the conventional manner - as a process which saw an initial US commitment to
Keynesian internationalism overthrown in the early 1970s by neo-liberalism, and range of
structural circumstances, which it was powerless to alter or prevent. 20Rather, it is necessary to
re-embed the Bretton Woods issue within its larger domestic and international context which,
I suggest, provides a more accurate understanding of its role and purpose in post-war US
policy. The context in which the US after WW2 consciously and systemically sought
preponderant power in the world. 21

The policy logic here is familiar enough, emanating as it does from analysis of Soviet
capacity and intent from the early 1940s on, which concluded that US interests would be
severely damaged if post-War Europe should fall to Soviet power and/or ideology. A
conclusion which, for the Truman administration necessitated a post-war struggle for
preponderant power in the world. A struggle that the US must not lose because, as Secretary
of State Dean Acheson put it, to seek less than preponderant power would be to opt for
defeat. [Consequently] preponderant power must be the object of US policy. 22

For the US in the post-WW2 period, however, preponderance did not mean the kind of old
fashioned military and territorial dominance that had blighted and recently devastated the

demand sector. This pragmatism was to become important later in the 1960s and 1970s as the US
allowed selected state regimes (i.e. anti-Communist) to play significant roles in creating the conditions
for market forces to operate efficiently. It is not really until the 1980s, and the Reagan years, that the
neo-liberal seeds sown at Bretton Woods are allowed to flower fully in attacks on high wage sector
jobs within the US, and on liberal internationalism externally. My point, nevertheless, is that the US
was never genuinely committed to the internationalism intrinsic to Keynesianism, but was always
following a larger strategy of what one commentator has called a distinctly American
internationalism i.e. a strategy of politico-economic preponderance, which created tensions and
contradictions for it as the world began to demand greater economic freedom, in particular, by the
1960s and 1970s. Globalisation in this sense is the second phase of this preponderance strategy, albeit
one now riven with increased tensions between powerful allies and competitors in Europe and Asia,
and with a global financial sector that can no longer be controlled in the preferred manner. The notion
of American internationalism comes from William Kristol, cited in G. Alcorn, Uncle Sam Does
Not Need You in the Sydney Morning Herald, 16-17 February, 2002:30
20
This perspective commonly leads to the lament over the demise of embedded liberalism that one
sees in both orthodox US liberal circles and in the literature of neo-Realists invoking the Hegemonic
Stability Theory thesis. In either case the contemporary image becomes one in which, for the sake of
world order and prosperity, the US is bound to lead into the foreseeable global future.
21
The preponderant power theme is drawn from Melvyn Lefflers 1992 book which still provides a
crucial contextual framework for the globalisation debate. See, M. Leffler, A Preponderance of Power:
National Security, the Truman Administration and the Cold War (Stanford, California: Stanford
University Press, 1992)
22
Cited in M. Leffler, Ibid: 19
European continent. Rather, it meant creating a world environment hospitable to US
interests and values. An enterprise that was to be achieved, in practical terms, by a strategy
23

centred on the power of the US dollar and of the Atomic bomb.24

Strategic preponderance was regarded as crucial even though outright war with the Soviets
was deemed unlikely. But, as an ultimate deterrent factor in the larger containment
programme, and as a psychological backdrop for economic initiatives such as the Marshall
Plan, the bomb and US military power was at the heart of the post-war policy framework.25
Nevertheless, by 1944 and Bretton Woods, the economic dimension of American power was
already integral to preponderance logic, with US trade strategy perceived as the keystone of
post-war security. The symbiotic proposal being that, the unrestricted flow of capital and
goods will tend to bind other nations to the United States. If necessary these resources might
then be used to bolster the military strength of the free world.26

This was already a proposition being put in elite Governmental circles as early as 1940 when
the US, under Roosevelt, were determining what implications a German Japanese victory
might have for the US. The conclusion then was that it could have devastating implications
for US business and society and its individualistic philosophy, to the extent that, the
American free enterprise system would be altered radically; the political economy would be
transformed, and the role of government would become omnipresent. 27
In this regard, as
Melvyn Lefler has put it, the US Cold War policy of preponderant power was, from its
beginnings, driven less by a desire to help others than by an ideological conviction that their
own political economy of freedom would be jeopardized if a totalitarian foe became too
powerful. 28

Consequently, at the end of WW2, the Truman administration turned, to the capacity of the
capitalist system to serve the welfare of the American people and, in turn, the free world.29
And never was a capitalist state in a better position to do just this, with the US at the end of
WW2 in control of two-thirds of the worlds gold reserves, three quarters of the worlds

23
Ibid
24
The theme of the dollar and the bomb is explored well by Mel Gurtov in Global Politics in the
Human Interest (Boulder, CO: Lynne Rienner, 1992)
25
See M. Leffler, op cit 1992: 18)
26
Ibid:21
27
Ibid: 22
28
Ibid: 23 The symbiotic character of this nascent Cold War fear was expressed clearly enough by
Trueman, via the observation that, if Western Europe were to fall to Soviet Russia it would double the
Soviet supply of coal and triple the Soviet supply of steel. If the free nations of Asia and Africa should
fall to Soviet Russia we should lose the sources of many of our most vital raw materials, including
uranium, the basis of our atomic bomb. Ibid, Leffler: 12
invested capital, more than half of the worlds manufacturing capacity, and half of the worlds
supply of shipping. Moreover, the US at this point, supplied a third of all goods produced in
the world and was already the worlds largest exporter of goods and services. Its GDP was
three times that of its major strategic opponent (the USSR) and five times that of its major
economic competitor (a devastated UK). US firms, in this situation, enjoyed all the
advantages befitting the most highly developed industrial economy in world history, at a
moment when the rest of the industrialised capitalist world was in turmoil and effectively
dependent upon the US to kick-start the post-WW2 international order.30

Which is precisely what it sought to do via the Bretton Woods institutions (e.g. IMF and
World Bank, 1944 and GATTin 1947) in an era designed, I suggest, to embed US hegemony
in a systemic configuration which actually sought to limit internationalism unless it served the
interests of the US national economy and US strategic goals a symbiotic configuration
entirely in line with its preponderance policy. My suggestion, moreover, is that it was this
policy of preponderance that the US could no longer sustain by the early 1970s, rather than
any serious commitment to Keynesian internationalism. Hence its abrogation of its role as
worlds policeman in the wake of the Vietnam War, and as world banker in the face of
competition and criticism from a rapidly regenerated Europe and Japan and a de-colonising
Third World critical of US corporate behaviour.

This is not to suggest that the preponderance ambition disappeared in the 1970s, but rather
that it was reassessed and reformulated in a situation which saw the US play an active role in
changing the global system in ways which it saw as more conducive to its ongoing policy
aim. In this case towards a more explicit and coherent free-trade agenda perceived by then as
serving US interests more effectively. In this sense, as in 1945, the US was following its own
perceived interests and, in its own terms at least, the interests of its global allies in
effectively creating globalisation. 31In so doing it created a global scenario which, while
difficult to define, is characterised in the 21st century by great political, cultural and economic
bifurcation and divisions, some of which I consider intrinsic to the events of September 11.

The point, for now, is that the issue of US unpopularity in much of the world has, arguably, as
much to do with its attitudes and behaviour at the birth of the Bretton Woods system, and in

29
Ibid: 13
30
Ibid: 2
31
On this issue, in more general terms, see J. Gowa, Closing the Gold Window (Ithica, New York:
Cornell, 1983); E. Helliener, States and the Re-emergence of Monetary Internationalism (Ithica, NY:
Cornell, 1994); and S. Strange, The Retreat of the State (Cambridge: Cambridge University Press,
1996)
the age of embedded liberalism, as it does with the more obvious points of global tension in
the age of neo-liberal globalisation since the 1980s. For this reason alone the sanguine view
of embedded liberalism and Bretton Woods requires more attention.

Creating Globalisation (ii) Preponderance Logic in the Bretton Woods Era

The Bretton Woods era was a dream an arrogant dreamThe notion that we could
rebuild the world and develop the industrial capacity of poor countries and think that we
would not someday have to compete with them and their low-wage rate labor that was
arrogant. 32

Two brief examples of the underlying preponderance strategy in action are worth recording at
this juncture, in regard to the IMF and the World Bank, the institutions created at Bretton-
Woods to provide post-depression and post war stability in the global economy. The original
IMF proposal (put forward by Keynes and Harry Dexter White) was centred on the
regenerative potential of international liquidity. The idea being that a safe expansion of the
international economy (via an IMF liquidity fund) would provide post-war national
economies with the capacity for restructuring and regenerating their own futures, thus
providing a stable floor for the system as a whole, in the hope that none should fall through
as in the depression years. Allied to this premise was one which argued that it was imperative
that national governments control their own financial policy in relation to IMF liquidity funds,
as a further spur to healthy (e.g. democratic) and stable redevelopment in the post-war years.
33

The actual IMF Agreement which emerged operated on significantly different premises,
primarily because of the power of the US delegation and its support for a global trade regime
dominated by the US. The result was an IMF which, instead of receiving $US32 billion in
liquidity funds for transference to ailing economies, received $US1 billion. Moreover, instead
of the funds being unconditional, a range of conditions were added to the process by which
they were to be granted. Thus, funds (i.e. loans) could only be drawn in the currency in which
they were to be repaid (i.e. read US dollars); they could only be drawn if internal economic
adjustments were made (i.e. read adjustments in line with US economic policy); and they
were to be contingent on no outflows of capital (i.e. read US restrictions on spending policy).
34

32
The view of Christopher Whalen, an international financial consultant cited in W. Greider, One
World: Ready or Not (New York: Simon and Schuster, 1997:287)
33
See, A. Wolfe, Americas Impasse (Boston: South End Press, 1981:145-147) See also F. Block, The
Origins of International Economic Disorder (Berkeley: University of California Press, 1977) 32-34 and
110-114, on the IMF and the US national capitalist assumptions which underlay it.
34
See A. Wolfe, op.cit 1981:147
The original World Bank notion suffered the same fate. Initially perceived as a lending
institution concerned primarily with sponsoring post-war social reform in Europe, it was
effectively transformed, by a coalition of bankers and the US State Department, into another
vehicle of US national interest. This was achieved as the US delegation increasingly tightened
the Banks charter and, eventually, as it stripped it of the ability to lend money per se, leaving
it only with the authority to guarantee loans derived from other (e.g. US corporate) sources. 35
And from its beginnings the World Bank constitution forbade funding for projects that
competed with private capital sources. Hardly a Keynesian initiative and in 1944 one further
designed to serve a particular (national) rather than a general (international) interest. 36

Indeed, Keynes was suspicious of both the intent and the long term viability of this strategy,
warning that the free movement of capital and goods, advocated by the US delegation in
particular, would lead to major instability and systemic inequalities, particularly if balance of
payments deficits were allowed to get out of control. But as the new hegemonic power intent
on taking advantage of its overwhelming systemic advantages as the war neared its end, the
US had a political and historical momentum that proved irresistible.37

This was further confirmed at the first formal meeting of the IMF, under the auspices of the
Truman Administration and amid an acceleration of Cold War tensions. Here, any lingering
ambitions that Keynes or the liberal internationalists might have retained about the
possibility of changing US strategy, and the nature of the new world order, were effectively
quashed when the US delegation declared that the IMF was to be centred in Washington DC,
and that the US government was to have veto power over the Bretton Woods institutions per
se. This now confirmed to the US post-war partners what Keynes and others had suspected
from the beginning, that the basic intent of US foreign economic policy [was] to facilitate
the overseas expansion of US business. 38

If the die was indeed cast in favour of this strategy at Bretton Woods then so, perhaps, was
the flaw in its post-war reconstruction programme a flaw that was to undermine Bretton

35
Ibid, 1981:47
36
See R. Swift, Squeezing the South: 50 Years is Enough in New Internationalist, p.6, July 1994
37
See, J. Kirshner, Keynes, Capital Mobility and the Crisis of Embedded Liberalism, in Review of
International Political Economy 6, 3, 1999:313-337
38
See, F. Block, op. cit., 1977: 163 A view that was only enhanced by the actions of the US and its
major state allies in shifting the IMF and the WB from its original intended relationship with the UN
and by creating a system of weighted voting within the BW institutions based on members
contributions, as against the one member - one vote theme of the UN Charter. Norway, in particular,
argued that this move effectively undermined the spirit of international cooperation which was
ostensibly the primary motivation of the BW agreement. See E. Childers and B. Urquhart, Renewing
the United Nations System (Uppsala, Sweden: Dag-Hammarskjold Foundation, 1994:15)
Woods and lead to the current phase of globalisation after the 1970s. This is not an issue that
lends itself terribly well to brief or rudimentary analysis. Suffice to say that the flaw in
question here was that emanating from the original preponderance logic underlying the policy
perspectives of the US at Bretton Woods, which oriented it toward the prevention of the
growth of the post-war international economy except under US control and tutelage.

This strategy was most obvious, perhaps, in the initial promotion of a liquidity gap in the
global economy (via IMF and WB rules) and the attempt to fill that gap with US dollars.39 The
problem here, of course, was that by the 1950s as national economies in Europe and
elsewhere (e.g. Japan under US leadership) began to experience significant post-war growth,
the need increased for funds to finance that growth. This, by definition, placed pressure on
the US dollar, now effectively the world currency and a currency pegged to the gold standard.
The result was that huge amounts of US dollars, and its gold reserves, began to flow overseas
as the post-war economic boom was financed via the US economy. This, in turn, created
increasingly large balance-of-payments deficits for the new global hegemon which, initially
(via the Marshall Plan) it turned to its own advantage, but which eventually became a
problem requiring significant reformulation of its global role. A reformulation, I suggest,
which was to lead to the structural condition we now refer to as globalisation.40

By 1960 the incoming Kennedy administration was faced with this balance of payments crisis
- one the US could no longer ignore. The US deficit stood at this time at around $US3.5
billion and the outflow of gold reserves in particular was, according to Kennedys economic
advisors, the single most serious issue facing the country.41 Lingering Keynesian influences
now came to the fore again (e.g. via JK Galbraith) and during the Kennedy era attempts were
made to more genuinely internationalise the ostensibly liberal-international system (e.g. the
Trade Expansion Act, 1962, the Kennedy Round of tariff negotiations under the auspices of
the GATT, 1963). These initiatives, however, like the plan to finally use the IMF as the
source of greater international liquidity, were thwarted - primarily by two Kennedy
appointees from the corporate sector.42 This, even though it has been estimated that if Keynes
original plan had been introduced in 1945, it would have accumulated $US 30 billion in
unconditional liquidity enough to finance the US deficit throughout the 1950s and 1960s.43

39
Ibid: ch. 5
41
For the figures, see Block, op.cit., 1977:141; and on the theme re. Kennedy see, Wolfe, op. cit.,
1981:157
42
Investment bankers Douglas Dillon as Secretary of Treasury and Robert Roosa, his major advisor on
the currency and gold crisis See, Wolfe, op. cit., 1981:159
43
Richard Gardner, cited in Wolfe, Ibid, 1981:157. Ultimately, Kennedy ended up increasing military
spending in Europe and worsening the balance-ofpayments problems.
But the problems of thwarted liberal initiative and a worsening balance-of payments crisis
were as nothing compared to that which followed for the US, now increasingly embroiled in
the Vietnam War, a conflict which saw US strategic and economic policy effectively unravel
as it began to lose its capacity to organise the global system, on its own terms, and as its post-
war internal coalition begin to break down. And it was in the wake of the Vietnam War that
the US was forced to confront the problems of Bretton-Woods, and the politico-economic
dominance it had enjoyed since 1945. In so doing it effectively created globalisation.

It did so as it sought new ways of retaining its hegemonic position by, for example,
acknowledging the need for burden sharing and multilateral structures of global governance
as it extricated itself from Vietnam and, most significantly, by increasing its explicit support
for US multinationals (MNCs) in their global pursuit of free trade.

Creating Globalisation (iii) Vietnam, the MNC Solution and the New Balance of
(Symbiotic) Power

This latter strategy had already been introduced during the Democrat administrations of
Kennedy and Johnson, as a way of appeasing the business and military establishments whilst,
potentially at least, alleviating the balance of payments crisis. The solution, simply put, was
to more explicitly project internal US political interests into the external economic realm.
In this case by rapidly expanding the US private sector beyond US borders and providing
massive support and encouragement for US corporations around the world. In return, as
Robert Gilpin has proposed, the United States government began to regard the multinational
corporations and their growing overseas earnings as the means to finance Americas
hegemonic world position.44

The role of the US government in this reformulation of the post-war symbiosis was clear
enough and it was effectively that which characterised the relationship during earlier
mercantilist eras i.e. to create and sustain the conditions under which the primary agents of
market expansionism (e.g. corporations) could operate efficiently in the pursuit of maximum
profit. This it did, for example, via a range of tax breaks for overseas investment, by
demanding special trading status for US companies in the European Common Market and by
creating the Overseas Private Investment Corporation (1969) which underwrote losses

44
R. Gilpin, US Power and the Multinational Corporations (New York, Basic Books, 1976:14)
sustained by US corporations in conflicts with overseas Governments which nationalised
them.45

The result was a huge increase in MNC investment, particularly in the Third World where, at
least in the initial period, expectations and profit margins were high.46 Indeed, for most of the
1960s this solution to the US balance-of-payments problems worked successfully for both
sides in the evolving post-WW2 symbiosis between state and capital. But by now the Bretton
Woods global trade strategy, in general, was facing a range of problems along its symbiotic
spectrum. At one level the US now became a victim of its own success to some extent, as
disputes between the US and Japan over textiles, and the US and Europe over food, began to
surface. This only enhanced tensions between the US and Japan, in particular, which flared
during the Vietnam War as the US currency crisis saw it reluctant to convert foreign currency
holdings into gold, and as the Japanese began to openly blame the US for its own rising
inflation levels.

Further afield there were political problems now increasingly creating difficulties for a US
strategy dependent on social order as the basis for its free market incursions into the Third
World. The convulsions of independence in Africa and Asia were a major concern, as
independence movements came to power in (among others) Mozambique, Angola,
Zimbabwe, Laos and Cambodia. Competition with the Soviets now increased in these and
other areas as the US struggled with its worlds policeman duties in Vietnam. And for all the
diversity associated with the Third World anti-colonialist surge, a shared anti-Western
tendency was becoming increasingly evident alongside a demand for a redistribution of global
economic power. A demand expressed in the agendas of the Non-Aligned Movement,
UNCTAD, the Group of 77 and the programme of the New International Economic Order
(NIEO) adopted by the UN General Assembly in 1974. In practical terms the actions of the
OPEC oil cartel during the1970s, and similar cartels seeking to seize control of crucial raw
materials, was perhaps the major indicator to the US and its major allies that the post-WW2
system was no longer working exactly to plan.

It was against this background, of course, that Richard Nixon sought to solve some of the
problems facing the US by scaling back its explicit and costly military role in many areas of
the world, be engaging Cold War enemies in Dtente arrangements, and by announcing, in

45
See, Wolfe, op.cit, 1981:162 This symbiotic relationship has continued, in relation to the preferential
access to Government contracts, the special tax concessions, lack of control on capital flows and
diplomatic assistance etc enjoyed by MNCs. On this see, Gurtov, op. cit., 1992:33 and the discussion
re. the WTO later in this paper.
46
On this issue see R. Barnet and R. Muller, Global Reach (New York: Simon and Schuster, 1974)
August 1971, a New Economic Policy which decoupled the US dollar from the gold standard,
thus formally rescinding the Bretton Woods Agreement and revoking the status of the US
dollar as the global currency.47

The preponderance policy remained, nevertheless, and it had a number of significant

dimensions at this time, particularly concerning the Third World where the Nixon and Ford
administrations maintained and upgraded a policy agenda invoked by their Democrat
predecessors.48 Support, in particular, was increased for wide ranging foreign aid programmes,
and for a number of World Bank affiliates set up to assist Third World countries with foreign-
exchange problems and help create a sense of economic stability in volatile times. 49
In this
way, it was hoped, the critical edge might be taken off the NIEO agenda, and via support for
post-colonial elites, the OPEC challenge might be averted and the Soviets thwarted without
recourse to global conflict. Particular attention at this time was payed to a favourable
relationship with the Saudi monarchy and its business elite, initially in order to undermine the
effectivity of the OPEC cartel and, more generally, to create a friendly regime within the Arab
world and a reliable source of imported oil. As the events of September 11 and investigations
into the al Queda network have illustrated, this was a decision with long term negative as
well as positive implications for the US.50

During this period too the pragmatic dimension of preponderance logic allowed for an
ongoing veneer of Keynesianism in the struggle for hearts and minds in the Third World,
particularly when it came to issues of protectionism and state-led development in those areas
perceived as at most risk from Soviet influence (e.g. Taiwan, South Korea, SE Asia)
Increasingly too the Bretton Woods institutions were utilised in the front line of the struggle
for the Third World. Accordingly, World Bank lending to the Third World was raised from
US$2.7 Billion in the early 1970s to US$12 billion by 1981 as the US put in place a global

47
During the Johnson Presidency, at the height of the Vietnam War in 1968, the US began this process
via an announcement that it would no longer support the price of gold at US$35 an ounce. At this
point, though, it stopped short of refusing to redeem dollars for gold per se. See, F. Block, op. cit.,
1977:194. In August 1971 it took this step. For a discussion of its broader implications, see Block,
Ibid, 1977, chs. 7-8 and J. Gowa, op. cit. 1983.
48
So, of course, was the support for both overt and covert anti-Communism. The most spectacular
example of the latter in this period was the CIA inspired coup against the elected Allende Government
in Chile in 1973, a coup which emphasised the symbiotic nature of US global strategy in the presence
of Milton Friedman as leading neo-liberal ideologue of the day and economic architect of the new
Chile under the military dictatorship of Pinochet.
49
Such as the International Development Association (IDA) and a range of regional banks. For a
discussion see W. Bello, Dark Victory (London: Pluto Press, 1994)
50
Its worth noting here that on an FBI list of the most wanted suspects for the September 11 attacks the
great majority are from Saudi Arabia, as were those on the planes. See The Proof They Did Not
Reveal at http://www.Sunday-times.co.uk/news/pages/Sunday-Times/stiusausa02012.html
7/10/2001
anti-poverty programme aimed, primarily, at those perceived in absolute poverty - an
estimated 35-40% of the worlds people in the mid-1970s. 51

Even more significantly in terns of subsequent events, this period saw a massive increase in
the activities of Western private banks in the Third World, now increasingly free from
regulatory control, cashed up with billions of petrodollars from the OPEC countries, and
enthusiastic about profits to be made via Third World credits. Ultimately, of course, this
lending/borrowing frenzy led to a debt crisis in the 1980s that was to have major implications
for both sides of the symbiotic equation. In particular, it was to become a central factor in the
neo-liberal strategy of the US during the Reagan years, as it sought to regenerate the post-
WW2 preponderance logic in an updated form.

Before this, however, the problems of the transition from the first phase of the preponderance
strategy to its second stage were becoming evident in the 1970s, with the post-WW2 brakes
taken off currency markets worldwide, and with the role and status of MNCs becoming
increasingly problematical as their own interests, allegiance and investment focus shifted
away from the restricted ambit of the US policy framework, and the national interest.

Accordingly, by the mid-1970s, with Japan and Europe becoming increasingly profitable
centres for investment ,and with MNCs now able to draw upon new sources of liquidity (e.g.
the Eurodollar market) there was a growing reluctance to simply repatriate profits back to the
US. This now created an even more serious (and ironic) problem for the US Government
which, after 1971 began to experience trade deficits in its dealing with rest of the world as it
struggled to compete with overseas manufacturers many of whom were US based MNCs.

In this context the external solution to the internal problem that had recommended itself to
earlier US administrations was less compelling. On the other hand, during the Nixon and
Ford years in particular, the strategic necessity of the MNCs meant that the governmental
sector was increasingly unable, and unwilling, to take them on even in favour of its national
constituencies. This, allied to the growing antagonism of the MNCs and big business interests
towards political interference in their affairs, meant that from around the mid-1970s on the
great post-war symbiosis was significantly altered in favour of its economic dimension.

The new balance of symbiotic forces was confirmed with the establishment of the Trilateral
Commission in 1973 which institutionally substantiated this shift in systemic power. It did so

51
See, W. Bello Dark Victory (London: Pluto Press, 1994:13)
in illustrating that the MNCs and the agents of corporate finance were now in the vanguard of
a more explicit free-trade approach to global restructuring following the demise of Bretton-
Woods. And it illustrated, just as clearly, that the US was no longer capable of planning and
organising the global political economy - on its own (preponderant) terms - as it had been in
1945.

Creating Globalisation (iv) Trilateralism: Institutionalising a Neo-Liberal Agenda

The result was a more pragmatically inclined US approach to systemic power which
acknowledged (often begrudgingly) that its former European protges, and the Japanese,
were now powerful competitors with whom the burden of leadership must be shared, and that
future US prosperity increasingly depended upon its relationship with a rapidly globalising
business sector led by the major MNCs. The Trilateral Commission reflected this change in
US approach and in the new interdependence project deemed necessary to maintain its
refashioned global ambition. It also represented a new phase in the elite politico-economic
coalition operating at the core of the internal/external symbiosis which, since 1945, had
shaped the US national interest and its global persona - and which was now to be increasingly
shaped by it. 52

Not surprisingly the agenda of the Commission reflected a globalisation project centred on
MNC led interests and ambitions. Its aims were to be achieved, the Commission Reports
indicated, by adherence to a re-kindled laissez-faire economic theory (e.g. Hayek/Freidmanite
economics) which harked back to the golden age of the 19th century great transformation.
At the core of this neo-liberalism was a designated role for the contemporary state (i.e.
minimalist) which also harked back to that other great moment of runaway capitalism a
century or so ago. And as a 1975 Commission Report proposed, the neo-liberal global agenda
could only be advanced successfully if there was a conscious effort on the part of (otherwise
muted) governments to deflate democratic influence and expectation around the world, which,
it was argued, was incompatible with efficient market practice.

52
See D. Korten, The Failure of Bretton Woods, in J. Mander and E. Goldsmith eds., The Case
Against the Global Economy (San Francisco, California: Sierra Club Books, 1996); see also E.
Helleiner, From Bretton Woods to Global Finance, in R. Stubbs and G. Underhill, eds., Political
Economy and the Changing Global Order (London: Macmillan, 1994) The Trilateral Commission was
formed in 1973 with the Chair of the Chase Manhattan Bank (David Rockefeller) at its head and with
Zbigniew Brzezinsky as its Director until he left to become National Security Advisor to President
Carter in 1977. In the ensuing years it has come to represent arguably the exemplary forum of
corporate globalism. Its members have thus included US Presidents, Carter, Bush and Clinton and
many of the leading members of their Administrations; The former Speaker of the House of
Representatives, Thomas Foley, the leaders of the worlds major Banking organisations and the heads of
the worlds most powerful MNCs.
Co-authored by Samuel Huntington, the Report warned of the need to counter the influence of
an excessive democracy in the Third World, as well as in the advanced liberal states. A
democratic excess which threatened to undermine political authority and social order and
thus destabilise market relations. 53 The influence of this new approach to foreign policy was
evident enough during even the resurgent liberal years of the 1980s when, during the Carter
Presidency, for example, amid calls from conservative newspapers such as The Economist, for
aid not trade with a struggling (and sometimes militant) Third World, the foreign aid budget
was cut back to 0.17% of GNP (from the 0.5% during the Nixon years).54 In line, therefore,
with the new hard line neo-liberal orthodoxy Carter, suggests one commentator, resolved the
contradiction between growth and social justice by giving up on the latter.55This didnt save
his Presidency, of course, and indeed it might have accelerated his demise, as militant groups
from Angola to Nicaragua to Iran exhibited a violent anti-Americanism as part of their
struggles against both the local and global status quo.

Whatever the case, in bringing to power the neo-liberal Reagan Administration the defeat of
the soft liberal Carter undoubtedly accelerated the influence in Government, and in US
society in general, of a globalisation project favoured by the MNCs, and the big
(transnationally active) business sector. It also further cemented the relationship between the
US and the corporate globalists of the Trilateral Commission, and of the new/old economic
orthodoxy within the IMF, World Bank and the GATT. Bretton Woods institutions that were
now to become key actors in neo-liberal globalisation project designed, albeit in modified
form, to reassert US preponderance.

In the early 1980s, consequently, the Reagan Administration took full advantage of the debt
crisis, which now gripped the Third World. A crisis prompted largely by the problems of
trying to service the huge loans made to First World banks during the 1960s and 1970s. A
crisis which now prompted a neo-liberal solution provided by the US, in conjunction with the
IMF and the World Bank, which was to furnish compliant debtors with Structural Adjustment
Loans (SAPs) that were to be quick disbursing and used primarily as interest payments to the
private banks, mainly in the US.
Thus, in accordance with rules drawn up by the US Treasury Department, the IMF and the
World Bank made desperately needed loan funds available if, and only if, debtor states

53
See, M. Crozier, S. Huntington, and J. Watanuki, The Crisis of Democracy: Report on the
Governability of Democracies to the Trilateral Commission (New York: New York University Press,
1975)
54
See, A. Wolfe, op. cit., 1981:22
55
Ibid: 228.
accepted a range of SAP conditions. These included: the removal of restrictions on foreign
investment in local industries, banks and other financial services; the reorientation of local
economies towards exports (both to service debt and the global consumer markets); the
reduction of government spending and public goods servicing (e.g. health, welfare and
education); the reduction of wage rates; the cutting of tariff quotas; the devaluing of local
currencies against foreign hard currencies (i.e. the US Dollar); and the privatisation of state
enterprises. 56

I will come back to the implications of this strategy shortly, for global poverty and for
antagonistic attitudes towards the US. Suffice at this point to say that in terms of the Reagan
doctrine the SAP strategy was a great success, if the aim was to privatise Third World
economies and integrate them even more tightly within the neo-liberal global agenda.
Indeed, as a recent summary has concluded, by the end of the 12-year Reagan-Bush era in
1992, the South had been transformed, to the extent that:

From Argentina to Ghana, state participation in the economy had been drastically curtailed;
government enterprises were passing into private hands in the name of efficiency;
protectionist barriers to Northern imports were being eliminitated wholesale; restrictions on
foreign investment had been radically reduced; and through export-first policies, the
international economy was more tightly integrated into the capitalist world economy.57

On the other hand the (tragically) ironic fact is the SAP strategy didnt work, if it was meant
to enhance the life opportunities of the global poor in neo-liberal terms. 58
As a number of
studies concluded this was primarily because the IMF and the World Bank had simply got
their (grand) theory wrong concerning the actual conditions in Third World (and particularly
African) contexts. Consequently, orthodox (i.e. neo-liberal) IMF and World Bank approaches
designed to solve the problem of ailing economies by restructuring them, actually created
greater social and economic problems.59

56
See, W. Bello, op. cit., 1994 and Structural Adjustment Programs: Success for Whom?, in J.
Mander and E. Goldsmith eds., op. cit., 1996: 285. It is true, of course, that elites in the South were
often supportive of SAP reforms because they saw the advantages, to them, of such reforms.
57
See, W. Bello and S. Cunningham, The World Bank and the IMF in
http://www.zmag.org/Zmag/articles/july94bello.htm) 31.10. 2001
59 In terms of the rate of capital accumulation, the share of manufacturing in GDP, and the growth of
exports all of which showed negative results after SAP - and worse results than before SAP. See,
Bello, op. cit., 1996: 288. Bello and Cunningham believe it was never meant to work in these terms
its real motive was to destroy the possibilities for state-led recovery in the South which might threaten
the globalisation ambitions of the US and its allies. See, W. Bello and S. Cunningham, The World
Bank and the IMF in http://www.zmag.org/Zmag/articles/july94bello.htm) 31.10. 2001
59
See, Bello, 1996 op.cit.: 288 An Oxfam International report has recently proposed that in the
Philippines as a direct cause of SAP induced cuts to preventative health care 29, 000 people will die
from Malaria and 90, 000 from TB. This kind of result has seen even Milton Friedman come out
against the IMF and its SAP programmes! See, R. Hahnel, Panic Rules (Cambridge, MA: South End
Press, 1999:30and 59)
For now, however, another irony is more immediately germane. The fact that, by the 1980s,
US workers and citizens were now also experiencing SAP type strategies and the kinds of
social and economic crises that others around the world had experienced for much longer
under US and MNC sponsored programmes. This at a moment, lest it be forgotten, of soaring
corporate profit and the speculative golden age of casino capitalism among the high rollers
of a booming global economy. A moment which saw a dramatic increase in the growth of
global financial capital sloshing around the burgeoning currency markets, even if only a small
percentage of this finance was being used for traditional purposes e.g. investment in the
production of goods and services.60

The result, in the US in the 1980s, was that millions of US farmers and factory workers and
bank employees and secretaries and retailers came face-to-face with the implications of long-
term structural unemployment and the kind of anxious, uncertain future that had been the
fate of others for so long. William Greider summarises the moment well in recording the
changing face of American society in the 1980s as one in which:
corrosive self-doubt slowly began creeping into social consciousness, as larger and larger
groups of citizens experienced loss or disappointed expectations for themselves or their
children. The poor, as always, suffered most from the deteriorating prosperity, but their
struggles were not the [main] source of alarm. The broad middle class was shrinking or else
breaking in twoand the psychology of being American was darkening. 61

In the age of casino capitalism, therefore, US workers and citizens, infused with the same
sense of personal and national destiny that had launched the American Century only three
decades earlier, were faced with another reality altogether a neo-liberal globalist reality in
which they were surplus to requirements much like the other 800 million unemployed or
underemployed people around the world since the 1980s, the largest levels since the great
depression of the 1930s. 62

Accordingly, the US political elite was faced explicitly with a dilemma that had been a part of
a largely unspoken agenda since the decision was taken to bind US foreign policy to the
economic fate of the MNCs in the 1960s. The dilemma of having to support globalisation

60
By 1998 $US 1.5 Trillion was being traded daily. Crucially, only about 2% of this $1.5 Trillion was
being used for traditional purposes e.g. investment in the production of goods and services. Instead,
98% of the deregulated capital was for speculative activities. Trading in derivatives, perhaps the
riskiest of all speculative enterprises increased 215% between 1987-1997. It was largely this paper
economy that collapsed in 1997. The legacy of this free market frenzy was to become evident also in
the late 1990s, in Asia, when speculative capital flowed out of struggling economies faster than it
flowed in, and when the downside of their relationships with the IMF were starkly illustrated in the
social anger and dissent aimed at governments following structural adjustment policies. See R. Hahnel,
op cit., 1999:viii
61
See, W. Greider, op. cit., 1997: 381
62
See, J. Rifkin, New Technology and the End of Jobs in J. Mander and E. Goldsmith eds., op. cit.,
strategies (e.g. SAPs) that were now seen by many to be working against large sectors of its
people.

The Reagan Years: Re-Kindling the American (Preponderance) Dream in the Era of
Neo-Liberalism

This was a dilemma that Ronald Reagan took in his stride in the 1980s, in seeking to rekindle
the American dream and the American national spirit at a moment of rising social concern. A
concern Reagan confronted by calling for a renewed commitment to the American way in
global affairs, and to the neo-liberal judgement of its Government and business elites in the
domestic context. Thus, during the 1980s and into the 1990s, in the face of the stagnation in
US incomes, the loss of high-wage jobs, the widening extremes of wealth and poverty and the
nations increasing foreign indebtedness, one saw the explicit rekindling of the preponderance
theme in US foreign policy, and an explicit articulation of anti-Keynseian neo-liberal
domestic policy for concerned US citizens.

In its own terms, at least, the new preponderance strategy of the Reagan years was eminently
successful. Some old foreign policy scores were settled, some desperadoes captured and the
Cold War ended with Soviet capitulation. Moreover, as the most powerful voice at the apex of
deregulated global governance (e.g. within the World Bank, IMF, GATT, G7) the US could,
and did, re-assert its destiny as bound to lead. And until the early 1980s, at least, the special
relationship with the MNCs was still paying off, with inflow of monies repatriated from
abroad (approximately US$ 35 Billion per year) still looked upon as like an annual bonus to
the national economy, the returns from decades of previous investments around the world.63

At the domestic level too the Reagan era saw the US economy and its social expectations
brought firmly in line with the neo-liberal global agenda. Thus, encouraged by its corporate
globalist supporters, the Reagan administration invoked a renewal of the post-WW2
American Dream this time more explicitly based upon the emancipatory power of the
individual in a society liberated by free-market principles. Market reformers were
encouraged to transform the public sector and its (already limited) social welfare programmes
into competitive private sector agencies of self-help; tax levels were significantly reduced,
particularly for upper-income groups and wealth holders; and extraordinary support was
afforded to big business and to MNCs operating in the US, as an incentive to private-sector

1996:108; see also Scholte, op. cit., 2000: 234

63
Ibid: 202
job creation.64 During this period, moreover, the ownership of financial wealth, like incomes,
was further shifted towards an even smaller minority of the US population. A New York
Times report in 1995 proposing that in this period of unparalleled neo-liberalism the top 1%
of Americans ended up owning 40% of the nations wealth, with the top 20% claiming 80% of
all wealth.65

At the same time, just to illustrate that the 1980s phase of US commitment to global free-trade
was, as always, underpinned by national interests, one saw the global south being harried into
the adoption of free-trade agendas as the Reagan government was raising protection barriers
more rapidly than any other post-war American administration. In this way the US sought to
retain its (national) status and power within a globalising marketplace which it could no
longer control in the preferred and traditional manner.66

For all its efforts, however, the post-WW2 symbiosis had changed considerably since its
formal inception at Bretton Woods. US MNCs, in particular, were now finding more
profitable conditions elsewhere, to the extent that following the Reagan and Bush years the
trade deficit had blown out to some $180 billion by the early 1990s. And, by now, the US
was importing $US 1.5 trillion more than it was exporting to the rest of the world, as the
changing nature of asset ownership in the US saw the most powerful economic predator of the
post-WW2 age become itself the target of massive global investment and overseas
speculation.

The catalyst for this major shift in foreign direct investment (FDI) policy by the major actors
in the global financial sector, was the emerging debt crisis in the global South and the search
elsewhere for more secure profit. It resulted in a range of wealthy states and foreign MNC
investors buying up income-producing assets in the US, in what has been described as an
epochal shift of wealth, probably unmatched in human history. 67
Consequently, since the
early 1970s, the US has gone from a structural position in which it held a surplus of foreign
assets equal to 30% of GDP to one, in the mid-1990s in which foreign interests owned a

64
General Electric, for example, had corporate profits of $6.5 billion between 1981-1983, yet received a
tax rebate of $283 million from the US government. Due to the Reagan tax incentives, the GE tax bill
went from $330 million per year to minus $90 million per year through the 1980s - as an incentive for
it to employ more US workers. It didnt, and in fact shed nearly 50,000 jobs during this period. A
period in which it used its tax windfall to engage in major corporate acquisitions. This was a pattern
pervasive throughout the big business sector in the 1980s. See, W. Greider, Citizen GE, in J. Mander
and E. Goldsmith eds., op. cit., 1996: 328.
65
Cited in J. Mander, Facing the Rising Tide, in J. Mander and E. Goldsmith, eds., op. cit., 1996:11
66
See Gilpin The Political Economy of International Relations (Princeton, New Jersey, Princeton
University Press, 1987:407)
67
Ibid: 204.
surplus share of assets, equal to 8.5% of US GDP.68 In the year 2000, 42% of the US National
Debt was still owed to foreign interests.69

This shift in FDI policy in the 1980s has given rise to the Triadist phenomenon that I touched
on earlier and I will return to this dimension of contemporary globalisation shortly
concerning its implications for the 21st century wretched of the earth. For the moment I want
to say something more, albeit briefly, about the winners at the apex of the neo-liberal global
system particularly the US, still seeking to retain politico-economic preponderance even after
its Cold War foe has been vanquished. This it has done, in strategic terms, via the Gulf War
of 1990/1991 when a new threat was perceived and crushed in classical demonstration effect
fashion. And amid fears of an Islamic threat to US and systemic safety and stability, the
Clinton and G.W. Bush administrations have followed exemplary neo-liberal principles into
the 21st century.

The Clinton Years, the WTO, and Winning the Globalisation Game

So successful was Bill Clinton in this regard that during his Presidency the US significantly
reduced its levels of unemployment and inflation and managed (at least officially) to balance
the primary budget - primarily via major spending cuts on government social welfare
programmes. 70Despite this, in 1996, as Clinton announced the upswing in the US economy
which was to get him re-elected, the national debt figure was equivalent to 70% of GDP. In
1986 it had stood at 35% of GDP.71

Moreover, the social and political implications of the neo-liberal revolution continued to
auger badly for great numbers of US citizens, even during the boom economies of the
Clinton era. SAP type programmes rewarding those already imbued with the wealth,
education and flexibility of mind required by the new dot.com culture but rendering insecure,
at best, those without such attributes. Those US workers, for example, who having lost their
jobs in the early 1990s were forced to accept a 23% drop in wages when employed again in

68
Ibid
69
See, Grandfather Federal Government Debt Report at http://home.att.net/-mwhodges/debt.htm
October, 2000
70
The primary budget relates to spending on actual government programmes balancing the books in
this regard means balancing these spending outlays against tax and other revenues, a surplus, in this
sense, means spending on government programmes was less than the figure received from tax revenue.
There is a major dispute about the nature and actuality of this surplus see, for example, Grandfather
Federal Government Debt Report at http://home.att.net/-mwhodges/debt.htm However, it is the
various social costs of the cuts to government spending that has alarmed non-orthodox economists and
others in the US since the 1980s. See, James K. Galbraith, op. cit., 1997
71
See Greider, op.cit.1997: 203
the new streamlined economy. Or that 80% of the US workforce who have seen their wages
stagnate or decline in the restructured economy at time when corporate profits have been
higher than for a quarter of a century and the stock market has regularly reached new price
peaks.72

From this perspective the strong performance in the stock market during the 1990s, is perhaps
not the primary issue in gauging the success or failure of Clintons neo-liberalism.73 More
important, I suggest, are the widening gaps in inequality between the haves and have-nots in
the US which, in the late 1990s, were wider than in any other time since World War 1.74 A
social reality, as one commentator has put it, of an America increasingly splitting apartinto
a rich and impoverished nation.75

The fact that there might be something wrong with this strategic equation did not escape the
Democrat Clinton, and a sense of confusion and frustration sometimes accompanied his
enthusiastic invocation of neo-liberal theory and practice. In 1995, for example, he
articulated his frustration in a manner that summaries splendidly the deeply embedded
complexities in the US/globalisation relationship:

I came to this job [the President said] committed to restoring the middle class and I did everything
I knew to do.We increased investment in education, in technology, in research and development.
We expanded trade frontiers. We have seven million more jobs. We have a record number of
millionaires. We have an all time high stock market. We have more new businesses than ever
beforeand most people are still working harder for lower pay than they were making the day I
was sworn in as President.76

In many ways the most important theme in this candid expression of a Presidents frustration
with the new global era is not the admission that, despite his best efforts, most people were
worse off than they had been a few years earlier. It was the admission that he had done
everything he knew to do on their behalf. Because, as this paper has emphasised, this
knowledge- whether articulated by Conservative or Republican, Trilateralist or Business

72
Ibid: 197
73
The Dow has risen some 10% in value during the Clinton years, increasing the wealth of investors by
unprecedented amounts. See, Clintons Last Chance to Laugh in the Face of Fate, in The Canberra
Times Jan, 20, 1999:9 But around 1997 the US corporate sector begin to see a dramatic drop in profits
as the largely speculative capital boom came to an end. This saw $US 4.6 US Trillion in investor
wealth wiped off in Wall Street a sum that is about 50% of the US GDP and 4 times the amount wiped
out in the 1987 crash. Another implication of this was that instead of competing with each other the
major corporate firms started buying each other in giant mergers, e.g. Daimler/Benz-
Chrysler/Mitsubishi, Renault take over of Nissan, Mobil-Exxon merger, the BP-Amoco-Arco merger
and the creation of the Star Alliance between many of the worlds airlines. See W. Bello, Creative
Destruction: Next Phase of the Global Economy at
http://www.focusweb.org/publications/2001/creative-destructive.html 13/9/2001:1
74
See, J.K. Galbraith, op. cit., 1997:147
75
Ibid, 1997: 267
76
Cited in Ibid: Galbraith 1997:197
CEO or neo-liberal economist over the past half-century - is as much the source of the
problems faced by the US, as the catalyst for any solution to them.

It is a knowledge (of humankind, of markets, of politics, of the modern good society) which
the Clinton Administration and its corporate allies nevertheless continue to espouse into the
21st century, both within the US and in the forums of global governance where the earlier
liberalisation initiatives of the Reagan and Bush years have been vigorously supported.
This was most powerfully evident in the new phase of US strategic trade policy undertaken by
the Clinton Administration, particularly during the Uruguay round of GATT negotiations
(1986-1993) which saw the emergence of the World Trade Organisation (WTO) in 1994.77

The birth of the WTO was represented as a triumph for the US and for neo-liberal
globalisation. In many respects it was. Above all the US got what it wanted with the creation
of a fully-fledged global institution designed to more effectively carry out the neo-liberal
agenda. In particular, with the WTO, US global trade policy was provided with a systemic
ordering mechanism (via WTO institutional and legal sanctions) which its national/global
interests require. Its direct neo-liberal interests were also provided for, as a Wall Street
Journal editorial explained in 1994, proclaiming the main purpose of the WTO as getting
governments out of the way so that companies can cross jurisdictions (i.e. national
boundaries) with relative ease. 78

The attractiveness of this process to the US is perhaps understandable when one ponders the
power invested in the WTO to make and enforce the rules by which global trade must take
place, particularly in confrontations with the weak states of the global south. WTO rules,
moreover, are privileged over national, state and local laws and, unlike the GATT, the WTO
has the legislative capacity to impose sanctions on those it judges to be in breach of its rules.
An expanded ambit of rules which now include a non-tariff barrier category, aimed at
measures that are not tariffs in the formal sense, but which act to inhibit free-trade. 79

77
For an overview of this process see P. Nicolaides, The Changing GATT System and the Uruguay
Round Negotiations, in R. Stubbs and G. Underhill, eds., Political Economy and the Changing Global
Order (London: Macmillan, 1994)
78
Cited in R. Nader and L. Wallach GATT, NAFTA and the Subversion of the Democratic Process, in
J. Mander and E. Goldsmith eds., op. cit., 1996:95
79
Ibid: 98 A primary target here are those national and local protections associated with health, safety
and environmental issues, which now can be challenged by MNCs - as a breach of WTO rules.
Challenges in 1995, for example, included those against the Thai governments attempts to limit
cigarette sales, Canadian re-forestation legislation, Danish bottle recycling laws, and Malaysian and
Filipino bans on raw log exports.
More generally, if unsurprisingly, given that it emerged from the protracted negotiations
between the EC and the US, the rules and general concerns of the WTO prioritise the
developing commercial interests of those most able to take advantage of changing global
work practices and new global technologies. Consequently, the WTO agenda is increasingly
oriented towards free-trade access in the new service sectors, e.g. in banking, insurance, IT,
the media, tourism and advertising, areas of special comparative advantage for Northern
MNCs and the focus of their new investment strategies in the 21st century. 80

This is not to suggest per se that the WTO has been set up to further exploit those most
vulnerable in the global marketplace. Throughout the WTO resolutions also there are
intimations about serious intent on the part of the major actors concerning better and fairer
access to Northern markets. 81
Yet, in February 2000, six years after the WTO rules on trade
access were pronounced and sanctions upon protectionism invoked, the governments of the
three major trading economies - the US, Japan and the EU (the Triad) acted together to scuttle
an UNCTAD plan aimed a giving forty-eight of the poorest exporters of agricultural products
access to their markets. At the forefront of the protectionist barrier was the US, which acted
to cripple the UNCTAD proposal before it was put forward by developing countries at the
WTO (in Seattle) where it might have become a binding agreement on members. 82

And the winners of the globalisation game have illustrated that, for all their shared interests,
they will use the WTO rules on free trade to compete with each other in ways which make
explicit the priorities of the neo-liberal world view in the contemporary era. Consequently, in
recent years, the EC, Japan and Canada among others, have challenging a range of US laws -
including those which seek to ban asbestos in public buildings, which restrict driftnet fishing
and whaling and which limit the lead content in consumer products. The US government and
its corporations have, of course, retaliated - by targeting European and Japanese laws - as in
the recent US challenge to European bans on growth hormone in beef. 83
Little wonder then
that various citizens groups, even within the ranks of the winner communities, have raised

80
Under WTO rules such investors must now be afforded national treatment in those areas they target
for investment which means that they must receive the same trading terms as national and local
companies when competing with them. The advantages to the huge banking concerns, IT companies,
media conglomerates and insurance and commercial health sector MNCs are obvious enough here,
particularly in the developing world. Even more so when one takes into account that the WTO
provisions exclude environmental, health, labor or human rights considerations, and that its dispute
resolution system is centred on a dispute tribunal of foreign trade bureaucrats which excludes non-
governmental organisations, local officials and legal representatives, citizens groups and the media
Ibid: 102
81
See, P. Nicolaides op. cit., 1994:241
82
See, P.Alford, Big Three Economies Act to Squeeze Out the Poor, in Weekend Australian,
19.2.2000
83
See, Nader and Wallach, op. cit., 1996
their concerns about a tit-for-tat process that, it is feared, will continue until all laws
protecting people and their environment have either been reversed or replaced by weaker laws
that do not interfere with the immediate interests of the corporations.84

Such fears are most starkly realised at the interface between the rich North and poor South. At
the WTO meeting in Doha, Qatar in November 2001, for example, the nature and intent of the
neo-liberal agenda was at its starkest on the issue of intellectual property rights, and the
question of pharmaceutical patents dealing with AIDS drugs. Here, one saw the US again
challenging the right of Brazil to produce and import generic anti-AIDS drugs rather than buy
the US product. The drugs from the US costing $US 10,000 per year the generic Brazilian
alternative less that $US 350 per year. And while it seems there has been some softening of
the initial stance on this issue, for concerned WTO analysts it represents another indication
that the attitude of the US, and the rich world, has changed little when status and profit is
measured against the interests of the global community in general. 85

Anyone doubting this interpretation might ponder the attitude of the G.W. Bush
administration in January 2002, in opposing even the belated attempt by UN members to
increase aid to the most impoverished people on earth - the 2.8Billion people who survive on
less that US$ 2.00 per day. The US insisting that there will be no increase to its 0.1%
contribution, but that poor countries must improve their own economic performance by
opening their economies and societies even further to the US model of neo-liberal
globalisation. 86

This kind of hard-line stance has seen a range of commentators warning of its implications for
the US, in the future. Some have emphasised the desperate plight of an increasingly
impoverished global underclass, others the likelihood of this desperation becoming the basis
for a long-term strategy of violence aimed at the US, in particular, from generations of global
losers in the globalisation game.

It is to the issue of the global losers that I now want to turn, in the final section of the paper
which explores in slightly different form a central tenet of neo-liberal globalisation in the 21st
century - the view that the liberalisation of global markets and the deregulation of political
systems is, in fact, leading to an expanded global free-trade regimen and, therefore, more

84
Ibid: 98
85
See M. Weisbrot Rich Country Protectionism Puts WTO on Slow Track at
http://www.zmag.org/weisbrotrich.htm 23/11/2001
86
See C. Denny, US Blocks Push to Lift Aid to Poor Countries in The Sydney Morning Herald,
Thursday, 24/1/2002:12
opportunity for market participation and global prosperity for all the key to a peaceful and
ordered future.

In this regard I want to explore, in particular, two precise claims derived from this neo-liberal
tenet (i)that poverty is being alleviated in the neo-liberal world order, and (ii) that isolation
and economic and technological backwardness is also being allieviated, as the world becomes
a global village in the age of the dot.com culture and the communications revolution.

Losing The Globalisation Game: Poverty, Isolation and Alienation

I have expressed scepticism about these kinds of claims throughout this paper, suggesting that
if one looks closely at the nature and strategic direction of the neo-liberal global order one
finds it to be very reminiscent of that which preceded it, primarily because global trade (and
the profit from that trade) is actually flowing in much the same direction (from the poor world
to the rich major states) as it has for centuries under the traditional state system.

Three indicators of this trend are worth pondering here. The first, records that between 1980
and 1990 there was a net transfer of capital from the Third World/South to the major
industrialised states of some US$418 Billion. The second, from a joint World Bank/OECD
study, concludes that of the additional profit which will flow from the increased free trade
regimen under the WTO, 70% will go the major political and economic actors of the rich
North.87 This judgement is further supported by an UNCTAD conclusion, that the poorest 48
countries in the world stand to lose $US300 - $US600 million per year as a direct result of
WTO strategies regarding (reduced) export access and (increased) food imports. 88

This still begs the question of whether, in relative terms, the recipients of these macro trends
are becoming more impoverished because of them. Like many issues on the globalisation
agenda this is a question of great complexity accompanied by data open to wide
interpretation. Suffice to say that, in some regards, global poverty can be said to have
declined during the current globalisation era. A UNDP Human Development Index in 1994
reported that there had been a 50% decline in the numbers of people living in absolute
poverty between 1960-1992. It suggested that, since 1950, more people had escaped poverty
than in the past 500 years. Other sources propose that average per capita income has more
than doubled between 1950-1980, while average life expectancy has increased by 17 years in
roughly the same period. This, plus evidence of decreasing child mortality rates and

87
These figures are to be found in J. Brecher et al eds., op. cit., 1993:60
increasing literacy rates make heartening reading for those still concerned in the new
Millennium about the wretched of the earth. 89

But at least two caveats are necessary in regard to these figures and the trends they appear to
illustrate. The first is that they refer disproportionately to the NICs of East and SEAsia and
parts of Latin America (i.e. Chile) which, for a variety of reasons, to do with the US
preponderance logic (see above) received special investment status in the early phase of the
MNC led global trade strategies of the late 1960s and 1970s. At the beginning of the 21st
century, however, things have changed dramatically in these regions, particularly in the
(previously) boom ing economies of SEAsia where, following the market crashes of the late
1990s, has come social devastation and spiralling levels of poverty.90

The second and more important caveat is that in absolute numbers the numbers of people
living in poverty has actually increased during the current era of globalisation. Indeed, a
UNDP report in the mid-1990s, proposed that 70 countries in the poor South have
experienced no rise in per capita income, since the 1970s, while 43 countries have actually
experienced a decrease in per capita income back to the levels of 1970. The result is that 1.5
billion people are now surviving on the equivalent of $US1 per day, while 2.8 Billion people
almost half of the worlds population - are seeking to survive on less than $US2 per day.91

Some of the worst poverty figures have actually come from parts of the old Soviet Empire,
with life expectancy in these areas declining after the fall of the USSR.92 This is not so
surprising, perhaps, when one ponders that since the neo-liberal takeover in Russia it has
undergone a social and economic catastrophe worse that our own Great Depression with
millions out of work, or nor being paid, and the end of the Soviet welfare system. Male life
expectancy in Russia was 57 years in 2001, in the same year that Russia was forced to default
on $US200 Billion worth of debt repayments to the global financial sectors. 93

But it is the plight of people in Sub-Saharan Africa which is most alarming, where the scale
of poverty is as great now as it was in the mid-1960s. More specific data shows that in the

88
See, J.A. Scholte, op. cit., 2000: 215
89
Ibid: 212-213
90
See, R. Hahnel, Capitalist Globalism in Crisis at
http://www.lol.shareworld.com/zmag/articles/dec98hahnel.htm
91
Poverty figures from World Bank Report (1996) cited in Scholte, op. cit., 2000: 234; and C. Denny,
US Blocks Push to Lift Aid to Poor Countries in The Sydney Morning Herald, Thursday,
24/1/2002:12
92
See, Scholte, op. cit., 2000:234
93
See M. Weisbrot, Neoliberalism Comes Unglued at
http://www.zmag.org/Zmag/articles/weisbrotoct98.htm, 31/10/200:3-5
year 2000, 33% of children under 5 years of age are malnourished in this region.94 Indeed, as a
Human Development Report (1994) confirmed after its investigations into the economic
conditions of 173 counties worldwide - 22 of the bottom 24 were in sub-Saharan Africa.
Little wonder, as Robert Kaplan suggests, Africa appears to be falling off the world
economic map. Nor, perhaps, is it so surprising that in the most desperate of these countries
militant forms of Islam have taken hold.95

A Human Development Report verified these general trends in the mid-1990s, concluding
that the richest 20% of the worlds peoples, living in the richest states, received 82.7% of the
worlds income while the poorest 20% receive just 1.7%. In the past half-century, moreover,
the richest 20% of the worlds population have gone from being thirty times better off than
their counterparts in the South, to being sixty times richer in 1990. 96
By the year 2000 the
richest 20% were 74% richer.97 And the gap continues to widen.

Put another way, and allowing for droughts and war, approximately 20,000,000 people per
year are dying of entirely preventable diseases due to poverty. That is 40, 000 people per
day, dying directly because of the poverty they experience on a daily basis in a world of
unparalleled privilege and extraordinary opportunity. And of those who survive
approximately 100,000,000 children are denied any education whatsoever, and hundreds of
millions more are denied adequate school and teaching facilities. In itself this must lead to
despondency among so many - and great anger among others. 98

The question of whether the neo-liberal globalisation project discussed in this paper is directly
responsible for this situation is again a highly complex and contentious one, and in many of
the contexts just mentioned internal factors (e.g. corruption, endemic warfare) are of
undoubted significance. But, even from within the global hierarchy, there is now
acknowledgement of a direct connection between the imposition of neo-liberal policy
frameworks and worsening economic and social conditions. Accordingly, even the IMF and
the World Bank began (in the mid-1990s) to review their approaches to SAPs, in the wake of
evidence that during the boom economy of the 1980s, many of the worlds poorest countries

94
See, C. Hines, East, West, Home is Best, The Guardian, 6.10. 2000: 21
95
The Report is cited in, and the quote comes from, R. Kaplan, The Ends of the Earth: A Journey at the
Dawn of the 21st Century (New York: Random House, 1996:12) It is to Kaplans credit that he
acknowledges that for the most impoverished this can have some positive implications.
96
See, D. Korten, The Failures of Bretton Woods in J. Mender and E. Goldsmith eds., op. cit., 1996:
24. For more on these figures see M. Miller, Where is Globalization Taking Us? at
http://www.ncrb.unac.org/unreform/archive/globalization.html 12/01/2002
97
See, R. Buckley, CHOGM an Outlet for Anger in The Canberra Times, September, 3, 2000:9
were encouraged to cut their health and welfare budgets - even as (non-emergency)
malnourishment ravaged large sections of their populations. 99

It is too early to make judgements about the affectivity of these IMF/World Bank initiatives,
but as the global flows evidence of investment and profit (above) indicate, the prospects for
the global poor look grim indeed. This is particularly so when one ponders again a debt factor
in North/South relations which illustrates that the total debt owed by the poor South has more
than doubled since the 1980s, to both official and private banking creditors. In the mid-1990s
the figure stood at about US$ 2,000 Billion. These arrears create real desperation for already
struggling societies faced with falling incomes and increasing poverty particularly if, as in
some African contexts, states are devoting 25-30% of their foreign exchange earnings to
servicing their foreign debt. 100

What then of the neo-liberal argument that this situation will get better as the world becomes
increasingly a global village, when rich and poor are connected to each other by the
extraordinary power of global communications, and by the redemptive capacity of capitalist
investment?. 101

Some figures might again indicate why, on the communication theme, a recent report has
spoken less of a global village and more of adigital abyss concerning the neo-liberal
technological revolution. 102
Figures which indicate that in the year 2000, only 3% of the
worlds people actually have access to the internet; that only 18% of the worlds population
have ever made a phone call, that there are more telephones in Tokyo than on the whole
continent of Africa; and that 94% of the market in computer software takes place in the
countries of the OECD.103

98
See M. Miller, Where is Globalization Taking Us? at
http://www.ncrb.unac.org/unreform/archive/globalization.html 12/01/2002
99
See, J.A. Scholte, op. cit., 2000: 234-5
100
M. Miller, op.cit., 2000:5
101
According to ex-Citicorp Chairman Walter Writson the global village of 2001 is tied together in a
single electronic market moving at the speed of light, cited A. Kearney Measuring Globalizationat
http://www.foreignpolicy.com/issue_janfeb_2001/atkearney.html9/11/2001. On electric money this
is perhaps true, with $US 1.5 trillion moving around the world daily. Likewise, the flow of bonds and
equities is 54 times higher now from and through the US, and has multiplied 55 times for Japan and 60
times for Germany. But for anyone seeking to analyse what this means for global life in 2002 the
question remains one of direction rather than quantity a question of where and to whom the money
going.
102
The term is used in A.T. Kearney, Measuring Globalization at http://www.foreign
policy.com/issue-janfeb-2001/atkearney.html 9/11/2001
103
The Internet figure is in J.A. Scholte op. cit., 2000:87. The others in Scholte, Ibid: 243-244 When one
looks at the spread of this technology the great bifurcations of globalisation are readily apparent. About
40% of citizens in US had on-line access in 2000. Similar percentages for Canada, Sweden, Finland
A major reason for this less-than-global scenario regarding the connectedness of the global
village is the less-than-global attitude taken toward foreign investment on the part of the
leading economic actors in the ostensibly global marketplace. This is where the issue of
Triadism becomes important, and I want to turn to this issue now as a final line of inquiry into
the question of what globalisation actually means in 2002 and how it came to be what it is.

But is it Globalisation After All?: The Triad Issue and the Question of de-Linking

The Triad theme centres on the proposal that, neo-liberal rhetoric aside, the globalisation of
the current era is not that global at all - nor is it likely to be in any foreseeable future.
Ricardo Petrellas study of global capital flows and patterns of FDI, over the past two decades
or so offers a precise explanation of how and why this is so.104 Above all, Petrellas findings
make clear that it is the ownership of capital that still remains the dominant factor of
economic and socio-political power in the world. What becomes clear also is that capital is
still very much in the hands of a few major powers, (e.g. the traditional state elite, their
Trilateralist allies and a relatively few corporations in these states) who, above all, appear
intent on organising the global era of free trade in a traditional (status quo) manner. 105

A general example of the strategy, and of the attitude of the neo-liberal systemic hierarchy is
apparent in the pattern of global investment between the 1970s and 1990s. A period which
began with Northern banks transferring huge amounts of surplus (petro-dollar) capital to
finance development schemes in the poor countries of the South, further trapping the
developing world in a vicious circle of debt and dependency, at little cost or risk to the profit-
takers in the affluent North. The implication of this for the loan recipients has been
devastating, and one of the main reasons why poverty alleviation strategies have been
unsuccessful. Between 1970 and 1997 the debt figure rose to $US2.2 trillion. Between 1980

and Norway. On the other hand most countries in Africa have only a few hundred subscribers in the
capital cities. Most of the continent has unreliable communications networks and the DR Congo, for
example, has no direct internet link. Chile, a neo-liberal exemplar for Latin America, provides another
sort of example, which sees 58% of mobile-phone subscribers and 57% of telephone lines located in
just one city Santiago with most of the country having no modern communication system.
Malaysia, likewise, has invested $US 3.6 Billion in advanced IT systems but 70% of its primary
schools lack computer facilities. See, A.T. Kearney, Measuring Globalization at http://www.foreign
policy.com/issue-janfeb-2001/atkearney.html 9/11/2001
104
See, R. Petrella, Globalization and Internationalisation in R. Boyer and D.Drache, eds., States
Against Markets (London, Routledge, 1996:68)
105
Its worth noting here that the largest 100 companies from about 40, 000 major MNCs, control up to
50% of global FDI. See, J.A. Scholte, op. cit., 2000: 130; see also Susan George comments on this in
A Short History of Neo-Liberalism Conference on Economic Sovereignty, Bangkok, 24-26 March,
1999 http://www.millennium-round.org/
and 1994 alone there was an increase of $US 1.3 Trillion, mainly in accumulated unpaid
interest.106

This massive accumulation of debt, initially encouraged by the major corporate investors,
now became the catalyst for the abandonment of the debtors in the early 1980s, as the richest
states and companies systematically turned inwards to a Triad strategy. Between the early
1980s and 1989, therefore, the share of the worlds capital stock heading to the poor South
was slashed from about 14% to 2%.107 Since this time capital flows have become increasingly
concentrated within the three richest regions of the world - the US, the EU and Japan. In the
1990s there was some selective re-investment outside of the Triad (primarily to China) but the
inward pattern of investment has continued, and via giant company mergers, been enhanced
in recent years. 108

Japanese policy since the 1980s provides a particularly instructive example of this not-so-
global strategy. As the single largest foreign investor in the global economy (26.93% of total
FI compared to the US 16.4%) the Japanese have been exemplary in maintaining economic
power in the hands of the wealthy Triad nations. Thus, since the 1980s, approximately 64%
of Japanese trade loans, 70% of its direct offshore investments and 95.5% of its portfolio
investments have gone to the other two regions of the rich-world Triad. Overall, this kind of
behaviour has seen the less developed countries of the world abandoned as sites for
investment.109 A situation, for Petrella, which leads to the view that if globalisation means
anything in relation to its global flows intent, it stands for a triadization strategy, involving
narrowed processes of technological, economic and socio-cultural integration between the
richest and most powerful regions of the world and the richest and most powerful states in the
world.

But this is not just a pattern intrinsic to the behaviour of the major states. It is repeated in
terms of the narrowing investment strategies of MNCs. In regard to the business activities of
multinational firms between 1980 and 1990, for example, of some 4,200 cooperative
agreements concerning the global trade of goods and services - 92.% were between firms in
Japan, Western Europe and the US. The more specific statistics concerning FDI patterns only
confirms this pattern, and indeed illustrates that the past few years has seen an increasing

106
See, J.A.Scholte, 2000 op. cit., 215-216
107
See, Petrella, op. cit., 1996: 70
108
There is still some investment outside of the Triad to China, to Eastern Europe, and to India,
Brazil, Mexico and Chile. Even when this is taken into account around 75-80% of FDI still takes place
within the Triad. See, D. Goldblatt, et al., op. cit., 1997: 278-279:117
109
See, Petrella, op.cit., 1996: 70
truncation of market activity among corporate companies, rather than any global extension of
it. 110

Consequently, while MNCs in the rich Triad have increasingly invested among
themselves in the period since the mid-1980s, the global capital flow has all but dried
up when it comes to the countries of Africa, Latin America, the former Soviet Union,
most of Eastern Europe and most of Asia countries which encompass the great
majority of people on earth. Indeed, in 1999, over 85% of world trade and over 90% of
the production of advanced sector goods and services (e.g. electronics) and almost all
of the headquarters of the top 100 MNCs in the world were concentrated in the Triad
countries. 111

This, for Petrella, adds up not to a world of global free trade, but of a politico-economic
strategy of de-linking - between the worlds rich and poor peoples. A strategy of inclusion
and integration on the one hand and exclusion and abandonment on the other.

The Question of Meaning Revisited: A Context for September 11?

Which brings me back to the question of what globalisation means. Or, more precisely, in the
context of this paper, the question of just what the US and its major state and corporate allies
created in the post-1945 era that, by the 1970s, became neo-liberal globalisation?. My
answer, as indicated earlier, is that in systemic terms what has been created is a reformulated
hierarchy of capitalist states and semi-autonomous economic actors, engaged in an uneasy
symbiotic relationship designed to maintain and enhance their wealth and global influence.

On the question, moreover, of whether territory and hierarchy still matter in the new neo-
liberal order, the answer is a resounding yes, particularly in terms of the de-linking practices
of global capital. A resounding yes is appropriate too concerning the question of whether
borders still matter. Or, more precisely, while it might be the case that global capital is more
indifferent to states and borders than ever before it clearly remains much more respectful
of some than others. And for all its obvious appeal to originality the new globalist era of
states and markets needs to be understood in neo-traditionalist terms, in terms which bind
together old ambitions and strategies with new techniques and vocabularies of systemic
control.

110
On this issue see also D.Drache, Keynes and K Mart, in R. Boyer and D. Drache, eds., op.cit.,
1996:38 which is especially good on inter-company business trends which compliment the broader
trends.
The power of the rich Triad states, for example, is not simply predicated upon the traditional
military and economic factors of the internationalist era, but upon precisely those new
power (or soft power) factors which globalists tend to equate with evidence of fundamental
historical and systemic change. Thus, the power of the Triad states and their corporate allies
at the beginning of the 21st century includes the power to direct and dominate global culture;
to own and control the major scientific advancements intrinsic to the human and ecological
future; to invest in and utilise the latest technology and communications networks; and to
wield overwhelming influence over the politico-economic institutions and organisations
which make the rules and provide the norms for the global governance in the globalisation era
(eg the IMF, World Bank, WTO) The fundamental aim of this new/old project being the
enhancement of the power, prosperity and status of that sector of the global community most
advantaged by (advanced) capitalist relations of production, and the imposition upon a
heterogeneous global community of a Western political and cultural hegemony based upon
an individualist ontology and a naturalised social utilitarianism.

It is in this context that the current globalisation project is still very much part of the historical
and intellectual process by which the modern capitalist state system became the template for
the global good society in the 21st century. A project re-ignited in the contemporary era by
tensions within the preponderance policy of the US following WW2, and accelerated by neo-
liberal theory and the practices of an MNC led capitalist break out in the 1980s. A project
which has worked effectively and efficiently for small minorities around the world (in the
Triad states in particular) but which appears neither capable of, nor interested in, providing
conditions of enhanced security, prosperity or social justice for the great majority of the
worlds people, including many within its Northern heartland.

The result, is that while it might be the case that trillions of dollars are traded daily, at the
speed of light, wealth is not being globalised, but the rich are indeed getting richer as the poor
get poorer; moreover, technology is not being globalised, even while the great advantages of
the contemporary revolution in communications technology are being enjoyed by small
minorities, particularly in the rich world; and labour markets are not being globalised, as the
rich world erects barriers to keep out those who would seek the freedom to move across
borders in search of greater opportunity and prosperity - the freedom enjoyed by capital in a
free-market system.

111
See, M. Mann, Has Globalisation Ended the Rise and Rise of the State in T. Paul and J. Hall, eds.,
International Order and the Future of World Politics (Cambridge: Cambridge University Press, 1999:
245)
This is intrinsically worrying to those who feel that the globalisation of resources,
information and opportunity is a prerequisite for a more just and stable world in the future. It
is more immediately worrying, I suggest, for those pondering the causes of September 11 and
ways of preventing something similar happening again and again in the future. In particular it
ought to be an issue of major concern for those seeking to protect US citizens from further
attacks whilst continuing their hard-line stances on global economic issues.

A fascinating study conducted by the Pew Research Centre and the International Herald
Tribune and headed by Madeleine Albright, illustrates this to be the case. It sought global
responses to September 11 from 275 political, media, cultural, business and government
leaders on five continents, most of whom would be expected to have empathy with the US
and its way of life. It found that 58% of these leaders felt that US policies were to blame for
the attacks, with 70% of them feeling that it was good that the US now felt vulnerable.
Overall, the study found a love-hate relationship with the US but it indicated that even
among educated opinion leaders America is disliked, principally because of perceptions that
US policies have contributed to a growing gap between rich and poor in the world. This
resentment, concluded Madeleine Albright, ought to be a major red flag for the US and its
policymakers as the 21st century unfolds. 112

Some in the US have caught sight of the red flag, it seems, and a recent commentary in The
New York Times offers hope that belligerence and revenge is not all that will follow the
September 11 atrocity. 113 An alternative, it is suggested, lies in the return of US attitudes to a
post-1945 concern to assist devastated societies and economies with growth and development,
as part of a multifaceted programme designed to strengthen US security in an increasingly
dangerous world. It recognises that the US currently ranks dead last among industrialised
countries in its budget allocation to foreign aid, but that the security of the United States now
depends on achieving throughout the Arab and Islamic world what the Marshall Plan
achieved in Europe.

There is more than a little irony in such a solution given the analysis throughout this paper,
which suggests that it was the kind of strategy associated with the Marshall Plan, and the
Bretton Woods restructuring of the world after WW2, that led to the bifurcated globalisation
scenario of the present day. And there is nothing in this particular new Marshall Plan

112
See, W. Neikerk, American Anxiety Gratifies Worlds Thinkers at
http://www.smh.com.au/news/0112/21world/world6html 21/12/200
113
See, R. Sokolsky and J. McMillan, Foreign Aid In Our Own Defence Editorial Op Ed, The New
York Times, 13/02/02
proposal which indicates why or how a global system dominated in the 21st century by
corporate strategic aims and neo-liberal philosophy would act with the kind of Keynseian
insight that such a programme demands. But its a start, if only because it recognises that US
economic and security policy, and its intrinsic connection to globalisation, is an issue
intrinsically connected to September 11.

What is necessary now is the (seemingly) much more difficult recognition that any new
Marshall Plan imitative needs to be invested with a more genuine concern for (cultural,
political, religious) heterogeneity and autonomy than marked the first model, and a more
genuinely critical approach to neo-liberal perspectives on economic and social development.
Above all, perhaps, what is necessary is the acknowledgement on the part of the US that, at a
moment when it stands as unequivocally the most powerful and influential state on earth, its
best interests are served by revoking its preponderance ambitions and rekindling the kind of
genuine internationalism that Keynes and others proposed in 1945. The point, as Joseph Nye
has recently warned, is that the traditional focus on unipolarity, hegemony, sovereignty and
unilateralism will fail to produce the right outcomes for the US, as it confronts a 21st century
in which its power cannot protect it from attack and its attitudes are likely to enhance the
prospects of attack.114

Indeed, a security forum held at Harvard University in February 2002 proposed that by 2010
there are likely to be attacks on the US which could see 100,000 of its citizens killed. In such
a situation, suggests Zbigniew Brzezinsky, the US will need its friends and must not
alienate global support by ignoring those calling on it to broaden its foreign policy
perspectives in order to persuade potential terrorists, and their supporters, that the future has
more to offer them than the misery and humiliation of the present. 115
There are those, on the
other hand, who celebrate the return of Reaganism to US foreign policy and a
confrontational attitude to anyone who would threaten US strategic and economic power in
the world a policy of distinctly American internationalism. 116
The kind of American
internationalism that (implicitly) characterised the Bretton Woods era and (explicitly)
created neo-liberal globalisation.
Meanwhile:
Slow economic growth and vast income disparities breed cohorts of partly educated young
people who grow up in anger and despair. Some try by legal or illegal means to migrate to the

114
This is from J. Nye, The Paradox of American Power: Why the Worlds Superpower Cant go it
Alone (2001) cited in P. Kelly, Strength and Peril in The Weekend Australian, 16-17 February,
2002:23
115
Cited in P. Kelly, (2002) Ibid: 23
116
The view of William Kristol cited in G. Alcorn, Uncle Sam Does Not Need You in the Sydney
Morning Herald, 16-17 February, 2002:30
 west: some join militant ethnic or religious movements directed at each other and their own
rulers. But now the idea has spread among a few vengeful fundamentalists that the US should
be attacked directly.

The US and its allies can stamp out specific groups by force and bribery. But in the longer run
the structural arrangements that replicate a grossly unequal world have to be redesigned so
that markets working within the new framework produce more equitable results. Historians
looking back a century hence will say that the time to have begun was now.117

117
See, R. W. Hunter, The American Empire in The Guardian, 5.2.2002