THE BALKAN WAR AND US GLOBAL POWER

by Giovanni Arrighi

It will take time before anyone will be in a position to draw a
minimally reliable balance sheet of the Balkan War that has just
ended. From the point of view of the humanitarian objectives for
which it was ostensibly fought, all we can do for now is to join Pope
John Paul II in declaring its outcome an unmitigated "defeat of
humanity." Beyond that, any kind of balance sheet requires a
preliminary identification of the real objectives of the war.

Noam Chomsky and many others have already shown much better than I
ever could how suspect were the humanitarian motivations of the war.
On this, I will limit myself to pointing out that throughout the
conflict the humanitarian issue has been bound up in the declarations
of the US and British instigators of the war with what they referred
to as a "credibility" issue. The United States and its NATO allies
had to demonstrate that their threat to use force was credible in the
sense that it would actually be carried out if NATO did not get its
way and, if carried out, it would result in NATO getting its way. If
the war made one thing absolutely clear, it is that this issue of
credibility (which is nothing but a straightforward issue of power)
had absolute precedence over whatever humanitarian objectives, if
any, were actually pursued by NATO. The most striking thing about the
war was indeed the callousness and self-righteous determination with
which the NATO command threatened to continue indefinitely an ever
more destructive air campaign unless Milosevic (or better still
anyone who might have succeeded in ousting him from power) bowed to
NATO power and acceded to its dictates unconditionally.

If additional proof was needed of the absolute priority of US and
NATO credibility over humanitarian objectives, it came with President
Clinton's "victory" speech on June 10. To him, victory meant first
and foremost that Yugoslavia had more or less unconditionally
capitulated to NATO demands. The human sufferings inflicted on the
Yugoslav population, both Serbian and ethnic-Albanian, in the pursuit
of unconditional capitulation were hardly mentioned, except for a new
intimation to the Serbs that they would not get any help in
reconstructing their devastated country unless they got rid of
Milosevic. As it should have been clear from the start, the
demonstration of US and NATO power was the true objective of the war.
Appeals to human sentiments were mere means, camouflaged as ends to
mobilize support at home and abroad for a disproportionate use of
violence in a patent breach of international law.

But why, we may well ask at this point, was it so important for the
United States and NATO to demonstrate their credibility? Was
credibility important in the pursuit of some broader objective? And
if this was the case, how successful has the war been in attaining
that broader objective? In seeking answers to these questions, it is
helpful to see this latest US military exploit, not as an isolated
event, but as a link in a chain of events capable of telling us
something about the trajectory of US global power. Our questions can
then be reformulated as follows: Is the need to demonstrate the
credibility of the US/NATO military apparatus the sign of a long-
term decline in the global power of the United States and the
instrument of a US attempt to slow down that decline? Or is it the
sign and the instrument of a new great leap forward of that global
power? Can the Balkan war be expected to have been successful in
slowing down the decline of US global power, or in propelling it to
new heights, as the case might be?
 

The Trajectory of US Global Power since 1968

Let me begin with a sketch of the most basic facts of US global power
over the past thirty years. Broadly speaking, over this period US
global power seems to have followed a U-shaped trajectory, with each
decade showing a different tendency: a precipitous decline in the
1970's, a bottoming out in the 1980's, a spectacular come-back in the
1990's. Let us briefly look at the forces that shaped this trajectory
in each decade.

The precipitous decline of US global power in the 1970's was
thoroughly shaped by the two key, world-historical events of 1968-73:
the defeat of the United States in Vietnam and the simultaneous
collapse of the Bretton Woods system through which the United States
had governed world monetary relations. Although in these same years
the successful landing of US men on the moon showed that the United
States could easily catch up with and surpass its Soviet rival in the
armament race, the US defeat in Vietnam showed how powerless the
high-tech and highly capital intensive US military apparatus was in
enforcing US commands against the determined resistence of one of the
poorest peoples on earth. Massive US spending at home and abroad had
thus resulted in a major fiscal crisis of the US warfare-welfare
state. Equally devastating was the loss of credibility in the
capacity of the US military apparatus to do anything other than
reproduce at ever more costly and risky levels the balance of terror
with the USSR. US global power fell precipitously, reaching its nadir
at the end of the 1970's with the Iranian Revolution, a new hike in
oil prices, the Soviet invasion of Afghanistan, and a new serious
crisis of confidence in the US dollar.

It was in this context that in the closing year of the Carter
Administration, and then with greater determination under Reagan, a
drastic change of US policies laid the ground for the subsequent
recovery of US global power. Militarily, the US government began
avoiding carefully (as witnessed by the flight from Lebanon) the kind
of confrontation on the ground that had led to defeat in Vietnam, in
favor either of war by proxy (as in Nicaragua and Afghanistan), or of
confrontations of merely symbolic value against insignificant enemies
(as in Grenada and Panama), or of confrontations from the air where
the US high-tech apparatus had an absolute advantage (as with Libya).
At the same time, the US initiated an escalation of the armament race
with the USSR--primarily, though not exclusively, through the
Strategic Defense Initiative-- pushing its costs well beyond what the
USSR could afford economically. The USSR thus found itself caught
into a double confrontation neither of which it could win and would
eventually lose: the one in Afghanistan, where its high-tech military
apparatus found itself in the same difficulties that had led to the
defeat of the United States in Vietnam, and the one in the armament
race, where the United States could mobilize financial resources that
were wholly beyond the Soviet reach.

This change of US military policies eventually resulted in the
collapse of the USSR and the beginning of the great come-back of US
global power of the 1990's. Nevertheless, it cannot be emphasized
strongly enough that the change in US policies that was most decisive
in bringing about the great turnaround in US global power occurred in
the financial rather than in the military sphere. Indeed, without
this other change in US policies, it would have been impossible to
escalate the armament race beyond the financial reach of the USSR.

The policy changes--a drastic contraction in money supply, higher
interest rates, lower taxes for the wealthy, and virtually
unrestricted freedom of action for capitalist enterprise--constituted
the liquidation of the legacy of the New Deal. Through these policies
the United States began to compete aggressively for capital
world-wide provoking a major reversal in the direction of its global
flow. From being the main source of world liquidity and of direct
investment in the 1950's and 1960's, by the 1980's the United States
had become the main debtor nation and a major recipient of direct
investment. The other side of the coin was the debt crisis that
ravaged poor and middle income countries, most of which did not have
a chance of successfully competing with the US giant in world
financial markets. Latin America and, above all, African economies
were devastated. But the crisis made itself felt in Eastern Europe as
well, further reducing the capacity of the USSR to compete in the
armament race with the United States, and contributing decisively to
the tensions that eventually led to the break-up of Yugoslavia and
the escalation of ethnic conflicts. Thus, while the United States
came to enjoy practically unlimited credit in world financial
markets, the Second and Third Worlds were brought to their knees by a
sudden exhaustion of their credit in those same markets. What US
military might could not achieve, US power in world financial markets
did.

There was nonetheless a problem with this victory. Japan and the
overseas Chinese operating out of Taiwan, Hong Kong, Singapore and
the main commercial centers of Southeast Asia, emerged as the world's
leading creditor nations and the organizers and financiers of a
region-wide industrial expansion that for speed and extent had few
parallels in capitalist history. Indeed throughout the 1980's, the
East Asian region seemed to be the main beneficiary of the
intensifying interstate competition for mobile capital and the new
escalation of the Cold War. While world trade and production
stagnated, the economic expansion of the East Asian region gained
momentum, capturing a growing share of world liquidity. Japanese
banks came to dominate international asset rankings and Japanese
institutional investors set the pace in the US treasuries market.
Earlier prognostications of an "emerging Japanese superstate" or of
"Japan as number one" seemed to be right on mark. The United States
might have recovered from the depth of the crisis of the 1970's by
putting its great military rival and the entire Third World on the
defensive. But if money rather than guns had become the primary
source of world power--as the very recovery of US fortunes seemed to
indicate--did not Japanese economic power constitute a new and more
insidious challenge to US global supremacy?

These fears were put to rest at the very beginning of the 1990's by
the collapse of the USSR and the almost simultaneous crash of the
Tokyo stock exchange in 1990-92--two events that sent the trajectory
of US global power soaring. The United States was left as the one and
only military superpower with no prospect in the foreseeable future
of any power to rival it. Moreover, the taming of the USSR cleared
the ground for the US mobilization of the United Nations Security
Council to endorse and legitimate its police actions throughout the
world. Saddam Hussein's invasion of Kuwait immediately created an
ideal opportunity for such a mobilization, which the US promptly
seized, putting up a televised show of its high-tech firepower.
Attempts to carry the experience one step further through the
"humanitarian" mission in Somalia failed, because an ambush led to
one televised snippet of a dead American pulled through the streets
of Mogadishu. This revived the Vietnam syndrome at home and led to
the immediate withdrawal of US troops. But subsequent safer
"humanitarian" missions in Haiti and especially Bosnia were more
successful. By and large, since the collapse of the USSR and the Gulf
War, US military power has continued to remain unchallenged and, on
its own terrain, unchallengeable.

The Gulf War also demonstrated that Japan, for all its financial and
economic power, was wholly incapable of taking an independent stand
in world politics, once again falling in behind the United States.
But even its financial and economic power were questioned, as the
Japanese economy was incapable of recovering fully from the crash of
1990-92--a situation that was made worse by the region-wide financial
crisis of 1997-98, which turned the near-stagnation of the Japanese
economy into contraction. In the meantime capital from all over the
world, and especially East Asia, continued to flow to the United
States, sustaining a long speculative boom on Wall Street and
enabling the US economy to expand considerably faster than in the
preceding twenty years, in spite of a large and growing trade
deficit. As the new millennium approached, not only the US military,
but also the US economy seemed to be unchallenged and unchallengeable.

In the light of this trajectory, it might seem that the most
plausible answer to our questions is that the need to demonstrate the
credibility of the US/NATO military apparatus in the Balkan War is
more likely to be a sign of an ongoing great leap forward of US
global power than of a decline. And since the United States and NATO
have demonstrated in the Balkans that their threats to use force
until they get their way are not empty or ineffectual, the war can be
expected to add new momentum to that great leap forward. It is
possible, even likely, that this is the way in which the US and
British instigators of the war see the situation. But it is just as
possible and likely that the situation is not at all what it appears
from the perspective of the 1990's--that is, from the perspective of
the rising portion of the U-shaped trajectory of US global power
sketched earlier. It is also possible in my view that the
Anglo-American misreading of the situation, far from adding new
momentum to an imaginary great leap forward in US global power, may
precipitate a complete breakdown of what is left of the US world
order.
 

US Global Power in World Historical Perspective

This assessment is based on two studies that have sought clues to an
understanding of present tendencies in earlier periods of capitalist
history that in key respects resemble the present. The first study
(Giovanni Arrighi, Il lungo XX secolo. Denaro, potere e le origini
del nostro tempo, Il Saggiatore, Milano, 1996; edizione EST, 1999)
focuses on the financial expansions that have characterized the
closing phases of each and every stage of development of world
capitalism from early modern times to the present. The second study
(Giovanni Arrighi and Beverly Silver et al, Chaos and Governance in
the Modern World System, University of Minnesota Press, Minneapolis
and London, 1999) focuses instead on the analogies and differences
between the present hegemonic transition (to a yet unknown
destination) with two earlier transitions of world capitalism: from
Dutch to British hegemony in the eighteenth century and from British
to US hegemony in the late-nineteenth and early-twentieth centuries.
Taken jointly, these two studies provide the following insights into
the present dynamic of US global power.

First, to different degrees and in different ways, the U-shaped
trajectory that has characterized US global power over the last
thirty years has been typical also of the power of all previous
leaders of world-scale processes of capital accumulation in the
closing phases of their hegemony. In the past, as in the present, the
recovery of the fortunes of the declining hegemonic state after an
initial crisis was based on a capacity to turn to its own advantage
the intense interstate competition for mobile capital that ensued
from all major expansions of world trade and production. This
capacity was and is based on the fact that the declining hegemonic
state still occupies the center of the world economic system.
Although its capacity to compete in the commodity markets is
declining, its capacity to act as the central clearing house of the
international financial system is greater than that of any other
center, including the centers that are emerging as the most
competitive in the commodity markets.

Second, in past hegemonic transitions, though not yet in the present,
the resurgence of the power of the declining hegemonic state was the
prelude to increasing world disorder and the eventual breakdown of
the old hegemonic order. Three tendencies seem to have been
particularly important in provoking this increasing disorder. One was
the emergence of new military powers that the declining hegemonic
state was incapable of keeping under control. Another was the
emergence of states and social groups who demanded a share of the
system's resources that surpassed what could be accommodated under
the existing hegemonic order. And yet another was the tendency of the
declining hegemonic state to use its residual (and resurgent) power
to transform its hegemony (based on some measure of consent) into an
exploitative domination (based primarily on coercion).

Third, in the present transition, in comparison with previous ones,
there is virtually no sign of any power emerging that can even
remotely challenge militarily the declining hegemonic state. Instead
of observing the emergence of new military challengers, we have
observed the collapse of the only credible challenger--the USSR. But
if there are no signs of the emergence of new powers capable of
challenging the United States militarily, there is plenty of evidence
that the other two tendencies are stronger than they were in past
transitions. Thus, the decline of US global power in the 1970's was
due primarily to US difficulties in accommodating Third World demands
for a greater share of the world's resources. And the subsequent
resurgence of US global power was due primarily to the success of the
Reagan global counterrevolution, not just in containing, but in
rolling back those demands. The essence of this counterrevolution was
precisely the transformation of US hegemony into an increasingly
exploitative domination. US hegemony in the 1950's and 1960's rested
not just on coercion but also on the consent elicited from Third
World countries through the promise of a global New Deal, that is,
wealth for all nations through "development." In the 1980's and
1990's, in contrast, Third and former Second World countries were
asked rather unceremoniously to subordinate "development" to the
imperatives of world financial markets that relentlessly
redistributed wealth to the United States and other wealthy countries.

In spite of its apparent success, this transformation can be expected
to be as unstable as analogous transformations have been in the past.
Two contradictions seem particularly difficult to resolve. One is the
continuing shift of the epicenter of global processes of capital
accumulation to East Asia. Contrary to widespread opinion, the
persistence of the economic crisis in Japan after the crash of
1990-92 and its transformation into a region-wide (East Asian) crisis
in 1997- 98 in themselves do not support the contention that the
shift has been reversed. As my co-authors and I show in Chaos and
Governance in the Modern World System, in past transitions newly
emerging centers of world-scale processes of capital accumulation
became the epicenters of turbulence rather than expansion, before
they acquired the capabilities to lead the world toward a new order.
This was true of London and England in the late eighteenth century
and even more of New York and the United States in the 1930's. To say
that the Japanese and East Asian financial crises of the 1990's
demonstrate that the epicenter of global processes of capital
accumulation has not been shifting from the United States to East
Asia, makes as little sense as saying that the Wall Street crash of
1929-31 and subsequent US economic crisis demonstrated that the
epicenter of global processes of capital accumulation had not been
shifting from the United Kingdom to the United States.

Moreover, the Japanese and East Asian crises have so far been
associated with continuing economic expansion in greater China (that
is, in the People's Republic of China, Hong Kong, Taiwan and
Singapore). Given the demographic size and historical centrality of
China in the region, this continuing expansion is far more
significant for the East Asian economic renaissance than the
slowdowns and contractions experienced elsewhere in the region. To be
sure, in spite of its great advances, China is still a low-income
country. Nor is there any guarantee that China's economic expansion
will not itself be punctuated by crises. Indeed, the chances are that
it will because, as just noted, crises are an integral aspect of
emerging economic centers. Nevertheless, the fact that China with its
huge population has managed to escape the financial strangulation
that brought the Second and Third Worlds to their knees is in itself
an achievement of historic proportions. If the inevitable future
crises will be managed with a minimum of political intelligence,
there is no reason why they cannot be turned into moments of
emancipation from US domination, not just for China, but for East
Asia and the world at large.

But whether they will or not, the continuing shift of the epicenter
of world-scale processes of capital accumulation to East Asia
undermines the capacity of the United States to hold the center of
the global economy. Already in the 1990's, the good performance of
the US economy and the underlying speculative boom on Wall Street
have been thoroughly dependent on East Asian money and cheap
commodities. While the money, in the form of investments and lending,
has enabled the US economy to keep expanding in spite of a large and
growing trade deficit, the cheap commodities have contributed to
keeping inflationary pressures down in spite of economic expansion.
It is not clear for how long a situation like this can be sustained,
or how it can be remedied by the United States without bringing its
own economic expansion to an end. What is clear is that, the longer
it lasts, the more the present economic dependence of East Asia on
the United States will be turned upside down.

The second contradiction of the resurgence of US power in the 1990's
concerns its growing dependence on military means, not just
politically, but economically as well. The US military-industrial
complex has always been a major (if not the major) source of US
leadership and eventual undisputed supremacy in high-technology
production and activities--from small arms production in the
nineteenth century that gave rise to the American system of mass
production, to the space program launched in response to the Soviet
Sputnik that gave rise to today's satellite-linked and computerized
communication systems. This undisputed supremacy is today the one and
only decisive advantage of US industry in global markets. More
important, the interpenetration of US high-technology and US military
production and activities has provided the US government with a
powerful instrument with which to bend the rules of an allegedly
"free" global market in favor of US business. The more competition at
home and abroad has intensified, the more essential this not so
invisible instrument of commercial advantage and self- protection has
become.

But while the importance of the US military-industrial complex as an
instrument of advancement of US economic interests has increased, its
usefulness on strictly military grounds has fallen off dramatically
with the collapse of the USSR and the end of the Cold War. As
previously noted, the main usefulness of the US military-industrial
complex lay in its capacity to reproduce a balance of terror with the
USSR at ever more costly and risky levels. But as the US experience
in Vietnam showed, and that of the USSR in Afghanistan confirmed,
these high-tech military-industrial apparatuses were rather
ineffectual instruments with which to police the world on the ground.
Policing the world on the ground, required risking one's own
citizens' lives in activities that made little sense to the citizens
themselves. As a result, as soon as the escalation of the Cold War in
the 1980's overshot its mark and brought about the collapse of the
USSR, the high-tech, highly capital intensive US military apparatus
lost most of its military value. With the loss of the one and only
credible military rival, the US military-industrial complex lost its
own credibility as a war-making apparatus.

This contradiction between the increasing importance of the US
military-industrial complex as the primary source of US economic
advantage on the one side, and its decreasing value on strictly
military grounds on the other, has never been resolved. The latent,
increasingly important economic function of the US
military-industrial complex cannot be openly admitted without
undermining completely the credibility of its ostensible function.
Worse still, such an open admission would also disclose the fact that
the US military-industrial complex has probably become the most
important instrument for bending and breaking the rules of "free
markets" that the US is so fervently preaching to the world.
Therefore a strictly military function for the US military-industrial
complex has to be found.

This has been the main purpose of the half a dozen hot "wars"--in
fact, more military exercises than wars proper--fought by the United
States since the end of the Cold War. In some instances, especially
in the Gulf War and to a lesser extent in the Balkan War, these
military exercises were also useful as highly publicized shows of US
high-tech merchandise. But the overriding objective has been to find
an alternative to the credible military function that the US
military-industrial complex had lost with the collapse of the USSR.
How successful has this series of wars been in attaining this
objective?

It seems to me that they have not been very successful. What they
have demonstrated above all is what everybody knew from the start:
that the United States has the technological capabilities to bomb out
of existence any country it chooses too. Indeed, if it chooses to, it
has the technological means it needs to blow up the entire world. But
in Somalia, Haiti, Bosnia and Kosovo, they have demonstrated also
that the new ostensible function of US wars--the pursuit of carefully
selected and highly discriminatory humanitarian objectives--is not
worth a single American life. When all is said and done, it would
seem that the Vietnam syndrome is well and alive, leaving the US
military-industrial complex without a credible function.

In conclusion, the foundations of the present resurgence of US global
power are not as solid as they seem. Attempts to use that power to
consolidate the exploitative domination of a handful of wealthy
countries over the rest of the world are the surest recipe for global
disaster. Hopefully, the ruling groups of these wealthy countries
will be wise enough to use their still considerable power to solve
rather than aggravate the problems that plague the world.
Unfortunately, as Abba Eban once said, "History teaches us that men
and nations behave wisely once they have exhausted all other
alternatives."