Naked Capitalism: American Exceptionalism and Empire Building


“If You Are Not Building a Nation, Then What the Fuck Are You Doing?”

Yves here. Earlier this week, we features a post from TomDispatch, The Geopolitics of American Global Decline: Washington Versus China in the Twenty-First Century, which elicited a lot of thoughtful reader comments.

I’m hoisting a particularly insightful, broad ranging response from Tony Wikrent, who has sometimes posted on Corrente. Wikrent took aim at the post’s reliance on the geographical theory of dominance of Sir Halford Mackinder:

By turning the globe away from America to place central Asia at the planet’s epicenter, and then tilting the Earth’s axis northward just a bit beyond Mercator’s equatorial projection, Mackinder redrew and thus reconceptualized the world map.

His new map showed Africa, Asia, and Europe not as three separate continents, but as a unitary land mass, a veritable “world island.” Its broad, deep “heartland” — 4,000 miles from the Persian Gulf to the Siberian Sea — was so enormous that it could only be controlled from its “rimlands” in Eastern Europe or what he called its maritime “marginal” in the surrounding seas….the “heartland” of this vast landmass, a “pivot area” stretching from the Persian Gulf to China’s Yangtze River, remained nothing less than the Archimedean fulcrum for future world power. “Who rules the Heartland commands the World-Island,” went Mackinder’s later summary of the situation. “Who rules the World-Island commands the world.”

The post then seeks to frame British imperialism, 20th century geopolitics, and China’s Silk road as confirmation of the proof of Mackinder’s thesis of the importance of control of key geographies in large-scale political dominance.

Wikrent didn’t just shred this thesis but gave one of the most compelling short overviews of America’s period of dominance in the 20th century and the seeds of its decline. I have to underscore two points that I mention from time to time. One is the revisionist history regarding how America lost its industrial dominance. Having read the business press at the end of the 1970s, the fulcrum point, it had nothing to do with now widely demonized (and then much more powerful) labor. As Wikrent points out, Germans and Japanese had an advantage by virtue of having better infrastructure, most important, newer factories. He also alludes to the fact that the comparative poverty of Japan (it had been reduced to third world status) forced them to be frugal with materials, and over time, that disadvantage was a spur to all sorts of innovation, such as just in time manufacturing. But just as obvious in the 1970s was how sclerotic American management had become, particularly in the auto industry. And rather than respond to the competitive challenge, more and more companies began to run on brand fumes and rely on cost-cutting and financial engineering as leveraged buyout artists showed that that could enrich managements more quickly and easily that doing the hard work of competing the marketplace.

Wikrent also mentions in passing the role that government has played in sponsoring new technologies. It’s even bigger than he suggests, as we discussed in this post: Government, Not the Private Sector, Leads Innovation.

By Tony Wikrent

Mackinder’s theory is bullshit. His theory completely ignores the crucial roles of human knowledge in the forms of technology, and of systems of belief.

But Yves is on the right track when she observes we have “a deceleration of technology advances (the fact that money is being poured into ventures like Uber and Lyft, whose source of return is using network effects to extract rents from laborers…” The aggregate power of any society is ultimately determined by its collective capacity to extract and process raw materials and transport and distribute the products thereof. In other words, the productive powers of labor. This is something surprisingly few world leaders have grasped. Fortunately for USA, its economy was designed by Alexander Hamilton, who thoroughly understood the need to promote and expand the productive powers of labor (through the use of machinery, i.e. technology). Note that the second section of Hamilton’s Report on Manufactures is devoted to a discussion of “An extension of the use of Machinery.”

Were Mackinder correct, the Soviet Union would have conquered the west and the Soviet bloc would never have collapsed. The USSR had control of about half of Germany (though it was, admittedly, not the half that contained the mighty industrial potentials of the Ruhr Valley; NATO commanders always expected and planned for the main thrust of a Soviet military advance to be through the Fulda Gap and into the Ruhr). And after the 1979 Iranian Revolution, the West was in grave danger of losing the pivot south to the Indian Ocean. I suspect that Brzezinski’s Operation Cyclone was in response to “losing” Iran. Finally, Africa has never been completely locked down by the West. The Soviets and the Chinese gave the West serious competition. Nasser in Egypt drove the Dulles brothers, and the Bundy brothers, into fits of apoplexy.

Again, Yves is pointing to the actual dynamics that run the world. The conventional wisdom is the USA emerged as a superpower after World War 2 because the industrial bases in Europe and Japan had been destroyed. This is an extremely superficial reading of history. The most important post-war result of the war-time destruction was the building of a new industrial base in Europe and Japan, more modernized and more productive than the USA, where investment in new plant and equipment was already beginning to be dragged down in the 1960s by the emerging boom in mergers and acquisitions fueled in no small part by dirty money from organized crime. Anyone familiar with Taiichi Ohno and the Toyota Production System, knows that the amazing productivity gains of the Japanese economy were based precisely on the need to get as much productivity and squeeze out as much waste as possible from the surviving capital plant after the USA bombing campaigns and the Surrender.

USA power and superiority after World War Two is mostly based on the electronic and computer technologies which, it should be noted, came out of the war research laboratories. The idea for Silicon Valley itself – originally Stanford Industrial Park – came from Stanford University’s engineering dean Frederick Terman’s war experiences just a few years earlier directing a staff of over 800 scientists and engineers at Harvard University’s Radio Research Laboratory, creating the technology and designing and building electronic jammers to block enemy radar, tunable receivers to detect radar signals, and other countermeasures to anti-aircraft fire.

The new electronic and computer technologies spawned entire new industries, and, most importantly, a new pool of wealth, countervailing the old pool of wealth of Wall Street and its inclination toward speculation, usury, and extracting rent. Electronics and computers, and all their economic were thus the key to USA’s post-war leadership. Note the size of the spill-over effects: for example, the rapid populating and build-up of California, which doubled in population from 10.6 million in 1950, to 20.0 million in 1970, while the USA population increased by only a third in the same period, from 151.3 million to 203.2 million. For other examples, think of the way electronic and computer technologies have impacted transformed many other industries: numerically controlled machine tools; process instrumentation; communications; medical devices, aircraft and aerospace.

And let us be clear here: the development of electronic and computer technologies was NOT driven entirely by market forces. There was no small amount of direction and support provided by the national government.

The U.S. has been coasting on the tidal wave of wealth from the computer and electronics revolution. That the economy is shifting, for the worse, is indicated by the fact that in 2011, Apple and Google spent more on legal fees</a (largely for patent fights) than on research and development. This bad trend portends even worse, because we are near the end of Moore’s Law. Intel is now producing chips built on its new 14-nanometer manufacturing process, supplanting its older 22-nanometer technology. Intel CFO Stacy Smith says the company has “an early look” at seven nanometers, but is not willing to discuss the next milestone, five nanometers, about twice the size of a strand of DNA. After that, humanity will have reached the physical limit of micro-circuitry. Robert Colwell, director of the microsystems group at the Defense Advanced Research Projects Agency, and a former Intel manager of Pentium-class processor design, says there are 30 possible alternatives to the CMOS technology that has been ruled by Moore’s Law. “My personal take is there are two or three promising ones and they are not very promising”.

So the wealth-producing dynamo that was computer and electronics is spinning down. Is there anything that can replace it? China has already set out to integrate Mackinder’s central land mass with its New Silk Road projects. But in USA and the West, elites fiddle while the planet literally burns. The obvious answer is the $100 trillion in new investment needed to stop climate change by building an new world economy that does not require fossil fuels.

Ironically, Hamilton’s understanding of the need to drive forward the productive powers of labor were forgotten by all USA leaders after the war (except for small groups mostly centered in the military services and in the labor unions) while it was put into practice by the leaders of Japan, Korea, and the Asian Tigers. On this point, see James Fallow’s important December 1993 article, “How the World Works.” It’s much more than just a diatribe against free trade.:

The sheer imbecility of American leaders is brought into glaring light by Kissinger’s praise for George Dubya Bush’s attempt at “transformation of Iraq from among the Middle East’s most repressive states to a multiparty democracy.” I can pinpoint the exact day and event that the Iraq war was lost, thanks to George Packer’s 2005 book The Assassin’s Gate: America in Iraq, On pages 110 to 112, Packer discusses the November 15, 2002 meeting of Condoleezza Rice and Steve Hadley of Bush’s National Security Council, with representatives from various conservative stink tanks to review plans for rebuilding Iraq after the USA invasion. The meeting ended when Chris DeMuth, then president of the American Enterprise Institute, cut off discussion. QUOTE “Wait a minute. What’s all this planning and thinking about postwar Iraq?” He turned to Rice. “This is nation building, and you said you were against that. In the campaign you said it, the president has said it. Does he know you’re doing this? Does Karl Rove know?” END QUOTE

OK, one fucking simple question here: if you are NOT building a nation, then what the fuck ARE you doing? Because of Demuth personally, and the conservative fetish against government planning generally, the USA war effort in Iraq was foredoomed from that meeting onward. We are still living with the consequences of DeMuth’s arrogant ignorance today. It is this type of arrogant ignorance which is squandering the US position of world leadership.

If you don’t have a positive vision of forward action to build a nation, then you simply do not belong in government. Period. End of discussion. And reliance on the free market is not a positive vision: Conservative Christians be warned. “Where there is no vision, the people perish.”


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