Europe versus America

World War II was, of course, fought out between two great predatory blocs. On the one side, the axis of Germany, Italy and Japan; and, on the other, the alliance of Britain, the United States and the Soviet Union. Yet within these bitterly opposed camps, not least that of the ultimate victors, there were underlying rivalries and deep contradictions. Britain, the US and the USSR each wanted to do the others down. In that sense the war conducted against the axis powers was simultaneously a hidden conflict between Britain, the US and the USSR; a conflict which continued and intensified after VE and VJ day. Britain won out against Germany. And yet, in 1945, the country lay exhausted and massively in debt to the US. Britain's Yankee cousins exacted their two pounds of flesh - controlled decolonisation and subordination of sterling to the dollar. Leon Trotsky's prediction of an Anglo-American war proved accurate - except that it was carried out using other, peaceful, means. Till 1949 Attlee and the Labour government put up timid resistance. The empire in Africa and the Middle East was to be maintained and, when feasible, considerably expanded. John Kent, an expert on the 'close of empire', writes that the "overriding aim" was the "re-establishment of Britain as a world power equal to and independent of both the United States and the Soviet Union". British weakness was viewed by Whitehall as "a temporary rather than a permanent phenomenon" (A Deighton [ed] Britain and the first cold war London 1990, p166). US might plus the aspirations of national liberation movements proved irresistible. What had been the world's largest empire gave way to the insubstantial Commonwealth. Nevertheless the "special crisis of Britain", keenly anticipated by 'official communist' theorists, failed to materialise (R Palme Dutt The crisis of Britain and the British empire London 1957, p27). End of empire coincided with an unprecedented economic boom. Divisions between the US and the USSR were overtly antagonistic by 1946. Even before the Japanese surrender, the US was busily preparing for a new war to be unleashed upon the Soviet Union. Once Harry Truman received news that the US - and the US alone - had acquired the atomic bomb, relations with Stalin rapidly deteriorated. According to official minutes, in the summer of 1945 the US joint chiefs of staff adopted a policy of "striking the first blow" in a nuclear war (M Kaku and D Axelrod To win a nuclear war London 1987, p29). The 'Strategic Vulnerability' war plan envisaged a surprise, "preventative", attack on the Soviet Union. B29s penetrate deep into Soviet territory. Twenty cities are obliterated in the first strike. Within an instant millions perish. Conventional invasion quickly follows by sea and land. Moscow and other key centres are taken. Or so the Pentagon calculated. Having lost 10% of its population and something like a quarter of its industrial capacity in the titanic battle with Nazi Germany, the Soviet Union was believed to be in no fit position to fight a World War III. Hence after the fall, or removal, of the "totalitarian" regime the plan was to dismember the Soviet Union and bring about a return of capitalism to the national parts. Truman went into raptures about the atomic bomb being "the greatest thing in history" (quoted in ibid p33). The subsequent course of the cold war is well known and does not need repeating here. The Soviet Union collapsed in 1991. The US beat the "evil empire" without firing a single shot. As a consequence the US now exercises a global influence that puts all previous empires into the shade. Neither Alexander the Great nor Genghis Khan can remotely compare, let alone present-day Japan, Russia or China. Those, such as Samir Amin, Giovanni Arrighi, André Gunder Frank and Immanuel Wallerstein, who prematurely announced "the decline of the United States as a hegemonic power" (see their jointly authored book Dynamics of global crisis London 1982), were evidentially suffering from what István Mészáros calls leftwing "wishful thinking" (I Mészáros Beyond capital London 1995, p959). "America is now the Schwarzenegger of international politics: showing off muscles, obtrusive, intimidating," complains a leading German journal (Der Spiegel September 1 1997). By any serious reckoning the US must be regarded as super-imperialist and permanently militarised. Joseph Schumpeter could not have been more wrong. Against Marxism, he maintained, in his famous apologia Capitalism, socialism and democracy, that imperialism and militarism were essentially pre-capitalist or semi-feudal features - alien to the capitalist business ethos. (Schumpeter's book, first published in 1943, as Ernest Mandel points out with damning praise, is "one of the few bourgeois historical studies ... worth mentioning, and vastly superior to Popper's critique of Marx, let alone Hayek's anti-socialist rantings" - E Mandel The meaning of the Second World War London 1986, pp171-72.) Schumpeter tried to prove his thesis by claiming that in normal times the US possessed no army or military bureaucracy to speak of. Vast 'empty' native lands in the east, an unthreatening and sparsely populated northern neighbour and weak client states to the south did indeed allow the US to ply a very different course from European capitalism. World War II changed that. Today US spending on armaments outstrips that of Russia, China, Germany, France, Britain and Japan put together. As an integral part of the cold war, western Europe slowly coagulated into a single economic zone. Unity in Europe was encouraged by the US and Britain because it was seen as creating a bulwark against communism externally and internally. Besides the Warsaw Pact, there were strong 'official communist' parties in Italy and France. With the end of the cold war in 1991 the European Union both embarked on a course of eastward expansion and accelerated moves towards a common currency. Sacrificing his beloved deutschmark for the euro was purportedly the price chancellor Kohl paid in return for French acquiescence to German reunification. Relations between the US and the EU have been those of partnership. The EU being viewed essentially as an extension, or an arm, of Nato. Cooperation, however, takes place in the context of increasing tensions, as EU interests and cherished aims come into conflict with US unilateralism, bullying and imperial arrogance. To be more specific - barriers against steel imports, the imposition of chronic US indebtedness upon the rest of the world, shunning the Kyoto accord, abrogation of the ABM treaty, National Missile Defence, demands for immunity from prosecution by the international criminal court, etc. Over the recent period there have been a number of attempts to smooth out relations between the US and the EU. They mainly serve, however, to underline US determination to guard its national turf. Eg, through the transatlantic business dialogue the US proposed that EU trade regulations be subject to bilateral agreement. In other words the US wants to water down or veto EU legislation. The message is clear. US transnationals should be allowed to freely operate without let or hindrance. At the same time the Bush administration violates World Trade Organisation statutes and imposes onerous tariffs. The EU has not limited itself to outraged protests and appeals to the WTO. There is plenty of evidence of EU-US divergence in other spheres. The EU helps finance the Palestinian Authority; the US backs Ariel Sharon's 'war on terrorism' and refusal to deal with Yasser Arafat. The EU seeks constructive engagement with the Iranian regime; Bush brands it part of the "axis of evil". Another important area is space. Against fierce US lobbying the March 2002 Barcelona summit agreed to launch the $2 billion Galileo satellite positioning system, which - unlike the US system - is dedicated to civilian use. Galileo allows users - aircraft, ships, etc - to locate themselves to within a metre without any danger that signals may be suspended because of overriding US military requirements. Before the project was given the go-ahead, French president Jacques Chirac gravely warned that US domination of space "would inevitably lead to our countries becoming first scientific and technological vassals, then industrial and economic vassals of the US" (quoted in Financial Times December 22 2001). More unites the ruling classes of the US and EU than divides them. Nevertheless stresses and strains are growing. A serious economic downturn would doubtless exacerbate things no end. As a result it is correct to say that the EU-US relationship is evolving into an antagonistic partnership. The EU has high ambitions. Ambitions that can be gleaned from the EU's constitutional convention, which is meeting in Brussels under the chairmanship of former centre-right president of France, Valéry Giscard d'Estaing. Consisting of 113 delegates, it has been given the remit of detailing various options and producing recommendations for the EU's inter-governmental summit in 2004. Sixty themes were set for debate. However, in broad terms the constitutional convention is expected to produce answers to the knotty problems arising from enlargement - the EU is expected to grow from 15 member states to perhaps something like 37 by 2010. With such a political-economic bloc institutionally streamlined and under centralised direction comes the possibility of the EU playing a determining global role and thereby gorging itself on the planet's human and natural resources as the imperialist top dog. Speaking to the opening session of the constitutional convention on February 28 2002, Giscard d'Estaing looked magisterially towards the future horizon: "If we succeed," he said, "in 25 or 50 years time Europe will have changed its role in the world. It will be respected and listened to, not only as the economic power that it already is, but as a political power that will speak as an equal with the biggest existing and future powers on the planet" (see www.cer.org.uk). Introduction of the euro and the expectation that it will soon function as an international reserve currency alongside the dollar are part of an agenda whereby the EU can politically challenge US hegemony. That is no fantasy. As alluded to by Giscard d'Estaing, in economic terms there exists already a rough economic parity. Will Hutton, an enthusiast for EU liberal imperialism, writes that because of the euro, for the first time since World War II, the US "confronts an economic grouping approaching it in size and cohesion" (W Hutton The world we're in London 2002, p321). He chillingly describes the euro as a "weapon with which to fight back" against the US (ibid p322). As a land mass the EU is much smaller than the US. However, in population terms it is bigger. The US has some 280 million inhabitants, the EU 350 million. By the standard measure, the EU has a lower GDP than the US ($7.8 trillion to $9.9 trillion). However, as Hutton points out, the US economy is more privatised than the EU and certain costs - eg, health and education - are not fully reflected in the calculation of GDP figures for Europe. That, and an "undervalued" euro, explains why many economists estimate that the EU has a higher GDP than the US. The EU accounts for a greater proportion of world trade. EU exports amount to $850 billion annually, compared with $780 billion for the US. Furthermore the US runs a gigantic trade deficit. That has been financed by foreign purchases of US government bonds and stocks and shares. EU capital has snapped up a whole swathe of US-based corporations. Given Enron, WorldCom and Xerox, EU capitalism seems set to become the latest model others are supposed to copy. With the recent dollar falls there now exists parity with the once derided euro. Certainly under the terms of the Bretton Woods agreement the EU stands well placed to ease itself into pole position in institutions such as the IMF. The US has 17.78% of the vote. But if the EU decided to vote as a bloc it has around 28% of the vote (some 23% for the eurozone plus Britain's 4.98%). The successful launch of the euro in January 2002, and its rise in value six months later, gives the EU increased strength. Twelve countries now use the same currency for daily purposes - the biggest conversion in history. Transaction costs of changing one currency into another are now abolished within the eurozone. Capital thereby gains an instant profits boost. And it is not hard to predict that Denmark will soon reconsider and Britain will find itself in the eurozone in the short to medium term. Given the huge acceleration of international capital flows, no single central bank in Europe can hope to set exchange and interest rates in isolation, as longed for by the euro's 'no' opponents in Britain to the left and right. While central banks in the US, Germany, Britain and Switzerland have reserves of $653 billion ($404 billion in Japan), the daily turnover of capital on the markets is $1.2 trillion. Margaret Thatcher once remarked, "You can't buck the market." With the free movement of capital it is indeed true that no central bank in a patchwork Europe can do that and hope to survive. Certainly Britain's humbling experiences throughout the 1980s and 90s confirm the tectonic influence of the money markets - the suggestion that an independent Scotland, advocated by petty nationalists and national socialists alike, could withstand a flight of capital beggars the imagination. The single currency allows the EU to fix interest rates that suit the whole eurozone. It is thought that interest rates will be appreciably lower and therefore promote capital accumulation. Weaker economies should be buffered. There is no longer an outside anchor currency - the deutschmark or the dollar - which these countries are obliged to follow, no matter what their circumstances. Shadowing high German interest rates brought Britain, Italy and France to grief in 1992. Individual countries retain fiscal policy - taxation, government spending and borrowing - in case of adverse developments. But the overall expectation is that the EU will enjoy the considerable advantages experienced by the US. In addition, as a world currency the euro holds out the prospect of substantial revenue from seigniorage (central banks are in effect paid by the banking system in exchange for cash). Those outside the eurozone who trade in the euro pay a surcharge for the privilege. Money can be printed in this case without triggering inflation. Some economists estimate that by 2010 Britain would gain £4 billion a year - if it enters the eurozone (see A Fischer, Thomas Jordan and Caesar Lack Giving up the Swiss franc CEPR discussion paper, December 2001). Throughout the 20th century capital operated in the US with all the blessings that come with a single economic space, common laws and a common language. Economies of scale have been augmented by successive waves of migrants - the latest being the 10 million Hispanics who came from Central and South America in the 1990s. They provide a pool of cheap, worst paid labour, which is often made all the more easily exploitable by the fact that much of it is illegal and therefore lacks basic democratic rights. Nevertheless, though the US has on average a much higher per capita income, the productivity of the most advanced countries in the EU is greater. Output per hour in France, Holland, Belgium and the former West Germany has risen over the last 20 years so that they have now overtaken the US. Ireland, Austria and Denmark are not far behind. Higher US incomes rely mainly on the fact that people work more hours and have fewer holidays. Americans work on average 50 hours a week. Feeble and politically compromised trade unions help to ensure that. It should also be stressed that average income does not mean the income of the average person - the supposedly classless US society is actually the most unequal amongst the advanced countries with the bottom 20% officially living in poverty, while the richest one percent hold 38% of the wealth. So the US and the EU are economically comparable. However, when it comes to the realm of arms, the situation is very different. Annually the US spends $290 billion compared to the EU's $180 billion. And to this must now be added George W Bush's projected $48 billion post-September 11 2001 hike. During the Vietnam war the US military machine accounted for nearly 10% of the total budget. In the 1980s Ronald Reagan increased military spending to new absolute heights. Writing at the time, Jeff McMahan, a British-based US academic, perceptively argued that surging ahead with the arms drive was designed to "cripple the less robust Soviet economy, ultimately bringing about the collapse of the Soviet system from within" (J McMahan Reagan and the world London 1984, p4). The end of the cold war saw reduced arms spending in both the US and the EU. It was September 11 which allowed Bush to push the arms budget back to 1980s levels. Anti-terrorism is the new anti-communism. In military terms the US is in a different qualitative league. Crude budget figures do not even tell half the story. Not that the US is omnipotent. But, whichever way you look at it, the US is in a position to forceably intervene in virtually every area where it believes it has vital interests at stake Afghanistan, Iraq, Taiwan, Panama, Colombia (the EU even had to rely on US air power in order to deal with Slobodan Milosevic's Serbia). Let us briefly illustrate US superiority. Firstly, the US has a single army, navy, air force, etc, and a straight line of command from the White House downwards. The EU's Rapid Reaction Force is in comparative terms a puny affair. More to the point, there are 15 separate armed forces in the EU, each with their own political masters. Secondly, the Americans have the great fortune of being able to easily speak one to another. In the EU there is a cacophony of separate languages. Thirdly, the bulk of the EU's strategic capabilities are integrated into Nato structures, which are still dominated by US top brass and military bureaucrats. Fourthly, the disunity of the EU's armed forces results in numerous sources of supply. Britain, France, Germany and Italy each have their own defence industries. Often they produce systems which are incompatible - spare parts, refuelling facilities, weaponry, communications, etc. Fifthly, the US is a global military power. It alone can exercise "full spectrum dominance". The EU's armed forces are essentially regional. The US has a network of geo-stationary satellites, bases located in many different countries - Cuba's Guantanamo Bay, Greenland, Okinawa - and awesome fleets of aircraft carriers, submarines and cruise missile ships routinely patrolling the Pacific, the Mediterranean, the Persian Gulf, the Indian Ocean, etc. Sixthly, the US possesses a huge nuclear arsenal. Only France and Britain are nuclear powers - and in terms of warheads, sophistication, accuracy and reach hardly compare. Then there is the chemical and biological capability which the US possesses in abundance and Bush's son of Star Wars project. Whether or not EU rivalry with the US takes on a military dimension is an open question. But to dismiss the possibility is to turn one's back on the blood-drenched lessons of the 20th century. Capitalism engenders competition by its very nature. One capitalist is pitted against another in the market. Equally one coalition of capitalist states resorts to military means when peaceful methods fail. Hence the mounting EU challenge to US economic supremacy carries profound dangers. Proxy war, cold war, accidental war, world war. Ideological lines of combat are being drawn. Liberals and social democrats boast that Europe has attained a higher, more humane, civilisation. That the US represents a brutal capitalism. The welfare state, public spending on health and transport are cited as evidence. So is the paucity of social provision in the US and the widening gulf separating the ultra-rich and the poor. Ironically Thatcher and the Tory right thereby become 'enemies within', their unalloyed admiration of 1990s US turbo-capitalism branded anti-European. Tony Blair and New Labour must shed pernicious illusions in the US model forthwith and wholeheartedly embrace the up-and-coming European superstate. Otherwise they will be accused of being a pro-American Trojan Horse. Will Hutton champions EU imperialist unity on the basis of caricaturing both the US and the EU. Europe's capitalism is based on "reciprocal obligations", dating back to "early christianity". The US, on the other hand, "is in thrall to an extreme brand of conservatism" and prone to use the "iron fist" (W Hutton The world we're in London 2002, pp352, 357). Not to be outdone, the Republican right in the US depicts Europe as woefully undynamic, inflexible, statist and easily swayed by demagogic racists. Capitalism does not come in discrete models, to be swapped one for the other according to intellectual whim or fashion. Eg, the Japanese, Singaporean, Swedish or American. Social relations are in constant flux and assume a particular equilibrium according to the balance of opposite interests. Dead labour and living labour. Capital has no interest other than the continuous expansion of exchange value. Hope for humanity uniquely lies with the working class and its ability to struggle for a better world. On neither side of the Atlantic can capital's paid persuaders admit the vital role of the class struggle in constantly shaping and reshaping politics. Nor the existence of another nation within each nation - trade unions, traditions of solidarity, Marxism and working class self-liberation. Europe's post-World War II social democratic settlement owes everything to the clash of class against class. Nothing to the establishment's supposedly benign desire to see fair play and equality of opportunity. Useful lies. The ruling class in Europe put off socialism by organising far-reaching concessions. The same goes for the US. Roosevelt's New Deal originated in the economics of the working class, not the high bourgeoisie. Class struggle can reverse the rightwing tide that has polluted and suffocated US society since the days of Joseph McCarthy and Dwight Eisenhower. Siding with either the EU or the US is no option. Both sets of rulers are equally reactionary. Nevertheless the tried and tested way to fight for socialism is in unity; beginning in our case on the continental-wide terrain represented by the EU. Communists and revolutionary socialists must also base their strategic evaluations on the probability that the working class in the EU will move onto the offensive sooner than workers in the US. To borrow a phrase - there is combined but uneven development. That is why the Socialist Alliance's manifesto is correct when it calls for "workers' and socialist unity across Europe". Instead of the Europe of the bosses and unelected bureaucrats we stand for a "democratic and federal Europe based on solidarity and cooperation" (People before profit London 2001, p19). Such an internationalist perspective directly posits the necessity of organising across the EU at the highest level - from the European Social Forum to a Socialist Alliance of the EU and in due course a Communist Party of the EU. The idea that our side would be collectively strengthened if one or two of our national battalions aligned themselves with the ultra-right and forced upon the government of a Britain, a Denmark or a Spain withdrawal from the EU displays as much a lack of internationalism as it does seriousness. Socialism in a breakaway country is the socialism of fools. Any reformist or revolutionary government that might arise amidst the turmoil would suffer instant retaliation. Fascist counterrevolution or, that failing, isolation through asphyxiating trade embargoes and perhaps a joint EU-US 'peacemaking' force. Our strategy is resolutely opposed to any renewed 'Balkanisation' of Europe. The Socialist Workers Party's Chris Bambery, the Scottish Socialist Party's Alan McCombes and Alan Thornett of the International Socialist Group irresponsibly campaign for, or indifferently excuse, such a scenario. But, whether it comes from right or left, fragmentation can do the working class nothing but harm. Ethnic cleansing, cleaving apart historically established workers' organisations, national hatred. Communists strive for working class unity within, but against, the existing EU. Wining the battle for democracy in the EU and securing working class rule in this geographically small but economically and politically powerful corner of the world would give us a fortress from where US counterrevolutionary threats could be confidently rebutted. The revolutionary contagion would then rapidly spread. That is the best service we in the EU can perform for our comrades in the Americas, Africa, Asia and Australasia. Jack Conrad