US policy often looks crazy

Imperialism, capitalism and war

Mike Macnair examines the paradox of the rational irrationalism of US foreign policy

For some years now the USA and its allies have been carrying out a blockade, or siege warfare, against Iran, under the euphemistic name of ‘sanctions’. In July, the sanctions siege was significantly intensified and alongside it the US and Israel have been organising semi-clandestine sabotage operations (most notably the Stuxnet computer virus) and assassinations.

Also parallel to the siege has been the running threat of direct bombardment - with its own set of euphemisms: the ‘surgical strike’ to ‘take out’ Iran’s potential nuclear capability. The level of media attention paid to this threat varies: very recently Republican presidential candidate Mitt Romney has given his backing to an Israeli ‘strike’, while publicity has been given to the arrival in the region of US super-bunker-buster bombs.

There is something obviously irrational about this policy. The suggestion that Iran getting the bomb threatens an immediate attack on Israel, which has 100 or more warheads and complete delivery systems, etc, is ludicrous. The arguments that president Mahmoud Ahmadinejad is a madman or can be analogised to Hitler are both equal nonsense, and scarily reminiscent of similar claims about Saddam Hussein in the run-up to the 2003 invasion of Iraq.

Moreover, one might imagine that the US would be a bit more cautious, given that its budget has been tightened by the results of the 2008 crash, and it spent billions failing either to find weapons of mass destruction or to create a shining beacon of democracy in Iraq, and has equally failed to defeat the Taliban in 11 years of war in Afghanistan.

The apparent irrationality - in a certain sense real irrationality - has substantive present political implications. On the one hand, an important section of the anti-war movement has seized upon it with the aim of persuading the capitalist class, or at least sections of it, to act more rationally: it is not really in their interests to pursue such wars.

(Or perhaps the idea is that we could have capitalism without US hegemony (or any other hegemon state): the United Nations as a proto-world-state, the ‘law-governed world order’ which Peter Gowan promoted before his death. The reality is that the UN, though an entity with which the US is often partially at odds, is an agency of the US’s alliance systems; and the ‘law-governed world order’ is precisely a regime in which the security council can authorise siege warfare, bombing and invasions.)

On the other hand, an equally important section of the left argues that behind the irrational arguments are real, rational reasons for the US to act as it does - chiefly concerned with the price and control of oil and with maintaining US geopolitical dominance through surrounding Russia and China. This latter view is associated with the idea that the left and the workers’ movement has a stake not merely in the defeat of the war drive, but positively in the victory of the US’s ‘anti-imperialist’ opponents.

This idea is a bastardised form of the ‘anti-imperialist united front’ of the colonial workers’ movement and the nationalists and/or pan-Islamists, which was promoted by the early Communist International. ‘Bastardised’, because in its modern form it is filtered through the diplomacy of the old USSR-led ‘socialist bloc’. The underlying idea is that the overthrow of imperialism (identified in modern practice with US-led imperialism) can precede and provide the basis for socialist revolution.

The view that the irrational explanations conceal real rational reasons of imperialist interests is associated with the ‘anti-imperialist united front’ conception, but is not essential to it. Rather, it offers supporting grounds for it: if the imperialists have a real economic or geopolitical interest at stake in creating puppet regimes in the Middle East, then the ‘resistance’ offered by nationalists can potentially actually undermine the imperialist order.

How should we judge these questions? In my view the siege warfare and bombing threats against Iran are part of a larger pattern of US policy and the nature and incidence of wars since the US defeat in Indochina in the 1970s. This US behaviour is neither simply irrational, nor, on the other hand, do the irrational explanations conceal real decisive interests which explain the war decisions.

I propose to explain, or to contribute to an explanation of, this US behaviour by three elements. The first is the political effects of the business cycle. The second is the relative decline of the United States, which partially repeats the previous experiences of older ‘leading capitalist states’. The third is the decline of capitalism as such, which is reflected in differences between the present relative decline of the US and the decline of British world hegemony in the late 19th century.

The pattern

Before the 1970s, US Middle East policy had a clear and rational character as part of the general policy of the cold war. This was an orientation involving state-to-state alliances, ‘containment’ of ‘communism’ - ie, of the USSR and its alliance system - and US-Soviet competition in development aid within the framework of managed trade and limited import-substitution industrialisation in ‘developing countries’. US military interventions and those of the US’s British side-kick were directed to supporting existing state regimes and used quite limited force. The 1967 Arab-Israeli war and 1973 Yom Kippur war were fought wholly within this strategic framework.

After Vietnam, the US gradually broke with this policy and embarked on a new orientation. Financial globalisation is the most discussed aspect of the changed orientation; but other aspects of it include the ‘human rights’ offensive; increased use of US support for guerrilla and militia operations to destabilise regimes seen as hostile to the US, with some tendency to produce ‘failed states’ (most strikingly Afghanistan after 1980); and episodic large-scale military operations that are merely destructive.

There is an apparent indirect connection to financial crises. The point at which the 1987 stock market crash began to feed through into the real economy around 1990 was followed by the first Gulf war of 1991. The point at which the economy was affected by the dot-com crash of 2000-02 (as opposed to mere financial difficulties), was followed by the invasion of Iraq in 2003.

It looks to me (I may be wrong) as though, although the sheer severity of the crash of 2008-09 has delayed the process, nonetheless this crash has already been followed by an escalation of siege and sabotage operations against Iran, while a large-scale bombing campaign against Iran appears to be in the offing.

All these 1990s-2000s wars display marked irrationality in the apparent reasons for war. In this I exempt the case of Afghanistan. There was nothing irrational about the United States making war on Afghanistan after the Afghanistan-based Al-Qa’eda made a large bombing attack on US home territory. What was and is irrational in the war in Afghanistan was both the impact of the ‘war on drugs’ and the curious US doublethink about its relations with Pakistan.

The 1991-92 Gulf war was preceded by signals that the United States was unconcerned about the territorial relationship between Iraq and Kuwait; and, indeed, before 1991 Saddam Hussein was a US client, and the emir of Kuwait was a British client. The ostensible reasons for the invasion of Iraq were ludicrous; and the ostensible reasons for the siege warfare and bombing threats against Iran are equally ludicrous.

Hidden reasons?

The argument that US war-making in the Middle East produces cheap oil, and so protects the interests of US businesses and consumers in cheap oil, is plain nonsense. If anything the effect of these operations is to raise the price of oil. There was some reason to suppose in 1991 that there was actually an economic benefit to US finance capital from raising the price of oil: this meant that certain loan obligations which were collateralised in oil did not default and produce a banking crash. So it might in an odd sense have been rational to start a war in the Middle East in order to push the price of oil up; but the result could have been achieved more cheaply by some other form of market manipulation.

There is some basis for the idea that the US has a geopolitical interest in controlling the ‘oil taps’. It is certainly the case that there are people writing strategy articles in the US who argue that the US needs such a policy in order to control China’s and Europe’s access to oil, and thus maintain US hegemony. That would require the United States to exercise control over Central Asian oil sources, and perhaps Afghanistan and Iran could be imagined as steps in this direction.

In 1991 the idea was put forward by sections of the left that the war was about disciplining ‘third world’ regimes to counter their nationalism and force them to comply with IMF dictates. That idea was dodgy, because the left nationalism of the Iraqi Ba’athist regime had already been destroyed when Saddam Hussein made his coup d’etat in July 1979, effectively as an agent of the United States, and through his launching in September 1980 of the war with Iran. There was nonetheless a certain historical and rhetorical basis to the idea that the US was acting as ‘world cop’ in the interests of IMF compliance against Iraq. But the idea that the United States is engaging in war threats against the Islamic regime in Iran in order to force the regime to become IMF-compliant is manifest nonsense: the regime is one of the most IMF-compliant regimes in the world.

What about the direct interests of US capital? Massive reconstruction contracts were handed out after the invasion of Iraq, and it is certainly true that a fair number of firms and individuals made a lot of money by stealing from the United States through reconstruction contracts (bales of dollars which were flown out to Iraq disappeared there, and so on). But there is a big difference between engaging in one-off theft on a grand scale, which is what happened in the wake of 2003, and creating a stream of profits for capital through privatisations and so on. And the second of those things pretty clearly has not happened in Iraq.

The US’s big oil majors have under the Iraqi government obtained leasehold titles to large quantities of potential oil fields. But it is unclear how far these titles can actually be turned into real revenue streams. Iraqi oil production is back to pre-1991 levels, but not, as yet, very profitable.1 It must be said, moreover, that the oil majors could almost certainly have got similar concessions from the Ba’athist regime if the US had been willing to make a deal with it. Similarly, the US could certainly make deals with Iran if it were only willing to give up on its policy of confrontation with the regime.

To a considerable extent the reason why profits from investment in Iraq did not materialise is precisely the thefts. The reconstruction did not get done, and the conditions for an emergence of capitalist development à la Germany and Japan after World War II, or even of a serious revival of capitalism under US ownership, were not created.

Business cycle and irrationality

If we look at the political dynamics of the business cycle, apart from the peculiar conditions which existed between 1950 and 1970, it is clear that the cycle displays the effects of gradually growing confidence, followed by solid faith in the future, then euphoria in the bubble phase, panic in the crash phase, and finally doubt, hesitation and disorientation in the stagnation which follows a crash.

The boom phase of gradually growing confidence and faith in the future carries with it rationalism: the ascendancy of liberal political ideas about the self-regulating free market, but also and equally faith in scientistic approaches, top-down management, bureaucracy, reformism, and so and so on. The crisis phase and the stagnation phase carry with them the opposite. There is a loss of faith in the legitimacy of liberalism and in forms of corruption that have become normalised.

It is important to be clear that corruption is not something that is peculiar: it is a normal aspect of capitalist government. The capitalist class is a minority class. In order to operate as such in a political regime in which the petty bourgeoisie is able to vote (as in Britain in the 19th century) and certainly in mass suffrage, capitalist politics has to function through institutionalised mechanisms of corruption. In the crash and stagnation phase, these mechanisms lose their legitimacy.

The result, if the left is weak, is an increased influence of forms of political irrationalism: traditionalist nationalism and the religious politics of nostalgia. To this extent Tariq Ali was correct when he argued in The clash of fundamentalisms that the Iranian regime and the Christian right in the US are mirror images of one another.

The loss of legitimacy also implies a traditional state practice: to try and distract attention from a loss of legitimacy at home by turning to glorious adventures abroad. This is a completely traditional practice of the state core, recommended in Machiavelli’s The prince, and taught as part of US political science degrees. A 19th century example is Napoleon III’s turn to military adventurism after the crash of 1857.

The business cycle, then, produces a cyclical return of political irrationalism and a cyclical return of governments attempting to distract attention from trouble at home through international conflict. There is a sense in which the conflict between the United States and the theocratic regime in Iran involves both sides attempting to do this.

US decline

The left has been stuck with an entirely erroneous historical conception, originally constructed by Kautsky in the 1890s, according to which capitalism develops in a single country, and produces dominance of industrial capital as opposed to merchant capital, leading to a policy of peace and free trade. This was supposed to characterise the policy of the British state in the period of the dominance of free trade as an ideology: ‘Manchester liberalism’, or ‘Manchesterism’, as Kautsky called it. The late 19th century rise of imperialism as an ideology is then taken to reflect a new economic development. This approach is reflected in Hilferding’s discussion of imperialism in Finance capital and, thence, in Lenin’s Imperialism, the highest stage of capitalism.

The reality is that the policy of free trade of 19th century British ‘Manchesterism’ was nothing more than a mercantilist policy in the interests of British shipping capital and the financial capitals associated with British shipping capital in the 19th century. It was absolutely not the case that the British government pursued a policy of free trade with a view to establishing a level playing field between British and foreign capitals. It pursued a policy of free trade because under the circumstances which existed that was the most advantageous policy for British capital as against foreign capitals.

There was never a period in the past of purely national capitalist development. Capitalism emerged as an international phenomenon in the late middle ages, built around bulk shipping using new technologies on a scale which required both the ships and the docks to be staffed by free and mobile wage labour. The transition from small-scale transport run on a family basis - peddlers going around with trains of pack mules and so on, and small family ships - to bulk shipping, is a transition to capitalism on an international scale. The consequence of bulk shipping is that it becomes possible to ship wool out of England (as a specialist primary materials producer) to the Netherlands, to produce high-grade cloth there, thanks to a high level of specialisation, and sell it on into southern Europe and into the Islamic world. Capitalism thus emerges as an international phenomenon, as a systematic international division of labour.

The result is that even interstitial city capitalism, in a Europe dominated by declining feudalism in the later middle ages, already engages in colonialism and the export of capital for primary production. Clear examples are found in the colonial sugar plantations operated by Venetian capital in Cyprus and by Genoese capital in Madeira.

At the same time there are insufficient decorative metals, (gold, silver, copper) in the world, for the monetary circulation needs of the capitalist economy. Hence credit money is essential: you cannot have capitalism without credit money.

But there is a difference and a very important difference between credit (lending people money, selling goods on credit and so on) and credit money. The difference is that credit money can be used as a means of payment to third parties. In order to have credit money, as opposed to networks depending on inter-personal trust, like the feudal social relation of lord and vassal, credit has to be impersonal.

Credit is made impersonal through a combination of institutions. First, there must be state enforcement. It is a mere illusion of the anarcho-capitalists that there can be capitalism without the state.

In itself routine state debt enforcement is not enough. It is always possible to dodge debts by moving assets out of reach of the territorial state, and for the debtor to move out of reach of the territorial state. So there has to be a carrot as well as a stick. To disincentivise debt-dodging the state has to act in a mercantilist fashion: to provide positive benefits to ‘its’ capitals, which are made unavailable to ‘other’ capitals. Debt-dodging by moving the debtor or assets out of reach of the state then involves loss of the gains made available by the state. In order for capitalism to function the state has to discriminate against ‘outside’ capitalists. It has to act in a mercantilist fashion.

Hence, the idea that there could be a free-standing capitalist state not acting in a discriminatory fashion is an illusion. There never has been a non-mercantilist capitalist state and there will never be. Capital is international in character; but the capitalist state starts on a city scale, and then develops into a ‘quasi-nation-state’.2 It is not and cannot be a world state in the full sense, precisely because of its need to discriminate in order to incentivise debt payment and thereby enable credit money.

But at the same time, capital needs an ultimate guarantor of credit money on the scale in which capitalism operates, which is international. So that demands the formation of a systematic hierarchy of nation-states, headed by a top-dog state. In the first place it is a military top-dog state, but it will inevitably become the case that that its currency will become the global reserve currency, even if that was not the case before.

That arises precisely because the currency is a form of credit money; credit depends on the regular enforcement of debts; and, hence, credit money depends on the state issuer of the money acting as a mercantilist state. Capitalism therefore from its early beginnings involves an international hierarchy of states.

The status of reserve currency state results from military superiority and in particular naval superiority. The cause of this superiority, in turn, is superior productive capacity in the home territory. But the effect of being the reserve currency state is to undermine material productivity in the home territory, for two reasons.

The first is that being the reserve currency state gives both local capitalists and the state the ability to skim off a segment of the surplus product from international financial transactions. This creates a pull towards investment in financial operations relative to domestic production. Secondly, being the reserve currency state increases the military demands on it. For example, when the British defeated the French in 1793-1815, the British became unequivocally the global reserve currency state. But a consequence of that was the demand on the British navy to deal with pirates and with troublesome local powers here, there and everywhere increased.

This increase in the demands on the military implies a problem of staffing and reliability. And this, in turn, implies a need for domestic peace. Thus, some of the spoils of empire must be diverted to concessions to the domestic subordinated classes. These may take the form of the high development of state or charitable welfare institutions, which are in the last analysis based on a cut in profits; of regulations which tighten the labour market, and also reduce the ability of capitalists to externalise costs onto neighbours; and so on. These developments are again already visible in Venice and Genoa by the later 15th century, in Netherlands by the later 17th, in Britain by the later 19th. They imply in turn that it is more profitable both to shift to financial operations and to offshore material production.

Hence, after this has been going on for some time, the top-dog state is no longer top-dog because its general domestic material productive capacity supports military superiority. It remains top-dog state simply by virtue of the tribute it obtains by skimming from financial flows, which allows it to support an unusually large arms budget proportional to its overall material productive capacity.

Hence in turn, the declining top-dog state is driven to repeated display of its military capabilities in order to retain its status; and this display is not necessarily rational in the individual case. The Crimean war was probably in immediate terms irrational, as were Britain’s repeated interventions in Afghanistan in the late 19th century. The Boer wars were equally clearly irrational operations of the British state.

The top-dog status persists long after the material productive dominance which gave rise to it is gone, as long as the state can preserve its global strategic balance. It was only when Britain lost the ability to act as globally dominant military power in 1940-41 that it ceased to be the world top-dog power - and there ceased to be the great flows of financial inflows into the UK which supported this status.

The United States appears to have entered into relative decline in terms of productive dominance in the late 1960s, and to have moved into financialisation and offshoring of material production from the 1980s. Military ‘display’ activity, which reasserts its military dominance as the ground for it to receive tribute, follows naturally as an element of the process of decline.

In other words, it is rational in a sense for the United States to display its military power: anybody who ‘disses’ the United States has to be punished. As it were, the US is saying, ‘You don’t fuck with the capo. If you have ever dissed us in the past we are going to take revenge: when we have the opportunity we will go after you.’ That is a kind of rationality, but it produces an irrational appearance (nonsense arguments about Iran getting the bomb to wipe out Israel or Saddam Hussein becoming a new Hitler) and nonsense outcomes: wrecked economies and failed states.

Decline of capitalism

One has to be very cautious about positing a general decline of capitalism as such, because quite a lot of the phenomena which are identified in the traditional left as evidence of that decline, such as the ascendancy of finance capital, appear to be phenomena in the decline of top-dog states in the sense discussed above.

We can see capitalist decline, it seems to me, most strikingly by comparing the United States with the European empires of the late 19th century. They were brutal, but they did in fact lead to capitalist development - railway lines, roads and productive operations of one sort or another. And they did produce capitalist development in the colonised countries.

The policy of the United States during the cold war period also produced capitalist development in subordinate countries. But US military operations overseas since its effective defeat in the Vietnam war have had a completely different character. All that they have done is inflict destruction on one or another country, smash a functioning capitalist economy and leave behind a wasteland. It seems to me that this is evidence of an overall decline of capitalism between the period of British decline and that of US decline.

Why? Part of an answer is that the European empires of the 19th century were characterised by enormous emigration of people going to seek their fortunes in this, that or the other colony. The US at this period was both a coloniser of the ‘American west’ and a recipient of migration. The present-day US is exactly the reverse: it receives migrants, rather than exporting them. Partly this is simply because the level of concessions which have had to be made to the working class in order to preserve domestic peace means that it is on the whole better to be poor in the United States than it is to be poor in a hell of a lot of other countries. The decline of capitalism consists, in this aspect, in its weakening vis-à-vis the working class, and that decline is evidenced in migration phenomena.

But the paradox of this, as far as everywhere else in the world is concerned, is that the symptom of that decline and of the migration problem is that the form taken by the decline of the United States is the infliction of mere destruction all over the world rather than the creation of the conditions for a capitalist development anywhere.

Why it matters

My basic points are, first, that US action is not simply irrational; but, second, that it is not simply rational action concealed under an irrational facade, but action which has really irrational motives and outcomes, which, however, are rationally driven by the situation of the US in world affairs.

I said at the outset that this matters because of the politics of the anti-war movement (to the extent that it survives at all). On the one hand, the idea that this is a matter of simple irrationality to be got rid of by pushing for a peaceful capitalism and a ‘law-governed world order’ simply strengthens the institutions through which the US usually acts, and the ideology which is used to justify barbarous attacks on ‘outlaw states’. It is rational for the US in decline to do things which appear to be irrational and have irrational outcomes.

The dynamic of successive wars is therefore not going to be stopped by sections of the capitalist class being persuaded that it would be more rational if they did not happen, or by building a consensus for a ‘law-governed world order’. Obama promoted this ideology as an alternative to Bush; but his practical policy is - surprise, surprise - identical to Bush’s.

On the other hand, the idea that the US is driven by secret rational motives such as control of oil promotes illusions in other capitalists and other states - like the Iranian regime, or like China. The Chinese have demonstrated that they are just as capable of functioning as ‘great Han chauvinist’ imperialists as the Americans are of functioning as Anglo-Saxon imperialists; it is just that China is not now top dog.

The real alternative to the dynamic of repeated destructive imperialist wars laying waste to sections of the globe is not alliance with the ‘democratic bourgeoisie’ for a ‘law-governed world order’, nor alliance with the ‘national bourgeoisie’ against schemes for US world domination. Rather, it has to be the action of the working class, of the workers’ movement organising itself in international solidarity for its own vision of peace and peaceful development. It is the struggle for working class political power that can potentially stop the infernal dynamic of repeated imperialist wars.



1. ‘Oil output soars as Iraq retools, easing shaky markets’ New York Times June 2 - an article that shows significant symptoms of ‘official optimism’.

2. I say quasi-nation-state because the Netherlands is not a nation-state: it is a sub-national state which organises part of the Dutch-speaking population of the area. Britain is a supra-national state which organises three or four nationalities and indeed was imperial almost from the outset of the British as a capitalist state. France is also a supra-national state. Despite the dominance of the ideology of the nation-state in the 19th century, most capitalist states are quasi-nation-states, not nation-states in the proper sense.