The Global Economic Crisis: An Outgrowth of the Perils of Empire

The current global economic crisis has a number of immediate causes, among them the bursting of the housing and real estate bubble in the United States. The bursting of this bubble has sent shock waves throughout the financial systems of the world and will certainly result in a fall in real estate prices around the world.

But there is more to the current crisis than that. What is underway is a fundamental shift in the global order that is the consequence of the overstretch of the American Empire.

At the end of March, my new book, Perils of Empire, will be published by Viking. The book compares the crisis prone American Empire to the crises that afflicted America’s imperial predecessors over the millennia.

Below is an excerpt from the book that grapples with the broader nature of the current global malaise:




By the time the Soviet Union expired in late 1991, however, the U.S. had recovered from the internal wounds of the Vietnam War and from the anti-American sentiments the war had generated in other parts of the world. In the early days of post Cold War triumphalism, there was a great deal of celebration of the victory of liberal capitalism over its totalitarian foes of the 20th century, Nazism and Communism. With Francis Fukuyama’s manifesto, The End of History and the Last Man, American power and the social system on which it rested were portrayed as natural and sure to dominate the world in the indefinite future. During the years of Bill Clinton’s presidency, American technological prowess and the establishment of the so-called “new economy” appeared to ensure American economic supremacy, along with the relegation of once-potent economic competitors in Japan and Western Europe to the sidelines. In addition, the new economy was not merely enriching a whole new cohort of capitalists in the high-tech sector, it seemed to have transcended the bad old days of the economic cycle. Boom and bust were deemed old hat along with industrial cities like Detroit or Cleveland. And underlining all this was the rise of the American military to a level of global domination greater than that of any military in the whole of human history. Apparently, America did not much need military allies any longer, not least because other militaries, such as those of Western Europe, were just too backward to be able to work seamlessly with the Americans. The easy military victories of the first Gulf War in 1991 and in Kosovo in 1998, in a war in which the U.S. had prevailed through the use of air power alone, and had not suffered a single casualty in combat seemed to confirm U.S. invincibility.

The speed with which the fate and durability and legitimacy of the American Empire have been cast into doubt since those days in the late 1990s has been remarkable indeed. The Dot Com crash which devastated the new economy in the early months of 2000 was the harbinger of the troubles to come, a sign while Clinton was still in power and before the terror attacks of September 11, 2001, that all was not well for the American imperium. Although the Dot Com crash took the sheen off the last year of the Clinton presidency, many Americans are bound to look back on his years in the White House as an era when many were enriched and a great opportunity to achieve social reform was squandered. The easy years were at an end before George W. Bush was sworn in as president on January 20, 2001.

It is often clamed that the terror attacks of September 11 changed the world. What is more accurate is that three major decisions taken by the Bush administration plunged the American Empire into crisis. The first decision, which pre-dated September 11, was an enormous tax cut, which mainly benefited the affluent and the superrich. The second and third decisions, growing out of the terror attacks, were the invasions of Afghanistan and Iraq, both of which caused a huge increase in American military spending. The policies of the Bush administration embroiled the United States in an interlocking, dual crisis that was geo-political and economic in scope. The geo-political crisis turned on whether the United States could continue to maintain its supremacy in the neighbourhood of the Persian Gulf. The invasion of Iraq was a highly risky attempt to tighten the American grip on the petroleum-rich lands around the Gulf. If successful, the Bush administration would be rewarded with solid strategic gains, and along the way, with the enrichment of key corporate backers of the Bush White House.

In a sanitized Iraq, remade in the socio-economic image of the United States, the U.S. would establish permanent military bases and would push rival contenders for Iraqi oil such as France and Russia aside in favour of Anglo-American oil interests. From Iraq, the Americans could keep a wary eye on Saudi Arabia, the country with the greatest oil reserves in the region and a country in which jihadist Islamic ideology had gained a strong position, thereby posing a constant threat to the Saudi regime. Not unimportant in the scheme of things were the profits reaped by corporations such as Halliburton, with which Bush loyalists, most notably Vice President Dick Cheney had intimate ties.

The defeat of Saddam Hussein’s armed forces came quickly, with Baghdad falling into American hands following a lightning drive of the U.S. military northwards from Kuwait. George W. Bush danced his jig of victory on the deck of a U.S. aircraft carrier. Then the real fighting began. Month after month, the insurgency against the occupation gained strength in Iraq. As the Kurdish, Sunni, and Shiite political leaders who were prepared to work with the Americans and their allies frequently quarreled with each other, those who had chosen the road of armed resistance broadened their alliance and grew ever more effective.

The Bush administration, under the direction of Defense Secretary Donald Rumsfeld, completed the reconstruction of the U.S. military. The new American military was a volunteer force, equipped with dazzling technology, both in its armaments and logistics. It boasted that it could fight and win two major wars simultaneously in different parts of the world. What the morass in Iraq revealed, however, was that the volunteer force was too thin on the ground to prevail in a lengthy occupation; a large number of reserve units had to be called up. The stresses of mobilizing reservists who had never expected to serve in a shooting war and of keeping units in Iraq for long periods contributed to flagging morale within the army, and sagging support for the war at home in the United States. In the early months of 2006, retired American generals and military critics were not only calling for the resignation of U.S. Defence Secretary Donald Rumsfeld, they were demanding a rethink of American military doctrine. What had appeared to be the most solid of the pillars on which the American Empire stood---its military---had shown itself to be much weaker than anyone had thought.

Because empires rely on the impression that they are invulnerable, continued or successful armed resistance is enormously damaging to the empire far beyond the region immediately affected. One consequence of the Iraq shambles for the U.S. has been to embolden potential foes of the United States in other parts of the Middle East and elsewhere in the world. The Islamic Republic of Iran, for instance, much troubled with its own domestic concerns, learned the lesson from Iraq that the United States would have a much more difficult time invading Iran than anyone had previously calculated. The result was that the Teheran regime felt it could take substantial risks in pushing ahead its program of uranium enrichment. For the Bush administration, facing declining support at home and growing doubts about its ability to cope abroad, Iran’s challenge meant that Washington would have to consider another risky military adventure---the bombing of Iran’s nuclear facilities. Empires cannot allow themselves to look weak and when they do they sometimes take risks that can make them look even weaker.

The Iraq miscalculation prompted many governments in different regions of the world to take actions that could be regarded as “soft” rejections of American power. In Latin America, the consequence was to reinforce the tendency of the region’s left of centre governments to shift away from support for the American-backed Free Trade Area of the Americas. In Western Europe, the tendency among political elites everywhere except in the UK was to see American global policy as reckless and to seek ways to counterbalance the initiatives of the Bush administration. In Asia, the momentum of many countries drawing closer to China, for commercial reasons, was accelerated.

America’s heightened military spending in the Middle East was directly related to the emergence of a crisis with respect to the economic position of the United States in the world. A number of key economic indicators of American economic performance warned that a basic realignment in global economic relations could be in the offing. The American current account, perennially in deficit, was plumbing new lows. As the most basic indicator of the American commercial relationship with the rest of the world, the U.S. current account revealed that both in terms of trade in goods and in terms of capital flows, the United States was in a sharply negative position. In 2006, Americans were importing far more goods than they were exporting, to the tune of about 800 billion dollars a year, with China replacing Japan as the country with the largest trade surplus with the United States. On the other side of the current account ledger, the story was one of growing American indebtedness to the rest of the world. Far from being the net creditor country that the U.S. had been before 1986, the United States was now, by a long margin, the world’s leading debtor nation, in debt to the tune of more than two trillion dollars to the rest of the world.

The plunge of the United States into the position of serious net debtor was a sign of the weakening position of the U.S. as the overseer of the global economic system. The other major area of malaise in the U.S. economic performance was the deficit of the federal government. In 2006, the U.S. government deficit was running at about 250 billion dollars a years, with American military spending at roughly double that level. Economic forecasts and the plans of the Bush administration made it clear that the U.S. was likely to run a very sizeable deficit over the medium term future.

Not only was the high price of petroleum threatening to push the world into recession, the U.S. dollar’s position as the global reserve currency was becoming ever more precarious. The Euro has been considered as a potential alternative reserve currency and even though the economic performance of the leading Euro countries have been sluggish, the countries of the Euro zone have a rock solid current account performance. For countries highly dependent on selling raw materials, particularly crude oil and natural gas, the temptation to denominate their sales in Euros rather than in depreciating dollars has been growing ever stronger. If the U.S. dollar was to lose its position as global reserve currency, either partially or generally, it would hit the American economy with price shocks in the broad area of primary products, most importantly petroleum. In addition, the freedom of the U.S. to run a continuous current account deficit would be sharply curtailed if the Euro were to seriously challenge the dollar as a reserve currency. This is because major central banks and corporations would be bound to shift their holdings to a considerable extent from dollars to Euros, a development that would accelerate the downward pressure on the American dollar and would force a sharp hike in U.S. interest rates to prevent a flight of foreign capital from U.S. securities.

While other major countries would have a strong interest in managing such a transition from dollar to Euro as responsibly as possible, the risk of a severe crisis could not be ruled out. Not since the end of the First World War has the world seen a transition of the kind that could be in the offing. Moreover, the world economy is enormously more global in its functioning than it was eight or nine decades ago, with capital and currency transfers from market to market dwarfing those made in the days when the pound was floundering and the dollar was taking its place.

Both the geopolitical and the economic aspects of the crisis of the American Empire are forcing major choices onto the American political agenda, and some of those choices are likely to be highly unpalatable politically. On the geopolitical side, the United States is faced with the need to decide what its future strategy should be in the Middle East.


In December 2006, the Baker-Hamilton Report (Report of the Iraq Study Group), and Defense Secretary Designate Robert Gates in testimony before Congress, declared what had been unthinkable in Republican circles----that the U.S. was not winning the war in Iraq. The Baker-Hamilton Report, not only advocated a withdrawal of U.S. troops from Iraq sometime in 2008, but called for negotiations with Syria and Iran, leading states that sponsor terror according to Bush administration orthodoxy.

While releasing his report, James Baker, a patrician elder statesman from the Bush Sr. administration, reminded the media that it had been American policy to talk to foes during the more than four decades of the Cold War.

The Baker-Hamilton Report was a clear signal that an important rift has opened up within the American political establishment, not only about the Iraq War, but about the approach of the United States to global issues. On one side of the debate was the Bush administration, committed to the neo-conservative conception of the American global mission. On the other side were the so-called “realists”, the Bush-Hamilton Report, a statement of their views.

The neo-conservative school of American foreign policy has promoted a radicalization of America’s global stance. Not satisfied with the status quo in which America was the strongest power, the neo-conservatives have set out to increase the global supremacy of the United States. During the halcyon days of the Bush administration in the aftermath of September 11, the use of military power was seen as the crucial way to transform societies with regimes hostile to Washington. War could be used as the means for creating democratic, liberal societies in countries such as Afghanistan and Iraq. Along with the drive to export an American-style version of liberty to other countries, the Bush administration proclaimed its determination to ensure that the United States remain the world’s dominant military power, able to face down challenges from friendly and hostile regimes alike.

By the end of 2006, the Bush administration’s policies were in tatters in the failing wars in Iraq and Afghanistan, in relationships with many countries around the world and in the rising crisis caused by America’s inability to finance its military operations and keep its fiscal house in order.

What was clear at the beginning of 2007 is that the United States was no longer committed to winning the fight in Iraq. What was at issue now was the withdrawal strategy.

Bush’s policy of sending reinforcements to Iraq was a rejection of the recommendations of the Iraq Study Group. It also flew in the face of the message American voters sent when the handed both houses of congress to the Democrats in the elections in November 2006.

The Bush White House, however, had lost much of its freedom to set U.S. policy. As the Americans prepare to leave, Iraq could disintegrate into its constituent parts. If that were to occur, the paramount American and western interest in the country would be to maintain their potential hold on Iraqi petroleum. The Americans could end up pulling their forces out of Iraq and setting up a very large and permanent presence in Kuwait from which they can oversee the petroleum reserves of the Persian Gulf Region.

The present period in the U.S. should be seen as an interregnum. The age of neo-conservative control of policy making has ended. But it is not fully clear what will come next.

Rethinking the American Middle Eastern position is bound to be accompanied by efforts to make the American Empire sustainable economically. This raises the thorny and inter-related questions of the size of the U.S. defence budget and the problem of the American government’s burgeoning deficits and debt. The Romans faced similar strains when they decided to build Hadrian’s Wall and to abandon most of the Germanic lands; the British when they had to finance their great wars against France during the 18th century. For the American Empire to survive, it will have to achieve a level of funding that is sustainable. Either the costs of empire will have to be pared back or greater funding for the imperial project will have to be realized.

Cutting the defence budget of the United States cannot easily be done as long as the Americans occupy Afghanistan and Iraq. Over the longer term, cutting defence spending is an option that segments of the American political leadership are likely to consider. Whatever the United States does about the defence budget, the overall budget deficit is a broader problem which cannot go unresolved. Previous empires, the Roman and the French, foundered on an inability to finance their operations. While Bill Clinton managed during the 1990s, through the imposition of a tax increase, to pull Washington’s finances into the black, it will be exceedingly difficult for the United States to summon the political will to repeat that exercise. Failure to deal with the government deficit can only mean more borrowing by the United States, much of it from foreigners. That borrowing will add to the problems of the American dollar and to the growing indebtedness of the United States to foreigners.

Everywhere one looks, the United States faces a series of interrelated problems. While the American Empire is by no means in imminent peril of collapse, it could be forced to pull back from some of its more exposed positions in world trouble spots, in particular the Middle East. In the process, it is likely that the United States will have to consider moving over to a more multilateral strategy, bringing other major powers into its confidence, so that the burdens of empire can be shared with the Western Europeans, the Japanese and others. Accepting the restraints that would accompany multilateralism would be no easy thing for the American leadership, certainly the neo-conservative leadership that has been at the helm under George W. Bush. For the neo-conservatives, sharing power with the Europeans and the Japanese has been anathema, a sure way to blunt the effectiveness of American power in sensitive regions of the world.

The challenges that now confront the American Empire are similar to the problems faced by previous empires---problems of imperial overstretch and of the challenge of fashioning legitimacy for its rule. What makes it especially difficult for the American political leadership to cope with these challenges is the extent to which the norms of American political culture confuse the issues and make it difficult to confront them directly. Only the occasional ideological outrider such as the maverick neo-conservative Charles Krauthammer has the temerity to say that the U.S. should stop shying away from the word empire, and then adds for good measure that “we could use a colonial office in the state department.” It is no easy thing to plan for the long-term viability of an empire in a political culture in which the very existence of the empire needs to be constantly denied, at least in public discourse.

Previous empires always recognized the need for the top elites in the society to understand their role in maintaining the empire. Sometimes their roles were cloaked in religion and in the idea of rulers as gods, as in the case of the Egyptian pharaohs. The rulers of the empires that endured for long periods of time had a clear view of their role and what needed to be done to sustain it. The British ruling class had a surer understanding of the role it needed to play if the British Empire was to be sustained than did the French ruling class during the 18th century. Never in the period of their dominance did the British sense of cultural superiority, the key to their claim to their right to rule, abandon them. While it was critiqued and questioned from time to time, the legitimacy of the empire was always uppermost in Britain’s public ideology.

In the case of the Athenian Empire, brilliant, but short-lived as was its career, there was always an unresolved question of legitimacy. The Athenians believed, as an integral part of their political culture, in the right of city-states to self-rule. Initially, when they constructed the Confederacy of Delos, the Athenians were able to cloak their dominance under the rubric of an alliance, in which Athens was first among equals. With the abandonment of the Confederacy and the creation of an Athenian Empire that was plain for all to see, the problem of legitimacy returned to haunt the leaders of Athens. They never resolved it, either among Athenians or those they colonized.

The American Empire faces a legitimacy challenge both at home and abroad. The point has already been made that because the United States was born as a consequence of an anti-imperialist revolution, Americans are highly resistant to the idea that their country itself has become an empire. Not only does the Declaration of Independence announce the right of Americans to enter the world as an independent state, it is a manifesto that heralds the right of all peoples to self-government. While the Declaration lists the wrongs inflicted on the thirteen colonies that have led its authors to take the dramatic step of dissolving “all political connection” between the colonies and Great Britain, its opening lines pronounce the rights of all peoples to “assume among the powers of the earth, the separate and equal station to which the Laws of Nature and Nature’s God entitle them.” While, the authors declare “Prudence…will dictate that Governments long established should not be changed for light and transient causes..”, whenever any form of government becomes destructive of the unalienable rights of men to “Life, Liberty and the pursuit of Happiness”, they have the right to “to alter or abolish” such a government and to institute a new government. When to this is added the proclamation that “all men are created equal”, we have a statement of general principles that is bound to find the inequality inherent in all forms of empire offensive.

Along with the Constitution of the United States, the Declaration is at the heart of the American civic religion of national values. To state that the United States has established an empire is to blaspheme against the Declaration. The Athenians, in their perverse way, under similar circumstances, imposed their own model democratic constitutions on the city states that they brought within their empire. A people that will not admit that it is an empire is not well suited to rule other peoples over the long term. This is especially true of that people’s elite, those who must insist on the martial discipline, the self-sacrifice and the willingness to shoulder the human and financial burdens of empire during difficult times.

The Athenian dilemma also plagues the Americans. Like the Athenians, the Americans insist on pushing the trappings of their system of government on peoples conquered by the U.S. military. And while the United States may aspire to secure special deals for its corporations on a country’s soil, and to establish permanent military bases for its armed forces, the system of government it champions incorporates the ideals of the American Declaration of Independence, namely that all men are created equal and that they have the right to self-government. While that contradiction promotes cynicism about the wide gap between American values and practice, it also has the effect of promoting the dissolution of the empire the U.S. is establishing. Constitutions written for other countries under the bayonets of American soldiers and under the tutelage of American officials, perversely become training manuals preaching the right of dependent countries to self-determination. The continuing power of the Declaration of Independence in the civic culture of the United States can be seen in the fact that it served as the basis for Abraham Lincoln’s Gettysburg Address in1863 and Martin Luther King’s “I have a dream” oration in 1963. To acknowledge the existence of their empire is for Americans to turn their backs on one of their most cherished values. This is much more than a matter of semantics. Americans cannot get around this dilemma by simply proclaiming that the United States is a superpower, while denying that it is an imperial power.

During the first century B.C., the Romans had to grapple with a parallel, but by no means identical, problem. By the time of the civil wars of that era, the Romans had established their imperial sway over much of the Mediterranean. Unlike the Americans, the Romans had no deep-seated ideological aversion to empire. Nonetheless, the transition from republic to empire was exceptionally traumatic for the Romans. The idea of the virtuous citizen-soldier as the archetypical figure of the society was replaced by that of the emperor, the godlike embodiment of the new imperial ethos.

Could the Americans endure such a transformation of their identity to enable their elites to plan for the long-term management of an empire? The American civic religion in which the Declaration of Independence and the Constitution are vital parts contains within it the germ of imperial ambition, cloaked though it is in the garb of the doctrine of national self-determination. From well before the American Revolution and its seminal accompanying documents, colonists who were becoming Americans developed the idea that theirs was a “special providence”, that their society was a City on a Hill, a shining example to the rest of the world, and a refuge for those seeking liberty.

In the post Cold War period, legitimation was achieved through the claim that America was the “indispensable nation” in the global system and more latterly through George W. Bush’s doctrine that it is America’s vocation to spread freedom to all of the people of the world. The Bush doctrine has proved to be a highly costly justification for empire, both abroad and at home. Foreigners, elites and peoples alike, have reacted strongly against the disruptive claim that the United States has the right to pursue regime change in countries such as Iran, North Korea and even Venezuela.

For Americans, the freedom doctrine, while it is capable of mobilizing Americans for short periods, has proved to be a very poor basis for rallying the American people for extended periods of time. When things do not go well in a place like Iraq, Americans can quickly conclude that Iraqis, with their interminable sectarian disputes, do not value democracy. Popular enthusiasm for lengthy occupations of other countries in the face of armed resistance has always been difficult to sustain in the United States. Although the Americans persevered in fighting a long and bloody guerilla war to victory in the Philippines a century ago, opposition to that war generated the first major anti-imperialist movement in American history.

More recent American missions in Vietnam and Iraq have provoked widespread opposition much more rapidly. In Vietnam, the American will to achieve victory was not great enough and sustained enough to overcome the fierce determination of the North Vietnamese and the National Liberation Front in South Vietnam. The Iraq occupation has been crumbling as a consequence of the insurgency and the flagging support for the war at home.

The problem with the freedom doctrine is that it does not offer American elites and the American people enough of an incentive to discipline themselves to win bloody, costly and lengthy struggles. The major alternative justification for winning lengthy wars of occupation is to argue that victory in them is in the vital national interest of Americans, both to safeguard their own national security and to maintain their access to critical resources, such as oil, and other economic benefits. Naturally, the self-interest case has been vigorously made during America’s wars. The argument that Communist expansionism had to be resisted worked well enough during the general standoff against the Soviet Union in the era of the Cold War. While the case was repeatedly made by the Johnson and Nixon administrations during the Vietnam War, it failed, in the end to rally Americans to pay the price necessary to achieve victory.

Since the demise of the Soviet Union, it has proved more difficult to find durable reasons for Americans to carry the day in their military missions. The terror attacks of September 11, 2001 served admirably to unite Americans in support of the invasion of Afghanistan and during the initial phases of the assault on Iraq. However, the Bush administration’s insistence that the war on terror was a great struggle on a par with the world wars and the Cold War was a palpable failure by 2006. Repeated alarums about potential new terrorist attacks on the American homeland had less and less effect on the people of the United States. Moreover, the cynicism that followed the revelations that there were no Weapons of Mass Destruction in Iraq and that there had been no credible expectation that they would be discovered in Saddam Hussein’s arsenal before the invasion, ate away at support for the mission. Worse still, the revelations about the Abu Graib prison atrocities and the realization that the United States was apparently constructing its own gulag in places such as Guantanamo, tore apart the idea that the U.S. mission in Iraq was genuinely about the pursuit of freedom. Both the Bush administration’s low ratings in the polls and the flagging support for the war were signs of the declining legitimacy of the Iraq mission.

The basic ambivalence of the American people and elements of the American elite about the imperial project has contributed to the inability of the rulers of the American Empire to see missions such as those in Vietnam and Iraq through to victory. Successful empires in the past were able to call on greater solidarity from both the general population and members of the elite to sacrifice to achieve imperial goals. The British Empire was the best modern example of this. In the 18th and 19th centuries, the British could rely on a constant supply of recruits for both the army and the navy, at times of stress, bolstered by the efforts of press gangs whose members forcibly seized men and carried them off to serve on the ships of the Royal Navy. Without that ready source of men who had few alternatives but to serve in the fighting forces, the British imperial system could never have been created and it certainly could not have been sustained. In the major battles of the imperial wars right down to Waterloo in 1815, this supply of men whose lot in life was to die if necessary to win British victories was the indispensable backbone of British power. In the United States today, while it has often been said that a form of “economic draft” exists, which pressures the poor from disadvantaged regions to join the Army, Navy, Air Force and Marines, the willingness to stay on indefinitely no matter how high the casualties no longer can be depended upon. While Americans were prepared to accept mass casualties through the two world wars and to a lesser extent in Korea, that willingness was sharply curtailed during the Vietnam War. Since Vietnam, casualties that would have seemed minor during the American Civil War, in which approximately fifty thousand men on the two sides died during the three day battle at Gettysburg in 1863, and thousands died in each of the campaigns against Japan in World War Two, or in the drive to Berlin at the end of that war, small body bag counts provoke a political reaction in the United States. This dramatically limits the ability of the United States to endure long struggles of occupation against strongly rooted insurgencies.

If the American people do not have the stomach for lengthy imperial wars, neither do important elements of the American elites. As things went badly for the American operation in Iraq in 2006, retired generals were quick to call for the resignation of U.S. Defence Secretary Donald Rumsfeld, and important political critics came forward to call for a revision to U.S. strategy abroad. In Vietnam, it was the growth of serious divisions within the American corporate and political elite, as well as among Americans at large, that finally forced the Nixon administration to wind down the war, and hand over operations to the South Vietnamese by 1973, which led of course to defeat in 1975.

In the face of stubborn resistance, elite opinion in the United States tends to splinter in a number of directions. Stoic dedication to a lengthy and discouraging cause is not something to which the American elites are inured. In part, this can be explained by the fact that the United States has been an immensely privileged country, occupying an enormous territory, blessed with weak neighbours and removed from dangerous foes by two oceans. It is not difficult to see why members of the American elite can grow weary of struggles in unpromising places. The stakes can appear not to be high enough for the leading elements of American society to summon up the resolve to achieve victory. Resolve for the elites does not, at present, mean volunteering to serve in the armed forces. The volunteer force of the United States, made up as it is largely of people from the poor and working class, is very much insulated from the upper classes and elites who do not have to fear, in most cases, that their own sons and daughters will die in battle. Resolve, therefore, has more to do with financing a war, for the elites, than actually fighting it.

The American upper classes, however, resent the payment of taxes. Mobilizing them to pay for a war on the frontiers of the empire is a political exercise fraught with the risk of failure. In the American political system, political leaders who make the case for financial sacrifice on the part of the rich and the affluent can expect to be challenged by potential leaders who are willing to offer this crucial constituency a better deal. In the Republican Party, the party of neo-conservatism that has promoted recent imperial wars, the mere suggestion of tax increases is anathema. This contradiction creates serious problems for the financing of American wars. It points up the difficulty that arises in a society in which the elite cannot be appealed to directly in the name of imperial loyalty. The republican virtues of the American Revolution and the strong commitment in the upper classes toward an untrammeled market-oriented society retain their potency. Altering this individualist culture which measures rewards in personal terms and which regards “business as the business of America”, just as surely as in the 1920s when this phrase was coined, in favour of more martial values is no easy thing to achieve.

What are the prospects for the development of a more consistently imperial and martial culture in the United States? As things currently stand, the chances are minimal. What could change this would be either a new great power confrontation, say with China, that could mobilize Americans in a struggle for survival, or a terrorist attack on the American homeland on a much larger scale than the one that occurred on September 11, 2001.

Barring an immense catastrophe, it is difficult to see how the American elite can be culturally transformed to become a disciplined and consistent imperial ruling order. At present, the prevailing pressures in American society militate against such a change. Indeed, the pressures are mostly in the opposite direction. In the not distant future, the excesses of American economic policy are bound to force a painful period of adaptation and restructuring. The accumulated debt to foreigners, the current account deficit and Washington’s budget deficit will all have to be faced, either through a protracted period of adjustment, the famed “soft landing”, or as a consequence of a hard landing that necessitates rapid adaptation. A hard landing could be the consequence, for instance, of a major recession caused by a spike in oil prices to the range of one hundred dollars a barrel, the bursting of the property price bubble (long overdue in both the United States and the United Kingdom), or the triggering of the above as a consequence of a U.S. military showdown with Iran. These adjustments, when they come, are virtually guaranteed to force radical changes in the economic relationship of both the U.S. and the U.K. (which has pursued a similar economic strategy) to the rest of the world. The sky high trade surpluses of China, and to a lesser extent of Japan, will have to be corrected and scaled back. These developments will generate two further effects worth noting---the end of China’s wide open market in the U.S., which will necessitate serious adjustments to Chinese economic policy; and pressure on the U.S. (and the U.K.) to ramp up the goods producing sectors of their economies which have been so seriously eroded during the age when these countries lived far beyond their means, importing more than they exported, and indulging in an orgy of cheap goods, which had the inexorable effect of obliterating their own industries.

What is coming is no less than the dethroning of the United States as the central economy around which the global system revolves. The First World War had similar consequences for the British who felt the pain of adjustment, beginning in the 1920s, and continuing through depression and war, for decades afterward. At the end of the great cycle of changes to come, for the first time in two centuries, the major English speaking countries will no longer be positioned at the apex of the global economy. This is not to predict that the United States will have an unimportant economic role to play. The suggestion here is very much in line with the forecasts of analysts such as Zbigniew Brzezinski that the U.S. economy is going to decline from accounting for twenty per cent of global output to the range of fifteen per cent. It is not that the Americans will cease to be productive. It is that they will no longer enjoy the extra benefits and free ride that have gone with presiding over the world’s central economy. As debtors, Americans will be pushed down the ladder of the world division of labour in favour of the world’s more financially sound creditor economies, likely the Japanese, Europeans and Chinese, among others.

These transformative events are sure to have an impact on the American Empire and the willingness among Americans and their elites to sustain it. Faced with a declining role for themselves in the global economy and with the material consequences of having to deal with their indebtedness, there are sure to be a number of strategies proposed by political leaders in response to these calamities. The responses will be informed by the traditions of American political culture. Undoubtedly, one wing of American opinion is bound to be sharply hostile to a world which has done such terrible things to America. Among those who respond in this fashion, there will be the two predictable and related tendencies, on the one hand to preach isolation from an evil world, and on the other hand to lash out at the world and to seek to dominate it. Isolation-domination---these have been the twin reactions that have been common among that stream of Americans who are particularly attached to the notion that the United States is a special society, endowed by God to play a special role in the world. In the face of material setbacks, both of these tendencies will be present. A segment of the American upper classes will undoubtedly attach itself to these tendencies. Both of these tendencies, whichever of them prevails, will promote militarism and the idea that America needs an indomitable military, either to fend off potential aggressors or to seize and hold onto the frontiers of the empire. No one can predict which stream of American political culture will become predominant in this hour of adaptation.

Other streams of thought will have a major influence as well. Those Americans, including major elements of the business community and the elites, who have considered themselves multilateralists, will want America to back away from the path of being the world’s solitary imperial titan. They will not want to dispense with the fruits of empire, but will seek to have the United States imbed itself in a far reaching regime of international organizations, rules and treaties. For them, the advantage of this route will be that it will allow the United States to adapt to changed economic and geo-strategic conditions. If higher taxes become necessary in the United States, and this is almost certain to be the case, this tendency will push for America to offset this by reducing its defence spending. Leaders of this line of thinking will want the United States to rely for its security on a system of relationships around the world in which many other countries bear the burden of security. In return for this, they will want the United States to sign on to the international agreements that the Bush administration has turned its back on---the Nuclear Test Ban Treaty, the Anti-Land Mines Treaty, the International Criminal Court, and the Kyoto Accord and future environmental agreements. In short, this tendency will want the United States to end its splendid isolation and come in from the cold. The outcome in the American struggle will be much affected by developments in the rest of the world, not least in the Americas where the rising Hispanic influence in the United States is bound to be a factor in the knitting the American political culture anew.

The struggle that occurs in the United States over which of these tendencies will emerge as the dominant one will have immense implications for the rest of humanity. If a militarist, revanchist regime is established in the United States that seeks to rely on American military power to dominate much of the world, the United States will become a dark force in the 21st century, more authoritarian at home and deeply resented abroad. If the second tendency prevails, the world can look forward, not to the immediate end of the American Empire, but to a long term shift away from empire toward an international regime in which a myriad of voices, tendencies, peoples and ideas have their place in shaping the world.