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Is US Imperialism Resurgent?
—a Critique of Petras and Rhodes
Albert Szymanski
The Petras and Rhodes article in NLR 97, ‘The Reconsolidation of US
Hegemony’ argues that, contrary to the view of many, the United
States is not on the decline as a world power. It states: 1. that although
the USA suffered some relatively minor setbacks around 1970, it has
now pretty much recouped its position of world hegemony; 2. that
Europe and Japan are on the decline vis-à-vis the United States, in good
part because of the fact that the US working class is more ‘docile’ than
that of its competitors. A careful examination of the evidence, however,
refutes the Petras-Rhodes claim of a reassertion of US world hegemony.
SOURCE: United Nations, Yearbook of National Trade Statistics, 1975, pp. 17–19.
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position of the United States is the only major factor which has con-
tinued to decline in relation to the rest of the world. Far from this being
the case, the relative US decline is revealed in a whole array of basic
statistics.
The declining export position of the United States is a reflection of
both its very slow rate of economic growth and its slow rate of growth
in productivity. In 1965, the American GNP was 28·9 per cent of the
world’s total, in 1970 26·4 per cent and in 1974 25·1 per cent. The ratio
of the American GNP to the (constructed) Soviet GNP was 2·06 in 1965,
1·83 in 1970 and 1·76 in 1974; while its ratio to the Japanese was 7·28,
3·97 and 2·83 respectively. The total GNP of the countries presently in
the Common Market is almost as large as that of the American and the
slight gap continues to close. While the American economy was 120 per
cent the size of that of the EEC in 1970, it was 111 per cent as big in
1974 (see Table 2).
TABLE 2
Gross National Product 1965–74
(US as a percentage of each)
1965 1970 1972 1974
World Total 28.9 26·4 26·2 25·1
NATO Europe 122·0 120·0 115·0 111·0
Japan 728·0 397·0 345·0 283·0
USSR 206·0 183·0 187·0 176·0
China 992·0 713·0 619·0 570·0
USA 100·0 100·0 100·0 100·0
SOURCE: US Arms Control and Disarmament Agency, World Military Expenditures and
Arms Transfers, 1965–74.
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The growth rate differentials are, in good part, in turn a product of the
differential rates of growth in labour productivity. While from 1965 to
1975 the US output per man hour increased to only 115 per cent of what
it had been ten years before (in 1972 the output per man hour was
actually higher than in 1975), that of the Japanese increased to 231 per
cent, the Swedish to 178 per cent, the West German to 165 per cent and
the French to 158 per cent (see Table 4).
TABLE 4
Percentage Increase in Output per Man-Hour 1965–75
US 115% Italy 163%
Britain 136% West Germany 165%
Canada 142% Sweden 178%
France 158% Japan 231%
The authors suggest that the military position of the United States has
been recouped, yet the data reveal quite another trend (see Table 5).
TABLE 5
Military Expenditures 1965–74
(US as a percentage of each)
1965 1970 1972 1974
World Total 32·5 33·2 29·7 27·3
NATO Europe 203·0 247·0 206·0 183·0
Warsaw Pact 87·0 90·0 81·0 73·0
USSR 99·0 102·0 93·0 84·0
China 1110·0 740·0 482·0 458·0
USA 100·0 100·0 100·0 100·0
SOURCE: US Arms Control and Disarmament Agency, World Military Expenditures and
Arms Transfers, 1965–74
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Europe from 2·47 to 1·83. The same phenomenon is seen when the
number of men in the armed services is examined (see Table 6). Here
TABLE 6
Size of Armed Forces 1965–74
(US as a percentage of each)
1965 1970 1972 1974
World Total 12·8 12·8 9·3 8·4
NATO Europe 86·0 98·0 70·0 68·0
Warsaw Pact 64·0 67·0 48·0 41·0
USSR 96·0 92·0 66·0 55·0
China 111·0 108·0 76·0 65·0
USA 100·0 100·0 100·0 100·0
SOURCE: US Arms Control and Disarmament Agency, World Military Expenditure and
Arms Transfer, 1965–74.
it can be observed that while in 1970 the United States had 12·8 per cent
of all military personnel in the world, by 1974 it had only 8·4 per cent.
Likewise the ratio of US to Soviet troops declined in the same period
from 0·92 to 0·55, while that for the NATO countries declined from
0·98 to o·68. Clearly, there has been a significant and continuous decline
in the military position of the United States. The latter’s 1976–7 $100
billion military budget must thus be understood, not as Petras and
Rhodes would have it, as a reassertion of the predominant American
military position, but as merely an attempt not to fall too far behind.
While the United States remains for the time being the leading military
power in the world in terms of sophisticated equipment, it now has
only the third biggest armed forces. Moreover, as its defeat in Vietnam
and its reluctance to get involved in Angola have shown, it is not able
to translate its technological advantage into military successes.
In addition to asserting that the US military position has not suffered,
Petras and Rhodes also claim that the United States has now become
financially hegemonic over its competitors. But once again their asser-
tion is not substantiated by the facts. Table 7 reports the overseas assets
TABLE 7
The Foreign Assets of Banks (Commercial/Deposit Banks Plus Monetary
Authorities): 1969–76
(billions of US current dollars)*
1969 1970 1971 1972 1973 1974 1975 1976
France 11·1 13·3 18·5 25·0 30·9 30·5 49·0 —
West Germany 21·1 28·7 32·2 36·8 46·1 52·0 61·6 67·0
Italy 13·1 15·9 18·3 29·0 25·8 13·1 13·3 —
Japan 8·9 11·5 19·3 25·6 20·2 22·3 22·2 25·8
Netherlands 6·2 8·6 9·9 12·2 15·5 19·0 23·5 23·8
USA 23·5 21·5 21·9 26·8 32·5 40·7 47·0 48·6
*Comparable data for Great Britain are not reported in the International Financial
Statistics.
SOURCE: International Monetary Fund, International Financial Statistics, August 1976.
of the banks of the leading financial countries of the world. From this
table it can be seen that both the West Germans and the French had
greater overseas assets in 1975 than the Americans ($61·1 billion for the
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Germans and $49 billion for the French, compared with $47 billion for
the Americans). Further it must be noted that during the course of the
1970s there has been no tendency for the US position to improve vis-à-
vis either of these countries.
TABLE 8
Foreign Liabilities of Deposit/Commercial Banks in US Dollars: 1969–76
(billions of US current dollars)
1969 1970 1971 1972 1973 1974 1975 1976
France 7·2 9·4 13·4 19·5 24·9 26·1 32·3 —
West Germany 6·3 9·2 10·4 11·2 12·9 15·2 18·7 20·0
Italy 7·2 12·1 12·1 18·8 21·5 12·4 14·3 —
Japan 4·6 5·6 6·8 7·8 12·3 20·7 22·8 —
Netherlands 3·4 5·1 5·6 6·8 9·0 11·8 15·0 14·9
United Kingdom 5·4 6·8 8·2 12·1 20·3 24·6 — —
United States 32·5 24·1 20·7 26·0 32·6 47·0 45·1 42·7
*Data for France, West Germany, Japan and the Netherlands are for all deposit
banks; for Italy and the United States all commercial banks; and for the United
Kingdom for the total value of all foreign deposits in British banks.
SOURCE: International Monetary Fund, International Financial Statistics, August, 1976.
United States has consistently held its position as having the largest
overseas liabilities (in 1975, $45·1 billion compared to $32·3 for France
and $22·8 billion for Japan). But while the foreign liabilities of US
deposit banks about doubled during the first half of the seventies, the
foreign liabilities of French, Japanese, Dutch and British banks all
increased considerably more rapidly. It should also be noted that the
American total decreased by $2·4 billion from 1975 to mid-1976. Hardly
what Petras and Rhodes suggest. All this would seem to point to the
conclusion that Petras and Rhodes are wrong, foreign money (Arab or
otherwise) is not flocking to the United States at the expense of its
competitors.
So drastic has been the relative economic decline of the United States in
the seventies, that even the very long-run tendency for the ratio of
foreign investment in the USA to US investment overseas to decline has
reversed itself. While in 1972 foreign investments in the United States
amounted to 15·8 per cent of US investments overseas, this had risen to
18·3 per cent in 1974. The ratio of European, Canadian and Japanese
investments in the United States to US investments in these countries
meanwhile rose from 24·5 per cent in 1972 to 25·4 per cent in 1974,
showing that the reversal of the long-term tendency is not due solely to
investments by the OPEC countries (see Table 9).
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TABLE 9
The Ratio of Foreign Direct Investment in the United States to US Direct
Investments in Foreign Countries
All Countries Europe, Canada and Japan Only
1969 0·167 0·263
1970 0·169 0·264
1971 0·162 0·251
1972 0·158 0·245
1973 0·170 0·247
1974 0·183 0·254
SOURCE: US Department of Commerce, Survey of Current Business, various issues from
1970 to 1975.
The authors do, however, make a very interesting point that the
‘docile’ nature of the working class gives American capitalism space to
stay competitive that is not available to its competitors. As Table 10
shows, the United States has had the lowest rate of growth in unit
labour costs of any of its major capitalist competitors—only 35 per cent
in current dollars from 1970 to 1975 (compared with 116 per cent for
West Germany and 141 per cent for Japan). Thus, in spite of the abys-
TABLE 10
Increase in Unit Labour Costs in US Constant Dollars 1970–75
USA 35% Italy 115%
Canada 43% West Germany 116%
Britain 77% France 126%
Sweden 99% Japan 141%
SOURCE: Fortune, August 1976, p. 130.
149
In fact, however, contrary to what Petras and Rhodes suggest, the
relative ‘docility’ of US labour has been operating as a major factor for
at least ten years and probably more like twenty-five. Rather than a
future factor, ‘labour docility’ may in fact be largely a product of the
past: for how long can the working class remain ‘docile’ in face of its
losses? As it becomes more and more obvious that the American living
standard is no longer the highest in the world, a reaction is bound to
set in. Rather than the relative decline of European capital accelerating
the radicalization of the European working class, we should be expect-
ing exactly the opposite, i.e. the relative decline of US capital producing
the radicalization of the US working class.
The evaporation of the traditional difference between the European
and American working class is not limited to the disappearance of the
difference in wages, but is also being extended to the disappearance of
differences in susceptibility to unemployment and in the availability of
social welfare. While the average rate of unemployment in the United
States had, through much of the fifties and sixties, been three or four
times higher than that of many of its leading competitors, in the mid-
seventies this difference decreased considerably. While the rate of un-
employment in the United States was 7·6 per cent in early 1976, it was
6·2 per cent in Britain, 4·8 in France and 4 per cent in West Germany at
the same time (see Fortune, August 1976, p. 131). Likewise, the US work-
ing class is now catching up with the European in terms of the social
services available to it. During the course of the sixties, and at an
accelerated rate during the seventies, federal spending on education,
health housing, ‘income maintenance’, etc. has been rapidly increasing.
In 1960, the ratio of federal social expenditures to military expenditures
was 0·45, in 1970 0·85, and in 1975 1·79 (see Table 12).
TABLE 12
The Ratio of Total US Federal Social Expenditure to Total US Military
Expenditures 1960–75*
1975 1·79 1970 0·85
1974 1·56 1969 0·73
1973 1·46 1968 0·66
1972 1·26 1965 0·61
1971 1·08 1960 0·45
*The ratio is the sum of federal expenditures for community and regional develop-
ment, education, manpower and social services, health and income security divided
by expenditures for national defence.
SOURCE: Computed from data in US Department of Commerce, The Statistical Abstract
of the United States, 1975, pp. 226, 253.
What we can expect politically from the inevitable decline of the United
States to the level of the rest of the advanced capitalist countries is that
the politics of its working class, which for so long have been virtually
unique among the advanced countries, should also come into line. The
conservative nature of the American working class has been a product
of the exceptional economic position of the United States during most
of the twentieth century. Its rapid economic growth induced both a
massive immigration from Europe (which in turn produced consider-
able ethnic antagonism and ethnic identification rather than class con-
sciousness), and a rather rapid increase in real wages and upward
mobility which acted to ‘cool out’ class antagonisms and hindered the
development of class consciousness. The evening out of economic
levels of development is coming to mean the ending of these differ-
ences as well. In fact, the tables have turned in the last generation.
Recently there has been more foreign immigration into Europe, than
into the United States, as well as a far more rapid rate of increase in real
wages in the former area as well. The natural inference from all this is
that the long overdue socialist working-class consciousness can be ex-
pected to develop and the revolutionary struggle of American workers
commence. It may yet turn out that American workers play a leading
role in the world revolutionary struggle.
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