[OPE-L:6035] hidden hand of american hegemony

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Tue Oct 02 2001 - 01:00:00 EDT

In grossman's reconstruction of marx's theory of accumulation and crisis, the 
capitalist system comes to suffer from a break-down in international 
cooperation. spiro's findings are consistent with marxian theory here. 

>From the review by Michael Anderson in Business History Review, Summer 2000:

[Spiro's] argument focuses on America's declining hegemony. It turns on teh 
common assumption that a hegemonic power is required for the sommoth 
functioning of intl capital markets--known in the IPE literature as the 'the 
theory of hegemonic stability' (THS). According to the THS, the hegemonic 
nation provides the public goods of confidence, liquidity, and a payments-
adjustment mechanism. From 1945 to 1971, American supposedly played that role, 
much as Britain was thought to have done prior to 1914. In the early 1970s, the 
collapse of the Bretton Woods regime, the ascedancy of the Japenese and Western 
German economies, and the stagnation of its own economy threatened America's 
hegemonic status. Then OPEC shocked the world. As the acknowledged hegemonic 
power, America was expected to adopt the legitimate course of cooperating 
within the system to address OPEC's challenge.

"S marshalls a plethora of public statements by US officials to show that hey 
paid lip service to this notion of legitimacy. yet as his data and numerous 
interviews show, US officials acted otherwise. Fearing the consequences of a 
market regulated outcome, they instead used the power of the state to direct 
OPEC surpluses into US govt securities. Among other activities treasury sectys 
Simon and Blumenthal cut secret deals with Saudi monetary authorities s that 
Arab kingdom could purchase T bonds outside the usual auction. Moreover, they 
convinced the Saudis to continue to price oil in dollars and not to diversify 
their portfolios into securities and deposits denominated in competing 

"US officials also failed to abide by agreements with OECD partners. they 
competed for capial rather cooperating in its distribution. (europeans and 
Japan did so as well, but their actions seemed more acceptable because they 
were not the hegemonic power.) indeed officials of the Nixon, Ford and Carter 
administrations activiely discouraged any coordiation of intl policy. They felt 
that private capital markets were not up to the task of handling increased 
flows. Moreover, the feared the consequences for America's budget deficits and 
payments position. Yet in their statements to the press and to Congress, they 
justified their actions in the shared language of accepted norms. That is, they 
insisted that markets were working to allocate capital and were cooperating 
with their counterparts in the OECD and at the IMF. 

"Spiro concludes that the 'American response was therefore exploitative of its 
hegemonic position...the revised theory predicts that cooperation after 
hegemonic decline is unlikely. Rather Spiro expects stability and cooperation 
in such circumstances to break down. 

"Spiro's book fits into the recent IPE literature challenging the popular idea 
that the state has grown increasingly powerless in the face of globalization."


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