BEGINNINGS, MATURITY, COLLAPSE REBIRTH, AND... NEXT?
Table of Contents
- Chapter One: The Beginnings, Growth, and Spread of Trade
- Chapter Two: World Trade in the 17th and 18th Centuries
- Chapter Three: Capitalism, Trade, and Imperialism in the 19th Century
- Chapter Four: 20th Century, First Half: Economic and Political Collapse, Social Disasters, and Wars
- Chapter Five: 20th Century, Second Half: Expansion and Improvement; Socio-Economic Troubles and Wars
- Chapter Six: Conclusion: Will the 21st Century be the most disastrous ever?
The world economy was born in the 17th century, began to grow in the 18th , matured in the late 19th, and became self-destructive with its two world wars in the 20th. The always swifter and deeper progress of technology guaranteed that the second war would be considerably more destructive than the first. During that war the USA began to think through and work toward what became a renewed world economy which, until recently, it has dominated. If there is a third world war, it would almost surely bring an end to our species.
It was also in the 17th century that interdependent social and technological developments began their strengthening, the lead taken by the Dutch and the British. Both the natural resources and the population of the Dutch were much more limited than those of Britain, and the latter’s location, entirely surrounded by the sea, also gave it more protection from endless wars. The Dutch gained most of their resources and wealth from their colonial achievements around the globe; the UK achieved much the same results from its murderous invasion and exploitation of both the people and the natural resources of neighboring Ireland.
Although those “worldly” steps were taken in the 17th and 18th centuries, there was nothing like a functional world economy until the second half of the 19th century. Its members were Great Britain, the USA, France, Germany, Italy and, late in the century, Japan. That economy was dominated by the UK for the entire 19thcentury and up until World War I. Because of the chaos and conflicts between the two world wars, the global economy fell into the shadows: given the severe damages of the first war and the upheavals of the interwar revolutions and counter-revolutions, a second world war was on its way, and there was no longer more than a make-believe world economy. Until, that is, the USA took over. By the time the 20th century ended and the 21st began, economic and social developments had made it appropriate to add China, India, and Brazil to the list (with the USSR and smaller economies participating).
There are several reasons for writing a book of this kind; among them the most vital is that since the 1970s the political economy of the USA has taken a historically unique flip flop; still the world’s largest economy it has now also become history’s largest importer and, even more worrisome, its largest borrower ever. It is relevant to note that in the period when the UK was the world’s leading economy and largest importer it also remained the world’s largest lender. Their main borrowers were the USA and Germany, both of whom would soon surpass them in economic strength. Of even greater importance – and the reason for this study – the world economy since the 1970s has differed beyond its predecessors in more ways than one:
Virtually all of the world’s national economies are seriously dependent upon rising exports, especially to the USA; if and when, for a variety of reasons, the USA’s imports decline, almost all other nations will suffer, because (1) the USA is by far the world’s largest importer; (2) the USA is currently beset by a serious recession which, although officially described as ended, continues; (3) the official unemployment rate today /10%/ is what it was at its height; (4) the rate is 16-17% when it includes what is not included the official rate: workers who were full-time, but now part-time; those skilled workers now stuck in unskilled jobs and /or those who have up looking; (5) the lurch toward conservatism of the U.S Congress since the 2010 elections.; (6) the probability that the U.S. economy’s industrial sector and its decent jobs will continue to contract; and, as will be detailed in the Epilogue, (7) while average wages decrease ad poverty increases in the USA, the costs of health care and educational, already high, are rising. (Rasmus, 2010)
Much more to be said about the economy will be found in the chapters to follow. Here I add only this: If the economy were our only problem that would be bad enough; it is not. As will be seen,, even before World War II ended, the USA was involving itself with French attempts to hold on to Vietnam, and that was only a beginning. When the French lost Vietnam the USA secretly took up the fighting, not to be admitted until the 1960s: with a lie saying we had been attacked /see Chapter Four/). Before then, we had been fighting in Korea, and increasing our hostility toward the USSR, with Iraq over the horizon. Our involvement with Afghanistan began in 1979 when, insanely, we armed the newborn Taliban to entice the USSR into a suicidal war of nine years which is now ours, and even longer. There is no reason to expect a reversal of that tendency: little reason to believe that we will exit either Iraq or Afghanistan ever, except as from Vietnam. Indeed, there is all too much reason to believe that, at Israel’s wishes, we will also become militarily involved with Iran; every reason to expect that the now GOP-dominated Congress (and, possibly, after the next election, the White House), as it decreases social programs will even increase our military adventures. As matters now stand, the USA seems to be disinclined to seek peaceful and positive ways to lessen hostilities from real and imagined terrorists. Unfortunately, and tragically for one and all, we have been a militarily aggressive nation from birth and come out the winner. That there will not be a winner in the next big war doesn’t seem to be understood. (Bacevich, 2008)
Add to all of that our large contribution to the destruction of the environment, which already hovers on the edge of irreversible disaster. The USA is by no means alone in those dangerous processes. But since 1945 we have been the world’s unchallengeable leader, economically, socially, militarily. Not only have we set a bad example for the rest of the world, we have also functioned – and continue to function – in ways which take other societies with us; or put them against us. The world we live in now is a horror show for the majority of its six plus billion inhabitants: a horror show which is also a tragedy. That word signifies a situation which could have been avoided and/or could be undone. Those who, along with led by the USA, rule over the world today have engineered the basis for that tragedy, whether for riches and/or power. They have done so in what has been called call “a class structure of monopoly capitalism: in which the levels of inequality are without precedent, the 400 richest Americans now own as much wealth as half of the U.S. population, and that small class fractions control increasingly large portions of social wealth.(Foster and Magdoff, 2010) Those “small class fractions in the USA and elsewhere will continue to do so until the disasters now lurking in the shadows take over; unless and until, that is, “we the people” awaken ourselves, push the plutocracy off the stage, and create a genuine democracy, run by and for the people: everywhere.
That said, here a few more comments regarding what is to follow. Chapters One and Two introduce the birth and beginnings of the modern world, capitalism and industrialism. Chapters Three, Four, and Five 5 analyze “the world economy’s functioning from the 19th century and its maturation, achievements, and disasters in the 20th century. Chapter Six analyzes the world economy, wars, and the environment as the 21st century opened and its rising troubles and uncertainties. The discussion of the world economy up through World War II analyzes only six nations: the UK, the USA, Germany, France, Italy and Japan. In varying degrees, up to the first war all of them were capitalist societies with varying degrees of democracy.. However, between the two world wars Germany, France, Italy and Japan became fascist. Although in all four cases most of he capitalist owners of the “means of production” supported the rise of fascism (if only to prevent socialism), when their nations’ socio-economic policies became subject to fascist militaristic aims and means that also meant that military strength and wars became the first priority. In those years, sooner or later, all four dropped out of the world economy.
Those six remain the leading capitalist nations, but there are now also two communist nations: Russia and China. Neither is discussed until Chapters Four and Five, if also for diverse reasons. Whether before or after Russia became the Soviet Union (then back to “Russia”), although it has had the strength to be powerful in world politics, its economy’s volume, structure of production, and average levels of personal income combine to make it insufficient to participate significantly in foreign trade. As will be discussed in Chapter Six, China has in recent decades combined its communist politics with the savvy of its privately owned businesses to become second only to the USA in its national production. However, there is a great difference: the USA is both the world’s largest borrower and largest buyer of the world economy, and China is its largest lender and seller. Those realities and differences portend a shaky future for the world economy and global politics. That will be discussed at length in the final chapter.
The Beginnings, Growth, and Spread of World Trade
Humans and all animals have some instincts in common; most clearly, reproduction, hunger, and fear. But their and our instincts go beyond mere survival when hunger becomes greed and fear becomes aggression. And, of course, humans also have at least one characteristic which is not shared equally, if at all, in the animal kingdom: the strengths and dangers of our imagination. That goes well beyond day to day survival in many ways; not least in that which goes beyond hunting and eating into production, trading, finance, and speculation. Of course there are other substantial differences, for better and for worse: “the better” has given us the abilities which take us into the realms of art and music, economic strength, philosophy, science, etc.; the “worse” is our all too strong ability to destroy each other and Mother Nature in ways and to degrees out of reach of all other creatures.
Archaeology shows us that both the better and the worse began to take hold at least 25,000 years ago, in the Stone, Bronze, and Iron Ages. As the materials used for production in those three epochs changed over time, so could and did the forces of production and, consequently, economic structures and social organization: the “Neolithic revolution” gave humans control over their food supply through the planting of edible grasses, roots, or trees and the taming and uses of various species of animals. Innumerable centuries in turn opened the door slowly to a more complex set of innovations: the transformation of tiny villages of self-sufficing farmers into populous towns and cities, thence to secondary industries and state-organized foreign trade.
That long process evolved from 6000 to 3000 B.C.; its geographic scene was in the belt of semi-arid countries between the Nile and the Ganges. Thus it was that in the studies of 3000 B.C. the archaeologists’ attention was no longer on communities of simple farmers but on societies embracing various professions and classes, dominated by priests, princes, scribes and officials, an army of specialized craftsmen, professional soldiers, and miscellaneous workers; all withdrawn from the primary task of food production.
In their effect upon humanity as a whole, some prehistoric changes were easily comparable to the dramatic transformation of the 18th century in Great Britain. ( Childe, 1936)
But the voyage from the prehistoric era to the period we call “ancient” had only just begun. As Knight points out, “It was not until only yesterday in the history of mankind that written records were devised. That development produced the ripe fruits of human organization and what we call civilized associations; first in western Asia and the Nile Valley. Before that was possible, weapons and tools (most vitally, the plow) had also to be developed, as some of man’s worst enemies were subdued or exterminated, and animals and plants were domesticated. ‘Civilized’ suggests political organization into cities and states, a definite amount of economic machinery, the transport and exchange of products, and a taxation system.” (Knight, 1926)
Thus it was that primitive society seeded the ground for the ancient, medieval, and modern worlds. The primitive people had achieved the art of making fire and the domestication of animals and tools for exploiting nature; that made possible early mechanical means, the use of extractive industries, the exchange of commodities, public control through government, and, neither last nor least, the development of languages. All of the foregoing was “invented” or set the stage for inventions long ago in primitive society; but their society was already strikingly ‘modern’ in its conceptions of group economic interests, its stern requirement of loyalty of members, and its instant alarm when venturesome individuals proposed sweeping or sudden changes. That said, if what we see as the modern world was to be born, it had to have additional “parents.” In the several quotations from Knight to follow, those “parents” are to be found.
Europe’s forerunner was ancient Egypt. In the 2000 years or so preceding the Christian era, Egyptians provided the basis for the first major economic/political European steps toward what would in the 17th century A.D. become the modern world. Over those many centuries, the ancient social order spread northward and westward through the entire Mediterranean region, to include the Balkan Peninsula, Italy, Spain and, connecting those three, the southern edge of the European mainland; Greece in the lead. Among many other matters, that meant: 1) a great expansion westward of the area reached by Near-Eastern commerce; 2) colonization of the Phoenicians and Greeks, and the transmission of Oriental civilization to its “Europeanization” in Italy, making it more palatable to western peoples; 3) the general use of money in the last third of those 2,000 years; a general use which had substantial effects on the economic life and imperial administration of 4) the birth and growth of the Roman Empire. With their industries and trade, the Phoenicians had performed a substantial basis for the civilizing of Europe with their settlements in Malta, Sicily, Sardinia, and as far west as Cadiz (on the Atlantic Coast of Spain); and by 1000 B.C., just north of Rome, the Etruscans had settled in Italy.
Taken together, the foregoing developments brought the civilization of the near Orient to Europe. That Egypt was often in the lead of these developments was essentially dependent upon the fertility of the Nile Valley: a 750 mile ribbon of land which, among other “inventions,” was creatively used for irrigation with devices to raise the water where necessary, which allowed a long list of vegetables, tamed animals, and trade to prosper. Along the way, Egypt became militarily strong on land and sea, built its pyramids, obelisks, and even stone-dressed roads. By 2000 B.C. Egypt was carrying on considerable foreign trade to its north, east, and west and had birthed the Suez Canal, originating in a chain of lakes and rivers and emptying into the Mediterranean Sea. Along with others from Western Asia and what came to be called the Middle East, the foundation had thus been laid for what would become Rome and Ancient Europe. Among the numerous developments involved in the centuries of the ancient world, it is pertinent here to list summarily the vital changes listed by Knight:
1. A great expansion westward of the area reached by Near-Eastern commerce and its colonization. 2. The transmission of Oriental civilization to Italy by the Etruscans. 3. The use of money. 4. The beginnings of state organization and fiscal measures through the influence of Persians and Assyrians. 5. The interactions of those developments over many centuries. 6. The inability of Rome to control what it had created and its horrible costs. 7. Taken together, the foregoing developments provided the basis for the emergence of numerous towns and cities and the foundations for what became medieval Europe.
Before turning to medieval Europe, here a brief discussion of the role of Greece as a critical element in what assisted Europe’s emergence and early functioning. The Greeks are not familiar to us as a European people; indeed, their first steps toward economic progress were when they became a prominent factor Near Eastern life. Then, as Greek population expanded and could no longer subsist on their small islands and valleys, they were forced to colonize and pushed westward or northward. On the very edge of the Orient, their geographic situation had put them in immediate contact with the oldest and most prosperous civilizations to the east. Knight again: “As enterprising individualists, they fought with all the armies, traded everywhere, and yet remained Greeks, clinging to their traditions and their affection for their main city of Athens. Because her natural resources were insufficient to maintain her people well, commerce was the only way in which the Greek cities could keep up with population growth, trade; became her solution.”
Thus, it was not the innate strength of Greece which gave it prominence and strength, but its geographical position on the threshold of the oldest and most prosperous civilizations to the east and south. In those same years, their numerous free island homes made them secure from marauding nomads and armies (as well as from the paralyzing influence of oriental political despotism). After a successful contest with the Persian Empire during the fifth century B.C., the Greeks (led by Athens) founded a commercial empire, more than a little facilitated by their victory over Persia.
Taken together, those developments left Greece without a peer as either a trading or naval power in both the Black and Mediterranean Seas. Thus it was that over time a line was drawn between Europe and Asia, a line which gave the Europeans time to mature their own institutions and to assume the initiative in subsequent developments in trade. But Greek dominance was limited, for its economic power never went beyond trade and finance and it would be diminished to the east by Persians and to the west and north by Romans. First a summary glance at the Romans. Then we will take a longer look at the centuries-long medieval period which unintentionally paved the way for capitalism and the modern era.
The Roman Empire
Its birthing was about 500 B.C., and it lasted for centuries in both the east and the west. Western Rome will be the focus here. Its decay had begun to be obvious already in the third century A.D. and was complete by 500 A.D. In those many centuries Rome had greatly enlarged European civilization. As has often been the case in history, that “enlargement” carried with it a great loss of unity, organization, and culture: Rome’s successes, as with those who both preceded and followed it, also became its undoing. Knight lists its problems succinctly:
Economic life in the Roman Empire was too varied for any stereotyped social system: Italy was economically too dependent upon the outside; the city of Rome rapidly ceased to be self-sufficing and became a great urban parasite upon the Empire; Italian commerce and industry were fatally injured by the competition of the Near East; indiscriminate charity, partially based on political motives and partly on economic necessity, destroyed the initiative of the population; non-free labor had a fatal influence upon the energy and independence of free labor; the middle class, the backbone of the State, was crushed by the burden of taxation; society was divided into the great mass of slaves and half-free “coloni” and a few great landlords able at last to defy the government. A ruling as broad and as complex as that of Rome of course had many difficulties and weaknesses. But what enabled her to live for so many centuries, was that she demanded and long achieved discipline: law and order, peace, and commercial intercommunication were established over an immense area, releasing productive forces which took the place of long-standing petty strife and competition and the Pax Romana took the place of the mutual destruction of centuries. The resulting peace was something more than the absence of strife: property relations came to be observed; innumerable differences were tamed by complicated sets of laws, and much more
Thus it went for centuries in the Roman Empire in the west; but as it did so, it was also setting the stage for its decay. That began in the third century A.D. and was completed by the sixth, at which time its onetime German sector was able to push it out of the west (see below). Rome withdrew to Constantinople; in doing so, it left a fourth of Europe with the vestiges of a strong legal system, and, as Knight points out, “:a memory of sumptuous and orderly life, with a Church and language which, working together, were to provide a basis for intercourse and cooperation far beyond what would have been possible otherwise. The departure of Roman discipline and social order left a large geographic arena plagued by one kind or another of disorder, but it also left behind a fourth of Europe with two quite different sets of social existence: 1) the vestiges of a great legal system, the memory of sumptuous and orderly life, crafts and agricultural skills, a Church and a language which, working together would provide a basis for intercourse and cooperation far beyond what otherwise would have been impossible. 2) A depressed and depressing world However, as Cipolla points out, in that sad world there would rise the cities between the 10th and 13th centuries “which turned the course of history.”
Seen often as “the Middle Ages,” that millennium was an outgrowth of the achievements, follies, and collapse of the ancient world. The medieval centuries of socio-economic development in turn provided the base for what in the 17th century became the beginnings of another new world, with its achievements, follies, collapses, wars: and capitalism. The earlier expansive efforts of Spain and Portugal from the 16th century on could be seen as attempts to create their own “Roman Empires”; but times had changed: both countries managed to create a base for imperialist gains, but their fuller aims, ways, and means were more medieval than modern and “out of date”; so much so that by the `19th century, they themselves had become de facto victims of imperialism.
More important, but by no means their intention, what Spain and Portugal had also done in crossing the Atlantic was to take a major step in the processes which formed the basis for today’s world economy. The next vital moves in that set of processes in the 17th and 18th centuries were taken by the first economic powerhouses of the modern world: the Netherlands, and then Great Britain. (See the next two chapters.)
Now we turn to a highly selective study of the political economy of the medieval world; “selective” in the sense that it will be focused almost entirely only upon the leading powers of Medieval Europe’s south (Venice) and north (Gilds and the Hanseatic League). Although both south and north were unique in many ways, their aims, procedures, and consequences were more common than unique, both individually and collectively interdependent, and in many ways representative of the period as a whole: (Apologies to the Milanese.)
Before turning to either region, an introductory statement on the background with which economic life functioned in both. After the disintegration of the western Roman Empire, there was little or no central government in western Europe and commerce between regions dried up for lack of protection, regulation or a commercial and monetary system: each community had to look out for itself in order to overcome the widespread decay and disorder left behind by the Romans, and for centuries, all but a small percentage of western Europeans lived in an agricultural villages fending for itself. The exceptions to that condition were to be found mostly in the trading societies closest to the Mediterranean Sea. As commerce grew in those areas and in some to the north, towns supplemented trade more and more with manufacturing industry. Almost by definition, the medieval world was up to a point ruled over by large and small kingdoms. Although economic conditions were slowly improving, most people were serfs, with no prospect of a different life. But it was in those same years, from the 11th to the 13th century, as Cipolla put it (1976)
Towns came into play as an element of innovation, as a place to seek one’s fortune. The town was to the people of Europe from the 11th to the 13th century what America was to Europeans in the 19th century: a “frontier, a new and dynamic world where people felt they could break the their ties with an unpleasant past…., would find opportunities for economic and social success, where sclerotic traditional institutions no longer counted….; where “the air of the city makes one free.”
Towns had of course existed before in both Europe and Asia, but these medieval towns were in a different world; one in which not only had traditional powers been weakened, but where the cities were clearly on their own, not an organism of a higher authority: cities clearly on their own: separated from the countryside by walls, moats, and gates, presided over effectively by merchants. Cipolla again:
The city was also another world from the juridical and cultural points of view; the merchants and craftsmen of the towns did not recognize the control of the rural world or its cultural values. The emergence of those 11th-13th centuries was not the appendage of a regional evolution but the expression of a revolution of a cultural and social revolution which found its base of operation in the towns…..With these cities and their “bourgeoisie” a new Europe was born and the urban revolution of those centuries created the perquisites for the Industrial Revolution of the 19th century
They also created perquisites for the developments which ultimately placed Europe, the USA, and Japan on a path toward ruling and/or wrecking the world. Now we shift to a quick look back at the critical developments in both south and north. The selective focus will be upon those who were among the most prominent and influential in the political economy of Medieval Europe.
From the beginnings of the ancient world, the northern and southern Italians were the most active economically of all Europeans; they became increasingly so as that world was left behind and the Middle Ages took hold, with Venice leading the pack. Its substantial economic efforts were of course much facilitated by its location on the Adriatic Sea, but also by a social system considerably more “modern” in both its politics and its militarism than say, Bologna, Florence, Milan, or Sicily.
The first effective steps of Venice were an unintended outcome of “the Crusades” which took hold in the late 11th century. The Venetians were among them, but their subsequent economic strength had little to do with that outcome: the Crusades did not hold the Holy Land, nor convert the “infidels,” nor permanently strengthen the Papacy; what they did do was to introduce much of the best of Near-Eastern civilization into Europe; especially to Venice. Given its location and determination, Venice became Europe’s first maritime power. Here some whys and wherefores from Knight:
After the fleet from Genoa and Pisa accompanied he first crusades, the Venetians fought and defeated Pisa, seized the lion’s share of the passenger traffic and gains of forwarding supplies to Palestine, demanded and received a market for themselves in every town captured and secured the Black Sea trade. By the time of the 4th Crusade, the already substantial commercial trade lead of Venice took it into an economic war with Constantinople. Venice won it, ruined their contestant, and became the first maritime power of Europe. Venice was already organized in the most modern way of Europe: by then their elected “Doge” /dictator or president/ was held in check by councilors and a senate, and among other modern ways and means, interest-paying bonds were floated; and In the years feudalism was reaching its strength in France and Germany, the Venetians were introducing the silk industry, along with hemp, flax, and glass blowing to Europe from the Near East.
All of that and more took hold for Venice in the 11th and 12th centuries; but they were not alone in Italy: whether in or near Milan or Genoa, or Bologna, Florence, or Sicily, “commercialization” and profiting were taking hold from what began as a virtual monopoly of the trade with Asia, Venice in the lead. The greatest contribution of Venice to economic development was that commerce, more than industry. She sent fleets of merchant ships to the Black Sea, Egypt, Aleppo, Asia Minor, and the northeastern coast of Africa; there they were loaded with spices, silks, cotton, ivory and other rare merchandise, to be traded for minerals, timber, and textile materials from Europe with (mostly) Germany, France, and England. As will be seen, such developments also came to mean always more in the political as well as the economics realms.
The Venetian government closely regulated voyages but the actual trading was done by individuals organized into privately-controlled gilds to provide direction and discipline over the substantial private capital involved. The gilds were not “democratic,” of course, but they were subject to gild and state regulation. Although the Venetian “style” was neither seriously achieved nor even sought for, in the rest of Italy, its centuries of commercial leadership contributed significantly to the medieval economic growth in Milan, Cremona, Mantua, Modena, Bologna and the new town of Alessandria (founded to guard the one Alpine pass without a city at its end). There is much of interest and more to say concerning southern Italy and the medieval era (see Note 4), but now we change the focus to the north.
The Medieval North
As Knight points out, “southern economic leadership in the middle ages had been founded chiefly on three things: more abundant vestiges of ancient economic achievements, an earlier start, and intimate contacts with the East, but the first and last of these could not be exploited without transmitting most of their effects upon organization to the North.” Here the ways in which southern early leadership was displaced: some combination of the copying of manufactures, the discovery of new trade routes, the strengthening of northern financial organizations, and the innovative use of its richer natural resources. All of that was taken advantage of and strengthened financially by the north’s Hanseatic League (see below). By definition “Medieval Europe” was not consolidated into national states, as at present: in the country of Champagne, for example, the Flemings, Normans, Bretons, et al. were “foreigners” to each other; they did not consider themselves fellow countrymen.
By the 13th and14th centuries, as the medieval period was drawing to a close, the key commercial institutions were the “international,” “regional” and “local” fairs, held for commerce, serving the different purposes suggested by those titles. By the 14th century, Flemish, German, and English towns had grown and deep-sea navigation had improved to the point where the Italian city-states found it best to sail a “Flanders Fleet” around to Bruges and London, meeting German traders at the former place.
As the medieval world matured, two of its most important widely-used terms – “gild” and “hanse” -- changed their meanings and became significant”: “gild” originally referred to religious payments, “hanse” to a “heap” or a “collection.”; but no later than the 13th century “gild” had come to refer to merchants mainly from one town. Then, as trade increased and spread, the terms came to be used interchangeably to signify an association of merchants, with “hanse” referring to an association “away from home.”
From the 13th century on, the gilds dominated the economics of virtually all trading towns/cities in northern Europe, and the Hanseatic League unquestionably controlled the economic trade of both coastal and inland towns in Northern Europe, led by Lubeck, Cologne, Dantzig, and Brunswick. The League was originally a union between those towns, with other inland towns drawn in over time. Contacts were established with Italy over the Alpine passes, and with great factories or trading posts in London, Bergen, and Novgorod. Some 3000 German traders were settled at Bergen alone. The three great sources of Hanseatic wealth and power were the English trade and the monopolies over Russian trade and the fisheries between Denmark and Sweden. At first, towns had no legal status, but as time went on, whether by force or by purchase, the towns acquired legal status through charters from overlords. Outstanding in those charters were the rights of justice and taxation, specified and enforced by the laws of the towns. The League functioned importantly and profitably for several centuries, but by the rise of modern states, overseas trade, and new business methods it had begun its withering away by the 16th century.
The Hanseatic League was not alone in that progressive set of developments in the north. By the 15th century, Flanders was already highly industrialized. Even during the late medieval years England’s trade was carried by continental merchants, but its exporting industries of that period were clearing the ground what would come to be an “industrial revolution.”
That cleared ground was soon to be planted with socio-economic developments which prompted and financed industry, invention, and science. In the late medieval years, cloth manufacturing and metal trades “were in a capitalistic corner” (Knight), milling was already being done by manorial concessionaries, the water wheel was being applied to milling, windlasses, windmills and other ingenious machinery became common and, of great importance for commercial and economic life and for science. All of that was vital, but giving it a great push was the expansion of geographical knowledge in the late medieval years and how it came to be used: Vasco da Gama of Portugal had reached the East Indies by sailing around Africa, and Columbus (Italian, but sailing for Spain), seeking to reach the same goal by crossing the Atlantic, thought he had arrived at India): which is how the native peoples of “the Americas” came to be called “Indians.”
What followed those discoveries was the birthing of “the modern world.” We have been taught to see that world as embodying skill and science and wellbeing for all, and Adam Smith has come to be seen as a cheerleader for capitalism because of his Wealth of Nations (1776). It is easy to such errors, considering passages such as this: “The discovery of America of the passage to the East \Indies by the Cape of Good Hope, are the two greatest events recorded in the history of mankind.” However, Smith went on in the same paragraph to warn what few if any consider the following:
But the short period of between two and three centuries which has elapsed since these discoveries were made it is impossible that the whole extent of their consequences have been seen. What benefits or what misfortunes to mankind may hereafter result from those great events, no human wisdom can foresee. By uniting, in some measure, the most distant parts of the world, by enabling them to relieve one another’s wants, and to encourage one another’s industry, their general tendency would seem to be beneficial. To the natives, however, both of the East and the West Indies, all the commercial benefits which can have resulted from those events have been sunk and lost in the dreadful misfortunes which they have occasioned.
The “better and for worse” events and their “misfortunes” will be discussed at length in the chapters to follow. Doubtless modern history’s foundations have created “for the better” in the innumerable and never-ending ways and means of scientific and technological improvements for all aspects of our existence; so much has been achieved that for decades now, all people, everywhere could have lived comfortably and safely. However: as Andrew Gunder Frank has put it, “On an integrated world scale, the capitalist system’s contradictory development generates at once economic development and under-development on
The “worse.” has meant that the overwhelming majority of people in both the rich and the poor societies live horrible lives. The politics and institutionalized greed of the capitalism which came into being in the 17th century virtually insured that over time those developments would be applied in increasingly dangerous ways; they have now reached the point of the destruction of precious natural resources, the numbing of constructive thought and one war after another. The next major war looms up ahead; if and when it is allowed to occur, it could and probably would end life for all; everywhere.
Now we turn to the birthing of widespread capitalism and nationalism in Europe. After
An introduction, it will undertake a brief discussion of the early steps taken toward
colonialism by Portugal and Spain in the 16th and 17th centuries as the medieval world
World Trade in the 17th and 18th Centuries
It is common to see the 17th century as the door opening to the “modern world” and what became industrial capitalism. Like the birth of persons, however, that world’s birth had a mixed and significant “pre-history” which, once born, evolved always more rapidly, using always more positive with always more harmful consequences. So it had been also for the evolution from the prehistoric to the ancient to the medieval to the modern world However, the always more rapid and increasingly complex changes which have also become wider and deeper in their ways. In consequence, we humans have become always more befuddled in our social attitudes, understanding, and behavior. We now work always less for “the better” and acquiesce more easily in “the worse” Unfortunately, the numbers and activities of those working for that “worse” steadily increase
The phrase ‘for better and for worse” is used frequently in this work, with reason. In the early centuries of the evolution of industrial capitalism “the worse” was perhaps unavoidable. That can be argued. But since the beginnings of the 20th century it has worsened, spread, and become always more disastrous. A deep crime in itself; that crime is even deeper when it is understood that by the 20th century it had become possible for all of the world’s people in both the poor and the rich countries to be well along a path toward a safe and decent life. Instead, in both the poor and the rich countries, the lives of always more people were rife with economic disasters, totalitarianism, mass murders, and wars. What lies ahead for this century? Its dire realities of the recent past and the even worse probabilities now emerging are the main concern of this work, and will be treated as we go on. Now we turn back to the evolution from the medieval period to the 17th century.
Toward the Modern World
Beginning in the 16th century, the Portuguese and the Spanish initiated the first sea voyages over the Atlantic: to the west, down to the south around Africa, thence toward Asia. Their long voyages and discoveries initially focused on hunts for precious metals and the spice trade. Although they did increase that trade quantitatively they did not replace the overland routes of the Arabs and Italians who had depended on it. However, as Frank points out:
Their usage of sea routes to the west and around Africa and subsequent voyages served to lay the basis for what would be the determinant for several centuries to come: naval supremacy, militarily and commercially. For a century the Portuguese benefited from a total monopoly of the ocean trade between Europe and the Orient through the Indian Ocean; the Spanish from transshipment across Mexico across the Atlantic.
Neither Portugal nor Spain nation brought about a socio-economic transformation of its own society toward what become “modernity”; their record-making sea voyages were unaccompanied by movements at home toward the kind of society which from the 17th century on would serve as the world’s driving force: the economics, politics, and sociology of capitalism. Consciously or not, as will be discussed at length below, those developments were brought to substantial life first by the Dutch and then, even more so, by the British. The dominant and driving force for both Spain and Portugal had been quick wealth through gold! gold! gold! Adam Smith saw this in 1776:
The pious purpose of converting /the natives/ to Christianity sanctified the injustice of the project. But the hope of finding treasures of gold was the sole motive which prompted them to take it. All of their enterprises subsequent to those of Columbus seem to have been prompted by the same motive: the thirst for gold.
Columbus put it simply: “The best thing in the world is gold. It can even send souls to heaven.” As though in confirmation, Hernando Cortez (the conqueror of Mexico) confided this to his new subjects: “We Spaniards suffer from a disease of the heart, the specific remedy for which is gold.” (Not much later silver was added) In his first of four voyages, Columbus in 1492 “discovered” both America and gold in the Antilles Islands. Subsequently he and the Spanish went from island to island searching for gold and the labor to mine it. Those natives had lived well and safely before 1492; thirty years later their lands were desolate and the indigenous population was all but extinct: the models for capitalist colonialism and (later) imperialism had been established; not only abroad, but in what became factories and mines at home.(Horwitz, 2008)
Portugal and Spain had created bases for increasing their wealth substantially from abroad by any means at hand; in doing so, they had also reduced the inclination to “modernize” economically or politically at home. Thus, by the 19th century, as they continued to take in gains from their colonies across the Atlantic and the Pacific, they remained “pre-modern” in their own countries: as such, both nations became easy targets for what became their northern dominators until well into the 20th century. When, in the 20th century, fascism spread across Europe, along with all too many other nations, both jumped into the cesspool of fierce totalitarianism. (Parry, 1966)
As we now turn to 17th century and the Dutch and English movements toward industrial capitalism it seems relevant to begin with a quick look at the dramatic processes at work in the background in all social realms which were both cause and consequence of what evolved. What follows will be a mere “listing” which relates to our 17th century focus; if the reader wishes to sense and pursue the ways and degrees in which their realms interacted with each other: (Boxer, 1965).
Developments in Science and Techniques: Awareness and use of logarithms, electricity, telescopes, microscopes, calculus, gravitation, air pressure, calculating instruments/machines. Leading scientists: Newton, Leibniz, Galileo, Descartes, Fermat, Gilbert.
Music, Art, and Literature: Bach, Correlli, Purcell, Scarlatti, Bernini, Michelangelo, Hals, Rubens, Vermeer;; Calderon, Cervantes, Defoe, Donne, Dryden, Jonson, Milton, Moliere, Peopys, Racine, Shakespeare.
Economic/Political Developments: Dutch East India Company (1602);
The Bank of England is established (1694).
Colonizing: Jamestown, Virginia (England); Quebec City (Canada); Puritan Pilgrims arrive at Cape Cod (1620); New Amsterdam founded by Dutch East India Co. (1620); Harvard University is founded ((1636); Dutch explorer sights New Zealand (1642; Dutch East India Co.” finds” Cape Town; British troops capture New Amsterdam and rename it |New York (1664); The Hudson’s Bay Co. is founded by Canada (1620); La Salle explores Mississippi River and claims Louisiana for France);
Portugal and Spain led the post-medieval colonizing processes. Their efforts, failures, and successes were continued with varying degrees of cruelty, disaster and gain by many of what were or would become nations by the 19th century: by France and Germany, Belgium, Italy, the Netherlands, Denmark, Norway, Sweden, Japan, Russia and, of course, the USA. The following discussion of the 17th century will concentrate on the Dutch and the British, but both their successes and failures had a lasting effect on both those who sought to match or exceed them and, of course, upon those they colonized. We turn first to the Dutch, who took the lead; then to the British, whose impacts were even more substantial. (Bowden, et al., 1937)
It could be argued that, if they were to survive, the Dutch were justified in seeking colonies, let alone to prosper. Why? Because: a fifth of both its land and population were below sea level, and half of its land lies less than a yard or so above sea level. That means various difficulties even in today’s technologies and its elaborate system of polders and dikes; in the early modern period it served as justification and a push for geographic expansion in Europe and abroad, and wars with the Spanish and the Germans. They did both, won much and lost little, and the result was that in the 17th century their seafaring strength and associated empire made them the major economic power and colonizer around the world: in Asia, Africa, and the Americas – including “New Amsterdam (i.e., Manhattan.)
Throughout the 17th century the Dutch ruled over both the production and the use of ships; they in turn served as the basis for their primacy in trade with the societies bordering the North Sea and, increasingly over time, with southern Africa, the West and East Indies, and Japan. The English and the Dutch had the largest fleets of combined merchant and naval vessels, but the Dutch outnumbered the English, assuring their control over the Dutch East Indies, the most fruitful of trading colonies. In the process, the Netherlands inched toward becoming the first industrial capitalist society.
In becoming the world’s richest society throughout the 17th and 18th centuries, they also created the first full-time stock exchange and insurance and retirement programs and -- what should have been a warning but was not -- the first financial bubble: “Tulip Mania.” “Mania” sounds funny; but it wasn’t; its techniques became always worse in their many colonies around the world. Central to that was the associated slave trade; as was true for others’ colonies preceding and following them. The Dutch – and, later, others -- used African slaves to cultivate coffee, cocoa, sugar cane, and cotton. Their treatment of slaves was literally murderous for those who could not escape. Although the Dutch rendered slavery illegal in 1863, their slaves were not fully released; indeed, they were required to work for “slave wages” with no assured freedom from torture and various other forms of harsh mistreatment.
As will be seen below, building on its base of the 17th-18th centuries, Britain took the lead in what became the substantial industrialization of six countries in the 19th century: the UK, the USA, Germany, France, Italy, and Japan. Although the Dutch remained wealthy, they were not eligible for that group for several quite different reasons: 1) their unique need to create functional waterways; 2) their dependence upon wind power held them back industrially; 3) industrialization counts heavily upon sheer size, and both its population and its “underwater” land space were insufficient; 4) they were “spoiled” by the great wealth they accumulated from slavery in their colonies in Asia, Africa, and the Americas and associated trade. The Dutch surely had their share of sharp-minded capitalists, wage slavery, and exploitation, but they had neither the need nor the ability to compete with the six nations who became capitalism’s industrial giants in the 19th century. That takes us to the nation which took the lead in that race.
The British played a crucial role in capitalism’s development, not least in having society take for granted its prime elements and the notion that its ends and means were “natural, normal, and best for all.” As we go on further with Britain, it seems appropriate to examine those elements. First to be noted is that capitalism is not merely an economic system, nor could it have strengthened and endured over time had it been; its “economics” have survived and flourished because its main beneficiaries and supporters have also sought for and achieved political and social dominance. Here some of that history.
Capitalism’s substantial “birthing” was in the Netherlands, but it moved into greater muscularity in the Britain of the 17th century and lurched into maturity in the 18th century. It is often assumed that capitalism first took hold in medieval Italy and was shaped up in 17th century Holland. But if capitalism is seen as comprising and depending upon interacting economic, political, and social processes which go beyond production and trade for profit, it is Britain’s 17th century where those processes began to interact strongly and irrevocably; there in the 18th century that capitalism, first achieved not only a firm grip but also developed the momentum and depth essential for a sturdy survival.
That survival required meeting of capitalism’s three unspoken “imperatives”: exploitation, expansion, and oligarchic rule. But they could be met only within the context of three overlapping “developments”: industrialization, nationalism, and colonialism (imperialism in the 19th century and globalization today). But now we examine how and why capitalism must meet those “imperatives” and does so. First, the “imperatives” then the “developments”:
Exploitation: Throughout capitalism’s history, its profitability has required and its political power have provided ever-changing means and areas of exploitation, both geographical and social. The critical element making this possible has been the ownership and control of productive property by a small minority and the resulting powerlessness of those without property and must take whatever wage they can get to stay alive. The resulting socio-economic class relationships have been the vital basis for capitalist development.
Expansion: Given the foregoing social relationships, the strength of each enterprise, each nation, and global capitalism varies in accordance with the volume, scope, and rate of capital accumulation and the “plowing back” of profits into additional capital. Rich capitalists’ consumption is of course at the social maximum, but – at least for most -- it is not buying but the passion for wealth which drives them. Times have changed since Marx wrote, but his observation concerning the capitalist still holds:
He shares with the miser the passion for wealth as wealth. But that which in the miser is mere idiosyncrasy is, in the capitalist, the effect of the social mechanism of which he is but one of the wheels. The development of capitalist production makes it constantly necessary to keep increasing the amount of capital… The laws of capitalist production compel him to keep constantly extending his capital in order to preserve it. But extend it he cannot, except by means of progressive accumulation. /Then, a few pages later, he adds/ Accumulate. accumulate! That is Moses and the prophets! (Marx, 1867)
Oligarchic Rule: As capitalism developed, political democracy became the rule in one nation after another and is now common; as is, however, rule by the few. That seeming paradox asks for clarification. A political democracy by definition means the formal right of the citizenry through the electoral process to install and/or remove through voting those who make up their governments. But that process is predictably contaminated when it coexists with capitalism’s intrinsic l inequalities of income, wealth, and power; indeed, taken together they allow the members of the higher levels to increase those inequalities; and effectively to veto those who would do otherwise. Oligarchy was the rule before capitalism, and its continuity within political democracies constitutes a puzzle; until, that is, one examines capitalism’s history.
Throughout the capitalist era, whether in the USA or elsewhere, power has been “bought or stolen.” In 1912, when he was running for president, Woodrow Wilson remarked that “when the government becomes important, it becomes important to control the government.” He was president for two terms soon after. Whether or not he sought to clean up U.S. politics, his residency werethe very years in which governmental corruption from top to bottom set new records. As will be seen in later chapters, that corruption may have had a setback for a while, but in the past half century or so, all records have been broken in the USA, whether under President Reagan, the Bush family, Clinton, or Obama. “It goes with the territory”: the territory of capitalism which, as will be seen in later chapters, has set new records in our time.
Next, the three fundamental developments of capitalist evolution -- industrialization, nationalism, and colonization -- as they took hold in the 17th and gained strength in the 18th centuries for Great Britain.
Industrialization: That the industrial revolution and robust capitalism emerged first in Britain is rarely disputed, but how did it do so? The reasons are several: access to appropriate resources, a long history of pre-modern industry, involvement in global commerce and extensive colonial holdings and, most importantly, a relatively fluid social process: for better and for worse. (Nef, 1940)
In the mid-17th century England was entering a new period of institutional trans- formation, which broke the ground for the socioeconomic flexibility for modern industry and capitalist rule to come into being. The strengthening of its industry also brought military superiority to Britain on both land and sea; that in turn allowed them to “rule the waves” both literally and figuratively. Those processes took hold in the same years as “the Puritan Revolution,” but whatever its social meanings, its main consequences were the breaking up of the debilitating remnants of feudalism and the codification of limits on the power of the Crown. By the mid-18th century British capitalism was “in the driver’s seat.”
The key element in that freeing-up process was the “enclosure movement” Its processes displaced traditions of social control and stability and opened the gate wide for commercial criteria and violent change. What was being “enclosed” were the agricultural lands of England, whether for the grazing of sheep or the cultivation of grains. Its most important result was the making of both land and labor into commodities. By1790 enclosures had transformed countless thousands of small farms into giant holdings, with only 2-3000 large landlords owning 75 percent of the country’s cultivatable acreage. What had been created was a class of powerless, dispossessed farmers, able to survive only by de facto slave labor, and those who had been farmers were thrust into the living urban hell of mines and factories; generation after generationl.(Tawney, 1942)
The governing classes of that period of what came to be called “laissez-faire” were made up of the “landed gentry” and the controllers of the two most powerful industries of the period. They also controlled the short and tortured short lives of those who worked for them mills and fields in Britain, Ireland, and its colonies. Now we turn to Britain’s industrial revolution and the horrors thus entailed by the largest part of its population.
The shift into industrial capitalism was not accompanied by democracy (even the more limited kind that emerged in later centuries). Its lack very much simplified the tasks of the government at home; the use of force was perennial, with violence only intermittingly necessary; abroad, however, force and violence “against the natives” were routine. But that takes us back to the working conditions and wages of the first mills, mines, and industries. As the poet William Blake put it, they were “satanic.” But at least the workers had wages, if also near starvation levels. But the numberless dispossessed rural families for most of the late 18th and early 19th century -- half of the population – were poor, powerless and demoralized; a social and human disaster now being repeated in today’s “emerging economies.” Those who were “fortunate” enough to find jobs worked 12-14 hours a day, with little food, no safety conditions, wives and husbands and children separated (with the littlest left to starve(or work in the cotton mills or mines, where their small size was “useful.” What made profits for a few made hell on earth for most. (Mantoux, 1906; Polanyi, 1944; Hammond, 1926)
Nationalism and Colonialism: They were two “birds of a feather,” most cruelly in their sustained mistreatment of men, women, and children. They will be examined both separately and together, beginning with nationalism; but first, a note about “the State”: As used here and capitalized, it refers to a national system of power; in contrast, for example, “state” can refer to Idaho, Oklahoma, New York, et al.) Whether the focus is Great Britain, the USA, Germany, Japan or other nations, the State in modern society has been and remains the institution which presides over social existence in peace and war, whether or not its controllers are in government which, in capitalist societies, they need not be.
It is the capitalist context of generalized inequality in which the State operates which basically determines its policies and actions. The prevalent view is that the State in these societies can be and indeed is the agent of a “democratic” social order, with no inherent bias toward any class or group. That is a fundamental misconception: the State in capitalism is primarily and inevitably the guardian and protector of the economic interests which are dominant in them. Its ”real” purpose and mission is to insure their predominance, not to prevent it. (Miliband, 1969)The government of Britain from the 17th century on was made up largely of landed gentry, nobility and the political group “Whigs.” Their powers and hopes centered on always deepening and expanding coal mines and promoting and protecting trade, not least in the colonies (where social conditions for most were as bad or worse than “at home”). Those public and private roles taken together (along with an always weakening British Crown) were then much of what is meant by “the State” then and similar and or worse consequences; which today’s technologies make it and easier to obscure. Now we return to Britain’s nationalism at home and abroad in the 17th-18th centuries.
It was guided and enforced by an always more capitalistic State in a society with no more than the seeds of democracy. Within Britain, the use of force was perennial and where violence was only intermittently necessary; abroad, however, force and violence were the routine tasks of the day’s work of the British Empire. We begin with the links between Britain’s nationalism and its colonialism. The first major move in that direction was toward Ireland, its neighbor.
At their peak, Britain’s colonial passions had it controlling a quarter of the world’s surface and over 500 million people (equal to the population of the 27 nations of today’s European Union). That enormous empire went into decline after World War II, when the UK had lost the strength needed to halt “decolonization.” But irreversible damage had been done to the colonized peoples: Britain had not only robbed them (and/or misused and destroyed much of their resources, but had left them with the political difficulties of peoples once living within historic tribes struggling to run their own lives after centuries of harsh dictatorship by outsiders. Back to Ireland which, in different ways and means, fought for centuries to free itself from British exploitation; as would others over time, against Britain and other oppressors.
When colonialism began, the native populations of North and South America were at least 100 million. Then the Europeans took over. As the 20th century opened, they populations were down to 10 million in South America, and the natives of North America who had survived but been pushed off their lands were less than that. Ireland suffered a similar disaster, in different ways and numbers. Its population today is between 4 and 5 million; as the 1840s began it was well over twice that amount. Brutally and systematically deprived by the British of their lands, their dignity, and their freedom from early in the 17th century, the Irish were increasingly forced to work on what once had been their land, but had become stolen, owned, and controlled by the British. To survive, the Irish became white slaves, working the lands for the British in Ireland or in England’s factories and mines. As what also happened to the stolen and enslaved from Africa, demoralization became common. At least a million Irish starved to death in the 1840s, and millions left for another country (my Irish grandparents among them). What the British did in centuries before and decades after the 1840s demands condemnation; and not only because it was a straining school for their slave trades.
Going back no later than the 17th century England had begun its efforts to steal from its Irish neighbors. The Irish fought for hundreds of years to rid themselves from being a colony of the UK (which they had formally become as the 18th century began). Between then and the 19th century, a great majority of the Irish had lost their lands (except for swamps) and become very cheap labor for the English, a cruel and for many a criminality for the Irish who starved as their crops were being transported to England for profit. As noted in /9/It was then that my grandparents and so many others immigrated to the USA.
But nationalism neither begins nor ends with colonialism (or its successors). At its heart is nationalism’s universal notion “If it’s my country it’s right.” That of course has its most frequent application when it comes to wars or the control of other societies by force through colonialism, imperialism or now, globalization, “or we wouldn’t be doing it; after all, we are better than other countries, no? Such convictions are of course held in other countries, too; not least of all in the USA, but…. Much of that also applies regarding domestic policies – if also with party conflicts -- regarding domestic policies which are harmful to almost all people in almost all societies; not only, but especially when it comes to economic affairs. In such cases – e.g. when the USA supports a US company with subsidies (etc.) when the effect is positive for a particular company but harmful to most others.. But nationalism goes well beyond such matters, and is assisted in doing so by the confusion between loving one’s country (naturally) and assuming that no matter what it does must be OK: “Or else, we wouldn’t be doing it, right?”
As will be seen in the next chapter, colonialism evolved into imperialism, and did so in consequence of two interlocking developments: 1) the beginnings and/or strengthening of industrialism in half a dozen countries, and 2) the growth of harsh rivalries for access to resources all over the globe by all of the industrializing nations. Until late in the 19th century, the USA was unique: by then it had murderously stolen all of what became the 48 states from both natives and Europeans. Having done so, it could be late in joining the global imperial race of the other industrial nations. The deadly and cruel paths pursued by the USA at home were those which all of the nations which became industrial capitalist walked along, if with variations. Leading the pack was Great Britain, with its worker exploitation at home and abroad and, as well, the robbery of natural resources and mistreatment of the natives in the stolen lands.
The focus up to here has been upon the early modern developments of the 17th and 18th centuries. In following chapters it will be seen in that the British conquests exceeded the social crimes Dutch, but that in both qualitative and quantitative respects, the Europeans, Japanese, and the Americans would go well beyond them. To which it needs adding that not only did the ways and means of industrial capitalism and its blood brother imperialism mean the use of cruelty and violence both at home and abroad for those nations, but that their competitive efforts would inevitably take them to what became the first world war.
Capitalism, Trade, and Imperialism in the 19th Century
Every epoch has its hallmark: for the 17th and 18th centuries it was the beginnings of world trade and its connections with capitalism, nationalism, and colonialism; for the 19th century, it was the maturation and spread of industrialization, technological and scientific advance, and imperialism. Those developments sped up greatly in the second half of the century, in a fervent race led by Great Britain. By the century's end the main followers were not only catching up tut would soon pass the leader. The ways and means and aims of all were a mix of capitalism, industrialism, nationalism, and imperialism. They set the stage for the contest of the "big six"-- Britain, Germany, France, Italy, Japan, and the USA -- and what would become history's bloodiest century. Now we take a summary look at that march toward disaster, beginning with its leader.
Why was Great Britain able to take the lead? The answer to that is provided in the following summary statement found in an excellent study of European economic history:
The geographic advantages of the British Isles; the stable yet evolutionary and adaptable nature of British political institutions in contrast to those of the Continent; the accumulation of surplus capital and the long varied experience of economic organizations in its utilization; the superior competitive power accruing from the industrial revolution, and the comparative freedom of the British Isles from the disruptive effects of the wars and revolutions characteristic of Continental states. (Bowden, et al., 1937)
Given the importance of Britain's flexible social institutions during the .industrial revolution, what was most vital was "its accumulation of surplus capital." That capital was the basis for Britain's extraordinary trade, its vast empire, and its leadership in railways and ships. As the 18th century took hold, British colonies were being established in all quarters of the globe, and by the end of the 19th century Britain had the most extensive and profitable empire ever: "the sun never set on the Union Jack." All of that had been made possible by and continually stimulated Britain's production and its use of sea vessels, required if the UK was to take advantage of it many colonies: all exports from their colonies had to be carried in ships owned, built, and manned by Englishmen, and all imports into the UK had to arrive in their ships.
As the new land and ocean transportation opened up, the resulting vast new needs and opportunities transformed colonialism into imperialism. The differences between those two "isms" were determined essentially by the technologies of the two epochs, well summarized by Maurice Dobb:
Imperialism required, as the colonial system did not, a large measure of political control over the internal relations and structure of the colonial economy. not merely to "protect property" and to insure that the profit of the investment is not offset by political risks, but actually to create the essential conditions for the profitable investment of capital.: e.g., the existence of a proletariat sufficient to provide a plentiful and cheap labor supply and, where this does not exist, suitable modifications or pre-existent social forms (enforced by the reduction of tribal land-reserves and the introduction of taxation of the natives (as in East and South Africa). The political logic of imperialism is to graduate from "economic penetration" to "spheres of influence" to protectorates of indirect control an from them to military occupation and annexation. (Dobb, 1937)
That is an apt summary of what imperialism required, but why was it required by all nations which sought to become or remain major powers? Answer: because to be a major power in the 19th century it was essential to be an industrial power. Also, the resource inadequacies of all European nations and Japan entailed the acquisition of assured resources of raw materials. Less urgently but urgent nonetheless, it meant privileged access to markets provided by empire and, in a world in which war was a constant, strategic locations for positioning military forces and refueling warships. It needs adding that of the six major industrial nations, the USA alone did not have that "excuse." After a closing note on Britain, we will proceed to examine the ways in which in addition to the UK, the USA, Germany and Japan became the world's principal industrial nations; in doing so, they set the stage for two world wars (including the France and Italy) and the political horrors among and between them. We proceed first with a note on Britain.
Because Britain it was the first nation to industrialize, the UK was able to reap its benefits in great ease in comparison with its Continental rivals. Those benefits included not only Britain's cheap and easy access to foodstuffs and industrial raw materials from its enormous empire, but getting markets for its own industrial exports (including manufactured consumer and capital goods and, always more importantly, coal. Moreover, in the second half of the 19th century, Britain had supplanted the Dutch as the. leading international creditor, to a stunning degree. As the 19th century was ending, Britain was well on its way to having standing investments exceeding $4 billion in the rest of the world; thus, although it would soon be importing more than half of its foodstuffs and seven-eighths of its raw materials (excluding coal), they were easily paid for by their investment returns. (Compare that with the USA today; its galloping import surplus and foreign debt, whose obligations to the rest of the world are, to say the least, worrisome: (See Chapters Five and Six)
Now we turn to role played by the three other major powers: the USA, Germany, and Japan, in that order. They were Britain's major debtors in the 19th century but as the 20th century opened, the newcomers had become its main competitors and pushed the UK aside: along with war (s) As we now turn to the USA, here but one illustrative example of that transformation: By 1913, Germany was producing 50 percent more steel than Britain, and the USA four times as much. (Mathais, 1987)
Of all the societies discussed in this work, the USA stands alone as unique: a colony which, having successfully wrenched itself loose from its imperial ruler went on to outdo all other nations not only in some positive ways; it also threatened the record for doing harm both abroad and at home. "The land of the free and the home of the brave" broke all records in our robbing and murdering of both the native peoples of the continent and enslaved Africans. That was in our youth. Although richer by far in natural resources than the five other industrializing nations; as the 19th century was ending we began to slash our way into the Caribbean Sea (Cuba et al.), the Pacific Ocean (Hawaiian Islands and the Philippines) and down through Mexico into Central America.
Meanwhile, as the USA moved through the 19th century toward becoming the leading industrial society, business was treating its free workers as slaves, with only a few exceptions here and there, once in a while. As the economy expanded and strengthened, except for a short blip in the 1930s wages, hours, and working conditions remained disgraceful. None of that changed until the scarcity of labor because of World War II left no alternative: 16 million who might have been workers were off to war. There was a distinct change for the better in the 1950s-60s, but we began a return to "normalcy" in the 1970s. As this is written, the probabilities of a return to the business fun and games of the 1920s are all too strong...
Throughout its economic history, the USA adhered to the ideology of the UK more closely than any other nation, humming the tunes of "free market capitalism." Indeed, the USA in some ways went beyond the worker exploitation of Britain, able to do so because of the composition of its working class: throughout the 19th history: the USA has been almost unique in holding off worker-based politics, assisted by the fact that our working population has been politically weakened by immigrants fleeing from the horrors of another society.
Had the USA adhered strictly to the principles of "laissez-faire capitalism" in either half of the 19th century, its socioeconomic development would have been drastically different.: the State was of course vital in the UK, both at home and abroad, but that vitality in the USA was different kind for two diverse elements: 1) the expansion of the U.S. territory on the mainland through some combination of force and purchase against or with European nations who had "landed" earlier (UK, France, Russia, Spain) and 2) its utilization of both black and wage slavery. Given that, so abundant were the blessings of time, space, and circumstance that there was no conceivable set of economic policies that would have held back an ever stronger industrial capitalism in the USA. When and where there were obstacles to that development they were brushed aside by any means necessary. (Du Boff, 1989)
Having achieved independence, the USA began a struggle between those who saw as ideal "the free market" and small companies (Jefferson, et al.) and those who took the position that "anything goes" which is needed for the USA to become always stronger. (Hamilton et al.) The Hamiltonians won.
Just before, during and after the Civil War the USA pursued what may be seen as a national economic policy supporting gung-ho industrialization: 1) subsidization of the entire railroad network (at least 2/3 of which were paid directly or indirectly by the federal government), 2) the great land give-away of immense amounts of natural resources of timber, mineral deposits, cultivable lands, etc., 3) a protectionist tariff policy and, not least in importance, 4) a government that placed property rights first and treated workers' rights as effectively non-existent. The USA was a capitalist paradise.
The foregoing may be seen as "man-made" benefits for industry and business in general; but of at least as great importance for facilitating the ultimate triumph of U.S. industrial capitalism was provided by the geography that gave it the most abundant resource base of all at home, while surrounding it with vast oceans insulating it from foreign wars. To that add that the USA, in comparison with all other capitalist nations was devoid of a history of formalized class relationships and of the connected institutions that elsewhere had been protective of both labor and land. Although such relationships had existed in colonial times to some extent, they had become "but a memory" by the time Jefferson and Hamilton were quarreling over socio-economic policies.
Implicit in the foregoing regarding the USA, but of critical importance in establishing both its absolute and relative strengths, is that concerned with the struggle for empire. The USA stood in sharp contrast with its competitors from the 1870s until World War I: none of latter had the resources essential for industrialization within their borders, nor – just as vital – for feeding the military strength they would need over time for their imperialism. Nonetheless, in the 1890s as noted above, the USA embarked on its external imperialist path, impelled to do so by greed and rapacity, not by need. To which it may added that the great size and wealth of natural resources which made overseas imperialism less essential for the USA meant something else even more important: it attracted and supported what became the largest population among the industrial powers; that in turn allowed it to become the unchallenged center for mass production of both capital and consumer goods (with parallel developments in agriculture).
The key elements of mass production are the techniques yielding standardized "interchangeable" products for articles consisting of many parts. Such doings make sense only when there is a potential mass market for such products: the USA's large and always growing population was just such a place. Also, because the USA was the first home of mass production, that led to become the first home of the "combinations" and their giant firms (with Germany close behind)).
Such "combos" took place first in railroads and in manufacturing (first in steel). Wherever giant companies emerged they brought with them pressures toward 1)monopolization, 2) the spread of excess productive capacities and 3) the reality or threat of what business (not always incorrectly) saw as destructive competition (first and foremost in the steel industry). The leader in the race to stifle competition was Andrew Carnegie. Starting in 1900 as Carnegie Steel, he combined 750 steel companies into his company. A year later he had combined the 11 remaining large steel companies into one: the United States Steel Corporation (USS), the first billion dollar company.
So it went, quickly: by 1905 over 5000 U.S. firms (in oil, steel, whiskey, et al., had bad become 318./7/ Thus began the era (stretching to the present) in which the term "competition," whose theoretical function is to increase efficiency and lower prices, was increasingly replaced by "rivalry" among giants, whose monopolistic pricing, advertising, and trivial product changes take society in the opposite direction of the "theoretical function." So it was that Veblen saw the truly competitive years as having begun their exit in the 1870s:
Competition as it runs under the rule of this decayed competitive system is chiefly the competition between the firms that control production, on the one side, and the consuming public on the other: the chief ingredients in this business-like competition being salesmanship and sabotage; salesmanship meaning little else than provocation, and sabotage a business-like curtailment of output. (Veblen, 1923)
In the course of the 19th century the world had been transformed more rapidly and in more ways than could even have been imagined in 1800. That drama was most electrifying in the USA than elsewhere; it was simultaneously the best served by nature and the least restrained by history, for better and for worse, as seen by Du Boff:
The accumulation process had moved the economy out of a long era of increases in living standards that were tiny and reckoned in centuries (if discernible at all)…… The remaining main problem was a system that encouraged efficiency gains but discouraged a distribution of income that could assure commensurate gains in worker purchasing power.
In the 19th century the USA became the first economy of mass production: as the UK had become the first industrial nation. That said, and as will now be seen, Germany, in seeking to overcome its severely limited resource base, became the technologically most advanced nation in the world. Advantageous though that was for Germany's economic and military strength, its ways and means and goals also paved the road for disaster, much assisted by the aims and means of their rivals. Now we examine that history.
As the 20th century opened, although Britain was rich and growing richer, it was becoming clear that the USA and Germany would soon become the strongest industrial nations in the world: the USA by virtue of its size, resources, and large population, Germany for its advances in big business organization, physics, chemistry, and technology. Britain, sitting back on its financial gains and its global and domestic profits, was overtaken in a set of consequences seen by Veblen as "the penalty of taking the lead and the advantages of borrowing": England had borrowed and improved the technologies from the Continent after 1600 and gone on to higher levels; Germany and the USA had done the same with UK industrial technology, taking it to new heights both quantitatively and qualitatively. History then repeated itself; once ore: as Britain relaxed with its still growing wealth its and outdated economic ways and means as, growing strength among its competitors was galloping.
As the 19th century began, there were Germans, a German language and culture, and German history; but there was neither a German economy nor a German nation. As the old saying goes, "thereby hangs a tale." Here is part of it. Western Europe was dominated by the"30 Years War" until, in 1648, the war was halted by The Treaty of Westphalia. Whatever its honorable intentions, its major consequence were for what ultimately became Germany was to hamstring Germany into a patchwork of over 300 principalities; reduced to smaller but still squalling group of "only" 40 by the Treaty of Vienna (1815). By far the most powerful of that group were the Prussians east of the Elbe River. Already strong before 1815, especially militarily, their strength was enhanced by the Treaty, for it allowed agricultural Prussia of the east to annex the more highly developed lands to the west. The new Prussia became the undisputed power both economically and militarily of the still fragmented German lands and, as well, the driving force that transformed the rhetorical "Germany" into an economically and militarily strong nation. They did so when two steps were undertaken" 1) their "Maassen tariff" of 1818 eliminated barriers between Prussia's eastern and western territories, and 2) their 1834 Zollverein customs union eliminated tariff barriers among and between most of the remaining and expanded principalities. (Veblen, 1915)
By 1866-67, all of what at the same time became Germany belonged to the "union" and, with the triumphant conclusion of the Franco-Prussian war, in 1871 Germany became "Imperial Germany." The Zollverein, in enlarging the German market for all member states also made the railroad more realistic and more compelling. From their virtually simultaneous beginning, the Prussians, guided by the coherent program of Friedrich List, saw the tariff and the railroad as the twins of the industrialization process. Given Germany's late beginnings as a nation, List turned the arguments of classical economics upside down, for he saw tariffs and a state railroad as the useful twins of the industrialization process; Germany thrust toward national industrialization, with Prussia as its leader. By the end of the 19th century, the Prussians had come to preside over the strongest nation and most powerful economy on the Continent. Its symbols were a fierce eagle and a spiked helmet, its songs were of blood and soil, and its economy was controlled through protective tariffs and cartels. As we go along (if without just those symbols) among "the big six" of industrializing nations Germany was not alone
The ruling power in Prussia was a feudal nobility of militaristic landlords ("Junkers). Although they were anti-industrial, anti-capitalist, not "pan-German," they believed in "free trade" and were feverish exporters and importers The serious depression of the 1870s led Otto von Bismarck, although s classic Prussian, to create what was called "the Solidarity Bloc." It was a complex compromise between industry and agriculture ("iron and rye") and, later, between and iron and machinery "rye and pigs"; and, as well, the protective tariffs of 1879, 1885, and 1887, the rates always rising and spreading in Germany, thence to France, Italy, and the USA. However: "Germany had grown the economic limbs of a giant, only to be confined in space for a pigmy. Bottled up, a highly industrialized Germany would explode." (Brady, 1943a)
Germany did so both literally with its undaunted militarism, and figuratively with its most compressed industrialization process ever: no other major industrial country has developed a large-scale heavy industry with the raw materials under its own political and economic control forming so limited and narrow a base. German soils, forests, and potash are abundant, but other natural resources are at best problematic. Germany spent much time at war with its neighbors in order to make up fore is inadequate resources; still, as Brady argues, "the key 'resource' for German economic development may be seen as their thoroughgoing application of science to technology and production, along with their resource-saving organizational and planning patterns., the levels of which set Germany apart from all others (Brady, 1933; 1937)
The ultimately advanced state of German science had its seeds, ironically, in its sociopolitical "backwardness." Its prior fragmentation into hundreds of mini-nations and innumerable bureaucratic entities served as the primary explanation for Germany's people becoming the best educated in Europe:.each principality had its own government and tariffs and thus the need for a highly disproportionate percentage of its people who could read and write and count. Also, protected by tariffs in those numerous principalities were craft workers (in metal and textile and paper products. As industrialization took hold those skills were easily transformed for application in modern industry at the highest levels of the working force, including engineering. Early in the 20th century Germany had become the scientific and intellectual Mecca. There has been no such place just like it since; nor anything like the Hell that followed it.(Except, perhaps, the USA; with its own Hell lurking around the corner?)
To the foregoing, add two unsettling facts, of which German business and political leaders were acutely aware:1) heavy industries were easily capable of supplying the needs of all of Europe for such production, 2) the capital goods markets of both Europe and the rest of the world were closed to them. The danger inherent to those realities was known to all concerned; namely, that heavy industry is the indispensable economic weapon for war. Then, witness this quotation from the London Saturday Review, 1897):
A million petty disputes build up the greatest cause of war the world has ever seen. If Germany were extinguished tomorrow, the day after tomorrow there is not an Englishman in the world who would not be the richer. Nations have fought for years over a city or of a right of succession: must they not fight for three hundred and fifty million pounds of yearly commerce? (Hoffman, 1933)
It is of course highly unlikely that the Germany of today would ever behave like that just quoted. Its crushing defeat in history's two worst wars has effectively crushed that set of inclinations. However, as regards both Germany and (next) Japan – it seems appropriate to take heed of the biblical injunction "judge not, that ye not be judged" and to note here their application to the dirty bottoms of our own time.
The pressures for nations and large numbers of their people to resort to violence and force and other atrocities within and beyond their borders have varied and never been absent in history; nor has there has ever been anything like the acceleration of our era. The "analytical quartet" of this work – the dynamics of capitalism, industrialism, nationalism, and imperialism – contains within it stimuli that transform the normal search for power and wealth into voracity;; their interaction, whatever their positive consequences may have been, may well have assured a precipitous descent into social disasters, accentuated by he powers of modern technology
We turn now to Japan whose industrialization stands as much in contrast with Britain's and the USA's as does Germany's; perhaps even more, generated by both similar and different needs.
Imperial Japan and Imperial Germany had in common a fervent nationalism. Although Germany had been effectively dismembered in the 17th century, until the mid-19th century Japan was uniquely and almost entirely isolated: culturally, politically, and economically. It had been made so by its conscious adoption of a "seclusion policy" in the 17th century. That policy made for a classical feudal military regime, prompted in large part by the European overseas expeditions of the 16th century; its dramatic socioeconomic transformation in the 19th century was the consequence of the pressures of western imperialism.
As the 16th century ended and the 17th began, the Japanese had expelled Portugal, their first unwanted guest, and ruled out all others except one: the Dutch, who were given trading privileges in the southernmost port of Nagasaki. In ensuing centuries Japan's isolation produced a society which, compared with the others of our "big six," remained unchanged. But from the beginnings of the 19th century, its hermitage began to be assailed:
The exclusion policy worked as well as it did for nearly 200 years because the Westerners had as little interest in getting into Japan as the Japanese in letting them in… /But/ the arrival of four American gunboats in July 1853 was hardly a surprise to the Japanese authorities. (Duus, 1976)
The commander of that intrusion, Admiral Perry, was imperious and hardboiled; when he left he vowed to return and did so a year later, riling with new threats. Despite much discord and confusion, the ruling military clique then made the fateful decision to avoid hostilities by opening two ports to the USA. The camel's nose was thus in the tent, shortly to be followed by its body: first the USA, then the UK, just as happened to China. The regime which had allowed this had its downfall soon after; what then ensued was a hybrid society mixing the most in modernization with the functioning remnants of a feudal order.
In prior decades there had been a slow movement toward commercialization and some industry; their acceleration was one of the aims of the new regime. Those developments were swift and pervasive and produced an industrial capitalist nation within the enduring sociopolitical framework of a feudal culture. The State – ruled over by lords (daimyo) and those beholden to them -- took an active role in aiding, encouraging, and subsidizing developments in transportation, agriculture, finance, education, foreign travel and trade and, for a while, in the ownership and development of industries strategic to military strength .As it did so, "a handful of trusted financial oligarchs came to constitute the core of those who controlled and benefitted from Japanese economic development: the zaibatsu. (Livingston, 1973)
By the late 19th century Japan had achieved great industrial strength, ranking only behind by the UK, the USA, and Germany. Veblen mused on Japan on two occasions, as follows:
Japan has with great facility and effect taken over the occidental state of the industrial arts, so should its population be due to fall in with the peculiar habits of thought that make the faults and qualities of the western culture…..For good or ill, the modern industrial system is in the long run incompatible with the prepossessions of medievalism. (Veblen, 1934) /Two years later he wrote/: Its industrial strength must be turned to account before its cumulatively accelerating rate of institutional deterioration overtakes an neutralizes the cumulatively declining rate of gain in material efficiency: which should mean that Japan must strike within the effective lifetime of the present generation, must throw all its available force, without reservation, into one headlong rush, since in the nature of the case no second opportunity is to be looked for. (Veblen, 1917)
Even though Japan had fought two successful wars (against China in 1895 and against Russia in 1905) it remained to be seen as "quaint and backward" in the West. That set of attitudes would be put into a very bloody garbage can in the first decades of the 20th century.
That takes us to the beginnings of the 20th century.
20th Century, First Half: Economic Collapse, Political Horrors, and Wars
As was noted in Chapter Three, the main social characteristics of the 19th century were capitalism, industrialism, nationalism and imperialism. Competition and rivalry were at the heart of that combination; they were also the elements which, as they took hold and intensified in the first half of the 20th century brought about revolution, counter-revolution, the worst ever depression, and two world wars.
If the proverbial "man from Mars" had observed only the scientific and technological achievements of the 19th century – and had no knowledge of accompanying capitalism and its cohorts -- he could well have thought that the people on that planet were well on their way toward peaceful and comfortable lives for all. On the other hand, had he known of the ways and means of capitalism and nationalism, he would have whizzed back home without looking back. What "went wrong" on our planet was what capitalism and nationalism inexorably galvanize and feed: bottomless greed, imperialism, militarism, and wars. Why "inexorably"?
1. Capitalism cannot function without continuous economic expansion and push for "more": more buying by us, more profits for business, and let the Devil take the hindmost. . 2. "Expansion" refers to the continuing increase of production and sales by business; that in turn is fed by nationalism and military strength. We view European and Japanese geographic expansion as "imperialism"; see our bloody expansion over North America not as imperialism, but as "moving westward"; nor were we imperialists in our own eyes when later we began our endless "going abroad" in the Philippines. Cuba, Chile, Africa, et al., seeing ourselves as "big brother." 3. Our ongoing wars in the Middle East and Central Asia: are not imperialistic; we are protecting ourselves and the world from "terrorists." (Bacevich, 2008)
As the 20th century began, the six most powerful capitalist nations were also the leading imperialist powers: Great Britain, France, Germany, the USA, Italy, and Japan. The stimuli of imperialism were that they made available two vital supplies for the "home country": raw materials and de facto slave labor. The USA alone had no need to stretch beyond its own borders to meet either of those needs; for many decades we met them easily with the lands stolen from the natives. . Along with those rich lands was the cheap labor of slavery and of immigrants. Taken together, the "free resources" and cheap labor would have made us Number One in the 20th century without geographic expansion. As will be detailed later, expand all of the big six did; greedily and, literally, with numerous small and the two world wars of the 20th century. In Europe alone, there were10 million known deaths during World War I; and more than six times that in World War II. Add to those the deaths of Chinese, Japanese, and U.S. military, plus those of civilians in the relevant nations; then add the numberless millions of those wounded plus lives wrecked before during and after the wars: not only because of what brought them about but, as well, the destruction of the wars themselves. In what follows, it will be seen that a major explanation for the easy acceptance of U.S. militarism in the recent past and present is that the USA has been the least harmed and most benefitted by modern wars. If and when another substantial war explodes, today's weaponry will benefit nobody and destroy all.
Enough of such good cheer; now back to the 20th century's capitalism and its supportive industrialism, nationalism and imperialism. The emphasis will be upon the USA, beginning with capitalism. The unchallenged and institutionalized greed and exploitation of U.S. capitalism, combined with its extensive, racism, its vast resources and two oceans of protection, opened the doors wide for it to become the capitalist society par excellence. We begin with close look at capitalism and the USA with associated discussions of nationalism, industrialism and imperialism regarding it and the five other major capitalist powers of the 20t century: Great Britain, Germany, France, Italy, and Japan, in that order. (Baran and Sweezy, 1966) (Hereafter, "B&S")
The political economy of of global capitalism
If capitalism was born in the 17th century, gained strength and spread in the 18th century, it may be seen as having matured in the 20th century. But if "maturity" signifies getting wiser and settling down, capitalism is still in its adolescence. To be sure, endlessly strengthening technologies have greatly modernized everything, but their applications are decreasingly "adult" in important realms: 1) in what is produced, for whom and why; 2) in its social and environmental harms, and 3) in its endless militarism and its justifications. I look first to the insanity and injustices of industrial capitalism, both at home and abroad, as the 20th century unfolded. (Those developments since World War II will be resumed in Chapter Five)
From capitalism's birth, its economics, politics, and sociology have been tightly intertwined: capitalists have owned and increasingly controlled or dominated not only the means of production, but also government, the media, and social standards. As the 20th century opened it was becoming clear that the USA would soon become the strongest capitalist nation in all those realms, for the reasons noted earlier: our abundant resources, our non-pre-capitalist history; and the bottomless racism of "the land of the free and the home of the brave." Of course many social crimes were also common elsewhere, in other capitalist societies and in the pre-capitalist world, not least when and where kings, queens, princes and warriors ruled the land with raw force. But they have been outdone by the system which took hold as they wilted away. (Tawney, 1920)
As the late medieval and early modern era merchants and financiers gained strength and the political structure moved toward modernity; it did so within societies where inherited socio-political habits of the medieval past persisted in significant degree. Not so for the USA. Once broken free from Britain, assisted by its safe location, rich resources, and cheap labor it steadily became stronger. Thus it is not surprising that the USA became a fully capitalist society sooner and more fully than any other: nation; its gates wide open to socio-economic changes suited to what was "good for business". It was also more likely to innovate and adopt inventions requiring substantial social changes which, although mostly originating in Europe were more fully and more quickly exploited in the USA.
Now we turn to some relevant 20th century history, again with support from Baran and Sweezy (hereafter B&S). They saw three inventions as "epoch-making": the steam engine, the railroad and the automobile. All three were invented and used in Europe but for social reasons were not applied in Europe (or Japan) as fully or as quickly as in the USA.
Each produced a radical alteration of economic geography with associated internal migrations and new communities, and also required and made possible the production of many new goods and services; in doing so they directly or indirectly enlarged the market for a wide range of industrial products…..The steam industry itself never bulked up large; but without its indirect effects neither the first nor subsequent "industrial revolutions" could not have occurred. For example, as regards the railroad industry in the 19th century and the automobile of the 20th century and examine not only direct but indirect effects: production, sales, and uses of cars are only one matter; add the process of suburbanization with its attendant highway and residential construction; then add their impacts on the metals, rubber and oil industries and their "side-effects. (B&S)
More concerning those developments will be discussed later; however, it is appropriate to interrupt this discussion with a note concerning what was integral to capitalism's economic development in the 20th century; namely, wars. In all of history, wars have been common; but -- setting aside Napoleon's career -- wars involving capitalist countries in the 19th century were rare, brief, and economically minor in effect. (A later discussion will note the economic and political importance of imperialist wars) Although the 20th century began with ten years or so of relative peace; since then, as B&S note:
The whole world has been continuously under the influence of devastating wars or their aftermaths. For better or, more importantly, for worse, the wars of the 20th century were also the basis for its defining economic history We must incorporate the 1914-1918 and 1939-1945 wars in our /explanation/ for they are economically similar to 'epoch-making innovations.
"Wars" will be given substantial treatment later in this and later chapters. Now we return to the first half of the 20th century and the relationships between capitalism, nationalism, industrialism and imperialism and economic and social developments. We begin with some of its most critical developments and the relationships between capitalism, industrialism, and the economy.
Competition and profits; mergers and monopolies, good times and depressions
The term "depression" almost automatically turns one's mind to the "Great Depression" of the 1930s. The depressions of the 1870s and again in the 1880s were notably more serious than those of the past; but although they were not yet "great," they should have served as a warning that: industrial capitalism is more precarious than just plain capitalism. The depression just noted did not mean the record-breaking unemployment of the 1930s, but because of the steadily lowering prices of those 19th century years, they did entail much reduced profits. That problem was in turn the result of great increases in productivity and the inability in a world of free trade to reduce either domestic or foreign competition. What to do? The answer from business was "control competition with gentlemen's agreements" and, increasingly, with "combinations." As Du Boff points out:
Around the turn of the century all those forces making for big business coalesced in a tidal wave of mergers and consolidations….A total of 2,653 large firms disappeared through merger from 1898 through 1902;….small by today's standards, but for the economy of 1900 they were staggering in terms of real GNP, when the economy was 15 times smaller than that of the late 1980s…..Between 1897 and 1905 over 5,300 industrial firms came under the ownership and control of only 318 corporations, the most advanced and powerful firms in the US economy or the world: led in 1901 by the first billion –dollar merger, by the United States Steel Corporation, a combination of 12 large corporations, themselves combined from over 700 companies earlier.
Note: When in Chapter Five we move from the early to the late 20th century and then in the Epilogue to the present, it will be seen that as big business and the numbers of reckless "mergers and acquisitions" endlessly multiply it become always more difficult to distinguish between Wall Street and Las Vegas.
The follies and dangers of big business
What here are called "follies" have increasingly been seen by big business as "good business" for their profits and power. That tendency became common in the 1929; when it was smashed. As will be seen in the next chapter, it came back to life after World War II and is once again the standard of business": whatever might increase sales and profits and induce the public to buy MORE, :do it!" It's called consumerism.
Although It was born in the 1920s it did not – could not -- become full blown until after World War II. Until then it was participated in only by a distinct minority; the fifth of the population which could afford or borrow. (Faulkner, 1947) Not until the 1950s had it become economically possible for the majority to join the game, because not until after the war were there full employment and strong unions, higher wages and reformist politics. Liberal and left-leaning politics were born during the 1930s, fed by the raw needs and deep angers of the depression and strengthened by worker shortage during the war: 16 million in the armed forces. The result was a strong labor movement after the war (.along with a substantial increase of women and black workers). Taken together, those developments meant larger and stronger unions, higher average wages, and wider buying power. All of that, along with TV and always more clever advertising meant that after the war there would be a big jump up in the ability –and the psyche -- of Mr. and Mrs. America to support the expansion of the entire economy: for a while. Consumerism, aimed initially at the well off, had by the 1960s become the chosen drug of the majority: and the hallmark of U.S. capitalism. Now we turn to the larger history of the early the 20th century.
Industrial capitalism and instability
The 20th century for the U.S. economy began with a collapse in 1907 and an upswing in 1909; but, as Faulkner points out: "it was of brief duration, followed by the depression of 1910-1911, another upswing in 1912 and a relapse in 1913… From then until America felt the impact of war prosperity in 1915, American economic history was largely one of brief spurts and recessions /5/ However, as B&S pointed out:
If the First World War had not come along, the decade 1910-1920 would have gone down as an extraordinarily depressed one… But the war did come – in the nick of time—and the picture changed from probable stagnation to a boom…In 1915 the first great wave of auto-mobilization began, rolled on during the war, and was producing all the multifarious by-products and indirect effects: suburbanization, road building, secondary industries, etc. There was a tenfold increase of sales from 1919 to 1929 (2.3 to 23 million). Meanwhile, the rate of capital investment reached an unsustainably high level: at the cost of the disastrous collapse of 1929.
The decade from 1929 to World War II was marked by the stagnation of "the great depression." It was an economy in which productive capacities were substantially unused, sales declined and stayed down, and unemployment rose to drastic heights – 25% -- and stayed there. Almost all were harmed, most deeply those who could not keep or find jobs, starved, were seriously ill with no help, etc. In a sane society serious efforts would be made to measure unemployment properly and to take the steps needed for workers and their families to survive. U.S. official unemployment measures only known to be seeking jobs, ignores those who have given up in despair, and counts as fully employed those who are part-time.
Before World War II, capitalist governments either did not even measure (let alone deal constructively with) unemployment, and when the USA did measure -- as they began to do in the 1930s -- it was done in ways which suggest a conscious aim to understate. Thus, the official unemployment rate in the USA in the 1930s varied from 12 to 25 percent. That is all too high in itself, but, the measuring standard severely understates. Thus, in today's ongoing recession, the official rate has varied from just under to just over 10 percent. If we were to use the methods common to Western Europe after World War II, the rate today as this is written in 2010 would be 17-18 percent, but .the U.S. Dept. of Labor has it as less than 10 percent. It omits discouraged workers who have given up looking, involuntary part-time workers who were working full-time and paid accordingly, and those without jobs but willing to work if offered a job. One way to understand the falsity of the official unemployment rate (past and present) is to note the full output of the war years, as did B&S:
Officially, from1919 to 1939 nearly a fifth of the US labor force and a quarter of productive capacity were idle. From this one would conclude that output could not have increased by more than a third if the entire labor force and capital equipment had been used. Yet, in the few war years, under the impact of war and the inherent restraints of the market removed, industrial production more than doubled and real GNP went up by more than two thirds. The tremendous expansion of output between 1939 and 1944jconclusively proves that the official unemployment rate and figures on capacity utilization greatly understate the extent to which human and material resources are underutilized in a monopoly capitalist society.
The major industrial nations lurch toward disaster
In the first half of the 20th century, only the UK and the USA -- could hold back disastrous socio-political upheavals: they were the richest and only they of the "big six" had access to the required resources: of the lands and resources of native peoples: all over the globe by the UK, all over North America by the USA. When France, Germany, Italy, and Japan sought to industrialize in the late 19th and early 20th centuries, what was left for them was such that they saw foot to militarize their politics both at home and abroad and, in interwar years, to become fascist. /7/
In a world dominated by capitalism, nationalism, and major political conflicts between left, middle, and right, it was only a question of time before a major war would erupt. From the 17th century on wars had been ever present, but none could have been as disastrous as World War I -- until the even more disastrous World War. II. The innumerable technological advances from the mid-19th century on provided the means for that "achievement." If we have a third "world war it will also occur in consequence of the interactions of capitalism, nationalism, industrialism, and imperialism, but with a difference: this time the past or present global victims of imperialism might well take the lead; and today's technologies would bring the end to history.
Now, a summary look at the troubled socio-economic-military developments of the six major nations" in this order: the UK, France, Germany, Italy, Japan, and then back to the USA. In what follows the aim is not so much to provide a substantial history of the pre-war period as to examine note some o its most troubling developments," its deepening militarism.
The UK: In the turbulent interwar years, the UK, and in the 1930s the USA, were in great trouble, but theirs were healthy societies compared with the fatal diseases of the other industrial countries. The economies of all of the six were in turmoil, but the UK was unknowingly going through its dying years as the all-powerful nation. It was on the winning side of World War I, but it was also on a path which would weaken its economic and political power both at home and abroad: once the world's greatest lender and imperialist power in would soon be on its knees asking for help from the USA, its once upon a time colony.
The physical and economic harms suffered by the UK during and after World War I were substantial, and it was not by chance that those same years saw the rise of anti-status quo politics from both the political left and the right; for communism/socialism or fascism. Compared to the others of "the six", the politics of the UK – and of the USA – were mild, understandably: as the two richest imperialist nations they had already achieved what the other four needed if their industrializing economies were to be strong and function effectively. As we now take a closer look at the UK, it will be seen that those in the past who pushed hardest and took the lead in British capitalism did not they see themselves as "capitalists": but as advocates of "liberalism." "What then is 'liberalism"? The following reply of Laski (1936) is deservedly long:
It is directly related to freedom; for it came as the foe of privilege conferred upon any class in the community by virtue of birth or creed. But the freedom it sought had no title to universality; in practice it was limited to men who had property to defend; to limit the ambit of political authority; to confine the business of government within the framework of constitutional principle; to discover a system of fundamental rights which the state is not entitled to invade,. But,, once more, in its operation of those rights it has been more urgent and more ingenious in exerting them to protect the interests of property than to protect as claimant to their benefit those who have nothing but their labor power to sell. It has attempted to respect the claims of conscience…, but the scope of conscience it has respected has been narrowed by its regard for property, and its zeal die rule of law has been tempered by discretion in the breadth of its application…. Liberalism came, then, as a new ideology to fit the needs of a new world…..Within the confines of medieval culture the idea of capitalism could not be contained. The capitalist begins, therefore, the task of trans-forming that culture to suit his new purposes through two great phases: to transform society and to capture the state…The whole ethos of capitalism is its effort to free the owner of the instruments of production from the need to obey rules which inhibit his full exploitation of them. The rise of liberalism is the rise of a doctrine which seeks to justify the operation of that ethos. With the close of the 17th century the foundations of liberalism had fully emerged: a secular state, rationalism in science and philosophy, religious freedom and, also a social philosophy linked with the security of the property-owning class and the men who have "made their way." It is not too much to say that, steadily as the years proceeded, that the property class hardened its heart against the poor. Out of the moral crisis of the 17th century there emerged liberalism indeed, but it was attuned to the implications of the religion of success. /Then, in his closing chapter, Laski observes/:
Liberalism was never able to see that the political democracy it brought into being was established on the unstated assumption that it would leave untouched the private ownership of the means of production… Political democracy and the liberal ideology which expressed its inner purposes could no more pass beyond the framework within which it was confined than feudal society could pass beyond its constitutive principle. What had been forgotten was the flaw in the economic system: the class-relations it established made it impossible for the power to distribute to keep pace with the power to produce; the forces of production were in contradiction with the relations of production. To make profit, the owners of the instruments of production were driven into an ever intensifying struggle for markets, out of which emerged the struggle for colonies, the clash of competing imperialisms and the economic nationalism…
The struggles within and between capitalist nations led to World War I, political upheavals, to the totalitarianism of both left and right and, finally to World War II. As will be seen in the next chapter, rising from that war's wreckage was a political shift in the 1950s and 1960s toward decency and peace in the UK and the other members of the Big Six. Whether in the UK or the others of "the big six" that shift lasted only than a decade or so. Its reversal was more than symbolized in the UK when, for about a dozen years (1979-1990) Margaret Thatcher was Prime Minister and took the UK back toward raw capitalism; her U.S. admirer President Ronald Reagan did his best to do the same.
France: The country of Napoleon did not have to take lessons in militarism or colonialism/imperialism from the UK; it had long been an enthusiast of both. Moreover, and in contrast with the UK, Germany, Italy, and Japan, France's own natural resources were such that it had little or no need to expand geographically for its people to have a decent life .In an ugly contrast, the UK stole and occupied the lands of the Irish and starved them so the rich could live in the luxury they desired. Ireland was only a warm-up for what would send UK ships and armies around the globe. As the 19th century began, France already had a history of seemingly endless wars in and around Europe; then, as the century ended, it had expanded its claims into the Middle East, Africa, North and South America, and Asia, running a close a close second to the UK's claim that "the sun would never set" on its flag.
It is likely that had France never existed Europe would have been a cauldron of wars, stirred by the British and the Germans (among others, but French militarism (and its accompanying militaristic leaders) strengthened that probability; not least is regards its German neighbor.
There were many differences between the UK. France, and Germany; including that for France and Germany capitalism ran second to imperialism, whereas for the UK – even though (or because) it was the most successful imperialist of all – capitalist ends and means dominated. The USA would become the champion in both respects, with its most vital imperialist successes within what would become its national borders. French imperialism was a by-product of its never-ending militarism within or on the borders of Europe. Not until well into the 20th century – if then -- did France become dominated more by capitalism than by militarism. That tendency was not France's alone, of course; others were also up in arms constantly; not least Germany, whose efforts to which we now turn. (Bowden, et al., 1969)
Germany: For centuries before the second half of the 19th century there were many Germans, but until 1871 there was not a Germany. Then, led and dominated by Prussia and its "Iron Chancellor" von Bismarck, what had been more than 30 separate governments of the North German Federation was dissolved, and the German Empire was founded. In that Prussia had been the most militant of the separate governments it was an ominous beginning.
Of the many aspects of that history, two in particular are worth noting as we begin: (1) Having had earlier more than 30 separate governments and their literate staffs meant that, compared with all others, Germany's population had the highest percentage of literacy in the world (2) It was also the most militaristic. Its birth as a nation was in the late 19th century, when wars were endless and militarism common and, because Prussia's power over the new nation was not disputable, the new Germany's militarism was assured and seen as normal. What also took place, but was by no means assured, was this: by1900 Germany's economy was the largest in Europe (and 2nd only to the USA in the world). In addition, Germany had taken the lead not only in militarism but also, in the realms of science and the fine arts. That seemingly contradictory social evolution combining human sins with human virtues should stand as a warning to those in the USA who see us as Mr. Clean.
Since World War II, we have been the world's scientific, economic, political, social, and militaristic leader. Current tendencies in some or all of those respects well put an end to that leadership. However: whether or not that occurs, if we allow the USA to continue its ongoing ways and means, it will be become ever more militaristic, presumably to protect the world from this or that real or supposed enemy. It will be argued in the following chapters that there is considerable reason to deal peacefully and positively with the sources of that set of threats; as matters now stand, the USA increasingly exacerbates them.
Back to Germany: In the early 20th century it would come to lead the world in aggressive militarism, with substantial competition from the others of the big six.. Germany's militarism was well on its way before it became a nation in 1871. That was the year when, after a long siege of Paris, the Prussian army caused the French to surrender and to pay indemnities to the Prussians, who then staged a victory parade in the streets of Paris. Prussia's ruler Bismarck was a full-blown militarist, but his vision was confined to Europe. However, in the 1880s, when tensions were running high among the great powers of Europe, Bismarck gave way to his Crown Prince's determination to make Germany a – even the -- world power. The door was opened the door with Germany's establishment of several colonies in Africa, New Guinea (and else where in Oceania), and in East Asia. Then, most provocatively, Bismarck approved the financing of the Baghdad railway, to connecting its North Sea with the Persian Gulf.
Put together, those and other German actions posed a serious threat to British hegemony on the seas. The stage was being set for the worst inter-European war; up to then. The curtain rose when, in 1914, the Austrian heir-apparent Franz Ferdinand and his wife were assassinated at Sarajevo (Bosnia);. Soon after the European war broke out; the worst war ever: until the next one. It was also the beginning of always rising and always more violent political conflicts at home between left and right, and the end of anything in between. Germany's vigorous attempts to gain economic strength through force were not unique, of course, but they came to late to succeed without war, whether in Europe or in the already thoroughly imperialized regions of Africa, Asia, the Middle East, and Latin America. Prussia could understandably – if incorrectly – expect to win out in attempts to expand the borders of Germany within Europe, but to do so in far off regions was another matter.
In the decades when Germany was seeking to expand abroad it was also setting the stage at home for what would become the most disgraceful and bloodiest society in all of western history. As the 20th century took hold two combative political developments were taking hold: the Communist Party of Germany (KPD), and the German Workers' Party, later known as the National Socialist German Workers' Party (NSDAP /"Nazis/" the party which, as the 1920s unrolled, came to be ruled by Adolf Hitler. Although the Nazis originally called themselves "socialist" and had a substantial socialist membership, the latter (along with Jews and others) were despised by Hitler. (Brady, 1943, 1937; Gerschenkron, 1943)
In 1933 Hitler was appointed Chancellor by President Hindenburg, and he immediately set out to make certain it that his rule would be unquestionable. The Reichstag building was set on fire and blamed on Communists, 11,000 Communists and Socialists were arrested and put in concentration camps, and 9,000 were soon executed by the newly-created Gestapo; also, in what came to be called "The Night of the Long Knives" Hitler had his murderers kill more than 5000 thousand socialists and Jews. All of that was but the beginning of what became indescribably worse. The "worse" was not only the torture and deaths of hundreds of thousands of those just noted, but also what became the beginnings of World War II.
After re-establishing the Germany air force in the 1935, Hitler had his troops march Into the Rhineland and militarize what had been "demilitarized," established the Rome-Berlin Axis" with Italy, signed the "Anti-Comintern Pact with Japan and, in March 1938 had his troops march into Austria for a successful coup (greeted in Vienna with cheers). Not content with that, Hitler sent troops into Czechoslovakia, with the internal support of over 3 million §Sudeten Germans gave military support. Thus it was that in those same years that Mussolini Italy), Daldier (France) and Chamberlain (UK) met with Hitler met at a Munich Conference, to agree upon – inter alia – Germany's territorial claims. And six months later took over the rest of Czechoslovakia as the protectorate of Bohemia and Moravia: and Hitler was ready for World War II. In March 1939, the German Reich and the Soviet Union invaded Poland and World War II began, not to end in Europe until September, 1945. The UK and most of Europe were in ruins, over 60 million European civilians and soldiers were killed (almost half of them Russian)) and, as noted earlier, countless others were wounded and more millions had their lives ruined.
The horrors and insanity of World War II did not end there and then, of course; many more dead and wounded were on their way, most inexcusably those of Hiroshima and Nagasaki. (Of which, more later) Had the USA, the UK, Europe and Japan finally learned their lessons: no more war? Not quite for some; not at all for the USA and the USSR. (See next chapter,) Now we turn to Italy and Japan. (For Italy, Salvemini, 1936 and 1967); for Japan, Norman, 1940)
Italy. In ancient and in medieval Europe Italy was at the top of the power and prestige list. Then, as the modern era unfolded Italy began a descent, whether as measured in economic, political, or military terms. As the Kingdom of Italy, it became a nation in 1861. Half a dozen years later, its prime minister (Depretis) was the first socialist in the world for such a spot. He and his socialist successor Crespi were eager militarists but, in addition to presiding over deep corruption, they led Italy to become the first European nation to take the steps toward public education and health care. Even more, both were determined to have Italy join the imperialist parade; it did so in Africa (Somalia and Eritrea and Ethiopia) and on the Mediterranean (Libya). When World War I erupted, Italy broke its alliance with Germany and joined the Allies. Italian troops suffered massive deaths and injuries for Italy's limited rewards, as would occur again in the World War II; even worse.
The first war set the stage in Europe for years of social turmoil; the left-right political struggles were usually won by the fascist right, and it was in Italy in the 1920s that fascism was born: Mussolini its leader. What had been the historic virtues of Italy were poisoned and swallowed up, and Italy renewed its friendship with Germany – Hitler's Germany – in the 1930s.
Mussolini had done his worst to destroy the virtues of Italy, much aided by his ties with Hitler as World War II was birthing. Italian fascism was socially murderous enough; and made even more so if Italy was to get on with the Nazis and their monstrous doings. Mussolini was a quick learner. He finally received his just reward when he was hanged, as Italy was knocked out of the war. The punishment for Italy's years of wars and fascism was like being run over by a truck; not for several years after Italy's collapse in 1943 that the best of Italy could be reborn, and cleanse itself of its sins. When, by the 1960s, it was well on its way to doing so, it was at the bottom of our list of our "six" As will be seen in Chapter Five, from the late 1950s and some decades after that, Italy was busy setting the Mussolini era aside, Italy has been among the least un-civilized of modern societies, but of the six under examination, it has had and still has the weakest economy, and is moving toward the economic troubles of Ireland, Greece, and Portugal.
However, decent reformism did not last for long. Led by the USA, Italy saw its badly-needed policies of post-World War II crushed or abandoned. Adding insult and injury, since the 1990s Italy has allowed the quasi-fascist Berlusconi to rule (See Chapter 5.)
Japan. It was a virtually isolated nation to the other five of our "six" until 1854, and was evidently planning to stay that way. However, it was in that year the USA, not wanting to fall behind in the galloping imperialist race, had Navy Commander Perry sail into one of Japan's major ports. His stated aim was to force the opening of Japan and push it into the imperialism as our victim. Japan was "awakened" but went along a different path: by the 1890s it was struggling with China and then Russia over territorial rights and then stole their first colony: Taiwan. As World War I ended, Japan was taking over Manchuria, nibbling away at parts of China, and had moved into Indonesia to stay. . World War I was participated in by five of "our six," but not by Japan. As the others were killing each other the Japanese were modernizing their economy and shouldering their way into becoming the key economic and political power of East and Southeast Asia.
As Europe headed into tumult, revolution, counter-revolution and a second world war, Japan was improving both its sciences and technology and its military strength. As the 1930s were ending with the always deeper conflicts which would produce a second world war, Japan prepared to move west, south, and east to take over what the Europeans were likely to lose in their mutual suicides.
That left the Pacific colonies of the USA: the Philippines and the Hawaiian Islands. The USA had wrenched the Philippines away from both the Spanish and the Filipinos as the 19th century ended. The Hawaiians had been a functioning colony of the USA since the end of the 19th century, and had their lands taken over for this or that U.S. business and served as a strategic location for the U.S. Navy. After World War II began in 1939 and then deepened and worsened, the Japanese heightened their imperialistic ambitions and bombed Pearl Harbor. That outraged the USA sufficiently to allow it to do what President Roosevelt had wanted to do; namely, to enter World War II. (After the war Hawaii became a U.S. state and the Philippines were granted their independence.).
World War II ended, literally, with a bang; with the nuclear bombings of Japan. Along with the Europeans of "the six" and the USSR, Japan was so badly damaged by the war that it became fully dependent upon the USA for its physical survival. But by the 1980s not only had it overcome its ruination, it had become the second most powerful economy in the world, second only to the USA. Now China has that spot. Still, it remains remarkable – literally as well as figuratively – that Japan, a nation with limited natural resources, seemingly ruined by World War II, and with a much reduced "empire," could become so strong- (See next chapter) Now we return to the USA and the pre-World War II decades.
The USA: As the 19th century ended and the 20th began the USA – by far the largest borrower from the UK – was already galloping toward becoming the most powerful economy of "the big six." As will be seen in Chapter Five, when the 20th ended, the USA was once more the largest borrower of the world economy; this time from China. Now China has displaced Japan as the second strongest economy and is likely become Number One in the not too distant future. There is, of course, an important difference between those two borrowing flings: first we "galloped ahead," now we're falling down drunk. What lies ahead for the world economy – and world politics and military activities – is unpredictable, but there is much more reason to worry than to relax and smile, if only because economic, political, and military recklessness feed each other.
Since World War II, "the big six" as a useful functional concept has dwindled away, as the earlier comment about China suggests. In recent years there have been many changes which have pushed "the big six" into history: 1) The structure of the world economy has altered both in the ways it functions and more than six set the pace. 2) Asia has its own "big three and a half" (China, India, Japan, and South Korea). 3) Latin America has Brazil, Chile, and Argentina. 4) Western and Northern Europe have the Dutch and the Belgians, Scandinavia, and Russia. 5) Then there is the Middle East. Some of those noted are quite strong in themselves; others are strong in conjunction with their neighbors; and the European Union has a strong voice in itself. Setting aside that listing, in this era the members of the world economy are so greatly intertwined that no one nation – neither the weakening USA nor the strengthening China --can any longer dominate as we did after World War II.. That is not necessarily good news, for even though the world economy is one of interdependencies, the politics of its participants often have a separate life. We will examine more of that in the next two chapters; now we return to the USA before World War II.
The only substantial victor of World War I was the USA. For Europe, in addition to its record-breaking wartime casualties and damages, coming around the corner after a brief prosperity was serious inflation and an even more serious wave of left and right political upheavals. The USA had suffered many injured and killed, but its "many" was a small percentage of the British, French, German, Italian, and Russian dead and wounded. Indeed, the USA benefitted from the war greatly, both qualitatively and quantitatively. The war in Europe began in 1914 and the USA joined it in 1917. In those three years, U.S. exports of both manufactures and agricultural produces grew substantially and, in doing so, transformed what in 1914 was moving toward a serious recession into a substantial economic expansion. Those were quantitative matters; but the war assisted at least as much in qualitative developments, for the technologies of warfare translated easily into the consumer goods of peacetime, not least in the electrical and automotive realms.
The 1920s in the USA were called "the prosperity decade": fun and games and high profits: for a minority; but hell on wheels for the majority. Unsurprisingly, the leading U.S. economist of that era -- Prof. Irving Fisher – didn't see it that way. He famously announced "the U.S. economy has solved the problem of the business cycle and is on a high plateau of endless prosperity." Had he looked at the whole economy instead of its Wall Street playgrounds, he would have discovered that industrial production had been slowly and steadily slipping down from his "plateau" for some time. The ugly realities of those years were better provided by Lewis (1959):
Problems left by the war remained unsolved, especially the creation of a stable international currency system, the adjustment of the size of the agricultural economy, and the re-orientation of Britain, of Germany and of France in the post-war world. So soon as America eased to expand and to lend, then underlying maladjustments were to come out and take charge.
The economy that gave Prof. Fisher his "high plateau" illusion was surfing on a tidal wave of speculation at home and abroad. (Sound familiar?) I commented on "the great depression" earlier; here I add some data of the 1930s and the astute analysis of Gordon 1979). There are many differences but also too many similarities with our own time:
Joblessness ranged from 5 to 13 percent; at least 40 percent of all families had incomes substantially below what was needed to provide basic necessities; between 1923 (years of no inflation) corporate profits rose by 62 percent, but industrial wages rose only 8 percent, were stable in agriculture, and declined in mining. In 1931 the U.S. economy seemed to be attempting to stage a recovery….In the late spring of that year the international financial structure collapsed completely, and a financial crisis starting in Europe began a new wave of liquidation through the world and deepened the depression in the USA;…A final wave of hysteria in 1933 undermined completely the foundation of confidence on which modern banking rests….; soon after, all banks in the United Sates were closed.
The world of the 1930s was greatly different from today; and its economic troubles led to legislation to prevent the repetition. As will be seen, in the 1980s that legislation began to be reversed and was fully gotten rid of in the 1990s. (Clinton was in the White House then; nor is it encouraging to note that his main advisor for getting rid of those safety laws – Lawrence Summers -- has also been the main financial expert for President Obama.)
The economic history of the 1930s is sad indeed; its military and political history is even worse. They were also the years of spreading totalitarian politics, when the stage was being set for history's largest and most devastating war. Its main participants were our "big six" plus the Soviet Union plus many victims in the colonies.. The first shots of World War II were fired in 1939, when Germany, joined by the USSR, invaded Poland. .Not much later Germany invaded the USSR, which then joined the Allies. As noted earlier, when France was taken over by Germany in that war, its leaders (and some of its "ordinary citizens") were happy to become part of the fascist team; soon to be joined by Italy and Spain, Nor were the UK or the USA exactly fervent anti-fascists: a number of their large corporations continued to deal with Nazi Germany and fascist Italy: until 1939 for the UK and for the USA only after the Japanese bombed Pearl Harbor in 1941: for the UK, the USSR, and the USA, the war against Germany, Italy, and Japan had more to do with power, pride, and territory than with dedication to democracy.
In sum, the innovations and hailed triumphs of the late 19th and early 20th century brought about a large handful of poisoned societies, economic collapse, and two major wars. If there had been such a thing as a disinterested party as the second world war ended he/she could sensibly have said, "Well, all those people have finally learned their lesson: it's time to leave all that behind us and begin to construct a safer and saner world for ourselves. We didn't.
20th Century, Second Half: Economic Expansion and Social Improvements Achieved and Cancelled; Endless Wars
World War II began in 1939 and ended in 1945. It was the most disastrous war in history in its number of dead, wounded, and lives distorted. During and after the war most nations underwent political/social upheaval. Except for Japan and the USA the economies and politics of the big six" had been badly distorted by the first war, and much more so – this time including Japan -- by the second. Setting aside U.S. military casualties (much lower than for others), both wars functioned as manna from heaven for the USA, the second much more than the first. Taken together, the wars were a big addition to the already good fortune of the USA, making it the uncontested ruler over the world economy; as all others weakened the already strong USA became incredibly stronger economically, militarily, and politically. In consequence, since 1945 only a slim minority in the USA has opposed its many wars since 1945; partly because of the jobs provided by "the military-industrial complex," partly because, (except for Vietnam) we have always been on the winning side and "we love a winner." (Blum, 2004; Mills, 1956)
The consequences of World War II were significant in all realms of social existence; for better and for worse, often a mixture of both. A few examples and then a fuller discussion:
1) Almost all of the imperialist powers were damaged badly in so many ways they could no longer maintain power in Africa, Asia, Latin America, and the Middle East. 2) The "political independence" of the liberated societies was more often than not deeply corrupted and their people and resources exploited even worse than earlier (not least by the USA). 3) Almost all economies, whether once rich or poor, large or small, were badly damaged and needy of U.S. assistance. 4) Especially in Western Europe, the horrors of the war opened the door for liberal and left movements to gain power and to create substantial socio-economic reforms as, in those same years, the business and rightist/fascist politicians who had ruled were disgraced and weakened. 5) That weakening has been shifted into reverse since the 1970s, almost everywhere, as big business, social conservatives, rightists and war lovers have walked hand in hand; not only, but most dangerously in the USA. Now a fuller discussion in two parts: 1945 to 1970, 1970 toward the present.
What fools these mortals be!
In the interwar years extraordinary social changes had occurred, whether as measured by the rise of communism and fascism, of Japan's rise to power, or by the economic collapse of global capitalism. After the war, only one of what had been major powers was not struggling to survive: the USA. Its 1930s depression-weakened economy was rapidly strengthened beyond its pre-depression strengths, not only during but after the war, as all others of "big six" (among other nations) struggled for survival. Serving its own interests as well as those of the desperate, the USA took important steps toward assisting much of the rest of the world to recover, whether those helped had been "friend or foe." For a few years after the war's end, there was a moment when it seemed as though the pre-war conservatives of the USA might regain their seats of power, but their interwar disgraces turned politics toward the interests and needs of the majority, both at home and abroad; "for a while": from the late 1950s until the early 1970s the capitalist world underwent a series of socio-economic reforms which softened free-swinging capitalism and made life safer, saner, and more enjoyable for the many. Here some aspects both for better and for worse of that period, at home and abroad, beginning with an emphasis upon the USA and its mix of negative and positive developments: (Van Der Wee, 1987)
World War II ended late in 1945; well before that the White House was making postwar plans; sometimes in consultation with its allies, sometimes not; it depended upon when. That "when" for the USA has to do with who was in the White House, and that requires more than a glance. When the USA entered the war in 1941, Roosevelt was President and his Vice President was Henry Wallace, who had been his Secretary of Agriculture. Before entering politics Wallace had been a successful agricultural businessman. Unusual for someone in that realm; he was what would today be called "liberal" (as Roosevelt himself had begun to be since the mid-1930s. The liberalism of Wallace regarded both domestic and foreign policies, especially as regarded jobs and food at home and U.S. foreign policy concerning the poorer societies abroad.
As the 1944 presidential election approached, the conservative forces in the USA -- led by the South -- persuaded or tricked the seriously ill president to replace Wallace with a politician from St. Louis, Missouri: Harry Truman. Roosevelt died early in 1945 and Truman took over. There were many differences between Wallace and Truman: Truman was a militarist: he had been an artillery officer in World War I, supervising shots against the enemy: from a distance. Had he been in the infantry he might have been a war-hater, but…. After the war he was active in the corrupted local politics of his state. His ways and means impressed Pendergast, the leader of corruption in St. Louis, and he lifted Truman out of local politics and into the U.S. Senate. That done, it was not difficult to convince the Roosevelt-hating politicians of the South to persuade the Democratic Party leaders to push Wallace out and Truman into the V.P. seat in the 1944 election; all knowing that FDR was near death.
Wallace was a peacemaker, Truman the opposite; Wallace a liberal, Truman a product of the then most powerful political crook of the nation: Pendergast. Truman was not "all bad"; but he was bad enough. He took the first steps toward de-segregating the military, but he also created governmental "loyalty checks," and the "Truman Doctrine" which facilitated the Cold War. He wasn't "all bad," but his being an agent for St. Louis corruption opened the door for him to being an agent for expanding U.S. militarism: its madness, and the associated corruptions made us the biggest military spender ever and everywhere, and let social needs take the leftovers. (Wittner, 1978)
Still, social decency sat at the table; if only for a while. Immediately following World War II the USA was rife with conflicts between the pre-war conservative and what came to be the postwar liberal-left movement. The latter was led by the newly-strong unions, war veterans, and their families. Thus it was that from the late 1940s into and through the 1960s the USA underwent a set of socio-economic policies which, among other desirable developments, provided the average person with the possibility of having good education, decent housing and health care, decent wages and working conditions, and at least some provisions for the poor and the weak; if also less than what was being in Most of Europe in the same years.
However, the many postwar changes allowing capitalism to come back to life after the war had become dysfunctional by the 1970s, especially in the USA. Thus:
1) In what was seen as expansion, both giant companies and strong unions acted to raise prices, no matter what. 2) The new "super-states became rife with inefficiency and stained by their corrupting links with business in every major country. 3) The seemingly endless expansion providing rising profits and incomes carried with it global excess productive capacities and slowed growth. 4) The unprecedented expansion of business and computer debt brought economic fragility in its wake. 5) Although growth slowed in the late 1960s and stagnated in the 1970s, both prices and taxes continued to rise. 6) The latter, combined with rising unemployment, led to rising social tensions and facilitated a politics for decreased social expenditures while urban decay and poverty were intensifying. 7) Nor did it help that all this occurred as consumerism had created whole populations whose desires for MORE! were being frustrated.
Those mixed developments were occurring in what was noted as "monopoly capitalism" in Chapter Four. As the 1970s lurched ahead that system was inadequate to the needs of the powerful, and "Monopoly Capitalism II" was on its way. What were its differences? Whether as seen by its critics or its supporters, what we can call "Monopoly Capitalism I" and some of its reforms had contained many deflections from "capitalism's true nature, in that capitalism's "true nature" was noticeably tempered; certain key policies were not those of capital alone, whether of business or government, most clearly what earlier were discussed as "the social decency set at the table," meeting people's needs more than, even rather than, those of business. As the 1970s began, so did the reverse directions of "monopoly capitalism." In sum, the capitalism which renewed its march from the late 1970s on is the form of capitalism which demands and gets the following: always more expansion at home and abroad, a return to heightened exploitation in the leading countries and the "reproduction" of the labor conditions of the industrial revolution in the poorer countries, tighter rule by capital over both government and the people. In short, back to where, as Marx put it long ago "the ruling ideas of the era are the ideas of its ruling class." Now some details:
1. Today's giant corporations -- especially its trans-nationals /TNC's/ -- make those of the 1950s seem small. 2) The State's many functions are increasingly at the beck and call of the giant TNC's and Wall Street, and always less for social wellbeing. 3) The global economy is much more integrated and more disruptive and dominated by finance than ever and less dependent upon the Cold War. 4) Consumerism has spread and deepened all over the globe and become dependent upon clearly precarious debt accumulation. 5) The world of media, "the lubricant of monopoly capitalism," has taken on forms and power which not only make its already great strengths of the 1960s seem paltry. 6) Today's state of economics has reached new heights – or depths – of subservience to the status quo.
In sum, soon after World War II, most of the rich countries underwent years of socio-economic reforms which not only substantially improved he lives of half or more of their people; for a while. Along the way, the popular pressures which had brought about those desirable changes brought with them two other developments (first and most obviously in the USA): First were the by-products of consumerism: endless (and often senseless) buying and, increasingly over time, borrowing; next, and connectedly, was the transformation of the economy into one dominated by finance instead of production. Taken together, those developments meant something else: 1)The political activities which had produced desirable reforms were shoved aside by consumer passions and debt concerns. 2) Not only did the financial sector come to dominate both the economy and politics, it also transformed itself from being the most conservative sector of the economy into being a dangerous copy of Las Vegas.
In the decades beginning with the 1970s, the world economy became always the always hotter source of the economic wellbeing of virtually every nation in the world: "globalization" had graduated from being a tendency into becoming an ideology: where "ideology§" is meant to signify the domination of passion rather than reason. The next chapter, whose focus is upon the recent past and the present, what sits behind that unpleasant generalization will be pursued at length.
Now I turn to the even uglier elements of post-World War II history; war. Unfortunately, but not surprisingly, as many much-needed reforms were being accomplished in the USA, its historic aggressive habits worsened abroad. What follows will begin with a secret war of the USA as World War II was ending and both admitted and secret wars following. The USA has not been the worst in such matters nor, much as our citizenry may think otherwise, the most innocent. One example of our misinformation has to do with the U.S. war in Afghanistan is in its 10th year; in fact, as will be discussed below, our military involvement there began thirty years ago.
Uncle Sam: war criminal
The discussions of wars to follow here and later again will be several, but will focus upon only a few of our outrageous military exploits. I begin with our initial secret involvement with Vietnam and follow with several others. Unbeknownst to most, the secret involvement occurred before World War II ended; I know of it because I was involved in it. (Wittner. 1978)
Vietnam: It was made into a French colony long before World War II. When it was taken over by the Japanese there was little resistance, except from the north. Years before the war, a movement was underway for Vietnam's independence, led by Ho Chi Minh. As the war went on, the movement was involved in two actions relevant to this study: continuing their independence struggle (against both the French and the Japanese), and assisting the USA in their area when our bombing planes were downed there. /3/ While we were bombing in the north we had assistance from both the Ho Chi Minh's people and a small group of U.S. men of the honorable OSS (Office of Strategic Services) which, after the war, became the dishonorable CIA. When our planes were shot down, the OSS helped us in the rescue work, assisted by the independence fighters. War or no war, the French continued to resist the independence movement. As he war was close to ending, the USA assisted the French against the independence movement by shipping French soldiers and weaponry to North Vietnam: in boats flying the U.S. flag. At their first docking, they were greeted with cheers and signs saying WELCOME UNCLE SAM!! The cheers stopped when the French began to shoot them. (Young, 1991)
Korea: Soon after the war ended, the USA began its endless wars, beginning with Korea. It had long been ruled over by the then defeated Japanese. The Koreans were of course eager – but also conflicted -- to build a government of their own; instead they got a terrible war and two terrible governments: one supported by the USSR, the other by the USA, both totalitarian: the first step of a not very Cold War. Whether the initial blame for the subsequent horrors falls upon the USA or the USSR is debatable; in any case, the struggle between them –the USSR still weak from World War II, the USA stronger than ever – was a massive disaster for the Koreans. After many long years in which the USA supported a fascist dictatorship, a democratic South emerged; the North's nominally communist dictatorship continues. We can only guess what would have happened in Korea had those cruel steps of the Cold War not been taken there.
Vietnam (again): While the USA was fighting openly in Korea it had also begun a disguised involvement in Vietnam. With the world war over and the French weakened, the independence movement in Vietnam gained strength. But that strength was one side of a war between the north and the south of Vietnam was also a struggle between left and right. As it went on, and Ho Chi Minh's troops were winning, the USA joined the forces of the right. (See the Young reference /4/ for the entire story.) At first the USA was only providing weaponry and "directions" to the South; when it became clear that the corruption of its rightist government was suicidal, the USA stepped up its secret operations on both land an sea and then, after many years, had to come clean by declaring war – using the rationale – a big lie -- that the North had attacked a U.S. ship. It took many years and the loss of millions of lives in Vietnam, Laos, and Cambodia, and thousands of U.S. dead and wounded, before the USA gave up. It was done in a way mixing comedy with tragedy, as U.S. officials blundered around on the roof the U.S. State Department, waiting to be picked up. For the first time in its history, the USA had lost a war (although it has never admitted it).
Cuba: For centuries it had been a rich holding of the Spanish, but in 1902 the USA, (along with its conflict with Spain's control of the Philippines) declared itself as a "protector" of Cuba. As the century went on, the ruler of Cuba became Batista, a fascist and a gangster. In 1961 he was overthrown by Fidel Castro's revolutionaries. When Castro's political involvements began he was an idealistic leftist. As year after year of U.S. efforts to end Cuba's independence, he hardened politically to the point where the younger Castro would have led a movement to replace him. Had the USA looked the other way when it lost Cuba who knows what then? But we didn't, and Castro ruled with an iron hand until illness led him to hand power to his brother. The USA, or more exactly, the U.S. business interests in Cuba, sought to overthrow the Castro government with a landing on Cuba's shores when JFK was in the White House, but….Land they did, but they were injured, killed, and/or imprisoned. Since then the USA has concentrated on doing what it can to weaken Cuba's economy while, at the same time, holding on to one piece of Cuban land: Guantanamo. It is used as a prison for the USA, and has a bad name for its mistreatment of its inhabitants.
The U.S. supported invasion of 1961 was useful in only respect; it served as another warning to the people of the USA that their government can sink very low without a second thought. There was nothing amusing about that for those who were wounded and killed, of course. Then we did it again, less obviously, further south and not funny.
Chile: In the early 1970s the USA contributed to the violent overthrow of the democratically elected Chilean government (which also led to the self-imposed death of Prime Minister Salvador Allende. Pinochet, an unabashed fascist, was the leader of the overthrow, and he went on to rule Chile for about 20 years. Having been given the nod by U.S. corporations, Uncle Sam was his good friend. Pinochet, with the USA standing by, was responsible for the torture and murders of over 3,000 Chileans and the imprisonment of thousands of others, but to the USA or its giant corporations in Chile it was just one of those things: Who's perfect?
Iraq. This will be quick, although the war has not been, and continues. Were Iraq not in the center of the rich oil reserves, the USA would never have given it much attention. But it is. It was a heart-breaking essentially fascist-controlled nation when the USA intervened, but it was the oil, not politics which did it. However, we had to have a more acceptable reason. So we manufactured one: WMD: weapons of mass destruction. It worked, and not until much was it discovered that the White House knew there were not such weapons. Many thousands of Iraqi's and U.S. soldiers were wounded or killed, and at least two million Iraqis fled their country in fear. Despite U.S. declarations that the war has been won and done, Iraq is today still a nation in chaos. And we are still there. (Stiglitz, 2008)
Afghanistan. As noted earlier, U.S. military involvement there began 30 years ago, and it is a sordid story. In 1979 President Carter's National Security Advisor Brzezinski (called "Zbig") persuaded him to sign the first of several directives to have the CIA supply arms to a small group in Afghanistan called the Taliban. It was done. Why? In 1979 the Soviet Union was still much larger than Russia, bordered on Afghanistan, and didn't want any monkey business to take place next door. So Zbig had a bright idea. In discussing it, bragging about it 20 years later in a radio interview with the French Nouvel Observateur this what he said: "Our stated intention in arming the Taliban in July 1979 was to draw the Russians into the Afghan trap. We didn't push them to intervene, ut we knowingly increased the probability that they would." He was right: three months later the Soviet Army entered Afghanistan, guns firing. Ten years later, when they left in defeat Zbig wrote to Carter: "Now we give the USSR its Vietnam war. What he didn't know was that once the USA got in there – secretly or not – they would never lose interest. The Taliban were a weak little group until we armed them and they gained war experience. After the USSR left the Taliban backed into the shadows for a time, but while there they got the very smart idea of inducing the poor farmers of Afghan to grow the plants for opium. Since then the Taliban has come to control the sale of opium, 90 percent of which now comes from Afghanistan, enriches them and pays for the huge Taliban army now fighting its one-time pal the USA in what is likely to be our second Vietnam; or worse?
That's enough dirty war news for a while; there's more to be discussed in the last chapter and the all too strong possibility of a U.S. war with Iran, encouraged by Israel. If and when that happens, its basis was born as World War II ended and the USA's relationships with the newborn Israel began. That will be discussed here and now and again in Chapter Six.
Israel and the USA: Among the many tragic doings of human history, one that stands out is the all too often cruel mistreatment of Jews, climaxed by Hitler's Germans, with all too much of the same by Poles, the French, and Italians, et al. It was thus quite sensible that during and immediately after World War II Jews would seek a land of their own; understandably they chose that to be their historic home: Israel. In modern times it had been under the control of the UK and peopled mostly by Palestinians. The British, weakened to the ground by World War II and then again in 1948, packed up and left the land of Israel. Although there was some expectation that a peaceful agreement between the Israelis and Palestinians could be could be reached, it was not: quite the opposite. Since 1948 there has been one bitter conflict after another between them, with support from outside to both: mostly from the Arab world for the Palestinians, with considerably more and always rising support for the Israelis from the USA: no matter what, when, or where. /6/
The question then arises: Why has the USA in the past and present given Israel unblinking support, no matter what? The answers are both unpleasant and explicable:
1) As World War II ended and the Middle East ceased to be under the control of the UK, that provided an important opportunity for U.S. and other oil companies to expand in that region. 2) Given the already existing and rising tensions between the USA and the USSR, Israel was also a vital spot for strategic reasons. 3) There is a significant Jewish political group in the USA which has successfully pressed the government to take Israel's side, no matter what the issue, no matter what the dangers. 4) For many decades, the USA and Israel have provided each other support in and out of the UN, no matter what the issue.
The foregoing put together has brought about a set of dangerous conditions in -- especially but not only -- the Middle East. In consequence, and with reason, the all powerful USA has come to be seen as the servant of Israel. That would be bad enough were it merely a matter of working against Jew haters. It is not. The most terrifying result of the USA-Israel relationship is that Israel is now under the leadership and control of rightwing fanatics who see Iran as their main enemy and are convinced that Iran will strike them first (and with nuclear weapons) unless they are stopped. That "stopping" would have two steps: 1. Israel would bomb Iran. 2. Although Israel has a big army it could not defeat Iran on the ground. 3. The USA jumps in and finishes the job. (Even worse; Israel will use its nuclear bombs and, in doing so, raise the possibility of stimulating a broader nuclear war. That may sound fanciful to you (as would have been World Wars I before 1939)): it is not seen that way either in Israel or Iran. Add this: As tensions rise between the two nations, they are also similar to each other in their political positions: both are dominated by recklessly militaristic politics. it is time overdue for a change; a big change.
With all that good news to ponder, I now turn to the closing chapter and its bad news.
Will the 21st century be the most disastrous ever?
For a decade or two after World War II it seemed possible that the USA, much of Europe, and many other societies around the world had learned enough from two world wars and violent political shifts to steer clear from the suppressive politics and suicidal economies they had just barely survived; that the time had come to work for functioning democracies. That was acted upon to one degree or another in all of the rich and some of the newly independent countries; but only for a while.
Then, from the 1970s on social intelligence and decency began their lurch back toward raw capitalism and autocracy; the USA in the lead. Year by year, the rich and powerful recovered and increased their political strength at home. That done at home, they (the USA and other long-standing imperialists) set about to have the newly-independent colonies open their doors for corruption; and economic exploitation among them has become even deeper than in the "good old days."
Thus, although "institutions" have changed on the surface in both the rich "big six" and in most of Latin America and Africa and much of Asia, not only has the exploitation of the many by the few deepened, but the efforts for genuine freedom and independence have been derailed. Among those processes many by-products has been the rise and deepening of always spreading and deepening terrorism. Although it is most unlikely that its ways and means can produce the victory the terrorists seek, it is quite likely that it will contribute to the next – and last – world war. Of that, and its associated dangers of war, there will be more; now we turn to the rising dangers among the powerful themselves The dangers now underway were mostly born and have become apparent in the USA, from which their main push continues. Since the 1970s, it has led the richest "six" and other advanced industrial capitalist nations to utilize new ways and means to increase profits and to "modernize" their power with consumerism and related tactics of "mind management" in the realm of communications. Most clearly in the U§A, with others catching up rapidly, rare indeed is the politician in the industrial world who has not been bought and paid for by big business as regards (1) the economy, (2) social needs, (3) war and peace, and with always more danger and more recklessness, (4) the environment. (Related social needs and problems will be discussed in (2). We begin with "the heart of the matter: the economy and its several dimensions in the USA and over the globe, then on to social Needs, war and peace, and the environment.
(1) The Economy. Once upon a time a common phrase in the USA was "it's our economy." It had never been "ours", of course, always "theirs": those who own and control the means of life; that is, production. However, as the 20th century ended and the 21st began "theirs" was slimmed down to an even smaller group recently noted in Fortune Magazine: "500 financial companies have revenues equal to more than two-thirds of the production of the entire economy, exceeding that of the next two largest national economies (Japan and Germany)." That in the 1990s only 500 companies took that percentage of the revenues of countless thousands of producers is a shocker in itself, but as the 21st century began it was worsening: the production sector is increasingly dominated by Wall Street which, to make matters worse, is dominated by always more high flying speculation. Here a bit of the processes which have taken us to the present:
In the early 1970s the financial sector was subordinate to Congress and the total of financial trades in the USA over an entire year was a dollar amount less than GNP. By the 1990s, however, through a 24- hour-a-day cascade of electronic hedging and speculation the financial sector had swollen to an annual volume of trading 30 to 40 times greater than the dollar turnover of "the real economy." Now each month several dozen huge financial firms trade electronically a sum in currencies, futures, derivatives, and socks, bonds that exceed the entire GNP of the United States. (Phillips, 1994)
Note the date of that critique: 1994; Clinton (Dem.) was president. His main financial advisors and officials were Wall Street buddies. Now Obama (Dem.) is president and his financial advisors have also been Wall Street buddies: Robert Rubin, Lawrence Summers, and Timothy Geithner. Add this headline of January 22, 2011: "General Electric Chief Immelt is to lead Obama job push." (And, the article notes, he will continue to run GE.) Immelt is noted for having been the leader of the anti-labor and tough market policies of GM, arguably the most powerful and socially irresponsible of U.S. corporations. In the same week, Obama appointed William Daley (top executive of Wall Street's JPMorgan Chase) as his Chief of Staff.
The foregoing sets the stage to examine problems of the ongoing U.S. economy and those in the closely related world economy and big business and the always more disgracefully unequal distribution of income, and the global economy. The relationships between the foregoing and socio-political problems will be examined in (2).
Recession. Those old enough or read a lot will be familiar with the ill-famed utterance of economists and politicians for several years after the 1929 crash:" Prosperity is just around the corner." What was around the corner was a recession which soon became the worst depression of U.S. history. As it flumped between 1929 and 1935, the White House and Congress realized they had to wake up or get kicked out; it was then, in the mid-1930s, that the desperately-needed policies of "the New Deal" took hold. However, it is relevant to note that as recovery took hold for a few years Wall Street convinced the White House and Congress to abandon reform policies because "inflation is just around he corner." So, from 1937 until World War II the economy flopped back into depression. (Soule for the 1920s, Mitchell for the 1930s)
Now we have been in a recession since 2007, with an official unemployment rate of 9-10. That rates nature was established in the 1930s, and it counts only those who are "known to be unemployed."
It does not count those who, before the recession, were working full-time but now work half-time (with, of course, lower wages and no benefits); does not count those who have given up looking nor the young people just starting to seek work who give up or whose jobs are low-paid and not those for which they were trained; nor the old who have been discharged sooner ahead of time. IF all those who are unemployed and underemployed were counted (as it is in Germany, for example), the "official rate" would be at a depression level: 17 percent. Nor does it count the unknown bunch – young and old -- who have despaired of even trying: Shades of the 'Thirties. (See Rasmus, noted earlier)
So what? So the "low" official rate of 9-10% allows Congress and the White House to hold back from job and/or financial assistance and in badly-needed socio-economic programs which would furnish wellbeing and jobs (in housing, health care, transportation, etc. In short we need another New Deal, but are getting what the conservatives – Democrats and Republicans – managed to squeeze by with from 1937 on noted above. As Paul Krugman, the most pertinent of today's economists has pointed out:
The U.S. economy has to grow 2.5 percent a year just to keep up with rising productivity and population….But even at 4 percent the – understated -- unemployment rate would be close to 9 percent at the end of 2011 and still above 8 percent at the end of 2012…. A rational national political system would long since have created a 21st century version of the Works Progress Administration of the 1930s (WPA). We would then be doing what needs to be done, repairing and improving our fraying infrastructure. /However/ the best we can hope for is that Washington doesn't actively undermine the recovery. (New York Times, January 2, 2011)
It took World War II to get us out of the 1930s depression. Now, with more than ten nations with atomic bombs and at least one of them – Israel -- itching to use them against Iran -- either “we the people” become the dominant politics of our nation – and even if we do – we’re nearing the edge of a cliff. Since World War II the USA and many other nations have been all too open to setting the stage for war (and/or marching ahead). That will be discussed more worriedly in the section on war and peace (3).
Big Business. Back in the 1920s a handful of economists had come to note a qualitative shift in the economy: although in the 19th and early 20th centuries there had been big companies and a handful of giant companies -- e.g., Standard Oil – who dominate their own markets, and although businesses infamously dominated their workers, the economy was not dominated by BIG business. No later than after World War II – and partially facilitated by it – the march toward what we now have – the domination of a few hundred companies not only of the economy, but of the entire social system. Except for a few economists, little or no attention was given to that dangerous evolution. Most powerful, comprehensive, and revealing of those works was Monopoly Capital: An Essay on the American Economic and Social Order (1966) by Baran and Sweezy; not least because their analysis went beyond the economy into the entire social order. /1/
There is, of course, much more to be concerned with about the U.S. and world economies. The USA has been the dominant economy since the 1940s; since the 1980s it has become history’s champion borrower. It is more than interesting to note that the USA now owes over three trillion dollars to China and India who, for centuries been long-standing victims of imperialism. It is difficult to see how they will ever get those billions back, given that the USA shows more signs of seeking to borrow more and more for its weakening economy. Put differently, it is more than difficult to see how the USA will ever be able to pay off those (and other) debts. If, in 2014, Obama keeps the presidency, but the Congress – as is highly likely – continues on its conservative paths (kept there by both the conservatives of the GOP and the Democrats) that would be ominous enough; however, it is at least as likely that Obama’s record as president will continue on its bumpy road and that he will be replaced by someone much worse. Obama has been all too friendly with Wall Street and big business. For him that may – or may not -- have been a bit of a strain; if the GOP takes over, Wall Street and big business will furnish them with cheerleaders.
As for the rest of the world, it is difficult, indeed close to impossible, to find governments in Europe or Asia or Latin America which will face ongoing or worsening economic difficulties with policies which – like those of the 1950s and 1960s – meet with and lessen serious economic weaknesses facing the majority. Their politicians, like those of the USA, have increasingly turned a deaf ear to the needs of the majority: not only does the money come from big business, but so too do daily swarms of effective mind warping. The USA takes the prize in that game, but it has some strong competition. Item: In Italy (where I now teach and live) Berlusconi is several things: He is its richest person, its most powerful businessman (in finance, communications, and owner of a soccer), the most infamous young women user and Italy’s most popular politician (especially among men), and both despite and because of all, he is now serving his third term as its leader. Perhaps, you will think, that’s just Italy. It isn’t. He is just the winner in a popular contest. In the USA, Clinton not only was caught with his pants down with fancy young woman, as president he also (as noted above) played games with high finance (and who knows who else?). And then there is the UK, France, Germany, the UK…. et al. Doubtless others are not as heated up as Berlusconi; but is very hard indeed, if not impossible, to find political leaders who listen first (let alone only) to “the people” rather than to the big shots.
That of course is partially the fault of the people -- whether because they are too busy buying and borrowing, sweating and worrying at their jobs, or just plain brown-washed – do not live up to the rule that a democracy can function as such only to the degree that that a strong majority of them are regularly involved in paying attention and acting upon politics. We did that, in the USA and in Europe and elsewhere, for a few years after World War II. We decreased our doing that as the 1970s approached and had thrown it aside as the 20th century was ending. How else does one explain that young Bush, a combination of fool, liar, idiot, and monster, could be elected, let alone re-elected (even considering the latter’s dirty tricks)? In the process, whether in state and/or local and/or Congress we opened the door wide for policies facilitating war and corruption and robbery at all levels. That takes us to the next set of bad news, with the understanding that their problems and, increasingly, their threats, mostly arise within a power structure tightly dominated by big business.
(2) Social Needs. If there is to be decently functioning society they must be met, but before the 1950s only rarely were any of them met. Those needs are many, but most critical for both a decently functioning society and its people are education, health care, and housing. Especially in Western Europe, and to a much lesser degree in the USA, healthy steps were taken in that direction. Since the 1970s those improvements have been cut back or eliminated and always more so. Why? The achievements were made in years in which substantial percentages of the public were involved politically; increasingly since the 1970s, as noted earlier, an always rising percentage of the public in those same societies has been using its energies in borrowing and buying (and watching TV). In those same years the business world has created research groups to advise on what may be done to keep society moving in that direction; in the same years a major consequence has been the displacement of relatively progressive politicians by their opposites in the UK and over all of Western Europe. When Obama made the presidency, it was expected that in the USA the tide was turning in a more favorable direction. Perhaps it could have, but up to now (2011) whether by choice or need, he has taken more direction from the right-center from the left-center. Those tendencies will not be reversed unless and until the people as a whole turn their energies much more toward politics and less toward TV and the latest bargain.
(3) Wars. For a few years after World War II ended, it was not only hoped but assumed that the lesson had been learned: no more wars! Especially was that so in Europe (where 60 million had died and millions more had their lives shattered). The hope was sustained for many years in Europe, but betrayed even as the war was ending by both the USA and the USSR re: Korea and (as noted earlier) by the USA in Vietnam. The USA alone had the economic strength to make war and at the same time – for a while – in doing so to stimulate and strengthen its economy. The opposite was so for the USSR: its war deaths were the highest of all participants in World War II and it ruthlessly continued to make war no matter the costs to not matter how many more: the very hot World War II had opened the door for decades of the not very cool Cold War.(La Feber,1976) In addition, for the USA the economic and political weakness of the other five of the “big six” (UK, France, Germany, Italy, and Japan) opened the door for it to expand its power over what had been the imperialized world over the globe. (Williams, (1980)
In doing so, not only did the USA poison the possibilities of those societies, it also guaranteed that U.S. militarism would be kept busy and, as this century opened, have an economy as militarized as it had been in World War II. (Bacevich,2008), Stiglitz, 2008). World War II had been what could be seen as a war for survival. The wars since then have been wars of expansion, beginning with the Korean war and continuing endlessly ever since.
Since the Korean war, the USA has taken center stage, beginning with Vietnam even before World War II ended (as noted earlier). Taking center stage, however, have been the ongoing or all too likely wars in Iraq, Afghanistan and, all too likely, with Iran. Those have been very much USA wars, all too eligible to be classified as “imperialist.” As they have proceeded over recent decades they have produced a group of conflicts which are not seen as “the war on terrorism.” They require a closer look.
For centuries, if not millennia, the societies of what Europeans first described as “the Middle East” and Central Asia have been exploited and ruled over by outsiders, from east and west the north and from neighbors, from those better organize and, vitally, better armed. After World War II, given the weakness of their European dominators, it was reasonably thought their peoples would be able to rule themselves. Had they not been sitting upon the world’s largest deposits of oil and its critical role in the 20th century, perhaps hopes could have been fulfilled, with or without difficulties. But oil reserves are more vital in the modern world than gold, silver, coal, and iron mines were in the past. (See Everest,2005; Heinberg, R. 2004; Sampson, A., 1975; Tanzer, M, 1961) and the struggle to control those deposits which began as the 20th century took hold broke all records after World War II. when the Europeans who had controlled those areas (most strongly the British, could no longer hold on. What then could have become genuinely independent nations were kept from it.
There were of course, formally new governments in the entire region, but their precious oil deposits became or remained under the control of outsiders, by far mostly by U.S. companies. In those same postwar years Israel became the homeland, not only of the small number who had been there all along, but for what would become the millions of Jews from the north who left its horrors.
Thus Israel was reborn. From its first years it sought and obtained substantial support and protection from the USA, prompted by well organized and financed Jewish organizations. As noted earlier, my mother was the daughter of Jewish refuges from the horrors of Russia, and what follows will be critical of both the U.S. relationships of the USA with Israel, and the attitudes and behavior of the Israelis toward its non-Jewish inhabitants: behavior which for decades has systematically stolen territory from Palestinians and made their lives not only difficult but are cruel copies of the mistreatment suffered by Jews in Europe from which they or their parents had fled.
So it is that as the 21st century took hold the USA was not only caught up in unjustified wars in Iraq and Afghanistan (and edging toward one with Pakistan) but its all too close military/political arrangements with Israel could well take us into a war with Israel’s neighbor Iran, which it is itching to bomb with or without the prior consent of the USA. What would be amusing if it were not so terrifying is that Israel not only complains that Iran is building atomic weaponry – which Israel itself is know to have itself, but which both the USA and Israel deny – but it also does what it can to held back anything that might reduce the political conflicts between Iran and the USA. That all of this could lead to a war which would itself serve as the first step toward a wider war should be seen not only dangerous but disgracefully dangerous behavior by the USA and Israel. It may also be seen as a basis for the spread of terrorism among the peoples of the Middle East. It should also be seen by us as sufficient reason for pressing the USA to wake up.
(4) The environment. For anyone who reads the news, it should be clear that substantial changes in how we produce and consume are made within the foreseeable future that in the not very distant future the world will sink into irreversible problems with its air and water and, therefore, our lives. It may be assumed that throughout history destruction and waste have existed; but not until the 20th century had that behavior become what it is now: destructive. That is bad enough but unless the nature and causes of wastes and destruction cease and/or, somehow, reversed. all living creatures will begin lives of increasingly serious difficulties which can become global disasters. Air, water, and earth are what we live by: all are poisoned increasingly by how and what we produce their quantities. The following example, concerned with bio fuels is representative of how our life style threatens our lives because of but one example:
The emissions effects of the huge amount of natural land that is converted to cropland to support biofuels development and its destruction of natural ecosystems -- whether rain forests in the tropics or grasslands in South America – not only release greenhouse gases into the atmosphere when they are burned and plowed, but also deprives the planet of natural sponges to absorb carbon emissions. /And, after further details/:For the next 93 years we are making climate change worse, just at the time when we need to be bringing down carbon emissions.("Biofuels Deemed a Greenhouse Threaat," (New York Times Feb. 8, 2008)
Multiply and fill out with relevant other developments and it becomes evident that as a species, slowly but surely we are committing suicide. Who are "we"? First and foremost it is those in agriculture and their owners/customers who depend upon such doings for profits. But they need "us" to go along with that because of our connected needs or desires; real or imagined, natural or created by the sellers. The foregoing is but an example. It has many buddy brothers: the huge majority of us hypnotized by consumerism, and its pal debt. We must awaken ourselves from this entrancement; time is running out.
Conclusion: Whether us in the USA or our counterparts in the rest of the world, "we the people" have allowed ourselves to be hypnotized by those seeking profits and power: no matter what. They are not going to change direction, eve: we must change it before it's too late. Almost all of the governments in the rich nations (and most of those not so rich) show few or no signs of seeking ways to reverse ongoing dangerous tendencies. Indeed, as in the interwar period of the first half of the 20th century, the main tendency was to accept totalitarian governments which made matters go from awful to suicidal. And the USA?
When Obama was elected two years ago, it seemed likely that the USA might be turning toward making decent good sense. That may yet be possible, but it is by no means likely. At present there is more reason to expect the politics of the USA to deteriorate always more and, if Obama loses the presidency in 2012, that the USA will lurch always more dangerously toward more hard times for the majority at home and even worse wars abroad. I hope very much the foregoing is wrong; I hope so. In any case, we should all become more politically active and alive.
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