So, this is our first question: What happened to turn Germany and Japan fromsuccess stories to, putting it impolitely, ‘basket cases’? How did the USeconomy recover from its sluggish performance to regain its competitiveedge? Our second question seems utterly unrelated: Why has Germany, andof course France, embraced the Peace Movement before and during thelatest Gulf War?In what follows we begin with the premise that neither of these questions canbe understood in terms of mainstream narratives on economics and politics;that the causes of the present situation are to be found neither in themicroeconomy of the world’s three leading economic zones (US-Europe-Japan) nor in the sphere of political ethics and diplomacy. We suggest,instead, that (in the spirit of Magdoff, 1978) useful insights on these importantissues can only obtain when we adopt the broader political economyperspective which takes seriously the form of globalisation guiding theinternational economy ever since the US gained the upper hand and emergedas the dominant force within Western capitalism.
2. The first phase of the post-WW2 era: A Grand Global Design
The United States came out of WW2 as the major and, in fact, if one excludesSwitzerland, the only creditor nation. For the first time since the rise of capitalism, all of the world’s trade relied on a single currency and financedfrom a single epicentre. Recognising this remarkable opportunity at achievingunhindered dominance (and, of course, taking on the USSR; a non-capitalisteconomic entity which, at the time, the best western economists thought of asa miracle-in-the-making), the United States took upon themselves the role of reconstructing the capitalist world. The grandiose project soon acquired twostrands:First, American policy makers were keen to end the dollar’s monopoly as theworld’s single convertible currency. This monopoly was undesirable becausea world trade system relying on a single currency (supported by a single realeconomy which is only a subset of the global economy) is inherently unstableand prone to major upheavals during the unsavoury parts of the businesscycle. Initially, they toyed with the idea of propping the pound-sterling up andusing it as a potential shock-absorber for the dollar-zone. However, withsterling’s collapse in 1947, US officials gave up on this idea.Instead, they favoured, propped up and cajoled the rise of two importantsupporting pillars for the dollar: one in Europe (the Deutschmark) and one inJapan (the Yen). According to Schaller (1985), the architects of post-war USglobalism were three men: James Forrestral (then Secretary of the Navy),Secretary of State Byrnes, and George Kennan. In their eyes, extending creditto Europe and Japan was to become a crucial component of US policy as itwould enable these two zones to buy technology and energy products,fundamentally oil,
as well as to attract and utilise (often) migrant labour.
The choice of Germany and Japan seemed entirely logical. Both countrieshad been rendered dependable (thanks to the overwhelming presence of the