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UFPPC ( Digging Deeper LXXVI: March 9, 2009, 7:00 p.m.

Michael Hudson, Super Imperialism: The Origin and Fundamentals of U.S.

World Dominance (London and Sterling, VA: Pluto Press, [March] 2003.
Second edition. First published 1972 by Holt, Rinehart and Winston as
Super Imperialism: The Economic Strategy of American Empire.

[Note: Most of the revisions in this 2003 the foundation of world economic policy.
second edition were made shortly after But U.S. officials [in 1971] insisted that
the 1972 publication of the first edition, because of their nation’s bankruptcy on
but no publisher was found (xiv-xv); international account, all other nations
apart from a few references to Hudson’s must warp their economies toward
subsequent books and some quotations transferring its bankruptcy to
from the 2001 third volume of Robert themselves” (264).]
Skidelsky’s biography of John Maynard
Keynes, covering the years 1937-1946, Preface to the second edition [dated
there are few recent references.] 2002]. There has been no change in the
U.S. Treasury’s neglect of its balance-of-
[Thesis. “The thesis of this book is that payments deficit from 1972 to 2002 (ix).
it is not to the corporate sector that one It amounts to a system of taxation the
must look to find the roots of modern U.S. imposes on the world without its
international economic relations as much consent (x). “This book aims at providing
as to U.S. Government pressure on the background for U.S.-European and
central banks and on multilateral U.S.-Asian financial relations by
organizations such as the IMF, World explaining how the U.S. Treasury bill
Bank and World Trade Organization. standard came to provide America with a
Already in the aftermath of World War I, free lunch since gold was demonetized in
but especially since the end of World War 1971, and why the IMF and World Bank
II, intergovernmental lending and debt cannot be expected to help. Published
relationships among the world’s central thirty years ago, it was the first to
banks have overshadowed the drives of criticize the World Bank and IMF for
private sector capital. — At the root of imposing destructive policies on the
this new form of imperialism is the world’s debtor economies, and to trace
exploitation of governments by a single these policies to U.S. diplomatic
government, that of the United States, pressure” (xi). Hudson’s career, 1971-
via the central banks and multilateral 1977 (xi-xiv). “No serious alternative . . .
control institutions of intergovernmental to the American-centered financial
capital rather than via the activities of system” is in sight (xvi-xviii).
private corporations seeking profits.
What has turned the older forms of Introduction. “The United States has
imperialism into a super imperialism is achieved its global position through novel
that whereas prior to the 1960s the U.S. policies that were not anticipated by
Government dominated international economists writing prior to World War I,
organizations by virtue of its preeminent or indeed prior to the 1970s” (1). U.S.
creditor status, since that time it has diplomacy reflects a strategic drive for
done so by virtue of its debtor position” world power, not merely “the profit
(23-24). — “Economic imperialism has motives of private investors” (1). This
produced some weird and almost was achieved “from the unprecedented
incomprehensible results in its history, terms on which [the U.S.] government
but never before has a bankrupt nation extended armaments and reconstruction
dared insist that its bankruptcy become loans to its wartime allies” (1).
Anglophile Democrats were in favor of Thus “[t]he world’s richest nation was
reducing tariffs, Anglophobe Republicans enabled to borrow automatically from
in favor of protectionism; “[i]t was largely foreign central banks simply by running a
to promote protectionist doctrines that payments deficit” (17). “America’s Cold
state land-grant colleges and business War spending thus became a tax on
schools were created after the Civil War” foreigners” (17). Foreign central banks
(2). The latter philosophy helps explain had no real alternative (17). To keep the
the backward-looking isolationism of the dollar’s worth high was in the interest of
U.S. between the wars, in which it was a the foreign central banks (lest cheap
world creditor but was uninterested in imports flood their markets), so buying T-
making sure debtors could repay, leading bills was seen as in their interest. Thus
to “the breakdown of world payments” was the classical balance-of-payments
(5; 3-6). “The Great Depression and mechanism inverted, and a balance of
World War II taught governments the folly payments deficit (rather than a higher
of this attitude” (6). The view of Jacob interest rate) used to supply foreign
Viner of the Univ. of Chicago was that the capital (18-19). It was “one of the
policy dictates of states, not economic miracles of modern times”
corporations, led to war; this was the (20). Not at first a deliberate policy, its
basis for post-WWII laissez-faire policies advantages were soon perceived, and
promoting “the United States as the since 1972 it has been “increasingly
center of a world system vastly more conscious and deliberately exploitative”
extensive and centralized, yet also more (21-23 & 29-31). “The United States thus
flexible, less costly and less bureaucratic achieved what no earlier imperial system
than Europe’s imperial system had been” had put in place: a flexible form of global
(10). Congress’s unwillingness to act to exploitation that controlled debtor
counter payments surplus of the U.S. in countries by imposing the Washington
the late 1940s led to the use of “an anti- Consensus via the IMF and World Bank,
Communist national security program while the Treasury bill standard obliged
hook on which to drape postwar foreign the payments-surplus nations of Europe
spending programs,” but “[w]ithin a and East Asia to extend forced loans to
decade . . . what at first seemed to be a the U.S. Government” (23). What
stabilizing economic dynamic because resulted was a sort of coercion: the U.S.
destabilizing” (12, 14; 11-14). “dared the rest of the world to call its
“[I]nternational money (viewed as an bluff and plunge the international
asset) is simultaneously a debt of the economy into monetary crisis” (23).
key-currency nation. Growth in key- “[A]round 1990, the United States
currency reserves accumulated by dropped all pretense of promoting the
payments-surplus economies implies that open world economy it had insisted on
the nation issuing the key currency acts creating after World War II. Instead it
in effect, and even in reality, as an demanded ‘orderly marketing
international borrower” (15). At first this arrangements’ to specify market shares
was hardly noticed, but by 1964 the debt on a country-by-country basis” (24).
to foreign central banks exceeded the “World commerce has been directed by
value of the Treasury’s gold stock, an unprecedented intrusion of
leading to a run on gold and in March government planning” (25). “The U.S.
1968 a suspension of conversion, economy thus achieved a comparative
breaking the gold-dollar link (16). In advantage in capital-intensive products
August 1971 Nixon made it official, and not through market competition but by
“[t]he U.S. Treasury bill standard—that is, government intrusion into the global
the dollar-debt standard based on dollar marketplace” (26). “The result has been
inconvertibility—was inaugurated (17). a global financial bubble” (27). In the
early post-WWII decades military wisdom for such an arrangement [63]).
spending produced the deficit; in the The U.S.’s relation to the war was
latter decades this shifted to providing “unique” and “American credits became
consumer goods to the U.S. economy “as the war’s distinguishing economic
it postindustrializes and becomes a feature” (44). Though the U.S. refused to
bubble economy . . . the role of foreign acknowledge the connection between
economies is to sustain America’s stock Inter-Ally debts and German reparations,
market and real estate bubble, producing in fact its insistence that the Allies repay
capital gains and asset-price inflation their Inter-Ally debts led them to ‘bleed’
even as the U.S. industrial economy is Germany (45-50). No rescheduling of
being hollowed out” (28). “The public payments was allowed (51-53). This was
domains of debtor countries are passing a “government function”; it was not due
into the hands of global finance capital” to private investment capital; it was
(29). The system created has been “unique in history” and was unforeseen
“parasitic” because it has devoted by theoreticians of empire (Hobson,
resources not to productive enterprises Kautsky, Lenin) (53-54). In 1925 Gerhart
but, instead, to “maintaining an imperial von Schulze-Gaevernitz [1865-1943]
military and bureaucratic superstructure identified the shift in the world’s center
that imposes dependency rather than of gravity to America and named the
self-sufficiency on its client countries” process Überimperialismus, defining it as
(32). The system “cannot last” and the “that stage of the capitalist epoch in
breakdown “is likely to be financial” (32- which finance capital mediates political
33). Hudson laments that the training of power internationally,” but “missed the
central bankers and diplomats is divorced point that it was more in the hands of
from these realities and that these tactics governments than in those of private
are “a secret that U.S. financial diplomats investors” (55). “[T]his assumption of
are not interested in broadcasting” (34; lending power by a single national
33-34). “The above view of U.S. financial government proved as revolutionary as
imperialism differs not only from the the Bolshevik Revolution” (56). It was
traditional economic determinist view, due to government policy, not the pursuit
but also from the anti-economic, of profit by private investment capital:
idealistic (or ‘national security’) “Without this perception one cannot
rationale” (34). “The key to comprehend the seemingly contradictory
understanding today’s dollar standard is and apparently self-defeating policies
to see that it has become a debt pursued by the United States toward its
standard based on U.S. Treasury IOUs, World War I allies and during the years
not one of assets in the form of gold that followed. Nor can a foundation be
bullion” (35). laid for understanding the financial-
imperial policies of the United States
I. BIRTH OF THE AMERICAN WORLD after World War II until one has grasped
ORDER: 1914-46 the power-seeking context within which
the United States conducted itself in the
Chapter 1: Origins of interwar period with respect to German
Intergovernmental Debt, 1917-21. reparations and the Inter-Ally debts” (57).
World War I changed international
lending and investment by creating Chapter 2: Breakdown of World
massive claims by governments on other Balance, 1921-33. “[T]he
governments that were unlike earlier disenfranchisement of private capital was
investments, which were based on in large part the result of a war whose
productive assets and backed by motivations stemmed largely from the
collateral (39-40; Keynes disputed the competition of international finance
capital. However, the consequence of purpose of the creation of the IMF and
this war was to disenfranchise it, to the World Bank, conceived in the 1941-
supplant it by a system overburdened by 45 period, was to avoid the errors of the
intergovernmental claims and debts. . . . previous postwar period and “to enable
The results were not what any prewar [the U.S.’s] allies and former enemies to
observers had anticipated” (63). Keynes maintain their imports of U.S. goods and
objected (63-64). The U.S. would not services in the absence of German
allow Europe to repay by increasing reparations” (137; 137-55). Other
exports, so new borrowing was necessary nations had no real alternative except to
(64-66). The system began to break agree (155-58). After the war
down in 1928-29 (66-67). The U.S. had burgeoning U.S. exports were too great,
to keep interest rates low to keep it and “U.S. diplomats therefore redesigned
going, fueling a stock market bubble (67- the nation’s foreign aid and investment
69). In June-July 1931, the system fell programs in such a way as to repatriate
apart and the pound sterling was gold to Europe” (158; 158-61).
devalued, leading to a tariff war (69-71).
“World debt had become, and was used Chapter 6: Isolating the Communist
as, an instrument of power by the United Bloc, 1945-46. It was originally
States against its only serious rival, the expected that the Soviet Union would be
British Empire” (73). Faced with crisis, part of the Bretton Woods system (162-
the U.S. refused accommodations (73- 72). But instead the USSR was excluded
79). because “the United States set out to
dominate the postwar world economy”
Chapter 3: America Spurns World (174; 172-75).
Leadership. In the Nov. 1932-Mar. 1933
Hoover lame-duck period, Franklin D. II. THE INSTITUTIONS OF THE
Roosevelt spurned attempts to ease debt AMERICAN EMPIRE
repayments by Britain and France (80-
94). He “effectively killed” the London Chapter 7: American Strategy within
Economic Conference in the spring of the World Bank. The U.S. wanted the
1932, thus rejecting world leadership IMF and the World Bank in Washington,
(94-111). The Great Depression (111- D.C. (179-80). “[I]n March 1946, at the
15). “World War II erupted . . . because close of the World Bank-IMF meeting in
of a world bankruptcy in which Savannah, Georgia, former Treasury
intergovernmental financial claims Secretary Morgenthau explained that
played the major role” (115). World ‘Bretton Woods tried to get away from
leadership “did not seem to pay” and the the concept of control of international
idea of a debtor-oriented financial system finance by private financiers who were
was inconceivable at the time (116-18). not accountable to the people’” (180’
180-84). Bias against agriculture due to
Chapter 4: Lend-Lease and “shortcomings of orthodox economic
Fracturing of the British Empire, thought . . . warped World Bank project
1941-45. U.S. used Lend-Lease lending after 1952” to the detriment of
strategically to gain support for post-war poor nations and causing the increasing
power (119-31). Tough U.S. diplomacy postwar “division of the world into
led to a situation in which “[a]t a stroke, developed and impoverished countries”
Britain’s economic power was broken” (187; 185-96). Critique of World Bank
(133; 131-36). policies (196-216).

Chapter 5: Bretton Woods: The Chapter 8: The Imperialism of

Triumph of U.S. Government. The Foreign Aid. U.S. foreign aid “started
out as a system of benevolent grants and role in the development of foreign
loans” but has “evolved into a strategy of countries” (247).
international client patronage and
dependency based on U.S. political and Chapter 9: GATT and the Double
military control over aid recipients” Standard. U.S. planners after World War
(217). “The United States Government is II originally intended “a system of
not a charitable institution” but rather regulated free trade binding upon all
pursues “the national interest of the signatory countries, including the United
United States,” as a Senate Foreign States itself,” but the drive for power
Relations Committee report on Technical (especially as expressed by U.S.
Assistance declared in 1957 (218). representatives in Congress, “as
“[T]he system of foreign aid is now sensitive to changes in world trade as
implemented callously, coldly and with barometers are to changes in
deliberate intent to enlarge U.S. military atmospheric pressure” [249]) gradually
and political influence” (219). Loans to turned the General Agreement on Tariffs
help finance exports that are essentially and Trade, which even at the outset
commercial are classed as “aid,” calling involved a double standard, into
the very meaning of the word as it is “economic nationalism” that maintained
used today into question; “[s]o-called U.S. dominance and supremacy (248-64).
foreign aid is, indeed, feudatory” (219-
21). In the post-WWII period, U.S. aid has Chapter 10: Dollar Domination
become increasingly militarized, while through the International Monetary
positively Orwellian rhetoric has Fund, 1945-46. Because they were
obscured the process (e.g. a large “Food exhausted by World War II, European
for Peace” program is used to facilitate nations “voluntarily abrogated what had
arms purchases) (221-22). “Taken on been more than four centuries of imperial
balance, all U.S. foreign assistance is ambitions” (265). Britain led the way to
ultimately military or paramilitary in this by capitulating to Inter-Ally debts
purpose, even its ostensibly economic after World War I, when it could have
aid” (223). Japan as an example (225- resisted in the name of “an independent
26). Poor planning during the escalation united Europe” (265-66). Speculations
of the Vietnam war hurt the American about why this “unique” world-historical
trade position (226-29). The Agricultural outcome occurred (267-68). The U.S.
Trade Development Act of 1953 (P.L. 480) subjugated sterling to the dollar by
disguised assistance to U.S. farmers as means of a 1946 loan that prevented
foreign aid (229-35). In 1961 the Agency Britain from devaluing the sterling to
for International Development (AID) rebuild its reserves, thus “ruin[ing]”
centralized non-military aid, structuring it Great Britain (268-73). Gold at $35 an
to reduced balance of payments deficits ounce became “the essence of the IMF’s
(235-38). Beginning in the late 1950s stable parity system”; this effectively
and 1960s, the line between economics “protected the U.S. gold stock” (275;
and military/security aid became blurred 273-78). The U.S. possessed veto power
and part of a common geopolitical over IMF decision-making (280-83). The
project; the 1970 Peterson Commission IMF was not at first a bank that made
report articulated how foreign countries loans, only a financial intermediary for
are required to finance their own military transferring funds (283-87).
systems to the U.S.’s economic benefit
(238-42). Examples of U.S. insistence on III. MONETARY IMPERIALISM AND
its own interest (242-47). “The foreign THE U.S. TREASURY BILL STANDARD
aid program had come to play a perverse
Chapter 11: Financing America’s showdown and monetary collapse” (323;
Wars with Other Nations’ Resources. 313-27).
Since World War I, one nation’s wars
have often been financed by other Chapter 13: Perfecting Empire
nations (291). In 1964, U.S. war-related through Monetary Crisis, 1970-72.
deficits as they affected gold stocks European countries (especially France)
could no longer be ignored, though only and Asian countries (especially Japan),
France actively opposed the Vietnam war provoked by illegal U.S. textile quotas,
(292-99). Faced with this problem, and led to a 1970-1971 confrontation that
as the Gold Pool (1961-68) came under ended with total capitulation by Europe
growing stress, “U.S. monetary and Asia in the fall of 1971 (328-47).
strategists . . . attempted to shift the
basis of financial power away from gold Chapter 14: The Monetary Offensive
toward debt,” the alleged reason being of Spring 1973. Taking the dollar off
increasing “world liquidity”; but President gold forced Europe “to choose between
Lyndon Johnson’s decision early in 1968 holding dollars (mainly in the form of
not to escalate the Vietnam War despite Treasury bills) or dumping them and
the Tet offensive meant that “depletion thereby permitting . . . a de facto U.S.
of U.S. gold holdings [had] abruptly devaluation” (349). The U.S. adopted a
altered the country’s military policy” policy of benign neglect toward its
(299, 307; 299-308). deficits (350-56). An anti-free trade tariff
offensive whose aim was to make foreign
Chapter 12: Power through countries accept obligatory quotas of
Bankruptcy, 1968-70. The only U.S. goods was won (with the help of
practical option for the U.S. was “to grain sales to the USSR) by the U.S. on
induce the central banks and Treasuries the pretense that adequate devaluation
of foreign countries . . . to accumulate of the dollar had been impossible (348-
dollar assets in growing amounts” (310). 76).
A 1969 U.S.-Canada agreement to relend
dollar accumulations to the U.S. Treasury Chapter 15: Monetary Imperialism:
became “a model for subsequent The Twenty-first Century. The U.S.
agreements, both formal and informal” achieved a decades-long “free lunch”
(311). “It became possible for a single amounting to “hundreds of billions of
nation, the United States, to export its dollars annually with no audible protest
inflation by settling its payments deficit from the rest of the world” as the U.S.
with paper instead of gold,” since this “deficit has been built into the world
paper was still “the world’s reserve economic system” (377). It is the first
currency” (312). The dollar was “at least time in world history that a nation has
in legal fiction, a gold equivalent” (312). been “able to invert the classical rules of
Special Drawing Rights were created, international finance” (377). The world’s
though these violated the IMF charter; reasons for accepting this have shifted
French resistance was overcome and from “an early postwar faith in American
theories constructed (by, for example, moral leadership and rhetoric of free
Arthur Laffer) that U.S. deficits were only markets” to “fear that the United States
a statistical illusion and that the U.S. will plunge the world into crisis if it does
economy was merely functioning as a not get its way” (378; 377-80). The U.S.
saving bank or savings and loan has enforced food dependency (381-83).
association; however, the arrangement The exploitativeness of the U.S. Treasury
was really accepted “partly out of bill standard amounted to “monetary
sympathy with U.S. war aims . . . and imperialism” (383-87). U.S. diplomats
partly to avoid a world political use the specter of collapse to maintain
the system (387-89). Retrospective
(389-91). No alternative to gold has
emerged, and European and Asian
nations have not shown sufficient will or
astuteness to oppose an alternative to
the present system; in addition, the
public has no understanding of the
system (391-93).

Notes. 19 pp.

Index. 13 pp.

[About the Author. Michael Hudson

was born in Chicago in 1939. He earned
a 1959 B.A. in philology (minor in history)
from the University of Chicago; his 1963
M.A. and his 1968 Ph.D. in economics are
from New York University. He is
Distinguished Research Professor of
Economics at the University of Missouri,
Kansas City. He previously taught at The
New School in NYC. He has served four
countries as an economic advisor (U.S.,
Canada, Mexico, Latvia) as well as the
U.N. Michael Hudson has also worked at
Chase Manhattan Bank and Arthur
Andersen, and the Hudson Institute.
Some credit his April 2006 Harper’s piece
with helping defeat the George W. Bush
administration’s effort to privatize Social
Security. In 2007-2008, Hudson was
Chief Economic Policy Adviser for the
Kucinich for President campaign. He
maintains a web site (michael- where many texts and
interviews are available.]