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Is US Imperialism Resurgent?
—a Critique of Petras and Rhodes
Albert Szymanski
The Petras and Rhodes article in NLR 97, ‘The Reconsolidation of US
Hegemony’ argues that, contrary to the view of many, the United
States is not on the decline as a world power. It states: 1. that although
the USA suffered some relatively minor setbacks around 1970, it has
now pretty much recouped its position of world hegemony; 2. that
Europe and Japan are on the decline vis-à-vis the United States, in good
part because of the fact that the US working class is more ‘docile’ than
that of its competitors. A careful examination of the evidence, however,
refutes the Petras-Rhodes claim of a reassertion of US world hegemony.

As the authors recognize in their article, the world export postion of

the United States has consistently been declining since the early fifties.
Moreover, in the period 1970–74 the rate of decrease in its share of
world exports has been increasing. While in 1963 US exports represented
14·9 per cent of the world’s total, in 1970 they represented 13·6 per cent
and in 1974 11·5 per cent. While in 1963 US exports totalled 44 per cent
of those of all the countries now in the Common Market, in 1970 they
were 38 per cent, and in 1974 35 per cent. The relative trends in world
exports are reported in Table 1. The authors suggest that the export
Exports by Value 1963–74
(US as a percentage of each)
1963 1970 1974
World Total 14·9 13·6 11·5
EEC 44·0 38·0 35·0
West Germany 155·0 122·0 107·0
France 286·0 240·0 215·0
Japan 424·0 220·0 221·0
USSR 312·0 333·0 354·0
USA 100·0 100·0 100·0

SOURCE: United Nations, Yearbook of National Trade Statistics, 1975, pp. 17–19.

position of the United States is the only major factor which has con-
tinued to decline in relation to the rest of the world. Far from this being
the case, the relative US decline is revealed in a whole array of basic
The declining export position of the United States is a reflection of
both its very slow rate of economic growth and its slow rate of growth
in productivity. In 1965, the American GNP was 28·9 per cent of the
world’s total, in 1970 26·4 per cent and in 1974 25·1 per cent. The ratio
of the American GNP to the (constructed) Soviet GNP was 2·06 in 1965,
1·83 in 1970 and 1·76 in 1974; while its ratio to the Japanese was 7·28,
3·97 and 2·83 respectively. The total GNP of the countries presently in
the Common Market is almost as large as that of the American and the
slight gap continues to close. While the American economy was 120 per
cent the size of that of the EEC in 1970, it was 111 per cent as big in
1974 (see Table 2).
Gross National Product 1965–74
(US as a percentage of each)
1965 1970 1972 1974
World Total 28.9 26·4 26·2 25·1
NATO Europe 122·0 120·0 115·0 111·0
Japan 728·0 397·0 345·0 283·0
USSR 206·0 183·0 187·0 176·0
China 992·0 713·0 619·0 570·0
USA 100·0 100·0 100·0 100·0
SOURCE: US Arms Control and Disarmament Agency, World Military Expenditures and
Arms Transfers, 1965–74.

The rate of growth of various countries of the world are reported in

Table 3, where growth in the period 1965–70 is compared with growth
from 1970–75. From this table it can be seen that the only major coun-
tries which the United States overtook in growth rates between the two
periods were West Germany and Switzerland. Its overall rate of growth,
together with Britain’s, remained one of the slowest in the entire
capitalist world. Hardly the mark of a resurgent economic power.
Average Annual Rates of Economic Growth
( percentage in real terms’)
1970–75 1965–70
Iran 13·0 11·9
Brazil 9·4 7·5
Japan 5·1 11·6
Canada 4·3 4·6
France 3·7 5·3
Netherlands 2·7 5·7
Sweden 2·2 3·9
Italy 2·1 5·9
India 2·1 4·8
US 2·0 3·0
Britain 2·0 2·1
West Germany 1·7 4·8
Switzerland 1·7 3·6
SOURCE: Fortune, August 1976, p. 126.

The growth rate differentials are, in good part, in turn a product of the
differential rates of growth in labour productivity. While from 1965 to
1975 the US output per man hour increased to only 115 per cent of what
it had been ten years before (in 1972 the output per man hour was
actually higher than in 1975), that of the Japanese increased to 231 per
cent, the Swedish to 178 per cent, the West German to 165 per cent and
the French to 158 per cent (see Table 4).
Percentage Increase in Output per Man-Hour 1965–75
US 115% Italy 163%
Britain 136% West Germany 165%
Canada 142% Sweden 178%
France 158% Japan 231%

SOURCE: Fortune, August 1976, p. 131.

Again, this is hardly the mark of a resurgent economic power. While

the United States might have been temporarily able to slow the decline
in its overall international position by keeping real wages constant in
the period 1965–75, and thereby considerably cheapening the cost of its
production in comparison with that of its economic competitors, such
a solution can only be a temporary one, which eventually will reach its
limits. Only improvements in technology and organization of produc-
tion can provide a firm and lasting basis for rapid economic growth.

The declining economic position of the United States is also reflected

in the international position of its leading corporations. For example,
while in 1965 76 per cent, and in 1970 64 per cent, of the world’s fifty
largest industrial corporations were American, in 1974 only 48 per cent
were of this nationality. (See Fortune, May and August, 1975).

The authors suggest that the military position of the United States has
been recouped, yet the data reveal quite another trend (see Table 5).
Military Expenditures 1965–74
(US as a percentage of each)
1965 1970 1972 1974
World Total 32·5 33·2 29·7 27·3
NATO Europe 203·0 247·0 206·0 183·0
Warsaw Pact 87·0 90·0 81·0 73·0
USSR 99·0 102·0 93·0 84·0
China 1110·0 740·0 482·0 458·0
USA 100·0 100·0 100·0 100·0

SOURCE: US Arms Control and Disarmament Agency, World Military Expenditures and
Arms Transfers, 1965–74

Table 5 shows that the percentage of total world military expenditure

attributed to the USA has shrunk considerably through the 1970s. While
it stood at 33·2 per cent of the world total in 1970, it had declined to
27·3 per cent by 1974. During this same period, the ratio of US to Soviet
military expenditures declined from 1·02 to 0·84, and to that of NATO

Europe from 2·47 to 1·83. The same phenomenon is seen when the
number of men in the armed services is examined (see Table 6). Here
Size of Armed Forces 1965–74
(US as a percentage of each)
1965 1970 1972 1974
World Total 12·8 12·8 9·3 8·4
NATO Europe 86·0 98·0 70·0 68·0
Warsaw Pact 64·0 67·0 48·0 41·0
USSR 96·0 92·0 66·0 55·0
China 111·0 108·0 76·0 65·0
USA 100·0 100·0 100·0 100·0
SOURCE: US Arms Control and Disarmament Agency, World Military Expenditure and
Arms Transfer, 1965–74.

it can be observed that while in 1970 the United States had 12·8 per cent
of all military personnel in the world, by 1974 it had only 8·4 per cent.
Likewise the ratio of US to Soviet troops declined in the same period
from 0·92 to 0·55, while that for the NATO countries declined from
0·98 to o·68. Clearly, there has been a significant and continuous decline
in the military position of the United States. The latter’s 1976–7 $100
billion military budget must thus be understood, not as Petras and
Rhodes would have it, as a reassertion of the predominant American
military position, but as merely an attempt not to fall too far behind.
While the United States remains for the time being the leading military
power in the world in terms of sophisticated equipment, it now has
only the third biggest armed forces. Moreover, as its defeat in Vietnam
and its reluctance to get involved in Angola have shown, it is not able
to translate its technological advantage into military successes.
In addition to asserting that the US military position has not suffered,
Petras and Rhodes also claim that the United States has now become
financially hegemonic over its competitors. But once again their asser-
tion is not substantiated by the facts. Table 7 reports the overseas assets
The Foreign Assets of Banks (Commercial/Deposit Banks Plus Monetary
Authorities): 1969–76
(billions of US current dollars)*
1969 1970 1971 1972 1973 1974 1975 1976
France 11·1 13·3 18·5 25·0 30·9 30·5 49·0 —
West Germany 21·1 28·7 32·2 36·8 46·1 52·0 61·6 67·0
Italy 13·1 15·9 18·3 29·0 25·8 13·1 13·3 —
Japan 8·9 11·5 19·3 25·6 20·2 22·3 22·2 25·8
Netherlands 6·2 8·6 9·9 12·2 15·5 19·0 23·5 23·8
USA 23·5 21·5 21·9 26·8 32·5 40·7 47·0 48·6

*Comparable data for Great Britain are not reported in the International Financial
SOURCE: International Monetary Fund, International Financial Statistics, August 1976.

of the banks of the leading financial countries of the world. From this
table it can be seen that both the West Germans and the French had
greater overseas assets in 1975 than the Americans ($61·1 billion for the

Germans and $49 billion for the French, compared with $47 billion for
the Americans). Further it must be noted that during the course of the
1970s there has been no tendency for the US position to improve vis-à-
vis either of these countries.

We see a similar situation when we examine the position of the US

private deposit banks in terms of total overseas liabilities (Table 8). The

Foreign Liabilities of Deposit/Commercial Banks in US Dollars: 1969–76
(billions of US current dollars)
1969 1970 1971 1972 1973 1974 1975 1976
France 7·2 9·4 13·4 19·5 24·9 26·1 32·3 —
West Germany 6·3 9·2 10·4 11·2 12·9 15·2 18·7 20·0
Italy 7·2 12·1 12·1 18·8 21·5 12·4 14·3 —
Japan 4·6 5·6 6·8 7·8 12·3 20·7 22·8 —
Netherlands 3·4 5·1 5·6 6·8 9·0 11·8 15·0 14·9
United Kingdom 5·4 6·8 8·2 12·1 20·3 24·6 — —
United States 32·5 24·1 20·7 26·0 32·6 47·0 45·1 42·7
*Data for France, West Germany, Japan and the Netherlands are for all deposit
banks; for Italy and the United States all commercial banks; and for the United
Kingdom for the total value of all foreign deposits in British banks.
SOURCE: International Monetary Fund, International Financial Statistics, August, 1976.

United States has consistently held its position as having the largest
overseas liabilities (in 1975, $45·1 billion compared to $32·3 for France
and $22·8 billion for Japan). But while the foreign liabilities of US
deposit banks about doubled during the first half of the seventies, the
foreign liabilities of French, Japanese, Dutch and British banks all
increased considerably more rapidly. It should also be noted that the
American total decreased by $2·4 billion from 1975 to mid-1976. Hardly
what Petras and Rhodes suggest. All this would seem to point to the
conclusion that Petras and Rhodes are wrong, foreign money (Arab or
otherwise) is not flocking to the United States at the expense of its

The rather rapid and continuous decline in the US international financial

position is similarly reflected in the trends in relative size of the world’s
leading commercial banks during the last few years. In 1970, six of the
ten biggest commercial banks in the world were American, but by 1974
only three were (see Fortune, July 1975 and August 1975).

So drastic has been the relative economic decline of the United States in
the seventies, that even the very long-run tendency for the ratio of
foreign investment in the USA to US investment overseas to decline has
reversed itself. While in 1972 foreign investments in the United States
amounted to 15·8 per cent of US investments overseas, this had risen to
18·3 per cent in 1974. The ratio of European, Canadian and Japanese
investments in the United States to US investments in these countries
meanwhile rose from 24·5 per cent in 1972 to 25·4 per cent in 1974,
showing that the reversal of the long-term tendency is not due solely to
investments by the OPEC countries (see Table 9).

The Ratio of Foreign Direct Investment in the United States to US Direct
Investments in Foreign Countries
All Countries Europe, Canada and Japan Only
1969 0·167 0·263
1970 0·169 0·264
1971 0·162 0·251
1972 0·158 0·245
1973 0·170 0·247
1974 0·183 0·254
SOURCE: US Department of Commerce, Survey of Current Business, various issues from
1970 to 1975.

Overall, therefore, the evidence on trade, economic growth, product-

ivity, military position, finance and international investments seems
consistently to refute the claims of the Petras-Rhodes article. The
United States is most definitely a declining world power, by just about
any measure that can be constructed. Furthermore, contrary to their
claim, there is no evidence for any reversal of this trend during the last
few years.

The authors do, however, make a very interesting point that the
‘docile’ nature of the working class gives American capitalism space to
stay competitive that is not available to its competitors. As Table 10
shows, the United States has had the lowest rate of growth in unit
labour costs of any of its major capitalist competitors—only 35 per cent
in current dollars from 1970 to 1975 (compared with 116 per cent for
West Germany and 141 per cent for Japan). Thus, in spite of the abys-
Increase in Unit Labour Costs in US Constant Dollars 1970–75
USA 35% Italy 115%
Canada 43% West Germany 116%
Britain 77% France 126%
Sweden 99% Japan 141%
SOURCE: Fortune, August 1976, p. 130.

mal performance of productivity in the US economy in recent years, the

even slower increases in labour costs (in fact there has been no increase
in US real wages to speak of since 1965) has allowed the United States to
stay competitive with the other capitalist countries, whose wage rates
have now almost caught up with the American. In 1975, Sweden not
the United States had the highest wage rate in the advanced capitalist
world (see Table 11).
Hourly Compensation in US Dollars mid 1975
Sweden 7·10 France 4·50
USA 6·30 Italy 4·50
Canada 6·20 Britain 3·20
West Germany 6·20 Japan 3·20

SOURCE: Fortune, August 1976, p. 130.

In fact, however, contrary to what Petras and Rhodes suggest, the
relative ‘docility’ of US labour has been operating as a major factor for
at least ten years and probably more like twenty-five. Rather than a
future factor, ‘labour docility’ may in fact be largely a product of the
past: for how long can the working class remain ‘docile’ in face of its
losses? As it becomes more and more obvious that the American living
standard is no longer the highest in the world, a reaction is bound to
set in. Rather than the relative decline of European capital accelerating
the radicalization of the European working class, we should be expect-
ing exactly the opposite, i.e. the relative decline of US capital producing
the radicalization of the US working class.
The evaporation of the traditional difference between the European
and American working class is not limited to the disappearance of the
difference in wages, but is also being extended to the disappearance of
differences in susceptibility to unemployment and in the availability of
social welfare. While the average rate of unemployment in the United
States had, through much of the fifties and sixties, been three or four
times higher than that of many of its leading competitors, in the mid-
seventies this difference decreased considerably. While the rate of un-
employment in the United States was 7·6 per cent in early 1976, it was
6·2 per cent in Britain, 4·8 in France and 4 per cent in West Germany at
the same time (see Fortune, August 1976, p. 131). Likewise, the US work-
ing class is now catching up with the European in terms of the social
services available to it. During the course of the sixties, and at an
accelerated rate during the seventies, federal spending on education,
health housing, ‘income maintenance’, etc. has been rapidly increasing.
In 1960, the ratio of federal social expenditures to military expenditures
was 0·45, in 1970 0·85, and in 1975 1·79 (see Table 12).
The Ratio of Total US Federal Social Expenditure to Total US Military
Expenditures 1960–75*
1975 1·79 1970 0·85
1974 1·56 1969 0·73
1973 1·46 1968 0·66
1972 1·26 1965 0·61
1971 1·08 1960 0·45
*The ratio is the sum of federal expenditures for community and regional develop-
ment, education, manpower and social services, health and income security divided
by expenditures for national defence.
SOURCE: Computed from data in US Department of Commerce, The Statistical Abstract
of the United States, 1975, pp. 226, 253.

This rapid rise in social expenditures seems to be caused by the factors

discussed by Jim O’Connor in his The Fiscal Crisis of the State. The
sharp international competition which has been preventing a rise in
real wages, in order to keep American goods productive, has been
forcing the state to take up the slack by increasingly bearing the burden
of ‘fringe benefits’, through the socialization of more and more of what
used to be provided directly by the private corporations to the workers.
At the same time that the wage bill of the corporations is being increas-
ingly socialized, international economic competition is also forcing a
decrease in the amount of money and resources allocated to military
expenditures. As Seymour Melman has pointed out so well in a number
of books, military expenditures are largely unproductive and wasteful of
the best scientists, technicians, technical resources, laboratories, etc.,
and produce a tremendous drain both on the growth of productivity
and on overall economic growth. In order to maintain its world econ-
omic hegemony, it is necessary that a country also attempts to become
the leading military power (so as to advance its economic interests).
But the cost of maintaining military hegemony is to undermine a
country’s leading economic position (by causing a slowdown in the
increase in productivity). This is truly a contradiction in the Marxist
sense. This contradiction can be considered to be at the root of both
Britain’s decline and now that of the United States.

The international capitalist system, at least the metropolitan countries

at its centre (Europe, Japan and North America), has a very strong
tendency, induced by international capital flow and trade, towards
economic homogeneity. Significantly higher wage levels or rates of
growth in some countries than in others are just not stable phenomena.
The considerably higher level of wages in the United States was doom-
ed to be a temporary phenomenon rather than a permanent part of the
world capitalist system. So too was the predominant overall economic
position of the United States. The world system has known a long
series of dominant states, but always the forces that produced their rise
have been reversed by the contradictory obligations of attempting to
maintain their leading position. The USA could not have been expected
to be any different.

What we can expect politically from the inevitable decline of the United
States to the level of the rest of the advanced capitalist countries is that
the politics of its working class, which for so long have been virtually
unique among the advanced countries, should also come into line. The
conservative nature of the American working class has been a product
of the exceptional economic position of the United States during most
of the twentieth century. Its rapid economic growth induced both a
massive immigration from Europe (which in turn produced consider-
able ethnic antagonism and ethnic identification rather than class con-
sciousness), and a rather rapid increase in real wages and upward
mobility which acted to ‘cool out’ class antagonisms and hindered the
development of class consciousness. The evening out of economic
levels of development is coming to mean the ending of these differ-
ences as well. In fact, the tables have turned in the last generation.
Recently there has been more foreign immigration into Europe, than
into the United States, as well as a far more rapid rate of increase in real
wages in the former area as well. The natural inference from all this is
that the long overdue socialist working-class consciousness can be ex-
pected to develop and the revolutionary struggle of American workers
commence. It may yet turn out that American workers play a leading
role in the world revolutionary struggle.