A World We Have Lost

James Kurth, The American Way of Empire

The American Century. For those whose lives have unfolded during the American Century, 1945 – 2020, James Kurth’s The American Way of Empire comes with a shock of both recognition and melancholy. It evokes ‘a world we have lost’, managed by wise leaders whose policies guided war-torn Europe and Japan to recovery. With a strong U.S. Dollar as the de-facto world currency under the Bretton Woods system, world trade protected by the U.S. Navy, and military alliances in East Asia and Latin America modeled on NATO in Europe, it was hard to imagine that peace, prosperity, and stability would not continue long into the future. That was the American Empire, not the old-fashioned colonial type, but rather one of mutual benefit, albeit based on hegemony and dependency. That world now lies in ruins; Kurth’s book tells us why.

The story begins in 1945, the year Henry Luce marked as the beginning of the American Century. America’s decisive victory over the genocidal Nazi and Tojo regimes, followed soon after by a reconstruction program of extraordinary wisdom and generosity, set the tone for the next several decades. Blessed by visionary leaders with experience of both war and peace — Eisenhower, Marshall, Kennan, Acheson, Churchill, Adenauer, Yoshida — Germany and Japan recovered within less than 20 years to form the core of the Free World. American firms provided the goods and financing desperately needed by war-torn Europe and Asia, and the markets for their low-cost manufactures. To American elites, it seemed a natural arrangement, from which it would be unimaginably foolish to depart.

What Went Wrong in the 1970s. In Kurth’s account, the American Empire fell victim to its own success. The industries of Europe, Japan, and East Asia, for which America had provided financing and markets, within 20 years were making superior products at lower prices. This competition hollowed-out American industry in surprisingly short order. Thoroughly financialized, U.S. elites adopted a philosophy of ‘free trade’ that justified unimpeded investment flows to cheap-labor locations, seeking improved competitiveness in that way. Hardships to American workers simply did not factor into their calculations.

I remember thinking during the 1970s that something is wrong with this picture. The notion that services and information made manufacturing obsolete rang as hollow as abandoned Rust-Belt factories. But why would U.S. financial elites destroy the U.S. industrial base? The short answer is they didn’t care. It simply did not matter to them where in the world things were made — for them it was axiomatic that investment would flow to least-cost locations. It was more efficient that way from a global point of view, and anyway it was irresistible. Kurth locates the origin of this ideology in the New York financial elite.

Even before the onset of the American Century, Kurth writes in Chapter 15, Between America and the World: The New York Foreign Policy Elite, U.S. foreign policy developed out of the rivalry between Midwest manufacturing and Northeast finance. Financiers, frustrated in their attempt in the 1920s to establish a League of Nations, formed the Council on Foreign Relations to promote their globalist views. They eventually succeeded with the United Nations, World Bank, IMF, and other international organizations. From the clubby transatlantic world of the New York financial elite, came all of the legendary figures ‘present at the creation’, in Acheson’s phrase, of the postwar international order — Acheson himself, McCloy, Harriman, Lovett. These two sets of elites, Midwest manufacturing and Northeast finance, exercised roughly equivalent control over U.S. foreign policy until the 1970s, by which time finance had gained the upper hand. Successors of the heroic generation that created the postwar international order carried on with their globalist program, promoting borderless flows of money and people — in Europe as well as in America. They did not concern themselves with the consequences for the people adversely affected by their program.

The 1970s swept America through like a malevolent wave, unaccompanied by any hint of awareness of its origins by either academics or authorities. As far as they were concerned, the maladies of that decade were without cause and therefore without solution. Obfuscation was the order of the day. But as Kurth writes, America had succeeded so well in re-building Europe and Japan that America’s own industries had become uncompetitive. Deficit spending by President Johnson on both the Vietnam War and domestic welfare weakened the dollar to the point where his successor, Nixon, de-coupled it from the Bretton Woods gold standard.

‘Third, and finally’, Kurth recalls,‘the oil-producing states of the Middle East — states that had been protected by U.S. military power since the late 1940s — succeeded in the early 1970s to first double and then quadruple oil prices. This produced a massive inflationary shock to the oil-importing client-states of the U.S. hegemonic systems in Western Europe and East Asia, and was also another amplifier of inflation within the hegemonic power itself. At the same time, it greatly diminished the ability of consumers in these oil-importing countries to buy the industrial products which they themselves produced. The result of these three accumulating and combined economic disruptions was the Great Stagflation, which afflicted the United States and its hegemonic systems in Western Europe and East Asia during the entire 1970s.’

These misfortunes were presented to the public at the time with an air of inevitability that it would be idle to oppose. News media showed gasoline lines snaking through the streets, consumers faced with crippling costs, energy-intensive industries unable to pass on vastly increased costs, all of this as if it were a natural disaster like a hurricane. The notion that U.S. elites had acted with stupefying fiscal and strategic ignorance in the Vietnam War, and that they passively acquiesced in an act of economic warfare by the oil-producing states, was beyond the pale of discussion. I remember an uneasy sensation that the Vietnam War and the oil-price extortion would have long-term consequences. Kurth supplies the reasons why they were bound to inflict severe damage on the American Empire, and the entire Free World. The pity of it is that the damage was avoidable.

Failures of Democratization. In the academy, meanwhile, the American model of development reigned unchallenged as the template for other countries to follow (or for development experts to impose). It was as if two-party electoral democracy and economics-first capitalism had been ordained by Heaven. And how could it be otherwise? America had remade the Free World in its own image; other countries were classified as ‘undeveloped’, ‘less-developed’, or ‘developing’ in accordance with how closely they conformed to that image. These precepts later morphed into democratization projects characterized by placid ignorance of history and facts-on-the-ground. Even as unlikely a place for capitalist transplantation as the former Soviet Union was subjected to the disastrous ministrations of Jeffrey Sachs, whose effort to reverse 72 years of history overnight predictably induced mass poverty. Such was the success of the American rebuilding of Europe and Asia that the ad-hoc methods and practices of a unique set of actors, under a limited set of favorable traditions and circumstances, became a superstition to be applied mindlessly everywhere else. Kurth documents the many failures of this model of development that were ignored by those bent on applying it regardless.

Iraq, for one of the most egregious examples, was to be magically transformed into a unified nation with free elections, speech, and markets. The stellar success of this model would inspire people throughout the Mideast to throw off the despotic tribal warfare they had endured for centuries, and walk joyfully into the modern world. What made U.S. elites so sure this would happen? ‘Reaching for models from the past to legitimate this vision of the future,’ Kurth writes, ‘the [Bush] administration repeatedly cited the successful U.S. occupations and democratizations of West Germany and Japan after the Second World War.’ But they forgot about the many failures of democratization, in Latin America, and of course Vietnam. ‘It is almost incredible,’ Kurth summarizes, ‘that anyone could seriously argue that the most relevant comparisons to Iraq were the homogeneous nations of West Germany and Japan in the 1940s. Only a globalist mentality and ideology would so blithely ignore such important local and historical particularities.’

One of Kurth’s virtues as a historian is to puncture the fantasies that govern elite policy-making. While pretense is of the essence of diplomacy, the occupational hazard of the statesman is to believe his own propaganda. Such delusions become dangerous when they depart too far from reality. U.S. elites, arrogantly proclaiming ‘the end of history’, set out to re-make the entire world in America’s image. In doing so they allowed themselves to be misled into several fantasies of their own making. Following the collapse of the Soviet Union, it became an item of faith among U.S. elites that Russia would accept incursions into its border areas. According to this preposterous belief, Russia would stand aside as NATO and EU were enlarged up to Russia’s borders and even into what had previously always been buffer states. When this expansion reached Georgia and Ukraine, Russia carved off amputee regions that neutralized the nations of which they had once been parts, preventing their absorption by NATO and the EU. Another favorite belief of U.S. elites is that lesser adversaries, through sanctions, bribes, and occasional bluster, will see the error of their ways and take American direction. Thus successive U.S. Administrations have persuaded themselves that Iran and North Korea would abandon or slow down their nuclear-weapons programs. While the leaders of these regimes are adept at playing into U.S. elites’ fantasies, they never deviated in the slightest from their nuclear aims.

The Prospect. Kurth brings clarity of vision not only to recent history, but through his historical perspective, to the current situation as well. He writes ominously: ‘In short, the U.S. economic elite had repeatedly demonstrated during the past thirty years, and especially during the past ten years, that it cares nothing about the economic condition of the majority of Americans and of America itself. Rather, it has come to think about citizens of the United States in a way similar to how it has always thought about residents of Latin American countries…. The most crucial of all the fractures of today is the fractured relationship between the U.S. economic elite and everyone else. And that fracture will not be repaired until that elite is removed.’

The 2016 election in the United States was directed to exactly that end. Elites responded with an insurgency: ‘…[B]oth the Democratic and Republican elites determined that there would never be a functioning Trump administration capable of implementing anti-elite policies. Rather, they would conduct an elite-backed insurgency against the anti-elite insurgent candidate who (temporarily) occupied the White House.’ Even now the members of this elite insurgency are assuring foreign leaders that soon the old elites will be back in power. Should that be the case, the prospects for restoring the American Empire will be dismal indeed.

Kurth asks:

‘What was it about America in the 20th century that made it so dominant in the world, that raised the United States to the level of being the leading superpower and the American way of life to the level of being the standard aspired to by dozens of nations around the world?’

The American Century, he says, was enabled by superiority in industry, finance, and technology. These in turn supported U.S. military strength. U.S.-based manufacturing, as we have seen, has been hollowed-out, though a few indications of revival are apparent. Finance — along with the whole globalist project — has been discredited by the after-effects of the 2008 meltdown, and the weakened U.S. Dollar is at risk of losing its status as the de facto global currency. America’s military alliances in every region of the globe are under pressure. The one remaining element of American superiority, according to Kurth, is technology, particularly in rising industries such as biotech, medical care, artificial intelligence, and green industries.

That favorable prospect requires an environment of freedom in our research centers, access to private investment free of political constraints, and a minimum of regulatory barriers to entrepreneurial startup and operation. That’s a topic for another book. This one is of inestimable value in adjusting our expectations to historically conditioned realities. For that reason alone it is essential reading for elites and citizens alike.


Another review, Adolescent Empire, by Charles W. Sharpe, Jr

Author: Peter Miller

Long-time resident of Kamakura Japan, artist/printmaker (photogravure etchings at https://kamprint.com/), high school in Pittsburgh Pennsylvania U.S.A., college Columbia in New York, PhD (Sociology) Berkeley, consultant at Stanford Research Institute, California U.S.A. Explorer, cultivator of garden, herbal remedies, healthy biome, and common-sense.

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