Empire without imperialists?

by James Petras

Michael Hardt and Antonio Negri's Empire is a strange book. At a time when the US is the only superpower, when almost fifty per cent of the 500 biggest multinationals are US-owned and -headquartered, and Washington is leading a war of intervention against Afghanistan (after previous interventionist wars in the Balkans, Central America (Panama), the Caribbean (Grenada) and proxy wars in Colombia (Plan Colombia) and earlier Angola, Mozambique and Nicaragua), the authors of this widely praised book tell us that imperialism is a thing of the past.

They argue that "Empire" is a post-imperialist phenomenon in which power is dispersed, and no single nation can control the "Empire". Moreover, they argue that Empire is a positive advance in world history: "The thing [sic] we call Empire is actually an enormous historical improvement over the international system and imperialism". After 413 pages of text and 57 pages of notes, the best the authors can do in discussing Empire is to tell us: "In this smooth space [?] of Empire there is no place of power—it is everywhere and nowhere. Empire is an OU-Topia or really a non-place." (p. 190).

Without being given a clear notion of the agents of Empire or its dynamic in the real existing imperial states and their corporations, we are told that Empire is imperial but not imperialist. From this, the authors deduce that the US constitution is imperial because (in contrast to imperialism's project always to spread its power linearly in closed spaces and invade, destroy and subsume subject countries within its sovereignty),

... the US constitutional project is constructed on the model of re-articulating an open space and reinventing incessantly diverse and singular networks across an unbounded terrain. The contemporary idea of Empire is born through the global expansion of the internal US constitutional project. (p. 182)

In other words, this celebration of Empire is also a celebration of US constitutionalism (the idea, to be exact), which is a model for "democratising" the Empire.

The study dispenses with classes and class conflict as outdated and imprecise, and substitutes the notion of "biopolitical production multitudes"—a term which is never clearly delineated and is without any historical or empirical specificity. Apart from "multitudes", there are no designated agencies for the announced but unspecified "revolution". The program of this novel revolution is not very different from that embraced by welfare state social democrats.

Much has been written about the "sweep of the book, its theoretical grandeur". Frederic Jameson, Hardt's colleague at Duke University, calls it "the first great new theoretical synthesis of the new Millennium."1 Hyperbole aside, few of the literary reviewers have commented on the lack of historical and empirical evidence to buttress the book's innumerable and unsubstantiated assertions.

The authors argue early on that the intellectual origins of the US revolution can be traced to Spinoza and Machiavelli. Rousseau and Locke are given short shrift, despite their greater immediate relevance. Extended and tendentious discussions of sovereignty are interspersed with reductionist assertions that collapse or omit numerous variations. For example, in their discussion of totalitarianism and the nation-state, they argue:

If Nazi Germany is the ideal type of the transformation of modern sovereignty into national sovereignty and of the articulation in its capitalist form, Stalinist Russia is the ideal type of the transmission of popular interest and the cruel logics that follow from it into a project of national modernization, mobilizing for its own purposes the productive forces that yearn for liberation from capitalism. (p. 110)

I have quoted extensively in order to illustrate the confused, illogical, unhistorical nature of the authors' broad and vacuous generalisations. What empirical or historical basis is there for claiming Nazi Germany as the "ideal type"? National sovereignty pre-existed the Nazis and continues after their demise in non-totalitarian settings. If Stalin's Russia embodied "popular interest", why should anyone seek to be liberated from it? "Cruel logic" of "popular interests" is stuff from the ancien regime—hardly the basis for orienting the "multitudes" whom the writers describe as the new agencies for democratising the world.

The authors engage in what George Saboul once referred to as the "vacuum cleaner" approach to history: a little of ancient history, a smattering of exegesis of elementary political theory, a plus and minus evaluation of postmodernism, a celebration of US constitutionalism, a brief synopsis of colonialism and post-colonialism. These discursive forays provide an intellectual gloss for the core argument dealing with the contemporary world: the disappearance of imperialism; the obsolescence of imperial states and nation-states (and boundaries) and the ascendancy of an ill-defined Empire; globalisation; and supra-national governing bodies, apparently resembling the United Nations.

Let us start with Hardt and Negri's (HN) assertion of the decline of the nation or imperial state. Their argument for a stateless Empire exaggerates the autonomy of capital from the state and parrots the false propositions of the free market ideologues who argue that the "world market" is supreme. Contrary to HN, in the contemporary world, the national state, in both its imperial and neo-colonial forms, has expanded its activity. Far from being an anachronism, the state has become a central element in the world economy and within nation-states. However, the activities of the state vary according to their class character and whether they are imperial or neo-colonial states.2

In recent years the centrality of the imperial state has been evidenced in fundamental areas of political-economic, cultural and economic activity that buttress the position of the imperial powers, particularly the US.

Crisis management

Over the past decade, several major financial and economic crises have occurred in various regions of the world. In each instance, the imperial states, particularly the US state, have intervened to save the multinational corporations (MNCs) and avoid the collapse of financial systems.

For example, in 1994, when the Mexican financial system was on the verge of collapse, President Clinton intervened to dispatch $20 billion to the Mexican state to bail out US investors and stabilise the peso. In the second instance, during the Asian crisis of 1997-1998, the US and European governments approved an International Monetary Fund-World Bank multibillion-dollar bail-out in exchange for opening the affected Asian economies, particularly South Korea, to foreign takeovers of basic industries. In the Brazilian crisis in 1999 and the Argentine crisis in 2001, Washington pressured the international financial institutions to bail out the regimes. Within the US, the threatened bankruptcy of a major international investment bank led to Federal Reserve (central bank) intervention, pressuring a private bank bail-out.

In a word, with greater frequency and with greater resources, the imperial state has played a dominant role in crisis management, saving major investors from bankruptcy, propping up insolvent MNCs and preventing the collapse of currencies. More than ever, the MNCs and the so-called "global economy" depend on the constant massive intervention of imperial states to manage the crisis and secure benefits (buy-outs of local enterprises).

Inter-imperialist competition

The competition between rival imperial powers, economic enterprises and MNCs has been spearheaded by rival imperial states. For example, the US imperial state is leading the fight to open European markets to US beef and us exports of bananas from South and Central America, while the Japanese and the European states negotiate with the US to increase the "quota" on a series of exports, including steel and textiles. Trade and markets are largely defined by state-to-state agreements. "Globalisation" is not only a product of the "growth of the MNC", but largely an artifice of state-to-state agreements. The competition between capitals is mediated, influenced and directed by the state. The markets do not transcend the state, but operate within state-defined boundaries.

Conquest of markets

The state plays a pervasive and profound role in the conquest of overseas markets and the protection of local markets. In the first instance, the state provides indirect and direct subsidies to export sectors.3 In the US, agricultural exports receive subsidised water and electrical power, and subsidies in the form of tax relief.

Secondly, the imperial state, via the multilateral financial institutions, pressures loan recipient states in the Third World, through conditionality agreements, to lower or eliminate trade barriers, and to privatise and de-nationalise enterprises, thus permitting US, European and Japanese MNCs to penetrate markets and buy local enterprises. So-called globalisation would not exist if it were not for state intervention, nor would the markets remain open if it were not for imperial state military and electoral intervention, political-economic threats and pressure and recruitment of local clients.

Imperialism takes many forms, but pursues similar goals: the conquest of markets, the penetration of competitors and the protection of home markets. The US has an elaborate set of trade barriers in a wide range of product areas of strategic importance: auto imports are limited by quotas, as are sugar, textiles, steel and others.4 A multiplicity of non-traditional constraints and informal agreements limit exporting countries from entering us markets—all negotiated on a state-to-state basis. In many cases, in its dealings with neo-colonial regimes, like Brazil under Cardoso, the US state rejects reciprocity, demanding and securing the liberalisation of the information industry while restricting Brazilian steel exports on the bogus pretext of "anti-dumping" concerns.

Trade agreements

All the major trade agreements, liberalising and establishing new trade regulations, are negotiated by states, enforced by states and subject to state modifications. GATT, WTO, Lome, etc., which established the trade rules and framework for global trading networks, were formulated by states. In addition, bilateral and regional multilateral trade pacts, such as NAFTA and LAFTA, are initiated by the state to open new markets for the multinationals.

The imperial state operates in synergy with its multinational corporations. The "expansion in markets" has nothing to do with multinational corporations superseding anachronistic states: on the contrary, most movements of capital to new markets depend on the state intervening to knock down barriers and in some cases destabilising nationalist regimes.

Investment agreements

New multilateral and bilateral investment agreements are formulated at the state level with the agreement and active participation of the MNCs. The reason is clear: the MNCs want state participation to guarantee that their capital will not be expropriated, subject to "discriminatory" taxes or restricted in remitting profits. The state is the enforcer of investment guarantees, a crucial element in corporate investment expansion. In many cases, the imperial states use their representatives in the multilateral financial institutions to impose new investment codes as conditions for "stabilisation" or development loans.

Protection, subsidies and adjudication

The imperial states of the EU impose powerful protective barriers for their agricultural products. The US and European states heavily subsidise agriculture with low rates for electricity and water use. Research and development of new technology is heavily financed by the state and then turned over to the multinationals. At each stage prior to, during and after the expansion of MNCs into the international market, the state is deeply implicated.

Moreover, where national enterprises are non-competitive, the imperial states invent pretexts to protect them from more efficient producers. Japan protects its rice producers, even though their production is ten times more costly to consumers. The US provides huge subsidies to agro-business exporters in the form of research, cheap water rates and loans tied to the purchase of us grain exports. The EU subsidises the formation of its high-tech industries.

Statism or neo-statism is the centerpiece of the "global expansion" of MNCs, located in the imperial states. The state has grown; its reach has been expanded; its role in the international economy is essential. The empty rhetoric of "free markets" promoted by conservative ideologues has been consumed and parroted by the "globalist left". While HN write about the declining role of the state, the right has been active in promoting state activity to further the interests of the MNCs. While HN write of the "globalisation" of markets, theMNCs from the imperial countries and their states carve up the markets, enlarging their spheres of domination and control.

Above all, the imperial state is not simply an economic institution; the overseas expansion of the MNCs is heavily dependent on the military and political role of the imperial state.

Political and military power of the imperial state

The overseas expansion of the MNCs has been made possible by the military-political expansion of Euro-US imperialism via NATO and surrogate armies in southern Africa, Latin America and Asia. In Russia (the former USSR) and Eastern Europe, client regimes have been sponsored and supported by the imperial states, laying the groundwork for the takeover of a vast array of strategic industries, energy sources etc.

The US imperial state's triumph over the USSR provided the impetus for dismantling the welfare states in Europe and what pretended to be a welfare state in the US. The Euro-US wars in the Gulf and Balkans consolidated the imperial states' dominance and extended their influence over dissident states. The destabilisation of the former Communist regimes and the destructive wars against nationalist and socialist regimes in southern Africa, Latin America and elsewhere opened these regimes to neo-liberal policy prescriptions. Military expansion was organised by state apparatuses that accompanied and promoted MNCs' overseas expansion.

So-called globalisation grew out of the barrel of a gun—an imperial state gun. To further protect overseas capital, the US and the EU created a new NATO doctrine which legitimates offensive wars outside of Europe against any country that threatens vital economic interests (their MNCs)5. NATO has been expanded to incorporate new client states in eastern Europe and new "peace associates" among the Baltic states and the former republics of the USSR. In other words, the imperial state military alliances incorporate more states, involving more state apparatuses than before—to ensure the safe passage of Euro-US MNCs into their countries and the easy flow of profits back to their headquarters in the US and western Europe.

The state and mass media

While the mass media and their political-cultural propaganda cross more borders than ever, ownership and control are highly concentrated in the hands of US and European MNCs. The message is increasingly homogeneous, and the source and inspiration are closely coordinated with policy makers in Washington, Berlin, London, etc. Global flows, imperial controls—that is the essence of the mass media today. The mass media MNCs look to the imperial states and officials to set the political line, as was explicitly stated during the Afghan War, and define the parameters for discussion, while they reap the profits.

The imperial states, far from being superseded by the overseas expansion of capital, have grown and become essential components of the world political economy. HN's concept of Empire mystifies the role of the imperial state in the front lines of the defence of the privileges and power of the MNCs.

Hardt and Negri base their argument about a stateless, class-less Empire without imperialism on the notion of a world market dominated by MNCs which, they argue, "must eventually overcome imperialism and destroy the barriers between inside and outside". (p. 234). These "global" MNCs have turned the nations and imperial states into anachronisms, they claim.

HN provide no data on the internal organization of the MNCs, no analysis of the decision-making structure, no discussion of their relations to states. Theorising by fiat is a convenient way of evading inconvenient empirical studies. Essentially, Hardt and Negri's argument is based on six unsubstantiated assumptions.

Assumption 1: MNCs are global corporations that have no specific location in any particular nation-state. They form a new world economy divorced from national controls and are part of a new world ruling class. This assumption is based on the fact that large corporations operate in a number of countries, are mobile and have the power to evade taxes and regulations in many national jurisdictions. There are several conceptual and empirical problems with this assumption.

First, the fact that MNCs operate in many countries does not detract from the fact that the headquarters, where most of the strategic decisions, directors and profits are concentrated, are located in the US, EU and Japan.6

Secondly, mobility is based on strategic decisions taken by directors in the headquarters in the imperial centres. These decisions depend on the political and economic conditions created by the imperial state and its representatives in the multilateral financial institutions. Mobility is contingent on inter-state relations.

Thirdly, evasion of taxes and regulations is possible because of deliberate policies in the imperial states and their multinational banks.7 Non-enforcement of laws against transfers of illicit earnings from the neo-colonial countries to the imperial countries is a form of state activity favouring large-scale transfers of wealth that strengthen external accounts. The MNCs' flouting of neo-colonial state regulations is part of a broader set of power relations anchored in the imperial-neo-colonial state relations.

Assumption 2: The old nation-state governments have been superseded by a new world government, made up of the heads of the international financial institutions, the WTO, and the heads of the MNCs (p. 326). This is an argument that is based on a superficial discussion of epiphenomena, rather than a deeper analytical view of the structure of power. While it is true that the multilateral financial institutions make many important decisions in a great many geographical locations affecting significant economic and social sectors, these decisions and the decision makers are closely linked to the imperial states and the MNCs that influence them. All top multilateral financial institution officials are appointed by their national/imperial governments. All their crucial policy guidelines that dictate their loans and conditions for lending are set by the finance, treasury and economic ministers of the imperial states. The vast majority of funds for the multilateral financial institutions come from the imperial states. Representation on the executive board of the multilateral financial institutions is based on the proportion of funding by the imperial states. The IMF and the WB have always been led by individuals from or beholden to the US or EU.8

Hardt and Negri's vision of multilateral financial institutions' power is based on a discussion of derived power, not its imperial states source. In this sense, international power is based in the imperial states, not on supra-national entities. The latter concept grossly overestimates the autonomy of the multilateral financial institutions and underestimates their subordination to the imperial states. The real significance of the multilateral financial institutions is how they magnify, extend and deepen the power of the imperial states and how they become terrain for competition between rival imperial states. Far from superseding the old states, the multilateral financial institutions have strengthened their positions.

Assumption 3: One of the common arguments of globalist theorists like Hardt and Negri is that an information revolution has taken place that has eliminated state borders, transformed capitalism and created a new epoch (p. 145) by providing a new impetus to the development of the productive forces. The claims that information technologies have revolutionised economies and thus created a new global economy in which nation-states and national economies have become superfluous are extremely dubious.

A comparison of productivity growth in the US over the past half-century fails to support the globalist argument. Between 1953 and 1972, before the so-called information revolution in the US, productivity grew an average 2.5 per cent per year; with the introduction of computers, productivity growth between 1973 and 1995 was less than half that.9 Even in the so-called boom period of 1995-99, productivity growth was 2.5 per cent—about the same as the pre-computer period. Japan, which makes the most extensive use of computers and robots, has gone through a decade of stagnation and crises. During 2000-2001, the information sector went into a deep crisis, tens of thousands were fired, hundreds of firms went bankrupt, stocks dropped in value some eighty per cent. The speculative bubble, which defined the so-called information economy, burst. Moreover, the major source of growth of productivity claimed by the globalists was in the computerisation of computer manufacture. Studies have shown that computer use in offices is directed more toward personal use than to exchanging ideas. Estimates run that up to sixty per cent of computer time is spent in activity unrelated to the enterprise. Computer manufacturers account for 1.2 per cent of the US economy and less than five per cent of capital stock.10

Moreover, the US population census provides another explanation for the higher productivity figures—the five million illegal immigrants who flooded the US labour market in the 1990s. Since productivity is measured by the output per estimated worker, the five million uncounted workers inflate the productivity data. If they were included, the productivity figures would deflate.

With the decline of the information economy and its stock valuations, it becomes clear that the "information revolution" is not the transcendent force defining the economies of the major imperial states, let alone defining a new world order. The fact that many people have computers and browse, and that some firms have better control over their inventories, does not mean that power has shifted beyond the nation-state. The publicists' claims about the "information revolution" ring hollow, as the investors in the world stock markets move funds toward the real economy and away from the high-tech firms that show no profits but increasing losses.

Assumption 4: Related to the prior assumption, globalists HN argue that we are living in a New Economy that has superseded the Old Economy of manufacturers, mining, agriculture and social services (pp. 3-21). According to the globalists, the market creates new efficiencies produced by the new technologies and ensures high growth. The recession of late 2000-2002 certainly refutes the claims of the New Economy ideologues: the business cycle continues to operate and, moreover, the cycle is particularly accentuated by the highly speculative nature of the New Economy. As it turns out, the New Economy demonstrates all the features of a volatile speculative economy, driven by exorbitant claims of high returns. In the absence of profits or even revenues, it turns out that much of what was touted as a New Economy was a colossal financial swindle, in which the high returns to the early investors led to financial ruin for the later investors.

The "new efficiencies" promised did not overcome the logic of the capitalist business cycle. "Just in time production" was premised on stable and continuous growth of demand. The recession of 2000-2002, the sudden decline in demand, led to an accumulation of inventories among producers and sellers, and the resultant lay-offs. Cash-flow problems, increased indebtedness and bankruptcies characteristic of the Old Economy reappeared with a vengeance.

It is clear that the so-called New Economy does not transcend capitalist crisis; in fact it is more vulnerable and has fewer resources to fall back on, since most of its cash flow depends on speculative expectations of continuous high returns. The sharp decline in commercial advertising earnings on the web sites and the saturation of the computer market have led to a structural crisis for producers of both hardware and software, leading to a giant shake-out: the exorbitant paper values of the stocks have tumbled to a fraction of their previous levels, and the major internet companies are struggling to survive, let alone define a "new capitalist epoch".

Assumption 5: Globalist theorists like HN write of an "imperial system" as opposed to imperialist states—as if one could exist without the other. The "system" has no "centre" since all states have lost their special significance before the all-powerful MNCs that dominate the markets.

Systems approaches fail to recognise the class and institutional power of nationally owned and directed banks and industries. Even more fatally, the systems theorists fail to link the structures, operations, legal codes and linkages between imperial states, the MNCs and their offspring in the multilateral financial institutions and the vast reach of their power and concentration of profits, interest, rents and royalties in the imperialist countries. The "system" is derived from and is sustained by the combined forces of the imperial states and their MNCs. To abstract from the specificities of ownership and state power in order to describe an imperial system is to lose sight of the basic contradictions and conflicts, the inter-state imperial rivalries and the class struggles for state power.

Assumption 6: HN operate at such a level of abstraction in defining the configurations of power that they obscure the most significant variations in regimes, states and class configurations. As a result, they do not have a very convincing conception of socioeconomic change. Their concept of empire resembles the world system approach. Instead of core, semi-periphery and periphery, they write of "empire" and "multitudes". This type of simplistic abstract stratification of the world economy and power subordinates the dynamic of class relations to a static distribution of market shares. The abstract categories obscure fundamental differences in class interests between nations in each category, differences that determine how market shares are distributed, the ownership of property, living standards and differences between dynamic and stagnant countries. More fundamentally, by looking at market positions, HN overlook the ubiquity of the state in preserving and challenging the relationship between states and economies and reconfiguring the world economy.

The myth of the third scientific technological revolution

HN's second major argument is that we are living in a totally new epoch, a new capitalism, thanks to the third scientific technological revolution. Detailed empirical studies of the 1990s economy have refuted the argument that IT, fibre optics and biotechnology inaugurated a "new epoch of capitalism" by revolutionising the forces of production.

Japan, which early on "robotised" its factories and engineered and applied many of the new it products, has been stagnant (average growth of about one per cent for the past eleven years and entering a deep recession in 2001). The US manufacturing sector has been in negative growth since the end of August 2000—the longest period of negative growth since the end of World War II. The recession is expected to continue for an uncertain period—estimates run from one to three years. it growth rates were negative throughout 2001. The prospects for an early recovery are dim, as negative savings rates, huge deficits and a strong dollar inhibit domestic or export-powered growth. As structural and cyclical crises coincide, it is highly likely that the recession will continue for some time.11 The recession totally undermines the IT ideologues who declared that the New Economy had made the business cycle obsolete. In fact, the IT companies have been the hardest hit in the current downturn. More than eighty per cent of the dotcoms are not profitable.12

Secondly, the IT economy today is less competitive and more concentrated than ever, a few giants having survived and many having failed. While thousands of dotcoms went under, the top five IT companies retained their position among the top ten rankings worldwide.13

The productivity revolution—growth of 2.5 per cent—was based on a short interval of four years (1996-2000) and was followed by a decline in productivity to an annual 1.2 per cent during the first quarter of 2001.14

The multibillion-dollar investment in IT drained investment from more productive uses and led to vast overcapitalisation in one sector that had low returns and few spill-over effects. Moreover, the biggest boost for it came from the Y2K scam—the hype of a system breakdown with the onset of the new millennium. Hundreds of billions were spent on IT between 1996 and 1999 to avoid a dubious danger with virtually no long-term effects. No serious critical evaluation or comparative analysis was conducted between countries like Russia, China, Finland and a few others that spent a fraction of what was spent in Europe and North America on Y2K, without suffering a "catastrophic breakdown." This raises the question of whether the IT bubble was itself an artifact of a massive promotional fraud. In any case, the base for claims of an IT-driven productivity revolution is extremely limited and problematical.

A recent study by Paul Strassman, a leading critic of IT ideologues, based on a study of 3000 European companies, demonstrates no relationship between investment in computers and profitability.15 Thus the three basic claims of the IT revolution—that it has put to rest the business cycle, has generated a sustained productivity revolution and produces high profits—are not in accordance with reality. In fact, the irrationalities of capitalism have been amplified by the IT bubble: the business cycle operates at full force, productivity tends to stagnation, and there is a tendency for the rate of profit to decline.

A recent article by Robert Gordon which analyses the increase in productivity (1995-1999) raises serious doubts about the claims of Hardt and Negri of a "new epoch".16 He argues that almost seventy per cent of the improvement in productivity can be accounted for by improved measurement of inflation (lower estimates of inflation necessarily mean higher growth of real output, thus productivity) and the response of productivity to the exceptionally rapid output growth of the 3½ year period. Thus, only thirty per cent of the one per cent per annum increase in productivity (or 0.3 per cent per annum) during the 1995-1999 period can be attributed to computerisation or the so-called information revolution—hardly a revolution.

According to Gordon's longitudinal study of technical progress covering the period 1950-1996, the period of maximum technical progress as manifested in annual multi-factor productivity growth was 1950-64, when it reached approximately 1.8 per cent. The period of lowest multi-factor productivity growth in this century was 1988-96, approximately 0.5 per cent growth!17

A recent detailed empirical study by McKinsey Global Institute demonstrates that the sharp improvement in economic performance of the US economy between 1995 and 2000 was accounted for by just a handful of business sectors and was not principally the result of the surge of investment in information technology.18 The study demonstrates that in most sectors of the economy, large increases in IT investment did not produce any improvement in productivity. The study provides data showing that fifty-three sectors representing sixty-nine per cent of the economy contributed just 0.3 per cent productivity growth. These fifty-three sectors accounted for sixty-two per cent of the acceleration in IT spending. Many of them even experienced productivity deceleration. Among the sectors which showed accelerated growth, it was only one factor among many.

It is clear that the innovations in the early and middle twentieth century were far more significant sources of economy-wide productivity improvement than the electronic, computerised information systems of the late twentieth century.

Computer manufacturers account for 1.2 per cent of the US economy and only two per cent of capital stock (1997). While corporations spend substantial amounts on computers, it is largely to replace old ones. There is no evidence to back up the HN claims of a "new capitalist epoch".19

The claim of Hardt and Negri of a new capitalist era has no basis in the purported third scientific information revolution.

Biotechnology industry, IT and optical fibres were seen as the three driving forces of the New Economy. The biotechnology industry is over a quarter of a century old and has yet to deliver a consistent flow of new treatments and profits. According to Arthur Levinson, the chairperson and chief executive of Genetech, the biggest and most successful of the biotech companies, "There has been no revolution in medicine in the past 25 years".20 According to the CEO of another biotech company, Kevin Sharer of Amgen, the billions of dollars invested in the sector have brought only sixty-three new drugs to market.21 Market analysts point out that just twenty-five of the US's 400 plus bio-pharmaceutical companies will make money.22 Most groups founded over a decade ago have yet to achieve profitability. Most biotechnology groups of the 1980s no longer exist. All the promotional publicity surrounding human genome sequences, currently attracting more billions of dollars of investment, is likely to disappoint, according to Levinson. Like the IT scam, the biotech revolution attracted billions of dollars, deflecting investment from productive uses, while leading many down the road of bankruptcy.

In the 1990s President Clinton and western European leaders, investors and academics saw a bright future for optical fibres—the third force in the "new capitalist epoch". In 1999-2000, more than 160 million kilometres of optical fibre were laid around the world as companies spent $35 billion to build internet-inspired communication networks.23 Today only five per cent of the fibre on the ground is "on", but the astronomical cost of delivering it to the end user has led to a dramatic decline in investment in the communications industry. As in biotech, the collapse has had an impact on the rest of the economy: billions invested in telecommunication companies appear to be wasted. The drying up of capital investment is one reason that the economy has come to a stop. The giants in communication equipment, like Lucent Technologies and Nortel, have reported losses in the billions: Nortel announced a $19 billion loss in the first quarter of 2001. In the first half of 2001, companies defaulted on $13.9 billion of telecommunication bonds, resulting in investor losses of $12.8 billion.24 Once again the technical scientific revolution ended up bursting like a speculative bubble.

US and European "global supremacy" is built on three unstable and unsustainable legs. One leg is a highly vulnerable and speculative sector prone to great volatility and entering into deep recession. The second leg is the high level of transfers of profits, interest payments and royalties from their respective colonised areas. In the case of Latin America alone, more than $700 billion was transferred as payments to European and US banks and multinationals in 1990-1998.26 The third leg is political power (including the power to print money to cover budget deficits) and the security that Euro-US states provide to foreign nationals who transfer funds, including billions illicitly secured from their home countries. Political power and the security of the imperial states depend on the acquiescence or consent of strategic economic sectors that are vulnerable to market competition from rival imperial and non-imperial countries. For example, because of the strong dollar, US steel corporations are having a hard time exporting goods or even competing in the US market.

The problem for the Euro-US rulers is how to manage their empires in the face of a growing recession, a deflated it sector and rising unemployment in economic sectors that are not competitive in the world market.

The new imperialism

Neo-liberalism was always a myth: the imperial states have never completely opened their markets, eliminated all subsidies or failed to intervene to prop up or protect strategic economic sectors, whether for political or social reasons. Neo-liberal imperialism always meant selective openness to selective countries over specified time periods in selective product areas. Markets were opened by the US government to products produced by US affiliates overseas. "Free trade" in the imperial countries was based not on economic but on political criteria. On the other hand, Euro-US policy makers and their employees in the IMF-World Bank preached "market fundamentalism" to the Third World: elimination of all trade barriers, subsidies and regulations for all products and services in all sectors.

Imperial states' selective free market practices allowed their multinationals to capitalise on market opportunities in target countries practising market fundamentalism while protecting domestic economic sectors that included important political constituencies. Conflict erupted when the two imperial rivals, the US and Europe (both selective free marketers) attempted to pry open each other's markets while protecting important political constituencies.

With the advent of recession, speculative collapse and intensified competition, the imperial countries have resorted to greater state intervention in a multiplicity of sectors: increased agricultural and other state subsidies—$30 billion in the US in 2001; increased resort to quotas on imports (Bush's commitment to the US steel industry)26 and intensified exploitation of Third World regions to increase the flow of profits, interests and trading advantages (the US "Free Trade of the Americas" proposal); and war, or military Keynesianism—as in the US attack on Afghanistan.

State-managed trade that combines protection of home markets and aggressive intervention to secure monopoly market advantages and investment profits defines the content of neo-mercantilist imperialism. Neo-liberal imperialism with its free market rhetoric and selective opening of markets is being replaced by a neo-mercantilism that looks toward greater monopolisation of regional trading zones, more unilateral political decisions to maximise trade advantages and protection of domestic producers and greater reliance on military strategies to deepen control over crisis-ridden neo-liberal economies run by discredited clients and to increase military Keynesianism.

Just as the US was the leader in developing its neo-liberal empire and Europe was a follower, so with regard to the transition to a neo-mercantilist empire, the US plays a leading role.

In substance, if not in style, the transition to neo-mercantilism began during the Clinton regime and became the dominant strategy of empire building during the Bush administration.

During the Clinton era, the US "shared" the takeover of Latin American markets and enterprises with the Europeans. For example, US banks, energy and telecommunication companies competed with Spanish multinationals in the buyout of public enterprises and national banks. The Clinton regime, however, sought to weaken European and Japanese competition by signing the North American Free Trade Agreement, which privileged US business in Canada and Mexico. Washington's success in monopolising the Mexican market contrasted with the relative decline of its share of newly privatised Latin American enterprises and markets.

Clinton's proposal to extend us monopoly control via the Free Trade Area of the Americas (FTAA) was given greater impetus by the Bush administration—particularly at the Quebec Summit of the Americas in April 2001. The purpose of the FTAA is to privilege US companies and exporters operating in Latin America while restricting Latin American access to US markets. While the FTAA is presented as a reciprocal trade doctrine, the Bush administration refused any concessions regarding the so-called anti-dumping regulations, which are habitually invoked to restrict entry of competitive Latin American products that would take market shares from US companies. Moreover, "reciprocity" is a meaningless concept when the two trading regions have such vast inequalities in productive capacity and size in many economic sectors and when infant industries are forced to compete with established giant enterprises. In these circumstances, "reciprocity" becomes a formula for US takeovers and the bankruptcy of Latin American enterprises. US enterprises in banking, energy, telecommunications, mining, and transport have a massive advantage, which they have used to displace Latin American competitors. FTAA will obliterate what remains of the Latin American national economies and impose an economic decision-making structure that will be centred in the headquarters of the US multinational banks and other corporations.

Equally important, the US state will dictate the rules and regulations that govern trade, investment and patent laws in the Americas. This will enable the US government to combine protectionism at home, European exclusion from Latin America and free markets in Latin America.

A clear example of the protectionist elements of the neo-mercantilist empire is the White House promise to protect US steel companies from overseas competition—including Brazil. In the first week of June 2001, the Bush administration launched action (a Section 201 investigation into "unfair trading practices") to protect us steel producers from overseas competition.27 Both Donald Evans, the US commerce secretary, and Robert Zoellick, the US trade representative, publicly defended state intervention to protect uncompetitive US steel producers from "unfair trade". The real reason for the loss of competitiveness of US manufacturing is the strong dollar and higher operating costs in the US. As the US National Association of Manufacturers stated in a letter to the US treasury secretary, the current exchange rate of the dollar was "having a strong negative impact on manufacturing exports, production and employment". The letter noted that the US dollar had risen twenty-seven per cent since early 1997, "pricing products out of markets both at home and abroad".28

The strong dollar, however, is a favoured strategy of the powerful financial sector of the US and vital in maintaining the vast flow of overseas capital into the US to finance the ballooning merchandise trade deficit.

The laundering of illicit funds by major US banks is an important source of external flows to the US: estimates by a US Senate subcommittee run from $250 to $500 billion a year. Like the earlier mercantilist empire, which depended in part on sharing the booty of its pirate predators, the neo-mercantilist economy thrives on corrupt rulers who pillage their economies and transfer their illicit funds to Euro-US empires. The strong dollar is one of the attractions for predators and corrupt rulers. It is no surprise that the Bush administration has significantly weakened its support for an international initiative tightening financial regulation to fight money laundering, except for "terrorist" funds.29

Mercantilist imperialism, in which the imperial state combines protectionism at home, monopolies abroad and free trade within the empire, is thus the chosen strategy for maintaining empire and sustaining domestic political support at a horrible cost to Latin America and to the dismay of its European competitors. In pursuit of the neo-mercantilist empire, Washington must increasingly rely on unilateral decisions and policy making. By its monopolistic nature, neo-mercantilism depends on excluding competitor allies and maximising trade advantages via unilateral state decisions.

The Bush administration's unilateral rejection of the Kyoto agreement, its unilateral decision to proceed with new missile programs in violation of existing agreements, its increased subsidies to US agriculture, its unilateral declaration of war against Afghanistan and its attempt to accelerate the ftaa are examples of unilateralism at the service of neo-mercantilist empire building.

The terrorist attacks in New York and Washington have led to Washington bombing Afghanistan in the best imperialist traditions, Hardt and Negri notwithstanding, even as conditions on world markets deteriorate. The alliance-building strategy, particularly with the EU, has not modified Washington's pursuit of hegemony. On the contrary, the alliance is built on EU subordination to US military command and monopolisation of all decisions pertaining to the war, to an even greater extent than in Kosova. What is striking in the early phases of the US military intervention is the degree to which its war demands were totally accepted by the EU, Russia, China and some Middle Eastern Arab regimes, without any explicit quid pro quo. The Afghan intervention and the powerful role of the imperial state in defining the issues, alliances and political circumstances for market transactions hammer another nail into the coffin of stateless empires and strengthen the argument for a theory of a new mercantilist style of imperialism.

Mercantilism, with its heavy emphasis on monopoly profits, unilateral action and particularly state intervention to favour business interests against external rivals, has historically been accompanied by armed conflicts and large military expenditures. Contemporary neo-mercantilism is no exception. Accompanying the FTAA is a major increase in US military expenditures in Latin America, new military bases, the colonisation of air space, shore lines, and rivers and estuaries. Plan Colombia, the Andean Initiative and related military expenditures to militarise the frontiers of Ecuador-Colombia and Panama-Colombia involve more than $1.5 billion and hundreds of US military operatives. The subcontracting of Latin American military officials, paramilitary forces and US mercenaries is an integral part of the protection and expansion of neo-mercantilist empire. The war in Afghanistan has led to vast increases in military expenditures ($100 billion), greater protectionism and military threats on all sides. Imperialism and the Empire are indeed doing well—only the "multitudes" are suffering.

It is no surprise that reviewers for Time and the New York Times welcomed the book. Empire, in line with general globaloney theory, argues that globalisation is a progressive movement in history as imperialism is abolished by intellectual fiat and the systemic alternatives are embodied by an amorphous multitude that lacks any of the tools of analysis and political organisation identified with contemporary revolutionary struggles. The book's citation of potted quotes from a sweeping array of thinkers provides the formal trappings for a celebration of US constitutionalism—at a time when its leaders are bombing Afghanistan into the Stone Age, after sending Iraq and Yugoslavia into the Iron Age. Empire is a sweeping synthesis of the intellectual froth about globalisation, postmodernism and post-Marxism, held together by a series of unsubstantiated arguments and assumptions that seriously violate economic and historical realities. Empire's thesis of post-imperialism is not novel, is not a great theory and explains little of the real world. Rather it is a wordy exercise devoid of critical intelligence.

Empire, by Michael Hardt and Antonio Negri, Cambridge, Harvard University Press, 2000.

Notes

1. Quoted in the New York Times, July 7, 2001, p. A15.

2. For a detailed discussion of the institutions of the imperial state and development of post-colonial imperialism, see James Petras and Morris H. Morley, "The US Imperial State" in Review, Vol. IV, No. 2, Fall 1980. Many of the themes and arguments discussed in our article are repeated by Leo Panitch in the Socialist Register, unfortunately without citing our article. Empire contains no discussion of institutions of the imperial state or even of their "empire" except to conflate the latter with the "world market".

3. In the year 2000, the US Export-Import Bank financed more than $15 billion in US export sales. Currently, the US ranks seventh among countries subsidising exports—behind Japan, France, Germany, the Netherlands, Canada and South Korea. See Financial Times, March 6, 2001, p. 4.

4. Both the US and the EU manipulate "anti-dumping" regulations to protect uncompetitive industries from more efficient producers. See Financial Times, March 6, 2001, p. 8.

5. See "The Strategic Concept of the Atlantic Alliance", NATO Summit Meeting, April 23-24, 1999.

6. Paul Doremus, William Kelly, Louis Pauly and Simon Reich, The Myth of the Global Corporation, Princeton, NJ, Princeton University Press, 1999, ch. 5.

7. "Private Banking and Money Laundering: A Case Study of Opportunities and Vulnerabilities", hearings before the Permanent Subcommittee on Investigations of the Committee on Governmental Affairs, United States Senate, One Hundred Sixth Congress, November 9-10, 1999. Also "Report on Correspondent Banking: A Gateway to Money Laundering", Minority Staff of the US Senate Permanent Subcommittee on Investigations, February 2001.

8. Washington appoints the head of the World Bank, Europe the director of the IMF. At the most recent meeting to select the head of the IMF, the US tried to impose one of its own, but the Europeans eventually won out, although not before they were forced to alter their nominee.

9. See Martin Wolf, "Not So New Economy", Financial Times, August 1, 1999, p. 10.

10. ibid.

11. Financial Times, May 15, 2001, p. 17.

12. Financial Times, May 10, 2001, p. 12.

13. Alan Cane, "Meltdown, But the Strongest Keep Their Cool", FT 500, The World's Largest Companies, May 11, 2001 (supplement to the Financial Times), p. 9.

14. Financial Times, June 6, 2001, p. 6.

15. Financial Times, June 28, 1001, p. 14.

16. Robert Gordon, "US Economic Growth Since 1870: One Big Wave?", American Economic Review, May 1999. The following discussion draws on Gordon's article.

17. ibid.

18. <www.McKinsey.commends>

19. Robert Gordon, op. cit.

20. Financial Times, April 6, 2001, p. 14.

21. ibid.

22. ibid.

23. New York Times, June 28, 2001, p. 1.

24. ibid.

25. James Petras and Henry Veltmeyer, "Latin America at the End of the Millennium", Monthly Review, July-August 1999, pp. 31-52.

26. Edward Alden and Richard McGregor, "White House Promises to Protect US Steelworkers", Financial Times, June 7, 2001, p. 6.

27. Edward Alden and Christopher Bowe, "Bush Seeks Friends in Steel Industry", Financial Times, June 8, 2001, p. 6.

28. Edward Alden, "Manufacturers in Call to Bush on Strong Dollar", Financial Times, June 8, 2001, p. 8.

29. Edward Alden and Michael Peel, "US May Ease Stance Over Money Laundering", Financial Times, June 1, 2001. Since September 11, 2001, US officials have called on countries to tighten up on laundering of terrorist funds, which of course does not affect the billions laundered by US and UK banks.

Issue 20