by Guest Fri Sep 07, 2012 2:21 pm
This is a very complicated set of observations, and I don’t necessarily agree with some of the premises.
Restricting the response to economic history, I think it is important not to confuse correlation with causality. The rise of America did not necessarily determine the decline of Europe, nor did the decline of Europe leave a vacuum that America stepped into.
America’s problem has never been lack of resources/material, it was in getting those resources to market. So the railways were essential in getting goods to the ports, then refrigeration was essential to transport foodstuffs to Europe and elsewhere. Until the transport problems were solved through new technology and the building of infrastructure, the value of American assets did not accurately reflect their potential. So America had a near zero cost of capital, but that cost couldn’t rise until it was supported by profits, profits which could not be earned from underdeveloped internal markets. From the 1880s, there was a race to invest in infrastructure to get those products to market, which exported quite savage deflation to Europe and led to a long agricultural slump. Capital was sucked in from Europe to fund this development, but the legal/political structure was deficient and led to the rise of the robber barons. It took anti-Trust laws to remove the extreme effects, and then WW1 interrupted which led to permanent capital transfers to the US. From that point the US had to boost domestic demand to compensate for poor export markets and was in a similar situation to China today.
I also query the suggestion that America did not create a Global Empire similar to the European model. There was a reluctance for America to involve itself in world affairs, but America was always keen to assert its dominance to protect what it viewed as its back yard. Conflicts with Canada (1812), Mexico (1840s), the Civil War (1860s), the Indian wars (1870s), the Spanish-American War (1898), intervention in Mexico (1916), various interventions in the Caribbean, etc. Not all of these were formal wars, but it is quite clear that America established informal protectorates and spheres of interest, which it controlled like Europeans controlled their colonies. Post WW2, I don’t think anyone can doubt America’s cultural, financial and in some cases military dominance of other countries. In the last 20 years this has been extended by its use of its technological systems and through the imposition of its laws on those who use those systems. In those respects its Global Empire is still very much alive and growing.
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