Oscillations of American hegemony

Image: John Lee


Promises and challenges of the new US government.

In what sense can Joe Biden be said to represent a break, or at least a discontinuity, in American history and political-economic life? Anticipating in three or four sentences the argument I intend to develop here, I would say that the discontinuity seems greater on the domestic plane than on the international plane. Internally, the discontinuity is really huge – what you have is a mixture of hyper-Keynesianism and social democracy (in the European sense) – a rupture with American traditions, especially those of the last 40 years. At the international level, what Biden proposes is, essentially, a return to the pre-Trump pattern, retaining certain objectives from his predecessor, but not the methods. If all goes well for Biden, the Trump administration will appear as an unfortunate, unintelligent deviant that has weakened America.

Hyperkeynesianism and social democracy land in the US

Biden's hyper-Keynesianism is expressed, as is known, in an aggressive fiscal policy, which implies a sharp increase in spending, including social spending, and public investment. Expansion that overlaps with the expansionary fiscal policy already practiced by Trump in response to the 2020 pandemic. Biden's 100-day speech in Congress, which I highly recommend reading, explained his policy in detail. I emphasize just one point: the plan to complete the welfare state American. The welfare state has always been more incomplete in the US than, for example, in advanced European countries or Canada. What Biden essentially proposes is to catch up.

Notice, reader, that this backwardness has deep roots. As economic historian Adam Tooze has noted, "If there is a single factor that explains why America has not had a comprehensive welfare state, it is racism." Welfare in the US it was code for race, and for addiction to blacks in particular, he notes. Absolutely right. American racism is a great reality. And, I would add, Obama's election in 2008 was an accident along the way, which would not have occurred without the disastrous financial crisis that began in 2007 and the failure of the Republican government of George W. Bush to anticipate it and face its first effects.

Biden wants to break with the nefarious heritage of racism. In the 100-day speech, he said with all the lyrics that “white supremacy is terrorism” and movingly reported his dialogue a year ago with the little daughter of George Floyd: “She is a little bit of people”, said Biden , “and I had to get down on my knees to talk to her and look her in the eye. She looked at me and said, 'My dad changed the world.' Well, after the conviction of George Floyd's killer, we can see how right she was - if, if we have the courage to act like Congress. We've all seen the knee of injustice on black Americans' necks. Now we have the opportunity to make real progress.”

But imperialism continues

All of this is very beautiful and I was moved myself. What is lacking, however, is recognition by the Americans that this same white supremacy, this same racism dominates internationally and suffocates, or tries to suffocate, the development of emerging and developing countries.

I don't want to, reader, use cheap, beaten rhetoric, but the question remains: where is US imperialism with Biden? It is here that Biden's discontinuity with the past is less clear. And, let's face it, we wouldn't expect it to be any different. Biden was elected president of the United States, to look after American interests – he will only take into account the interests of other countries if it is convenient from the US point of view. Humanity, I remind you again, does not exist from a political point of view.

To answer the question about US imperialism, it seems necessary to take a few steps back. Since World War II, the world has lived under the hegemony of the US and its European allies. The North Atlantic axis, under American command, commanded and commanded. It did not always prevail, of course, but it constituted the main pole of power. With the collapse of the Soviet bloc and the Soviet Union itself in the late 1980s and early 1990s, this hegemony was consolidated. The United States had its “unipolar moment” and the international rhetoric of the Americans, Europeans and their satellites came to be dominated by the supposed triumph of “neoliberal globalization”.

Shocks that shook American hegemony

Biden takes over the US presidency at a time when his country is living under the impact of a succession of shocks that have profoundly shaken American hegemony and “neoliberal globalization”. He would highlight the following:

(1) The rise of emerging economy countries in the 21st century. China is the most celebrated case, but it is not the only one. I remind the Brazilian reader that until our 2015 crisis, still not overcome, Brazil featured prominently in this group of countries.

(2) The financial crisis in the North Atlantic, in the period 2007-2009, which required strong State intervention – macroeconomic and in the financial system. This crisis shook not only the convictions that the financial system could function with regulation and, too, but it undermined the confidence of the whole world (or at least the part of the world that thinks a little) in the economic-financial theses propagated by Americans and Europeans. The impact was all the greater because emerging countries, notably China, but also Brazil, experienced a milder crisis in 2008-2009 and a faster recovery than most North Atlantic economies.

(3) The election of Trump and other right-wing nationalists in Europe. Trump is a nationalist like Biden (and like all US presidents, by the way) but he was frontally opposed to “neoliberal globalization”. But he didn't do it smartly. He tore up the rhetorical fantasies that Americans always use and ended up weakening their country's position. He never understood the value of hypocrisy – the hypocrisy that, as La Rochefoucauld said, is vice's homage to virtue (a phrase I've quoted about five hundred times).

(4) The 2020-2021 pandemic which, once again, and now more intensely, led to a monumental stabilizing and anti-recession intervention by the State in the economy, through monetary and fiscal channels, and in helping the most affected families and companies .

In short, Biden has already taken over with “neoliberal globalization” in tatters. His government plan is an attempt to respond to all of this. But – and here comes the key point – a response that preserves, or recovers, American hegemony.

With China, the United States faces the greatest challenge to its hegemony since the Second World War. The Soviet Union was a political-military rival, but not an economic one. Japan was an economic rival, but not a political-military one. China is both at the same time. It is no coincidence that Biden, like his predecessors, is focused on meeting this challenge. And, for now, he seems to promise more in this field than either Trump or Obama.

Strength, fellow Biden!

          I fully understand that China and Russia do not look kindly on the Biden administration. Trump with his antics was probably an easier opponent for them. The case of Brazil is different.

The big political test for Biden will be reaching the midterm elections for Congress, at the end of 2022, with results to be presented in economic, social and foreign policy terms, expanding his majority in both houses if possible. In macroeconomic terms, the challenge will be to promote rapid growth and job creation without losing control of inflation – a non-trivial challenge, but one that seems achievable. In 2021, it seems likely that the economy will grow at “Chinese” rates with low and reasonably controlled inflation. The unknown is what happens to inflation from 2022 onwards, bearing in mind the size of the fiscal impulse provided in 2020 and, above all, 2021, combined with an ultra-expansionary monetary policy.

A buoyant economy with job creation and controlled inflation would point to a great success for Biden in his first two years. But if he were to lose control of Congress to the Republican Party, still dominated by Trump, he would quickly become a lame duck, as was Obama.

Brazil, which imported a perhaps worse version of the Trump model in the 2018 elections, will not be able to see a possible Biden failure with good eyes.

Paulo Nogueira Batista Jr. he was vice-president of the New Development Bank, established by the BRICS in Shanghai, and executive director at the IMF for Brazil and ten other countries. Author, among other books, of Brazil doesn't fit in anyone's backyard: backstage of the life of a Brazilian economist in the IMF and the BRICS and other texts on nationalism and our mongrel complex (LeYa.)

Extended version of article published in the journal Capital letter, on May 14, 2021.


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