Pre-emptive wars, sanctions and other measures are being used by the US to prevent even the possibility of a real ‘peer rival’ emerging, argues Mike Macnair. This article is based on his talk given to Communist University in August 2022

Here's an excerpt (although you should read the whole article):

At base, the problem is that the logic of capital requires the existence of credit money. There is not enough gold and silver in the world to have pure commodity money; and interpersonal credit of the sort which existed in the late medieval and early modern period, whether in the localities or among narrow merchant groups, is not sufficient for the circulation needs of actual capitalist markets. Now in order to have credit money we need routinised state enforcement of debts, so that IOUs - like Bank of England banknotes at their origins - can be used like gold and silver to make payments. This routinised debt enforcement is much the larger part of what the civil court jurisdictions do.

But it is not enough, because it is too easy for the debtor to flee the jurisdiction. In the colonial period of North America this was a persistent problem: debtors flee the jurisdiction into territories which did not yet have courts: the result is instability in colony/state of paper money. Part of the solution to the problem of people fleeing jurisdiction is that the credit-money-guaranteeing state has to be able and willing to discriminate against economic actors outside the jurisdiction - so that Venetian economic actors get advantages which actors from other states (and hence runaway debtors) do not; and this stabilises Venetian money and impersonal credit.

A necessary consequence is that state credit money is ranked by the strength of states. So the pound was the global reserve currency until the British strategic position was destroyed by the fall of France and Norway in 1940. At that point, the British had to agree to hand over global hegemony to the US and from 1945 the dollar became the global reserve currency.

The need to discriminate against non-national capitals continues right down to the present day. In the 2008 crash the British government seized Icelandic assets under anti-terror legislation in order to assist it in bailing out British banks. The US government treated Exxon rather leniently in relation to the Exxon Valdez oil spill in 1989; but threw the book at BP over the Deepwater Horizon oil spill in 2010. Barack Obama denounced BP’s attempt to place part of the blame on US companies Transocean and Halliburton.

Any capitalist state, then, is forced to discriminate against foreign capital simply by virtue of the nature of state credit money. Every capitalist state is mercantilist. 19th century British ‘free trade’ was a mercantilist policy in the interests of the British shipping industry. Late 20th century US ‘free trade’ is a mercantilist policy in the interests of the US financial services sector. (In any case, the US, while advocating free trade for everyone else, remains massively protectionist.)

Equally, how the bourgeoisie as a class routinely rules the state is through the money form of capital. Capital is the circuit, money-commodity-production-commodity-money: it is in the money form that it can rule. It does so partly through free movement of capital - so that, for example, when François Hollande introduced very mild reformist measures in France, there was a flight of capital and he had to capitulate. This is merely a recent example of a commonplace event: the first Harold Wilson government in 1964 led to a run on the pound, leading George Brown to coin the phrase, “gnomes of Zurich”. Capital rules, equally, through bribery, taking various forms: the payment of advertising funds to pro-capitalist media to drown out non-pro-capitalist speech; the direct bribery of public officials, whether illegal or in the form of campaign donations, or of post-retirement jobs and gifts; the free market in legal services, which amounts to the sale and denial of justice in violation of Magna Carta chapter 29. ‘Liberal democracy’ is better named ‘liberal plutocracy’.

‘Lose-lose’ option

But liberal plutocracy inherently entails the dictatorship of what is the reserve currency state, whose currency is ‘real money’. So a ‘liberal democracy’ inherently produces regimes which are subordinate (in the 19th to early 20th century to Britain, in the later 20th and early 21st century to the US). In order to escape from that subordination without overthrowing capitalism globally, states are forced to adopt Bonapartism. This was the role of not only Louis Bonaparte, but the kaiser in the 19th century. It is also the role of Putin, and somewhat differently of Xi, in the 21st.

The US is driven to aggression towards Russia and China because they will not play ball. They refuse to do so because America is driven to discriminate against non-US capitals; therefore, accepting political subordination to the US is a lose-lose option.

The USA talks about promoting a ‘law-governed world order’, in which people compete without aggression, and so on. But it cannot actually offer that, because the ‘law-governed world order’ is a world order of rules made by the US (and from time to time arbitrarily altered by the US in the interests of the US state and US capital). In the 1985 Plaza Accord the Americans simply forced the Japanese to revalue the yen, and as a result threw Japan into the ongoing 40-year stagnation. The right to make the rules in your own state’s interest explicitly became the basis of what makes hegemony worthwhile by the Rand Arroyo 2000 analysis, and is explicitly defended by the Biden administration’s national security policy.

So the US fails to deliver a ‘law-governed world order’ because it is obliged by its nature as a capitalist state to discriminate in favour of US capitals. It presently is unable to make the sort of concessions which would allow a ‘law-governed world order’ of the sort run by the ‘west’ in 1948-71.

Why the US was able to make radical concessions in 1948-71 is the combination of, firstly, the global gains caused by massive destruction of capital and debt defaults, at the expense mainly of the British empire, allowing substantial global growth; and, secondly, Soviet tanks on the Elbe and mass communist parties in many parts of the world, meaning that it was necessary for US capital to agree collectively through its state to make massive concessions to other capitals and to the working class to avoid short-term overthrow. That is, the concessions would not have happened without the strength of the organised working class.

These concessions were taken away in the 1970s, after both the working class and anti-colonial movements got too strong. Hence Nixon’s break from the Bretton Woods agreement and Carter’s turn to ‘rollback’, ‘human rights’ and US sponsorship of terrorism. ‘No return to the 60s and 70s!’ continues to be the watchword of the media, even as both media and national security policies hand-wring about inequality and the loss of ‘middle class jobs’ and skills.

It is the ‘no concessions’ regime which then means that the US is forced, irrespective of what it wants, to create conditions which invite other powers to try and organise themselves against the consequences of US discrimination; and that in turn leads us back to the endeavours to encircle and contain China and the war in Ukraine.