Meta-crisis, hegemony and counter-hegemony By Tim Anderson University of Sydney, Australia Email: [email protected]

To: Technical Coordination, Department of the Conference International Political Economy Conference CENTRO INTERNACIONAL MIRANDA CARACAS, VENEZUELA [email protected]

Abstract This paper seeks to contribute to the discussions on imperial ‘transition’ and the opportunities and challenges that may flow from that. It argues that a ‘meta-crisis’ of the imperial power is driving the global restructuring of economic and strategic relations, rather than recent policy or adventurism. Ideological hegemony, however, is strong and resilient and counter-hegemonic strategy must pay attention to this. Multiple economic challenges for the US economy will affect much of the rest of the world, but restructuring will also provide opportunities for reclaiming autonomous space, as in the initial post-colonial era. The US currency is the weak link, in the current chain of economic events, but the great power still holds important economic and ideological resources, including a pervasive and disempowering neoliberal ideology, exercised mostly through the network of corporate media monopolies. I suggest counter-hegemonic forces must build human security, construct practical alternatives, and democratise the mass media.

Short CV Dr Tim Anderson is Senior Lecturer in Political Economy at the University of Sydney. He writes mainly on trade, development and rights, often on themes to do with the small islands states of the South Pacific.

.

Meta-crisis, hegemony and counter-hegemony By Tim Anderson University of Sydney

This paper seeks to contribute to the discussions on imperial ‘transition’ and the opportunities and challenges that may flow from that. It argues that a ‘meta-crisis’ of the imperial power is driving the global restructuring of economic and strategic relations, rather than recent policy or adventurism. Ideological hegemony, however, is strong and resilient and counter-hegemonic strategy must pay attention to this.

Multiple economic challenges for the US economy will affect much of the rest of the world, but restructuring will also provide opportunities for reclaiming autonomous space, as in the initial post-colonial era. The US currency is the weak link, in the current chain of economic events, but the great power still holds important economic and ideological resources, including a pervasive and disempowering neoliberal ideology, exercised mostly through the network of corporate media monopolies. I suggest counter-hegemonic forces must build human security, construct practical alternatives and demand democratisation of the mass media

I begin by outlining a meta-crisis and what that may involve. I then discuss the features of the last decades of the ‘Old American Century’ before moving to the current hegemonic strengths and counter-hegemonic challenges. I build on the debates over accumulation crises and emphasise the post-colonial principle of self-determination, making use of some financial aggregates in the first part and particular examples from my own country in the discussion of hegemony and ideological formation.

1. Meta-crisis and imperial eclipse I suggest we have been experiencing an extended meta-crisis of the imperial power, over several decades, and that this meta-crisis has heavily conditioned imperial behaviour in recent years. Economic imperial overreach is now matched by strategic

2

overreach, and their combination has helped drive the interventions of recent years. The recent middle east interventions, as well as broader US unilateralism should be best seen in this wider context.

A meta-crisis might be distinguished from a simple crisis - for example of regional finance, or political restructuring - by its catalysing an imperial transition as well as wider scale economic reorientation. In line with accumulation theories (see: Baran 1957; O’Connor 1984), but without adopting some of their more deterministic notions on resistance, this paper maintains that imperial behaviour has been strongly conditioned by the imperial power’s economic dilemmas. Comparing the crises of the 1930s and 1970s, Gouverneur spoke of the difference between a ‘conjunctural’ and a ‘structural’ crisis. The former was a overproduction crisis, followed by a recession; the latter had the additional requirement of more far reaching changes including development of “a new type of accumulation” (Gouverneur 1983: 192).

How might a meta-crisis be different from a structural crisis? By the eclipse of imperial power. That is, substantial economic restructuring, the breakdown of global management mechanisms and a shift in the locus of economic power. Will this ‘transition’ involve imperial succession, or a vacuum? The English speaking world is full of speculation about a possible Chinese empire, apparently because China has the mystique of the orient, the scale of a giant and the most rapidly growing economy on earth. However it is not at all clear that China has either the capacity or the will to assume an imperial role. Nevertheless, the US is clearly intimidated and maintains its long term policy of ‘containment’ of China, as well as Russia, not least through its permanent military presence in many of the surrounding Asian countries (Bello 2005: 21).

There can be only one empire in the same territory, yet for some time now we have had an emergent hybrid, and that in itself suggests the roots of a transition. So how is US power responding to its eclipse by the successful European economy, and its subordination to rising East Asian capital?

3

The European-US collaboration through global economic management regimes (the WTO, the IMF) has been under strain; even more so the ‘cooperation’ in strategic intervention. Samir Amin wrote: “The solidarity between the dominant sections of transnational capital and the members of the Triad (US-EU-Japan) is real, and it explains their rallying to global neoliberalism … [but] Washington hardly intends to ‘share fairly’ the profits of its leadership. On the contrary, it seeks to make its allies into vassals, and is only ready to make minor concessions to junior allies” (Amin 2004).

The US has not been totally successful in this aim. Despite its unilateralism, it has not managed to completely exclude the other economic powers from its territory, and secure what should be the imperial prerogative - exclusive and privileged access to strategic resources. Latin America has asserted significant autonomy; the Europeans are seeking escape from the disastrous middle east wars; China has access to Iraqi oil.

What evidence is there of the eclipse of US power, and of this extended meta-crisis? We are certainly seeing an extended financial restructuring, based on at least two decades of insecure credit and fictitious commodities (derivatives and secondary instruments of exchange). This had an impact on stocks and bonds, then moved to demolish a series of mainly USA-based financial institutions; in turn causing Washington to intervene with many billions of dollars, to socialise the losses (Solomon and Paletta 2008).

The failure of global management mechanisms can be seen in the retreat of the main international financial institutions, the World Bank and the IMF; the failure of APEC and the discrediting of NAFTA (Bello 2008); and the drawn-out collapse of talks at the World Trade Organisation. On the one hand there has been a crisis of legitimacy, affecting all these agencies; on the other, there has been a failure in the Washington-led ‘consensus’ that seemed on the ascendant in the 1980s and 1990s. Finally, while the weight of productive power and the strongest currency now reside in Europe, financial and manufacturing power is ascendant in East Asia.

It was no coincidence, then, that the middle east invasions of the 2000s were launched as the US economy slowed, its rivals grew and its medium term energy crisis could no longer be hidden. The proposed Free Trade Area of the Americas, designed to compete

4

with Europe, was looking sick. The US trade deficit was enormous (see Appendix Table One). Overextension militarily and economically was more than a gamble.

This conjuncture was hardly the creation of the Bush administration. Not only had the proposals for a ‘New American century’ been dreamed up in the late 1990s (Kristol et al 2008), underwriting these ambitions was an ailing economy, with powerful accumulation logic but unable to properly reason its challenges or doubt its preeminence. A ‘pressure cooker’ was acting on the trustees of the Washington project.

Many hope that overreach, multiple strategic failures and domestic economic crisis will catalyse a withdrawal of US imperial power. A new era of US isolationism may open up opportunities for a global reorientation of political and economic relations. No other power seems able to fill the gap left by withdrawal of US power. But at a time of enormous global challenges we must extend our understandings, so as to better inform counter-hegemonic and resistance strategies. This analysis must include a sober analysis of imperial strengths, as well as weaknesses. So what are the current weaknesses and strengths of the Washington project?

2. The last decades of the ‘Old American Century’ Let’s briefly review the last decades of the ‘Old American Century’, before considering imperial capacity and the improbability of a ‘New American Century’.

The US had the advantage, in the post World War Two period, of being both industrial powerhouse and printer of the world currency. It exported and invested extensively, amassing assets and building a huge consumer economy. However, by the late 1960s rising competition, exhaustion in the prolonged Indo-China war and an overly strong currency precipitated a decline in US trade performance. In 1971, as the US trade balance headed into deficit, the US dollar, the de facto world currency, was devalued and cut adrift from the international system of foreign exchange. This unilateral and destabilising act laid the basis for the inflationary pressures of the 1970s, as well as for the secondary financial markets to manage the risk of volatile currency fluctuations. Later in the 1980s and 1990s Washington would seek European and Japanese assistance to lower the value of the dollar but, as with the 1971 move, such measures brought only

5

temporary relief. US trade slid into chronic deficit in the late 1970s and a precipitous fall from the early 1990s onwards (see Appendix Table One).

At the same time, in the 1970s, European and oil-exporter holdings of dollars grew and began to build a body of state-less global capital, expanding credit. The developing countries, which at that time were beginning to find an independent voice, suffered a set back in the early 1980s. A sharp rise in interest rates from newly ‘deregulated’ banking systems, pushed up repayments, sparking the first international debt crisis. Through this crisis the US-led ‘Washington Consensus’ gained a critical advantage, having systematised financial leverage through loans to facilitate the entry of private investors. Between 1981 and 1999 these leverage (or debt ‘bail-out’) programs were called structural adjustment or enhanced structural adjustment programs (SAPs). They were harsher versions of the economic experiments trialled under the US-backed dictatorships of the 1970s, in Chile and Peru. This greater investment penetration of new markets, combined with new opportunities at home through the privatisation of public assets and productive services, and the rise of new financial commodities, allowed some respite from falling productivity levels in the US and the US-led cartel. The strategic shift also allowed reconstruction of the GATT trade liberalisation process, which had proved irrelevant to most countries was nearly dead in the 1970s. However a new ‘free trade’ coalition was resurrected in the 1980s, leading to the creation of the World Trade Organisation in 1995.

Nevertheless, after several years of financial leverage through the SAPs, there were reactions across many countries. Resistance grew to privatisations, dismantling of shared services and privileging of foreign capital. The SAPs were failing in their own stated objectives of building investment and economic growth, let alone real measures of development, such as health and education standards. The failure of Washington Consensus leverage through SAPs in Africa, Latin America, Eastern Europe and East Asia, slowly began to reverse the neoliberal gains of the 1980s and drove a growing crisis of legitimacy for the great power. Defectors from amongst the global managers denounced SAPs, most notably former Chief Economist of the World Bank, Joseph Stiglitz, who declared that Eastern Europe was “worse off” after a decade of free market reforms than they had been under Soviet style socialism:

6

“there never was economic evidence in favour of capital market liberalisation. There still isn't. It increases risk and doesn't increase growth … IMF policies … exacerbated the downturns … excessive rapid financial and capital market liberalisation was probably the single most important cause of the crisis” (Stiglitz in Moberg 2000).

In a similar vein, Fantu Cheru reported for the United Nations Human Rights Commission that countries under SAPs had not performed well in growth and investment terms, according the IMF and World Bank’s own studies. However “the most crucial impact” of forcible liberalisation had been to remove the state as a “buffer” against the world economy, and to expose entire populations to the instabilities and vagaries of global commodities. SAPs added to the repression of labour, the deterioration of environmental assets and to the widening of income disparities, privileging exporters “at the expense of civil liberty and self government” (Cheru 1999). Such statements were, of course, heresy, and added substantially to the legitimacy crisis.

In late 1999 the term ‘structural adjustment’ was abolished at a joint meeting of the World Bank and IMF. The term ‘privatisation’ also rapidly disappeared. However financial leverage continued, with SAPs rapidly replaced by ‘Poverty Reduction Strategy Papers’ (PRSPs) and ‘Good Governance’ programs, as well as ‘Debt Relief’ and ‘Transition’ initiatives. The name changes were not persuasive for those looking closely. The General Accounting Office of the US Congress found that the PRSP program “does not differ significantly” from the earlier SAPs (GAO 2001: 4).

A parallel debate raged over the failure of bilateral aid, which in many respects had become linked to the policy leverage of the SAPs. Aid had become an institution of the postcolonial world, but it became apparent that those countries receiving the most aid were neither the best performers in economic growth nor real development indicators. Nevertheless, in the scramble for legitimacy, the impact of aid was hotly contested. The failure of aid was demonstrated in one study which examined non-military foreign aid to ninety-six countries, concluding that in most cases “aid does not significantly increase investment or growth”. It made no difference whether recipient governments were “liberal democratic or highly repressive” (Boone 1995). This paper was challenged by a 1998 World Bank study which argued that “the impact of aid depends on the quality of state institutions and policies” (Burnside and Dollar 1998). This suggestion that ‘good policies’ were needed for aid effectiveness led to large increases in

7

conditional US aid – additional policy leverage - and the creation of the Washington based Millennium Challenge Corporation, with additional financial ‘aid’ (Easterly 2006). However the World Bank study was in turn challenged by another wider study that found no support for the Burnside and Dollar conclusion that aid worked in a “good policy environment” (Easterly, Levine, and Roodman 2003). In a parallel process, one IMF commissioned study found that bilateral aid did not reduce infant mortality (Masud and Yontcheva 2005: 20); then a subsequent IMF study suggested that “doubling health aid” was associated with a 2% reduction in infant mortality; small in relation to the explicit Millennium Development Goals (Mishra and Newhouse 2007: 29). In the current climate we can expect such debates to go on, because legitimacy is crucial and much is at stake.

Capital in general gained from financial leverage and enforced neoliberal policy, but even as the developing countries were being directed to dismantle their social programs, state-sponsored privilege in the metropolis endured. The most obvious sign of this was in the US, where the enormous agricultural, steel and transport subsidies of the early 2000s were joined by a desperate bailout of failing financial institutions. In September 2008 Washington was reported as engaged in a “comprehensive” program to purchase hundreds of billions of dollars of bad debt; said to be the biggest financial intervention since the 1930s (Solomon and Paletta 2008).

This plan will place enormous strain on the economic capacity of the US, despite the scale of its economy. Undermined by a huge trade deficit and expensive military interventions, the financial bailout will add to the already very large and growing budget deficit. Before these bailouts, around 44% of the US budget was committed to the military (23% in 2008) and the Treasury (20.6 in 2008), the latter being mainly debt servicing (Paulson and Nussle 2007; OMB 2008: 36 – see Appendix Table Three). With the bailouts, a projected large budget deficit of 8.3% (of receipts) is being revised up to a massive 25% (Hernandez 2008). It is hard to imagine how long such massively wasteful expenditure can be sustained, as hundreds of thousands of US citizens lose their houses, their jobs and their very expensive health and social security insurance. The US system is hardly democratic, but at some stage there must be political response.

8

In the great constellation of economic changes, the most vulnerable element of the US economy is its currency, still the de facto world currency but weakening. Washington does not want the dollar to remain strong, yet any sudden collapse will undermine US capacity. Many large countries (Japan, Russia, China) are engaged in a process of diversification of their foreign currency holdings, not just because US bond rates are virtually zero, but because more devaluation is to come. What has stalled this process is that virtually the whole world holds reserves of US dollars. For example, at mid 2008, China held about 1.8 trillion US dollars as reserves, or 23.6% of the world’s stock of $7.6 trillion. Combined European holdings were about 1.4 trillion (18.4%), Japan’s 1 trillion (13.2%), Russia 560 billion (7.4%) and India 291 billion (3.8%) (IMF 2008b). In other words, all the big powers have an interest in managing their losses. Nevertheless, a transition from the US dollar to the Euro has seemed logical for some years now, as the Euro has strengthened. Oil sales are still denominated in US dollars; but the big powers are gradually shifting their US bonds into Euro bonds. Oil rich countries under threat from the US, such as Iran and Venezuela, have spoken of shifting oil sales into Euros, but have not yet done so. China has been debating for some time whether these US dollar reserves are ‘a blessing or a burden’. The process of change would not be without broader pain, and losses. Any large scale shift away from US dollar reserves or from oil sales in dollars could catalyse a collapse in the value of the dollar, triggering further financial system failures.

In this context of decline and financial crisis the US has pursued great ambitions abroad. It is essentially stretched across every continent in interventions, wars and destabilisations, with the overarching (and classical imperial) aim of securing long term privileged access to resources and excluding its major rivals. It has been supported by a virtual army of ‘embedded’ intellectuals, revising the lessons of history and calling for a more overt renewal of US imperialism (e.g. Cooper 2002). They suggest that British colonialism was not that bad, the Vietnam war was only lost for reasons of specific tactics, weak political will and because it was not fought “more ruthlessly” (e.g. Ferguson 2004: 96-101). However the ambitions for a ‘New American Century’ are far too great.

In summary these seem to be the weaknesses of the Washington project:

9

First, US capacity is heavily constrained the long term and worsening trade deficit ($740 billion in 2008, or 5.3% of GDP), and its dependence on imported capital. With US bond rates nearly at zero, its capacity to sustain the capital imports must be in serious doubt. About one third of the US trade deficit is with China, which it sees as a major rival. Japan and China have around one trillion dollars each in US capital markets. This is a great turn-around for a country which once exported capital all around the world. It exposes the US vulnerability to shifts in the investment strategies of other economic powers.

Second, the US failure to reduce reliance on fossil fuels, or to change its patterns of consumption and forms of technology indicates an incapacity to adapt. It was aware of its vulnerability to oil imports in the 1970s, when they stood at 40%; thirty years later they are 60% and rising. The failure to deal with this entirely foreseeable problem contributed to the desperation behind the reckless middle east wars, and the biofuel initiative which - in combination with high oil prices – has helped catalyse a global food crisis. The subsidised monocultures associated with global agribusiness have compounded the environmental problems we now face. Neoliberal ‘solutions’ on food and the environment are hopeless. New privatisation schemes such as ‘carbon trading’ which neither develop new technologies nor address consumption patterns similarly offer zero real solutions. The unlikelihood of the US securing or maintaining privileged control of middle east energy reserves will further aggravate this dilemma.

Third, massive US debt and the growing financial crisis flow from a build up of low quality (‘sub prime’) loans and housing loans. Equity in family property was used to wind up credit levels, and maintain consumption. Now that bubble is bursting, slowly, and grinding down the ‘real’ economy. Hundreds of thousands in the US have lost their homes and stock prices have crashed. As bad debt is written off analysts estimate that only a fraction of the US bad debt - at least several trillion dollars - has so far been written down. This huge credit bubble was underwritten by the derivative markets which now dominate the world of finance. Global capital flows grew from $1.5 trillion in 1995 to more than $6 trillion in 2005, representing a shift from 5% to almost 15% of world GDP. Through these financial markets, the ‘emerging markets’ (largely Asia and the oil exporters) have become the major sources of capital to the USA and Europe (Goswani, Ree and Kota 2007; IMF 2008a). The USA has become by far the largest 10

capital importer in the world (IMF 2008a; see Appendix One), sucking in more than two-thirds of global savings, mainly through official reserve flows into US long term bonds. Most of this process developed over the 1990s and 2000s, extending the structural adjustment process of the 1980s, which had systematised resource flows from the poorer, developing countries, to the richest country in the world (see McKinley 2006). In current circumstances even small countries like Timor Leste see the folly in this, and are starting to diversify their financial assets.

Finally, through reckless decisions of the Bush administration, the US has engaged in a classic case of imperial ‘over-reach’, initiating two aggressive and expensive wars with very long supply lines. The substantial resistance over more than five years in both Afghanistan and Iraq means that these wars are already effectively lost. The US will not be able to control these countries and their resources, if and when the US occupation army leaves. Unfortunately for the populations subject to these occupations, the US does not know how to lose a war. The defeat is likely to drag on for years, unless some further shock to the US system catalyses a more rapid withdrawal. This is not impossible. Indeed we might recall that the collapse of the Suharto dictatorship in Indonesia was triggered by the Asian financial crisis. In the case of the US, the failing political will to pursue heavily resisted occupations would be reinforced by economic crisis at home. The US has long been self-obsessed and its ‘isolationist’ tendencies were evident even at the start of the Bush administration. Some (Stiglitz and Bilmes 2008) have suggested these wars have already cost three trillion dollars. This, in the end, may bear more heavily on US debate than the cost of one million Iraqi lives. While there has been some short term economic stimulus from war production, longer term wars are both a drain on resources and resented in face of any domestic crisis.

What about the strengths of the US system? One should never underestimate a great power, let alone one which has demonstrated its past resourcefulness, and which now appears to have its ‘back to the wall’.

These appear to be the enduring strengths of the US project:

First, while the US is now itself a net recipient of capital flows, US companies maintain a very large stock of private investment in other countries. Over half a century of 11

foreign investment, backed by the privilege of minting the world currency, will ensure a steady stream of income into the US system. While US capital inflows began to outstrip capital outflows in the early 1980s, the US stock of foreign investment is still huge and has maintained a positive ‘net income’ balance on the Balance of Payments, despite the large trade deficit (BEA 2008a: 2).

Second, the US maintains a powerful domestic consumer market: $10 trillion, most of its GDP of $14 trillion (BEA 2008b). This huge market exerts a type of commercial magnetism, with most the countries of the Americas (north, central and south) highly dependent on the US for exports. Continued Chinese investment in the US, in face of a falling dollar and low bond rates, has puzzled many. Yet Chinese production had come to rely on US consumption and their investments helped sustain consumption in China’s biggest export market. Recession in the US will hurt the Chinese economy.

Third, most countries possess a large stock of US dollar reserves. So they all share some interest in holding up the value of the US currency, and in turn the capacity of the US to ‘print money’ for itself. Nevertheless, as mentioned earlier, the chronic problems of the US dollar and the recent low bond rates have driven most countries into foreign exchange ‘diversification’.

Taken together, we could also say that the US has large number of dependent states (‘allies’) which it can use to help mobilise defensive strategies, such as opening new markets for trade or new service areas for investment. These states constitute a global community, through their investments and dollar holdings, with a substantial stake in the ‘success’ of the US economy. Many can be drawn on in defensive strategies. This advantage, however, is somewhat undermined by the growing economies of Europe and East Asian, in particular if the latter makes some breakthroughs in economic cooperation and coordination. It is also undermined by the substantial autonomy processes and south-south trade underway in much of Latin America. It says much about the character of the different processes that European integration has succeeded while the US project for a ‘Free Trade Area of the Americas’ has failed.

12

3. Hegemony: the resilience of neoliberal ideology One factor of wider relevance deserves special discussion. The grip of neoliberal ideology is deeply entrenched, in many parts of the world; the imperatives of individualism, consumerism and privatisation will not simply fall away. This is a powerful force which disempowers resistance and ensures that new strategic opportunities, including those brought about through serious crisis and restructuring, might be entirely missed. Contemporary propaganda is far more powerful than before.

The popular idea of propaganda tends to be Hitlerian or Orwellian. It is thought to be crass, overbearing and directive. Like ‘ideology’, it is sometimes assumed to be a device of the left. However, as Alex Carey wrote, long term propaganda and ideological formation by “the respectable right” has been far more powerful. Educated people are influenced more by the steady repetition and reinforcement of desired values and notions, than by being told what to think. Highly organised corporate propaganda in the US after the second world war, for example, tried to wind back the social solidarity generated at times of depression and war. Leading corporations sponsored experiments to determine the best ways to identify ‘free market’ ideas with patriotism, and the ‘New Deal’ ideas of social security with ‘un-Americanism’ (Carey 1995: 137-139). A similar indoctrination process today relentlessly asserts that invaded countries are being ‘liberated’ and that privatising public assets is in the public interest. While many educated people find such notions hard to believe, they are often intimidated enough to not speak out against them.

Historically, propagated ideas have been accultured by acts as well as arguments. The systematic repression of solidarity by, for example, banning solidarity strikes and other actions (sometimes as ‘third party’ restrictions on trade), the normalisation of anti-social privatisations and the normalisation of foreign interventions, all have a deep impact. Human beings are social creatures, psychologically influenced by their social context. Nevertheless, neoliberal movements and attacks are always accompanied by mass media campaigns, led not so much by authoritarian states as by the deeply antidemocratic ‘private tyrannies’ (to use Chomsky’s words), deceptively styling themselves as the ‘free media’. The self-interest and fundamentally anti-social nature of these private media corporations poisons rational public debate today.

13

In the past it was said that private media monopolies distorted news and public debate through their ties to - or as a by-product of - some amoral or technical business logic. This would have been undemocratic enough. However it seems that private mass media corporations today have assumed a more strategic role in ideological formation, and in more directly shaping and dominating public debate. With no popular mandate whatsoever, these tyrannies have managed to convince their own employed journalists and wider communities that they represent ‘freedom of expression’ and a foundation for democratic societies. Nothing could be further from the truth. Indeed this is the media monopolies’ first and foundational lie.

In Latin America, the media monopolies have been central to anti-democratic reaction, faced with a popular and progressive government, for example in Venezuela and Bolivia. As the voice of a tiny elite and some fellow-travellers, they have mounted unremitting attacks against popular governments, including overt support for military coups (e.g. Lemoine 2002). They have been backed by their investment group brethren in the metropolis. US private newspapers, for example, overwhelmingly presented the April 2002 military coup in Venezuela against a popularly elected President as a “prodemocracy” move (FAIR 2002).

The media corporations have sold the lies of war and privatisation, to promote the unthinkable. The invasion if Iraq, for example, had the support of only a tiny fraction of peoples outside the US (Chomsky 2004: 4); yet it was supported by most of the corporate media chains. Those that did not support it soon moved in behind the occupation. So much for the human rights ban on propaganda for war (OHCHR 1966: Article 20). Populations are ‘softened up’ on the massively unpopular issues of war and privatisation yet, when they maintain an expressed opposition, their views are disregarded. This, of course, is enormously disempowering and creates despondency.

Let me give sone examples of ideological domination from an eminently undemocratic corporate media in my own country. I do this to illustrate hegemonic power, and a central challenge for any counter-hegemonic movement. The first concerns use of Australia’s oldest university to help reshape popular views on the imperial power.

14

A opinion poll in 2005, after the invasions and occupations of Iraq and Afghanistan, found that 68% of Australians believed Australia takes “too much notice of the views of the United States in our foreign policy”; 57% said they were worried about US foreign policies (Cook 2005: 1). Two years later another poll reinforced this message: they had “an unfavourable opinion of the United States” because of George W. Bush (69%) and because of US foreign policies (63%) (Gyngell 2007: 13).

The Australian born, but US resident, media magnate Rupert Murdoch reacted swiftly to the first poll. Murdoch had been a strong supporter of George W. Bush and Tony Blair, and had backed the Iraq invasion with all the forces of his global media empire. In Australia his News Limited company controls 68% of the capital city and national newspapers, 77% of the Sunday newspapers, 62% of the suburban newspapers and has substantial shares in the AAP news agency, Foxtel pay television and News Interactive Online (Jackson 2006).

These channels broadcast his command: “Australians must resist and reflect the facile, reflexive, unthinking anti-Americanism that has gripped much of Europe .. Australian sentiment is thankfully nowhere near Europe’s level of hostility – but it could get there. And it mustn’t.” At a dinner which included James Packer, Chief Executive of the other major media chain in the country, Murdoch was honoured for contributing $20 million dollars to a ‘US Studies Centre’ at the University of Sydney (US Studies Centre 2008). Murdoch said the Centre would “raise awareness, dispel myths, groom new leaders”. (Fife-Yeomans 2006).

The then Prime Minister, John Howard, matched Murdoch with another $25 million, while the American Australian Association (a business lobby), which was given control of the project, appointed representatives from both Australia’s major political parties to the Centre’s board. One of these board members, former Liberal Party MP Michael Baume, said that if the Centre succumbed to the anti-American prejudice endemic in Australian universities, the AAA would ‘pull’ the funding (Lane 2007). In this way Australia’s oldest university, once famous for independent thought, was rapidly purchased for the imperial cause, with cooperation from many academics and only a small protest from the student body (e.g. USSCW 2008).

15

A similar process of ideological formation has been at work with the privatisations of basic services, such as telecommunications and electricity. These were and are, of course, highly productive industries which have been considered a great prize for the same investment groups that dominate the corporate media.

Australian corporate media campaigns against the public telecommunications monopoly Telecom (now Telstra) began in the 1980s, to generate resentment against what was said to be a lazy and unresponsive giant monopoly. ‘Competition’ was demanded, and this eventually led to the controlled introduction of one private Telco (Optus) in 1991. More investment groups wanted a share of this prize and eventually demands were pressed for full privatisation of Telstra. However public opinion lagged well behind this project. According to a series of public opinion polls, the high point of public support for Telstra privatisation was 48%, in 1985. This fell to 37% and 31% in the late 1980s, then 29% and as low as 7% in the mid 1990s, by which time private corporations had joined the market (Goot 1999: 217). The argument moved to ‘partial privatisation’, supposedly to fund environmental projects. Nevertheless, the demand for full privatisation re-emerged and was yet again rejected by public opinion. Seventy percent of Australians opposed the sale of Telstra, according to one poll (McGrath 2005). None of this deterred Sydney’s major daily paper, the Sydney Morning Herald (the ‘competition’ to Murdoch’s network) from assuming the voice of the nation: “The case for completing the process of privatisation is as strong as ever … Telstra's privatisation would deliver a stronger, stand-alone Telco … the full privatisation of Telstra is undoubtedly in the national interest” (SMH 2004).

Eventually the investment groups got their way, fully absorbing this highly productive ‘cash cow’ and strategic public asset.

In my own state of New South Wales (NSW) the same process was underway, with electricity services. The parliamentary leadership of a Labor state government, against the strong and explicit wishes of its own party, proceeded with a plan to fully privatise the states entire power industry (just as had happened in California, with the notorious Enron, in the 1990s). They claimed the state was poor and needed these several billions of dollars in sale funds to maintain basic government operations. The conservative opposition, however, in combination with the Greens and some dissident Labor MPs, blocked the privatisation bill. This was, of course, not because the conservatives

16

opposed privatisation, but because not being on the ‘Treasury benches’, they would not be the beneficiaries. Public opinion, meanwhile, was strongly against this privatisation. Eighty-five percent of NSW citizens opposed the privatisation while 96% feared the move “would drive up the cost of electricity” (West and Robins 2007).

Shortly after the failure of this bill, the NSW Premier, the Treasurer and two other senior ministers were forced to resign, following recriminations within the ruling Labor Party. A new state government was formed, from amongst the Labor MPs. Yet celebrations from the public campaign against the privatisation were muted, in the knowledge that the leadership of both major parties, and the corporate media, still had privatisation in their sights. After the failure of the Bill in parliament the Sydney Morning Herald attacked the conservative opposition for blocking Labor’s bill, showing the conservative MPs’ faces and headlining ‘The Conservatives who said: NSW is Closed for Business’ (Ralston 2008). Not a word of the corrupt mess of the Enron years in California, just a naked grab for a valuable social asset.

The corporate media, in other words, holds the ‘whip hand’ over the heads of formal democracy in Australia, and they wield that whip with utter contempt for public opinion.

One of the great contradictions of the current era is that we have the most highly educated populations in human history, yet in most countries we are beset with mass confusion, where educated populations are asked to accept that privatisation equals social benefit, and bloody war equals democracy and human rights. Confronting this undemocratic and anti-social corporate media, and holding it accountable, must be a major challenge for any counter-hegemonic movement, in this great time of turmoil and imperial transition.

4. Counter-hegemony I would like to conclude this paper by suggesting some considerations for counterhegemonic strategy, in face of the meta-crisis, likely imperial eclipse, economic restructuring and other challenges that we face. These could be discussed in three

17

groups: building human security, constructing practical alternatives, and democratising the mass media.

In the first place, global resistance to imperial domination must have a base, a position of human security from which communities can survive to maintain the just claims of self-determination, dignity and human cooperation.

This must means rejection of the global chain of imperial military bases which, in pursuit of the great power’s quest for ‘national security’, invariably compromises the human security of other peoples. As Walden Bello says, we must forget shallow appeals to ‘American’ idealism and stress the costs of intervention, to help force a new isolationist Washington regime (Bello 2008). These bases cover Oceania, Latin America, Western and Eastern Europe, Africa and Asia. Everywhere they undermine human security and ensnare populations in their power plays. They must be popularly rejected and expelled. Survival is a precondition of being able to move forward.

Programs of food security must be developed to avoid further food crises and to mitigate the current environmental crises. This means building strong measures of domestic agricultural self-reliance; that is, support for regions growing most of their own food, for small farmers to remain on their land, and for domestic agricultural markets to be accorded priority over agricultural exports. The big grain exporters (including my own country) will protest but, in practice, most countries - big or small, and with the capacity and political will to do so - already practice this at home.

Further, support for the preservation of existing community assets and mutual support systems, such as traditional and indigenous lands, cooperatives and the full range of shared institutions, built over time. It is always more difficult to recreate shared institutions if they are crushed by a ruthless neoliberalism that, unchecked, would privatise every square inch of this planet. Such assets are not anachronisms of a previous era but rather essential means of survival, and of renewal of the human conscience, in an era of individualism.

Second, the construction of practical alternatives to imperial dependence and neoliberal dollar-isation serve both a concrete and an educational purpose. Initiatives in human 18

security, food security and in building new shared institutions and alternatives to the neoliberal world educate the participants and observers that ‘another world is possible’ and that it may also be desirable. In this respect the Cuban example, most notably of its health care system and its magnificent health cooperation programs, stands out (see MEDICC 2008). Thanks to the Cubans, most of Latin America, much of Africa - and now also many parts of Asia and Oceania – are well aware that the best and most effective health systems are public, free and prioritise human solidarity. The Cuban example has silently and effectively destroyed the arguments for privatised and commercialised health systems.

Such alternatives can be built on every continent; indeed, each continent will have its own lessons to offer. Samir Amin noted that Europe “must be freed from the liberal virus; nevertheless this initiative cannot be taken by segments of dominant capital, but by the people”; and that powerful south-south relations also require strong participatory initiatives and people to people relations (Amin 2004).

At an international level, we can draw attention to the distinct character of emerging regional trade agreements, with the collapse of the ‘North American’ model at the WTO. The European, South-East and East Asian and Latin-American models already have a number of distinct features. They have begun to stress cultural protection, greater agricultural autonomy, targeting of particular areas for tariff reductions; and to different extents they have downplayed the strong intellectual property and investment rights that characterised the North American model.

Nevertheless such education and advocacy is crippled if we do not address the fundamentally anti-democratic and anti-social ‘private tyrannies’ than dominate public debate, masquerading as the defenders of freedom.

We must democratise the mass media, not simply by building alternatives, though these are essential. We must nourish those channels of communication and information that are not controlled by the giant companies; that is, the internet networks, community radio stations, those sections of the public media that maintain levels of participation and plurality, and do not repeat the glib official pronouncements on the inevitability of unending war and privatisation. In this respect the creation of Telesur in Latin America 19

was a great breakthrough (Telesur 2008). It was a great exercise in cooperation amongst nations and its quality was immediately apparent. Welcome also is Cuba’s proposal for a joint non-aligned nations news agency and TV network (Minrex 2008).

However it is not enough to stand back from the small group of pirates who have kidnapped public debate. I suggest we must build the demand for democratising these private tyrannies; to demand an end to the regime of unaccountable and privileged, private mass media. Why should not they also be subject to the democracy they pretend to support elsewhere? The corporate media has neither independence nor useful watchdog functions. In Venezuela, these great watchdogs all went to sleep, during the 2002 coup! They blacked out news of Hugo Chavez, both when he was kidnapped and when he was returned to Miraflores (Lemoine 2002). Amongst these was RCTV, which some years later had its broadcast license cancelled, to great cries of ‘denial of press freedom’ (Jordan 2007). It was no such thing.

I say that what happened to RCTV should happen to all the corporate media; but in a different way. If we have social requirements that organisations like political parties, NGOs and trade unions must be participatory, with democratic structures, why do we not demand and legislate the same for the organs of mass media? In what way are they exempt from democratic society? The main reason for this inaction is that political elites are either in league with, or in fear of, those same media magnates. However, given the political will, a demand to democratise the mass media could galvanise public imagination. Democratic forms of organisation could include community media, organs of local councils and participatory structures in state owned and corporate media – but it could not include the directorial regimes of private companies. No rich man should be allowed to dictate the nature of our precious social debate. The private media companies would have to change or be changed.

I have argued in this paper that we are in an extended meta-crisis, which will involve substantial economic restructuring as well as the eclipse of the imperial power. There are multiple economic challenges for the US economy, which will affect much of the rest of the world. This restructuring will provide opportunities for reclaiming autonomous space, as in the initial post-colonial era. The US currency is the weak link, in the current chain of economic events, but the great power still holds important 20

economic and ideological resources. Chief amongst these is the maintenance of disempowering neoliberal ideology, exercised mostly through the network of corporate media monopolies. For effective public debate we must raise the call to democratise these self-appointed guardians of our ‘freedom’. It will be hard to advance without this.

Bibliography Amin, Samir (2004) ‘The Conditions for an Alternative Global System Based on Social and International Justice’, Document for WSF Mumbai, online: netx.u-paris10.fr/actuelmarx/m4aminm.rtf Baran, Paul A. (1957) The Political Economy of Growth, Monthly Review Press, New York BEA (2005) U.S. International Transactions Accounts Data, online: http://www.bea.gov/bea/international/bp_web/simple.cfm?anon=71&table_id=1&area_id=3 BEA (2008a) ‘US International Transactions: second quarter 2008’, Bureau of Economic Analysis, US Department of Commerce, September 17 BEA (2008b) National Income and Product Accounts Table, Table 1.1.5. Gross Domestic Product, Bureau of Economic Analysis, US Department of Commerce, September 20, online: http://www.bea.gov/index.htm Bello, Walden (2005) Dilemmas of Domination, Metropolitan Books, New York Bello, Walden (2008) ‘The World Needs an Isolationist America’, Sept 9, online: http://www.huffingtonpost.com/walden-bello/the-world-needs-an-isolat_b_124427.html Boone, Peter D. (1995) ‘Politics and the Effectiveness of Foreign Aid’, October, NBER Working Paper Series, Vol. w5308, National Bureau of Economic Research, Massachusetts Burnside, Craig & Dollar, David, 1998. "Aid, the incentive regime, and poverty reduction," Policy Research Working Paper Series 1937, The World Bank Carey, Alex (1995) Taking the Risk out of Democracy: Propaganda in the US and Australia, UNSW Press, Sydney Cheru, Fantu (1999) ‘Effects of Structural Adjustment Policies on the Full Enjoyment of Human Rights, Economic and Social Council’, Report for the United Nations, 55th session of the Commission on Human Rights, E/CN.4/1999/50 (24th February 1999) Chomsky, Noam (2004) Hegemony or Survival: the American Empire Project, Metropolitan Books, New York Cook, Ivan (2005) Australians Speak 2005: Public opinion and foreign policy, Lowy Institute, Sydney, online: http://www.lowyinstitute.com/Publication.asp?pid=236 Cooper, Robert (2002) ‘The new liberal imperialism’, Observer, April 7, online: http://www.guardian.co.uk/world/2002/apr/07/1 Easterly, William; Ross Levine and David Roodman (2003) ‘New Data, New Doubts: A Comment on Burnside and Dollar's 'Aid, Policies, and Growth'’, NBER Working Paper No. W9846, July, National Bureau of Economic Research, Massachusetts

21

Easterly, William (2006) The White Man’s Burden, The Penguin Press, New York FAIR (2002) ‘U.S. Papers Hail Venezuelan Coup as Pro-Democracy Move’, Fairness and Accuracy in reporting, 18 April, online: http://www.fair.org/index.php?page=1867 Ferguson, Niall (2004) Colossus: the Rise and Fall of the American Empire, Penguin, London Fife-Yeomans, Janet (2006) ‘Rupert Murdoch speaks out’, Herald-Sun, November 15, online: http://www.news.com.au/heraldsun/story/0,21985,20758193-661,00.html GAO (2001) ‘International Monetary Fund: Few Changes Evident in Design of New Lending Program for Poor Countries’, May, United States General Accounting Office, Washington Goot, Murray (1999) ‘Public Opinion, Privatisation and the Electoral Politics of Telstra’, Australian Journal of Politics and History, Vol 45 No 2, pp.214-238 Goswani, Mangal, Jack Ree and Ina Kota (2007) ‘Global Capital Flows: Defying Gravity’, Finance and Development, Vol 44 No 1, March 2007, International Monetary Fund Gouverneur, Jacques (1983) Contemporary Capitalism and Marxist Economics, Martin Robertson, Oxford Gyngell, Allan (2007) ‘Australia and the world: public opinion and foreign policy’, Lowy Institute, Sydney, online: http://www.lowyinstitute.org/Publication.asp?pid=660 Hernandez (2008) ‘US Debt may grow $1 Trillion on Rescue, Barclay’s Pond Says’, Bloomberg, Sept 19, online: http://www.bloomberg.com/apps/news?pid=20601087&sid=a.kAXACVdHTI&refer=home IMF (2008a) ‘Global Financial Stability Report: Containing Systemic Risks and Restoring Financial Soundness’, International Monetary Fund, April, Table1, Global Capital Flows: Inflows and Outflows, online: http://www.imf.org/external/pubs/ft/gfsr/2008/01/index.htm#c1figure IMF (2008b) ‘Times Series Data on International Reserves and Foreign Currency Liquidity: Official Reserve Assets’, International Monetary Fund, online: http://www.imf.org/external/np/sta/ir/8802.pdf Jackson, Kim (2006) ‘Media Ownership Regulation in Australia, Analysis and Policy, Social Policy Group, Parliament of Australia, Parliamentary Library, 30 May, online: http://www.aph.gov.au/library/INTGUIDE/SP/media_regulations.htm Jordan, James (2007) ‘Venezuela, RCTV, And Media Freedom: Just The Facts, Please’, Venezuela Analysis, May 29, online: http://www.venezuelanalysis.com/analysis/2416 Kristol, William and others (2008) ‘Project for the New American Century’, Washington, online: http://www.newamericancentury.org/aboutpnac.htm Lane, Bernard (2007) ‘Beazley signs on to US studies centre’, The Australian (Higher Education), August 23, online: http://www.theaustralian.news.com.au/story/0,25197,22295870-12332,00.html Lemoine, Maurice (2002) ‘How hate media incited the coup against the President’, Le Monde Diplomatique, online: http://mondediplo.com/2002/08/10venezuela Masud, Nadia and Boriana Yontcheva (2005) ‘Does Foreign Aid Reduce Poverty? Empirical Evidence from Nongovernmental and Bilateral Aid’, McGrath, Catherine (2005) ‘Telstra privatisation causes friction in the Coalition’, 16 August, ABC Radio, online: http://www.abc.net.au/worldtoday/content/2005/s1438753.htm McKinley, Terry (2006) ‘The Monopoly of Global Capital Flows: who needs Structural Adjustment now?’, Working Paper 12, United Nations Development Programme, International Poverty Centre, Brazilia

22

MEDICC (2008) ‘Medical Education Cooperation with Cuba’, online: http://www.medicc.org/ns/ Minrex (2008) ‘Cuba Says NAM Should Have a Joint News Agency’, Ministerio de Relaciones Exteriores, Havana, June 26, http://america.cubaminrex.cu/English/NoAlineados/Noal.htm#41 Mishra, Prachi and David Newhouse (2007) ‘Health Aid and Infant Mortality’, IMF Working Paper WP/07/100, April, International Monetary Fund Moberg, David (2000) ‘Silencing Joseph Stiglitz’, Salon, May 2, online: http://archive.salon.com/news/feature/2000/05/02/stiglitz/print.html O'Connor, James (1984) Accumulation Crisis, Basil Blackwell, New York OHCHR (1966) International Covenant on Civil and Political Rights, Office of the High Commissioner for Human Rights, online: http://www.unhchr.ch/html/menu3/b/a_ccpr.htm OMB (2008) Mid-session review: Budget of the U.S. Government: Fiscal year 2009, Office of Management and Budget, http://www.whitehouse.gov/omb/budget/fy2009/pdf/09msr.pdf Paulson, Henry and Jim Nussle (2007) ‘Joint Statement of Henry M. Paulson, Jr., Secretary of the Treasury, and Jim Nussle, Director of the Office of Management and Budget, on Budget Results for Fiscal Year 2007’, US Treasury, http://www.treas.gov/press/releases/hp603.htm Ralston, Nick (2008) ‘The conservatives who said: NSW is closed for business ... but Iemma will start sale without them’, Sydney Morning Herald, August 29, online: http://www.smh.com.au/news/national/theconservativeswho-said-nsw-is-closed-for-business--but-iemmawill-start-sale-withoutthem/2008/08/28/1219516662678.html SMH (2004) ‘Reality check for Telstra sale’, Editorial, Sydney Morning Herald, December 15, online: http://www.smh.com.au/news/Editorial/Reality-check-for-Telstra-sale/2004/12/14/1102787077900.html Solomon, Deborah and Damian Paletta (2008) ‘US Drafts Sweeping Plan to Fight Crisis’, Wall Street Journal, September 19 Stiglitz, Joseph and Linda Bilmes (2008) The Three Trillion Dollar War, Allen Lane, London Telesur (2008) online: http://www.telesurtv.net/ UNCTAD (2007) World Investment Report, online: http://www.unctad.org/en/docs/wir2007p1_en.pdf UNCTAD (2008) ‘Key Data from WIR Annex Tables: Inward FDI stock’, online: http://www.unctad.org/Templates/Page.asp?intItemID=3277&lang=1 US Studies Centre (2008) University of Sydney, online: http://sydney.edu.au/us-studies/ USSCW (2008) US Studies Centre Watch, online: http://www.ussc.org.au/index.php?title=Main_Page West, Andrew and Brian Robins (2007) ‘Majority oppose power sell-off’, Sydney Morning Herald, December 19, online: http://www.smh.com.au/news/national/majority-oppose-powerselloff/2007/12/18/1197740273381.html

.

23

Appendix One: US Trade Balance as % US GDP, 1960-2004

2

U.S. trade balance as % GDP, 1960-2004 1

-1

-2

-3

-4

-5

-6

Source: BEA 2005

Appendix Two: Global Capital flows, 1996-2006 (US$ billion) 1996 2001 USA 138 400 Japan -56 -90 United Kingdom -3 13 Euro area Na -24 Emerging markets and Developing Countries 116 -43 Source: IMF 2008a: Table 1

24

2006 805 -136 36 137 -717

20 04

20 02

20 00

19 98

19 96

19 94

19 92

19 90

19 88

19 86

19 84

19 82

19 80

19 78

19 76

19 74

19 72

19 70

19 68

19 66

19 64

19 62

19 60

0

Appendix Three: US Government spending 2007-2008 Fiscal 2007 Fiscal 2008 (est) US$bn % Govt US$bn % Govt receipts receipts TOTAL 2,568 100 2,521 (est) 100 SURPLUS / DEFICIT -163 6.3 209 / 650 * 8.3 / 25.8 * Defence 530 20.6 583 23.1 Treasury (debt service) 491 (430) 19.1 (16.7) 520 20.6 Health and Human Services 672 26.2 709 28.1 Social Security 622 24.2 657 26.1 Administration Education 66 2.6 68 2.7 Agriculture 84 3.3 95 3.8 Homeland security 39 1.5 42 1.7 Transport 62 2.4 69 2.7 Veterans affairs 73 2.8 87 3.5 Sources: Paulson and Nussle 2007; and OMB 2008: 36; * a projected large budget deficit of 8.3% receipts is being revised to a massive 25%+, after the late 2008 financial bailouts; see Hernandez 2008

25