Dr Molly Scott Cato

See the little hegemon
He doesn't give a damn
I wish I were a hegemon
My God! Perhaps I am

The most frequently heard question about Labour’s foreign policy is why. Why does Tony Blair follow so slavishly the imperialist adventures of a corporate-controlled hick? Why does he risk our European friendships for the sake of a few warm handshakes on global TV? These questions are often asked rhetorically, but they have an answer. That answer is the need to safeguard global finance capitalism.

I found out all about the need to defend global capitalism by permanent war at a conference in Germany where I met Ramón Fernández Durán, a radical Spanish economist and member of the environmental action group Ecologistas en Acción. He presented a highly complex and wide-ranging explanation of the inevitable link between our economic system and our history of permanent war. Put simply, the capitalist system relies on violence to keep it in place.
His thesis originates our present economic system with the Spanish and Portuguese invasion and domination of the Americas. The Iberian peninsula became the first global hegemon, a single power which is able to dominate all others because of its superior wealth and military might. Its power was based on the gold discovered in South America, which paid for the men and material. By the middle of the 17th century the power moved to Holland, which had invented an innovative method of banking that enabled it to expand its trade without access to gold. Its domination was in turn broken by that of France and Britain, which struggled for the right to dominate the economic and political world in the early 19th century. Britain won, and created a global empire in which military and economic interests were inextricable. This role was finally ceded to the USA following the Second World War.

This short paragraph is a summary of a centuries-long struggle for economic power and it conceals beneath its bland surface bloody tales of the warfare that is the most distinctive feature of the history of the western world. Because the hegemonic power does not give up that role willingly. Each transition is marked first by widespread civilian unrest, a reaction to the unfair settlement that the capitalist system requires and that the military might of the dominating power keeps in place. This unrest is followed by full-scale war, as the hegemon struggles to maintain its status. The transition from Spanish to Dutch rule was marked by the Thirty Years’ War. That from Holland to Britain by the Napoleonic wars, as Britain and France fought to be the superpower. And the world wars of the 20th century can be interpreted as the death throes of the British Empire, which fell apart as the USA became dominant at the end of WWII.

At the beginning of the 21st century there can be little doubt about which country is the hegemon: the USA is widely considered the world’s only superpower. Its central role is to defend the interests of capital, especially finance capital, in return for which it is allowed to operate above international law and its people enjoy a higher standard of living than those of other countries. In an era of 24-hour media the role of defending capital must be especially active, since market traders respond to every hint that its position is weakened.

The figure shows the value of the dollar against the euro and how it is affected by international events, and even foreign policy speeches. For finance capitalism the most dangerous aspect of the September 11 attacks was the real threat they posed to the teetering global finance system. A serious attack had been launched that had exposed the weakness of the hegemon. It was because of the devastating potential consequences of this for confidence that Wall Street was closed for a week following the attacks. During this time European financial planners moved to support the dollar, while its bank, the ECB, and the Fed. Both reduced interest rates.

This action and the refusal to allow free trading during this period prevented a catastrophe, but the dollar continued to fall, while investors withdrew their assets from the dollar to place them in the safest locations: the Swiss franc and gold. The slide stopped abruptly on 7 October, the day the USA launched its attack on Afghanistan. As the hegemon proved its military strength and demonstrated its ability to defend the global financial system the jitters were ended. Here was a perfect demonstration of the need for war to protect global capital. But the corruption within US corporations caused another slide, which was only reversed by the war in Iraq. Most critics of globalisation recognise the importance of confidence to a financial system that is massively over-indebted; few appreciate that what impresses the markets the most is the flexing of superpower muscles. It is this, not weapons of mass destruction, that guarantees that the war in Iraq is only one on a list of global show-wars.

Under the current arrangement capitalism is organised by corporations that extract value, especially from the countries of the South. The inequality and poverty this causes is leading to exactly the sort of civil unrest that precedes the transition to a new hegemon. But is Europe realistically challenging the USA for that role? The creation of the euro is certainly a step in this direction, and one that has, in the limited terms of this debate, had some success as countries in the Middle East begin selling their oil in euros and Russia and China organise their mutual trade outside the dollar bloc. The development of a European army and calls for increased defence spending in Europe are also significant. And who could not be chilled by the content of Tony Blair’s speech in Warsaw in 2000 when he said ‘Europe today is no longer just about peace. It is about projecting collective power’? During the ‘Iraq crisis’ advisers offered Blair a stark choice: stand by the USA in defence of global capital, or watch the collapse of the financial system.

Our history is a bleak and depressing one. The war in Iraq is really only the logical consequence of an economic system we have lived with, against our interests and those of the planet, for some 500 years. There used to be a peace slogan ‘War is declared; Nobody turns up’. Better still, we can avoid the need for the wars by refusing to involve ourselves in the economic system that generates them. Refusing to work for a global corporation, building up your local economy, and withdrawing any money you may have from the global financial system is just as important as anti-war marches and campaigns.