The Self Destruction Of The American Empire

Michael Hudson’s latest piece, America has Just Destroyed a Great Empire, makes a number of interesting points. Unfortunately it suffers for having been written in Hudson’s trademark opaque style—he simply has issues with the English language. Still, it’s worth taking the time to work through it. For my part, I will—when necessary—edit the passages that I quote, for readability and clarity.

The basic framework of the article is the parallel Hudson draws between the ancient King Croesus of Lydia’s (c. 585-546 BC) hubristic ambition to conquer the Persian Empire and the Neocon led American Empire’s “hubristic drive for unipolar world dominance.” That hubristic drive on the part of the American Empire can only be brought about by subjugating both Russia and China. This is the key to US foreign policy from the end of the Cold War to the present. Hudson provides a brief summary as it applies to the current conflict in Ukraine:

Having organized a coup d’état in Ukraine in 2014, the United States sent its NATO proxy army eastward, giving weapons to Ukraine to fight an ethnic war against its Russian-speaking population and turn Russia’s Crimean naval base into a NATO fortress. This Croesus-level ambition aimed at drawing Russia into combat and depleting its ability to defend itself, wrecking its economy in the process, and destroying its ability to provide military support to China—and any other countries that had made themselves targets by seeking an alternative to U.S. hegemony.

… The United States and its NATO allies immediately seized Russia’s foreign-exchange reserves held in Europe and North America, and demanded that all countries impose sanctions against importing Russian energy and grain, hoping that this would crash the ruble’s exchange rate. The Delphic State Department expected that this would cause Russian consumers to revolt and overthrow Vladimir Putin’s government, enabling U.S. maneuvering to install a client oligarchy like the one it had nurtured in the 1990s under President Yeltsin.

We know how that worked out.

On the other hand, the American war on Russia has had the effect of enforcing European dependence on the United States. This was accomplished by such bare knuckle tactics as the terrorist sabotage of the Nordstream pipeline, forcing Germany—the engine of the EU economy—into dependence on expensive US LNG to replace cheap Russian pipeline gas.

How long this strategy will work remains to be seen. As financial and economic instability in Europe increases, so too does social unrest. The strategy rested on the assumption that sanctions “shock and awe” would quickly bring Russia to its knees, and the ensuing regime change would restore access to Russian natural resources—on terms dictated by the collective West. Another leg to this strategy assumed that the Russian military would attempt a suicidal frontal offensive against the strongly entrenched, NATO supported, Ukrainian forces. The resulting destruction of NATO military materiel would be a small expense compared to the wealth effect flowing from the subjugation of Russia. The US would profit by requiring the NATO countries to replace their lost weapons by purchases from the US. This scheme, too, is backfiring, as the slumping European economies are in no position to purchase expensive US weaponry, and Russia’s military industrial complex pumps out vast amounts of advanced weaponry to replace any losses.

Thus, Neocon strategery is more likely to bring about the destruction of the American Empire than its expansion. American vassal states are in a downward economic trend—increasing unrest with US hegemony over Europe—and the rest of the world is aligning with the Russian and Chinese led BRICS movement as an alternative to US dominance:

Without German exports supporting the euro’s exchange rate, the currency will come under pressure against the dollar as Europe buys LNG and NATO replenishes its depleted weaponry stocks by buying new arms from America. A lower exchange rate will squeeze the purchasing power of European labor, while lowering social spending to pay for rearmament and provide gas subsidies is plunging the continent into a depression. 

A nationalist reaction against U.S. dominance is rising throughout European politics, and instead of America locking in its control over European policy, the United States may end up losing – not only in Europe but most crucially throughout the Global South. Instead of turning Russia’s “ruble to rubble” as President Biden promised, Russia’s balance of trade has soared and its gold supply has increased. So have the gold holdings of other countries whose governments are now aiming to de-dollarize their economies.

The somewhat ironic result of Neocon strategizing appears to be that the US has forced the rest of the world to look for alternatives to US hegemony on an expedited basis. Even Russia and China had not expected to be in this position so soon. They were content to hope for a more gradual transition. But what they, and many non-EU countries, have discovered is that this project of freeing themselves from American dominance is workable even in the shorter run. The American Empire is accomplishing the exact opposite of what it had hoped:

... America’s hubristic drive for unipolar world dominance could only have been dismantled so rapidly from within. The Biden-Blinken-Nuland administration has done what neither Vladimir Putin nor Chinese President Xi could have hoped to achieve in so short a period. Neither was prepared to throw down the gauntlet and create an alternative to the U.S.-centered world order. …

US sanctions had the effect of creating a critical mass of global demand for an alternative to US dominance. That critical mass had not heretofore coalesced into an effective movement.

… U.S. confiscation of Russia’s official dollar reserves in NATO countries … dispelled the thought of the dollar as a safe vehicle in which to hold international savings. The Bank of England’s earlier seizure of Venezuela’s gold reserves kept in London – promising to donate them to whatever unelected opponents of its socialist regime U.S. diplomats designate – shows how sterling and the euro as well as the dollar have been weaponized. …

American diplomats avoid thinking about this scenario. They rely on the one unique advantage the United States has to offer: refraining from bombing non-compliant countries, or from staging a color revolution to … install a new “Yeltsin” to give the economy away to a client oligarchy. 

But refraining from such behavior is all that America can offer. …

In a sense you could say that Neocon hubris has had the effect of calling the American Empire’s bluff. What I mean is this. In the past the American Empire was able to pursue a selective policy of intimidation against weaker nations, thereby scaring most countries into compliance. By biting off more than it could chew with its war on Russia—by fulling occupying itself in this crazy war—the American Empire has lost the ability to pursue that divide and conquer strategy. The Neocons grossly underestimated and misunderstood the strengths that Russia possesses, both militarily and economically, and now the American Empire has lost leverage over the rest of the world because it has its hands full.

Now, at this point Hudson moves on to his favorite subject. Hudson is a Marxist economist and he likes to contrast the parasitic neo-liberal economic model with a socially oriented model. As a critique he has some strong points to make, but as a solution I’m not at all sure I’d buy it. Here’s his basic idea.

Hudson begins this concluding section by noting that the critical mass of global opinion in favor of an alternative to American hegemony—brought about by the US’ abuse of dollar hegemony through sanctions and outright confiscation—has led to a “change in consciousness.” Much of the world is now coalescing around the project of not only “creating alternatives to the use of dollars, but of creating an entire new set of institutional alternatives to the IMF and World Bank, the SWIFT bank clearing system, the International Criminal Court, etc.”

From there, Hudson paints with a broad brush:

The upshot will be civilizational in scope. We are seeing not the End of History but a fresh alternative to U.S.-centered neoliberal finance capitalism and its junk economics of privatization and class war against labor. The idea that money and credit should be privatized in the hands of a narrow financial class instead of being a public utility to finance economic needs and rising living standards is finally facing its reckoning.

The irony is that, while America has been unable to lead the world forward along these lines, America’s attempts to lock the world into an antithetical imperial system by conquering Russia on the plains of Ukraine and trying to isolate China technologically (from breaking the U.S. attempt at IT monopoly) have been the great catalysts pushing the global majority away from them.

The criticism of “neoliberal finance capitalism” seems fair enough. The US political economy has devolved, beginning at least as far back as the Reagan years, into a narrow oligarchical financial class running the country for its own benefit, crushing the nation’s industrial base and its middle class in the process. America has been hollowed out economically and culturally.

On the other hand, the idea that “money and credit” should be treated as “a public utility to finance economic needs and rising living standards” leaves me skeptical. My very strong impression is that everywhere that project has been attempted it has led to pretty much the same result that we find under neoliberal finance capitalism—at least as a bottom line. We find in each system the rise of a privileged, oligarchical “new class” that runs the country for its own benefit, while crushing the middle class to maintain social control. There are a near infinity of possible permutations, but the basic outline seems very similar under both systems.

Nor is this entirely surprising. Both liberalism (classical or neo) and socialism have their philosophical origins as responses to the skepticism of late medieval nominalism. We can identify those basic responses variously—Anglo liberalism v. the German ideology, “capitalism” v. “socialism”, etc., and various combinations of the two tendencies. But it seems to me that the mistake that has been made is the failure to examine the underlying philosophical assumptions about human nature that form the basis of modern political - economic thought. My contention is that the deformations of political economies arise from those philosophical assumptions. The only way out of the seemingly insoluble difficulties we find ourselves in is to challenge those assumptions, with a return to the foundational philosophy of Western civilization.