Why the Emperor Can't Afford New Clothes: International Change and Fiscal Disorder in the United States

In: Monthly review: an independent socialist magazine, Band 43, Heft 3, S. 74-94

Abstract

Post-WWII US hegemony, an important factor in the rapid growth of international & US economies, combined with a decline in military spending, enabled expansion of US government spending on domestic programs. The decline of US hegemony in the 1970s resulted in economic stagnation & led to increased demand for public services & opposition to tax increases. Attempts to reassert US power abroad through military means in the 1980s represented a response to economic weakness. However, since domestic programs were maintained & military spending expanded, budgetary deficits grew rapidly. While business & the Reagan & Bush administrations tried to reestablish a world order to facilitate a new era of economic expansion, others advocated a policy of cooperation with Western Europe & Japan, known as trilateralism. It is argued that military strength does not mean that economic policies can be imposed on other capitalist nations or world financial markets. Neither will it eliminate the trade deficit, diminish US reliance on foreign capital, or enhance the competitive position of US multinational firms. 1 Figure. V. Wagener