us international economic policy since the beginning of the seventies can only be explained as a reaction to the relative decline of the American economy vis-à-vis Western Europe and Japan. There is already an ample literature on the decline in us economic power, footnote1 which is evidenced by the fact that in the fifties and sixties the other major capitalist countries, excluding Britain, reached a higher rate of growth of gnp, exports and manufacturing productivity. The share of gross investment in national product was also significantly larger in the rest of the oecd countries. As a consequence,us national income fell from 36 per cent of the world total (including the socialist countries) in 1955 to 30 per cent in 1971, while the us share of the manufactured exports of six leading industrial countries contracted from 25 per cent in 1955 to 18.5 per cent in 1970. Fifteen years ago the us economy seemed geared to a sharp loss of predominance, much sharper indeed than that suffered in the past by Britain or the Low Countries. Up to a point, the United States has managed to retard the decline, and the purpose of this article will be to show the ways in which different strategies adopted by successive us administrations have achieved this without substantially altering the factors at work. However, it will be argued that policies pursued during the first Reagan administration have actually aggravated the country’s economic plight, making more painful an adjustment to the new reality.

In general, theorists who have studied the American decline follow a historical materialist approach, footnote2 and have mainly been concerned with identifying such fundamental tendencies of capitalism as the law of uneven development or the growing internationalization of productive activity. Only in a few instances has attention been paid to governmental responses or to the consequences that ensue for the future pattern and outcome of the crisis. footnote3 Such concrete analysis, however, may not only shed light on the likely course of events but also suggest supranational strategies to minimize the impact of the crisis on living conditions and to transfer class conflict to an international level.

Orthodox economists deny the possibility of, or have no interest in, formulating rational strategies to meet the crisis, and are convinced that the behaviour of the us authorities has always involved a mere reaction to market pressures. footnote4 It is my conviction that it is possible to reconstruct the successive international economic strategies followed by the United States over the past fifteen years. I shall compare those of three Administrations—Nixon’s, Carter’s and Reagan’s. Nixon tried to reestablish American supremacy by placing the onus on Europe and Japan, whilst preserving and strengthening amicable relations with the Soviet Union. Carter aimed to reduce the cost shouldered by the Europeans and Japanese, engaging them in concerted action to prop up the world economy and continuing detente with the ussr. Reagan’s policy, on the other hand, has been marked from the beginning by a very aggressive stance towards Soviet-bloc countries. Originally, his economic policy tended to favour Europe and Japan while precipitating economic collapse in the Third World. In a second phase Washington has reverted to a Carter type of concerted action to stabilize the international economy but without any form of sharing of power.

During the Nixon presidency, dollar devaluation was employed to raise the competitiveness of us industry. In the same period the oil price increased fourfold, inflicting a severe blow on the balance of payments of European countries and Japan. The resulting need for deflationary adjustment by industrial oil-importing economies was magnified by the fact that, owing to an American veto, there were no official facilities for recycling the surpluses of oil producers. Commercial banks thus had a free hand to dispose of opec funds by making loans to developing countries.

These developments during the seventies produced three areas of rapid growth in the world economy: opec, Comecon and the newly industrializing countries. The opec economies obviously benefited directly from the higher oil prices; Comecon—and particularly the Soviet Union—participated as well in the oil bonanza, and had ample access to international credit; a large number of non-oil developing countries found almost no limitations in their borrowing from international lenders. For their part, Western Europe and Japan had to cut their growth rates in order to bring their external balance into equilibrium, being neither willing nor able to borrow large sums on international money markets.