During the early part of this decade, a number of writers asserted that we were entering a new historical period marking the end of us world supremacy. Mustering an impressive set of dramatic events, the argument against the American century was quite convincing. In the so-called third world, American militarytechnological and economic power was decisively defeated in Indo-China, resulting in the establishment of non-capitalist régimes. In addition, primary producing countries were organizing and demanding better prices and more equitable terms of exchange from the industrialized countries: the successful effort by opec was interpreted as a major breakthrough, signalling a drastic shift in financial and political power towards the third world—or at least its oil beneficiaries. In the advanced capitalist world, Europe—through the common market—and Japan were expanding at an unprecedented rate, competing with us goods and services on a world scale and showing signs of developing an independent foreign policy. In the Communist world, the United States was forced to come to terms de facto, if not de jure, with China; at the same time, it agreed to accommodation with the Soviet Union and began discussions with Cuba. Containment was giving way to détente—ostensibly a recognition of the limits of American power. Alongside these politicoeconomic events, the over-arching financial-commercial scenario included the declining value of the dollar, negative us trade balances and the apparent weakening of the us role as the world’s banker. These external challenges were complemented by the internal paralysis of the American executive branch. Exposure of the Nixon régime’s violation of bourgeois-democratic rules of the game set off an unprecedented campaign of scrutiny and debate in the mass media and, eventually, in Congress. While executive authority was challenged, the basis of opposition was narrowly conceived and the outcome left institutional structures and practices virtually unscathed. Nevertheless, the decline in authority and prestige of the incumbent president and the element of uncertainty gave the appearance of instability and paralysis—suggesting that external decline and internal instability were two sides of the same coin, presaging an accelerated movement downwards, and away from world hegemonic politics. Not only liberals and radicals, but conservatives too became convinced of declining world influence. From those who rejected decline, there came schemes for colonial revivalism, calls for an end to détente and exhortations to show more willingness to use power. From those who welcomed the supposed decline, there came proposals to focus inward, show more concern for domestic priorities and express more restraint and judiciousness in external involvements. Whatever the ultimate concerns, all opinions involved seemed to converge in the notion that the United States was losing influence and its structural position was being challenged on a world scale.

It appeared that the post-war advantages that the United States had accrued were being wiped out. No longer could it command raw materials and resources at prices it could set. No longer could it dictate internal economic priorities and political régimes through loans and credits. No longer was European and Japanese capital dependent on American goodwill for economic expansion and political-military protection. No longer could the usa organize a boycott and undermine a nationalist project in the oil world. No longer could it count on the military as a last resort against economic nationalism. Bank flows went through Europe, Japan and the Middle East, as well as New York. The costs of exploitation of raw materials increased with each new nationalist régime. Sheiks and shahs quoted Emmanuel on unequal exchange, while Peruvian generals bought Russian tanks and the imf overrode us reservations and lent funds to Chile under Allende.

It was clear that the old basis of American hegemony was cracking, that new alignments were developing and the old basis of doing business on a world scale was coming to an end. It is also clear that the international conjuncture (1969–73) was an unfavourable one for us capital and the state which backed it. Nevertheless, it has apparently been less obvious to most analysts that this conjunctural downturn in us influence was not in fact the result of any global challenge to the structure of us domination. For losses incurred in marginal areas were recoupable in others. Furthermore, what appear as losses created conditions which allowed for a reconcentration of America’s power and a relative stabilization of its influence over and against its challengers—East and West, North and South. The historical judgements on the rise and decline of us hegemony have been based on a conjunctural analysis; this analysis has overestimated structural defects and underestimated the internal dynamic, political strength and global structural underpinnings which facilitate recovery and reconsolidation of us hegemony in global politics.

The imperial state network was shaken, but not broken, by recent events in Indo-China. The withdrawal of troops and resources allowed the usa to reconcentrate its efforts in other parts of the world. One of the very arguments of the self-styled ‘doves’ during the Vietnam War was precisely the ‘over-extension’ of the United States in Vietnam, by relation with other imperial commitments. The defeat in Vietnam allowed Washington to concentrate on reconstituting its army, as a mobile mercenary force capable of instant intervention—a far cry from the disintegrating and demoralized body of 1969–70. The far-reaching military claims in the executive budget for 1975–6—a record-breaking 100 billion dollar allocation—were eloquent testimony on this score: the overseas military arm of the American imperial state has not only recouped its pre-Vietnam position but is extending far beyond, with new weaponry, installations and capacity for ensuring its overseas expansion and maintenance of its global power. us manipulation of international finance in the overthrow of Allende suggests that strategies of development in the third world can be determined by the global power of the United States. On the private side, American control over overseas banks has grown immensely during the 1970s. The assets of foreign branches of us banks increased from 47 billion in 1970 to more than 166 billion by September 1975. International loans increased from 45·665 billion in 1974 to 52·438 billion in 1975. Robert Holland, a member of the Federal Reserve Board, pointed to the growing importance of overseas profits for the banking oligarchy in the United States: ‘As further evidence of the increased volume of foreign activities by us banks, a few of the larger banking institutions of the us reported that upward of one half of their total income last year represented income from foreign activities.’ (New York Times, 5 February 1976.) In terms of both financial might and military capacity—two essential components for sustaining global power—the United States, far from declining, continues to control the major instrumentalities of the capitalist world. The only area of relative decline over the last decade is in the area of trade, where the relative share of the usa has fallen. It could be suggested, citing the English example, that trade decline foreshadows investment and financial deterioration over the long run. Even if this were the case, we would be speaking of a historical process involving several decades, certainly not of any imminent and dramatic changes. While us imperial state power maintains its network, it is possible for American business to oust competitors, receive lucrative contracts, reverse trade patterns, collect debts, obtain loans. In other words, the United States continues to use the world’s financial resources to project outward and compete successfully. When the Shah of Iran spends billions earned from Japanese, European and third-world oil sales to purchase American arms, industrial products and expertise, it is because the us global military-political organization (the imperial state) not only put the Shah in power but organized his army, trained his economic advisors and technicians and penetrated his security apparatus from top to bottom. The us imperial state turns the rise of a certain third-world ‘nationalism’ (especially in the oil countries, where long-standing interstate ties exist) into an effective instrument for weakening its competitors and strengthening its own position. The new oil nationalism has, with few exceptions, served to reallocate wealth towards the usa at the expense of the rest of major capitalist countries—a not fortuitous occurrence in this ‘interdependent’ world.

The second foundation of us world power concerns the nature of political and social relations in the United States itself. Lacking any form of organized class challenge to capitalist hegemony, the American capitalist class has an unlimited capacity to recuperate from economic crises without paying the political and social costs that all its competitors must confront. Among the industrialized capitalist countries, the usa has one of the highest rates of unemployment and makes the lowest provision for social services, while furnishing the biggest subsidies to privately controlled research and development. Lacking any substantial political and social struggles that challenge this allocation of goods and services, possessing a party system (Democrats and Republicans) which maintains these priorities and a trade-union bureaucracy which actively supports both the allocations and the parties while harshly disciplining unrest among their members, us capitalism is in an excellent position to ‘modernize’ industries, increase productivity and lower the cost of goods by maintaining high levels of unemployment and lowering the social costs of production, through fiscal squeezes on the federal, state and local governments.