The 1980s will be a decade of escalating conflict between Western Europe, the United States and Japan over trade, financial and monetary policies. This heightened economic competition has already revived one of the most long-standing debates in Marxism—the polemic between Lenin and Kautsky on ‘ultra-imperialism’.footnote1 It will be recalled that Kautsky held that an increasingly international capitalist system might lead to the fusion of diverse national bourgeoisies into one, overarching international bourgeoisie—thus eliminating, as Lenin scoffed, ‘the most unpleasant, the most disturbing and distasteful conflicts such as wars, political convulsions, etc.’ In contrast, Lenin asserted that while ‘in the abstract one can think of such a phase’, in practice the consolidation of a completely international bourgeoisie is impossible. ‘There is no doubt that the development is going in the direction of a single world trust that will swallow up all enterprises and all states without exception. . . . But the development in this direction is proceeding under such stress, with such a tempo, with such contradictions, conflicts, and convulsions—not only economical, but also political, national, etc.—that before a single world trust will be reached, before the respective national finance capitals will have formed a world union of “ultra-imperialism”, imperialism will inevitably explode, capitalism will turn into its opposite.’footnote2

Yet the prevailing opinion on the Left has been, so to speak, Kautskyite. Most have downplayed competition between imperialist nations and concentrated on some suitable proxy for the international bourgeoisie—multinational corporations, the International Monetary Fund, the Trilateral Commission. Riccardo Parboni presents a strikingly different argument.footnote3 His new book is a powerful and well-documented analysis of the continued importance of economic conflicts between advanced capitalist countries. Indeed Parboni, of the University of Modena, ascribes the contemporary crisis precisely to such conflict: ‘The stark truth is now seeping through: the crisis is not the result of so-called objective factors, but is fundamentally the fruit of a grand inter-imperialist conflict the stakes of which is the global redivision of economic and political power between the United States on the one hand and the major powers of the second world—Germany and Japan—on the other.’ (p. 118)

Parboni begins The Dollar and Its Rivals with a description of the role of the dollar in international monetary relations. The dollar is the world’s generally accepted reserve currency, used by central banks to settle accounts and intervene in foreign exchange markets, and by many private firms to conduct international trade. The dollar therefore has an importance far out of proportion to that of the us economy—much as the pound sterling did before World War One. This state of affairs—which by definition gives the United States a disproportionately greater influence over the international monetary system—arose after World War Two, when the United States acted as a benevolent despot in providing the rest of the capitalist world with economic resources. By the late 1950s American leadership had become a somewhat less universally appreciated hegemony, and by the early 1970s the United States was unabashedly pursuing a self-interested policy which literally forced dollars on an unwilling world. ‘The United States,’ says Parboni, ‘no longer provides the collective blessing of world economic stability, but instead unhesitatingly pursues its own national interest, and has thus become the principal source of perturbation of the international economy.’ (p. 50)

The most important element in this perturbation, argues Parboni, is the inexorable devaluation of the dollar that began in 1970 and continued until 1979. In an attempt to halt the relative decline of United States economic might, successive American administrations have brought about a continual depreciation of the dollar, which makes American exports cheaper and other countries’ exports to the United States more expensive. Other nations pay a stiff price for devaluing their currencies, since the more expensive imports fuel inflation, but since imports are relatively unimportant for the us economy, devaluation is far less inflationary than it is elsewhere. Yet the dollar devaluation led to drastic increases in world raw material prices, as well as a significant growth in world liquidity; and thus, writes Parboni, ‘the international acceleration of inflation is a by-product of the continual devaluation of the dollar’. (p. 86)

At the same time, the dollar devaluation is—in Parboni’s view—the direct cause of European economic stagnation. This is so because Germany’s response to increased us competition was to step up its export drive by extending cheap credits to potential customers and by improving the technological quality of German manufactured goods. Both prongs of Germany’s export strategy—cheap credits and industrial restructuring—require domestic deflation. In order to maintain its international competitiveness, Germany is forced into domestic recession, and because the rest of Europe is dependent on German orders, Europe is forced into recession along with Germany. Parboni summarizes his argument in a passage worth reproducing: ‘The United States and Germany, in conflict over the maintenance of industrial and technological leadership, join together in the commercial exploitation of the rest of the world. The consequence of this imperialist relationship of competition and alliance is the demotion of Europe to conditions of direct subordination to the exigencies of German capitalist development, both internal and multinational. The European countries, subjected to a heavy drain of resources because of the rise in the cost of oil, and unable to increase their exports because of their relative technological backwardness and their poverty of financial resources, are now witnessing the evaporation of their prospects for development of the national income and return to full employment.’ (pp. 138–139)

In this context, the European Monetary System is a major link in the chain of German domination over the rest of Europe. Parboni, indeed, compares Germany’s position within the ems to the us role in the postwar Bretton Woods system: one of profound assymetry. ‘The assymetry,’ writes Parboni, ‘lies in the fact that under the ems . . . there are no effective means by which to compel a strong-currency country [such as Germany] to weaken its currency, but the weak-currency countries [such as France and Italy] are compelled to strengthen theirs.’ (p. 149) The ems will thus draw the rest of Europe into a fundamentally unequal dependence on Germany, while strengthening Germany’s hand in its conflict with the United States.

Parboni completes his survey with a discussion of long-term, structural changes in the world economy. Industrial production has been shifting rapidly from the advanced capitalist world into the ‘newly industrializing countries’ (nics) of the Third World. Much of this development was concentrated in a small grouping of reactionary nics that ‘were rewarded for their subordination to the international division of labour imposed by the metropolitan countries and received considerable foreign investment and credit financing’ (p. 192)—while what Parboni calls the ‘independent developing countries’ such as India pursued more autonomous paths. In any event, Third World industrial development—largely financed by private international banks—is supplanting traditional industries in Europe and North America. ‘The modification of the international division of labour now under way,’ Parboni argues, ‘renders the crisis of the industrialized countries chronic: it is therefore correct to say that the interminable crisis suffered by the European and Japanese economies is structural.’ (p. 178) The capitalist world is, in short, coming to the end of one era—economic expansion under us hegemony—and entering another of austerity, of ‘the wildcat capitalism of the industrial revolution, of unbridled cartelization, of imperialism, of world wars’ (p. 206).