In the field of interstate military affairs it makes sense to talk of an American empire; but not in interstate economic affairs where the world remains thoroughly multipolar. So says Joseph Nye. This essay disagrees with the second part. It proceeds by way of a thought experiment. Imagine you are an aspiring modern-day emperor in a world of sovereign capitalist states. What sort of framework do you create such that (a) it sets the context in which all states and firms have to operate if they are not to exclude themselves from the world economy; (b) it channels normal market competition so as to benefit your firms and citizens disproportionately; and (c) it allows your economic statescraft to operate with fewer constraints than it imposes on everyone else’s? The essay argues that the United States has indeed created such a framework since the 1970s, based on dollar dominance and American-centered private (not public) international financial relations. The framework allows the United States to keep spending far more abroad than it earns there—to have more butter and more guns (including military bases)—to a degree that other states cannot; and allows the United States to make the dollar swing high or low in accordance with American conditions, regardless of the costs inflicted on others. This is the paradox of economic globalization: it looks like the “powerless” expansion of communications and markets, but works to enhance the ability of the United States to harness the rest of the world to its rhythms and fortify its empire-like power. Concerted action between Europe and China and the East Asia countries is a vent for hope.
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