By John Ross
Introduction
The U.S. attack on Venezuela is merely the latest step in an increasingly open path of U.S. military aggression – the U.S. enabling Israel’s genocide in Gaza, creating the war in Ukraine through NATO expansion, following from the bombing of Serbia in 1999, the invasions of Afghanistan in 2001 and of Iraq in 2003, and the bombing of Libya in 2011. This increasingly open U.S. aggression, accompanied by increasing disregard of the views of the majority of other countries, flows inevitably from the fundamental situation facing the U.S.: It has lost its economic hegemony and is therefore forced to attempt to compensate for this by using its military, which remains the strongest in the world.
Some in the Western left wrongly believed that the international economic weakening of the U.S. meant it would be forced to accept decline or a “multipolar” world. Instead, as the article below states: “These economic setbacks for the United States have led some, particularly in a few circles in the West, to believe that the defeat of the United States is inevitable or has already occurred… views are incorrect. They forget, in V. I. Lenin’s famous words, that “politics must take precedence over economics, that is the ABC of Marxism”, and, regarding politics, that “political power grows out of the barrel of a gun”, in the famous dictum of Chairman Mao. The fact that the United States is losing its economic superiority does not mean that it will simply allow this economic trend to peacefully continue: to presume that this is the case would be to make the mistake of placing economics before politics. On the contrary, the fact that the United States is losing ground economically both to China and to other countries is pushing it toward military and military-related political means to overcome the consequences of its economic defeats.”
The U.S. is therefore not preparing to accept multipolarity; it is instead attempting to use its still existing military dominance to compensate for its economic weakening. The result is increasing U.S. military aggression.
The analysis below, from an article published in 2022, entirely accurately predicted this U.S. path – which is one that will continue. It was originally published in China in Guancha.cn, and in English at MROnline before being included in the book Washington’s New Cold War: A Socialist Perspective, published by No Cold War, Tricontinental and Monthly Review.
The increasingly violent course of the U.S., driven by the disparity between its economic decline and its continuing military strength, is the chief feature of the international situation and will continue.
* * *
The Economic and Military Position of the United States During the “Old Cold War” and the “New Cold War”
Reduced to the most essential facts, the key forces that have driven this escalating U.S. policy of military aggression, are clear. They are, first, the permanent loss of the overwhelming weight of the U.S. economy in global production, and, second, the preponderance of U.S. military power and spending. This asymmetry creates a very dangerous period for humanity, one in which the U.S. may attempt to compensate for its relative economic decline through its use of military force. This helps explain U.S. military attacks on developing countries, as well as its escalating confrontation with Russia in Ukraine. An important question is whether this U.S. military aggression will increase further to include a growing confrontation with China, even to the point of a willingness to consider a world war. To answer this question, it is necessary to make an accurate analysis of the United States’ economic and military situation.
To start with the economy, in 1950, near the commencement of the first Cold War, the United States accounted for 27.3 percent of the world GDP. In comparison, the U.S.S.R., the largest socialist economy of that period, accounted for 9.6 percent of world GDP. In other words, the U.S. economy was nearly three times larger than the Soviet economy. During the entire post-Second World War period (the first Cold War), the U.S.S.R. never came close to the U.S.’s GDP, equaling only 44.4 percent of it in 1975. That is, even at the peak of the U.S.S.R.’s relative economic achievement, the U.S. economy was still more than twice the size of the Soviet economy. Throughout the “Old Cold War,” the United States enjoyed a significant economic lead over the U.S.S.R., at least in terms of conventional measures of output.
Turning to the present situation, the United States accounts for considerably less of the global GDP than it did in 1950, ranging from roughly 15 to 25 percent depending on how it is measured. China, the main economic rival of the United States today, has gotten much closer to parity with the U.S. economy. Even at market exchange rates, which oscillate somewhat independently of actual outputs with currency fluctuations, China’s GDP is already 74 percent that of the United States’, a far higher level than the U.S.S.R. ever achieved. Furthermore, China’s economic growth rate has for some time been much faster than that of the United States, meaning that it will continue to close in on the latter.
Calculated in purchasing power parities (PPPs, which account for countries’ different price levels), the measure used by Angus Maddison and the IMF, by 2021, the United States accounted for only 16 percent of the world economy—that is, 84 percent of the world economy is outside of the United States. By the same measure, China’s economy is already 18 percent larger than that of the United States. By 2026, according to International Monetary Fund PPP projections, China’s economy will be at least 35 percent larger than that of the United States. The economic gap between China and the United States is far closer than anything the U.S.S.R. ever achieved.
Taking into account other factors, no matter how they are measured, China has become by far the world’s largest manufacturing power. In 2019, the latest available data point, China accounted for 28.7 percent of world manufacturing production, compared to 16.8 percent for the United States. In other words, China’s global share of manufacturing production was more than 70 percent higher than that of the United States. The U.S.S.R., on the other hand, never came close to overtaking the United States in manufacturing production.
Turning to trade in goods, the defeat of the United States by China in the trade war launched by Trump is even somewhat humiliating for him and the country. In 2018, China already traded more goods than any other country, though its trade in goods was only around 10 percent larger than that of the United States at that time. By 2021, China’s trade in goods outpaced the U.S. by 31 percent. The situation was even worse for the United States in terms of the export of goods: in 2018, China’s exports were 58 percent higher than those of the U.S., and, by 2021, China’s exports were 91 percent higher. In summary, not only has China become by far the world’s largest goods-trading nation, but the United States has suffered a clear defeat in the trade war launched by the Trump and Biden administrations.
Even more fundamental from a macroeconomic viewpoint is China’s lead in savings (household, business, and state), the source of real capital investment and the driving force of economic growth. According to the latest available data in 2019, China’s gross capital savings were, in absolute terms, 56 percent higher than those of the United States—the equivalent of $6.3 trillion, compared to $4.03 trillion. However, this figure greatly understates China’s lead: once depreciation is taken into account, China’s net annual capital creation was 635 percent higher than that of the United States—the equivalent of $3.9 trillion, compared to $0.6 trillion. In summary, China is greatly adding to its capital stock each year, while the United States, in comparative terms, is adding little.
The net result of these trends is that China has overwhelmingly outperformed the United States in terms of economic growth, not merely in the entire four-decade period since 1978, as is well known, but continuing into the recent period. In inflation adjusted prices, since 2007 (the year before the international financial crisis), the U.S. economy has grown by 24 percent, while China’s economy has grown by 177 percent—that is, China’s economy has grown more than seven times faster than the U.S. economy. On the terrain of relatively peaceful competition, China is winning.
The U.S. lead in productivity, technology, and company size means that, overall, its economy is still stronger than China’s, but the gap between the two countries is far narrower than was the case between the United States and the U.S.S.R. Furthermore, whatever one might say are the exact relative economic strengths of the two global giants, it clear that the United States has lost its global economic predominance. From a purely economic standpoint, we are already in a global era of multipolarity.
The U.S. Military in a moment of economic decline
These economic setbacks for the United States have led some, particularly in a few circles in the West, to believe that the defeat of the United States is inevitable or has already occurred. A similar view has been expressed by a small number of people in China who take the view that China’s com-prehensive strength has already overtaken that of the United States. These views are incorrect. They forget, in V.I. Lenin’s famous words, that “politics must take precedence over economics, that is the ABC of Marxism,” and, regarding politics, that “political power grows out of the barrel of a gun,” in the famous dictum of Chairman Mao. The fact that the United States is losing its economic superiority does not mean that it will simply allow this economic trend to peacefully continue: to presume that this is the case would be to make the mistake of placing economics before politics. On the contrary, the fact that the United States is losing ground economically both to China and to other countries is pushing it toward military and military-related political means to overcome the consequences of its economic defeats.
More precisely, the danger to all countries is that the United States has not lost military supremacy. In fact, U.S. military spending is greater than that of the next nine countries combined. Only in one area, nuclear weapons, is U.S. strength roughly equalled by another country, Russia, which is due to Russia’s inheritance of nuclear weapons from the U.S.S.R. The exact numbers of nuclear weapons held by countries in general are state secrets, but, as of 2022, as of 2022, according to a leading Western estimate by the Federation of American Scientists, Russia possesses 5,977 nuclear weapons, while the United States has 5,428. Russia and the United States each have about 1,600 active deployed strategic nuclear warheads (though the United States has far more nuclear weapons than China).4 Meanwhile, in the field of conventional weapons, U.S. spending is far greater than that of any other country.
This divergence in the United States’ position in economic and military spheres underlies its aggressive policy and creates the distinction between its economic and military positions in the present “New Cold War” compared to the “Old Cold War” waged against the U.S.S.R. In the Old Cold War, U.S. and U.S.S.R. military strengths were approximately equal, but, as already noted, the U.S. economy was much larger. Therefore, in the Old Cold War, the U.S. strategy was to attempt to shift issues onto an economic terrain. Even Reagan’s military buildup in the 1980s was not intended to be used to wage war against the U.S.S.R., but rather to engage it in an arms race that would damage the Soviet economy. Consequently, despite tension, the Cold War never turned to a hot war. The U.S.’s present situation is the opposite: its relative economic position has weakened tremendously, but its military power is great. Therefore, it attempts to move issues to the military terrain, which explains its escalating military aggression and why this is a permanent trend.
This means that humanity has entered a very dangerous period. The United States might be losing in peaceful economic competition, but it still retains a military lead over China. The temptation is then for the United States to use “direct” and “indirect” military means to attempt to halt China’s development.
The direct and indirect use of U.S. Military strength
The U.S. employs both “direct” and “indirect” means to display its military strength, which are far more expansive than the most extreme “direct” possibility of a frontal war against China. Some of these approaches are already in use, while others are being discussed. The former includes, for example:
• subordinating other countries to the U.S. military and attempting to pressure these countries to adopt more hostile economic policies towards China, as is the case in relation to Germany and the European Union.
• attempting to overcome the multipolar economic character of the world, which has already been established, instead creating alliances dominated in a unilateral way by the United States. This is clearly the case with NATO, the Quad (United States, Japan, Australia, India), and in relation to some other nations.
• attempting to force countries that have good economic relations with China to weaken these relations. This is particularly evident with Australia and is now being attempted elsewhere.
Meanwhile, approaches that are being discussed include the possibility of waging wars against allies of China and Russia and attempting to draw China into a “limited” war with the United States regarding Taiwan Province.
The above article was originally published here on John Ross’s substack