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Imperialism Reading Group - Super Imperialism, by Michael Hudson - Week 1 - February 17th to February 23rd

This is a weekly thread in which we read through books on and related to imperialism and geopolitics. Last week's thread is here.

Welcome to the first week of Michael Hudson's Super Imperialism: The Origin and Fundamentals of US World Dominance! I'm reading the Third Edition, but I imagine most of the information is the same if you have an earlier edition.

Looking at the page count for this book, it seems an appropriate pace to read one chapter per week, which, including the introduction, will mean this book will take 18 weeks to read, meaning we will finish in June. Obviously, you are totally free to read faster than this pace and look at my/our commentary once we've caught up to you.

Every week, I will write a summary of the chapter(s) read, for those who have already read the book and don't wish to reread, can't follow along for various reasons, or for those joining later who want to dive right in to the next book without needing to pick this one up too. I will post all my chapter summaries in this final thread, for access in one convenient location. Please comment or message me directly if you wish to be pinged for this group.

This week, we will be reading the Introduction, which is approximately 37 pages.

28 comments

  • Life got in the way of following the Imperialism reread but I’m getting this out the library today if they have it

  • I consider myself well versed in global economics compared to the average bear, but I have to reread paragraphs pretty often to parse the terminology. However, I got a good grasp on the "free lunch" concept Hudson refers to. On pg 19-21 in my copy my understanding:

    1. US imports more than it exports, meaning there is a surplus of dollars in the world. The US also runs up a deficit by "military spending" and other ways of expanding the US empire.
    2. Foreign nations export to the US and build up reserves of USD with nowhere to spend it. If they spent it too much, they would risk lowering the value of the USD which would hurt their ability to export (because then US goods would be comparatively cheaper)
    3. Foreign central banks with USD reserves invest them into US Treasury Bonds (because they have nowhere else to send them), which keeps USD flowing into the US financial sector and keeps the US stable.
    4. This "recycling" of dollars means the US can keep their own interest rates low to spur investment without devaluing their own currency, because the demand for US Treasury Bonds keeps the price inflated. So foreign central banks essentially fund US domestic spending.
    5. This system keeps spinning because not keeping it spinning could crash foreign economies and the US then seeks to expand other nations into the dollar economy.
    6. The US now has the power to threaten foreign countries that they'll mess up their exchange rate if they don't give the US favorable trade deals

    If I'm missing anything important or misunderstanding, please comment.

    • This is my first read but this seems like a perfect summary. The only addition, which I'm still unsure how to feel about, is that the US fell into this stumbling around with not intention behind the design, one that was arranged as "one of benign neglect." At first this was an attempt to maintain a balance of payments that allowed rolling over of debts to the next year. But that this seemed stable, so it's continuation became the norm and the loser of the situation was US debt holders.

      Edit: I see you were focused on that one set of pages, and so this came in a later section I think, my bad. Gonna leave this here though

  • Something I'm watching out for in this read-through: I've heard from many trusted sources that this book is great at dealing with finance and monetary policy in itself, but that it often can get lost in that analysis and lose track of a materialist basis. I do see that a bit in this first part of the book, where talks of debts and being bound to debts isn't always grounded in the reality of the trade of goods and services which makes it impossible to escape. Is the real imperialism the money-structure which holds countries hostage or the control of goods which is aided by that hostage-taking? Gonna stay sharply attent to this and seeing if this difference results in different conclusions

    • Yeah, in general I think one should read this book at least slightly cautiously - Hudson isn't the most dialectical guy around, and I think most of us would disagree with him on Stalin, and at least partially disagree with the successes and failures of the USSR. I shook my head a little at the brief section that drew parallels between America's exploitative measures and the USSR's measures, it's knocking on the door of the crowd of people who go "uh ackshtually the Soviets were imperialists who did a hecking holodomor and imperialistically and evilly invaded afghanistan because they were evil and stupid" (well, perhaps they were a little stupid there).

      That being said, I think it's still very much worth engaging with the material as I don't know anybody else who has a grand working theory of current-day imperialism that corresponds to reality as well as his theory does, even if some authors are better on individual aspects of it with a more explicitly socialist/dialectical approach (Gabriel Rockhill for example, or Vijay Prashad on the role of the Third World). And several of those who are creating their own theories of imperialism are very much in debt to Hudson and wouldn't disagree with any of it, so much as make tweaks here and there and change the overall perspective (such as Desai, who literally co-hosts a goddamn youtube geopolitics show with him, and who tends to focus on how the US has largely failed to exert their full imperial vision since 1945 and has been barely keeping things together).

      • I'm excited to read it regardless of any cautions! It's good and well written (I already read the first part too).

        The section comparing the US to the USSR was exactly what I had sort of expected: his analysis was based in the monetary control utilized by the USSR and disregarded how that was implemented in reference to goods and services. Then, after concluding, he referenced this difference a section later when building to his idea of super-imperialism (control of the money meaning that the US can effectively scrape off the top without taxes and entirely independently of the subjected country). But his reference to the differences of the USSR and the US came too late. So it's obvious where this focus lost the connection to commodity production and trade.

        Still super useful, anyways, and very easy to save from itself for us I think

  • The introduction (at least in my copy) was mostly just hype for the book, so I guess I'll have more interesting stuff to say next week when we start the text proper. I did find this section interesting, though.

    It must not be thought, however, that what has been true for twenty-five years past is of necessity true of the future. Total recovery and vast enlargement of the productive and investment powers of Europe and Asia are by now a fact. The imperative question, therefore, is whether Europe and Japan, each with productive powers superior to those which characterized them in 1939, and with Europe moving towards an economic integration so advanced as to require a common currency and a common central bank, may not themselves experience large savings which cannot find any profitable employment in Europe or Japan. If this does become the case, as economic history suggests it might, a new stage of finance-capitalist imperialism must develop. Excess capital in the United States, in the sense that enormous capital sums cannot today find adequately profitable investment at home, may meet head-on excess capital from Europe and Asia also seeking profitable investment abroad. Hobson's postulate, it seems, has perhaps not been disproved but deferred, to reemerge, perhaps in explosive antagonism, in a not distant future.

    And in fact, this is precisely what has happened, first with Japan in the 80's as Japanese capital extended across the globe in search of profits, even investing in American firms and land until that entire effort was killed by the Plaza Accords the US imposed on Japan. And it is now happening again, with China's BRI and the various more regional players like Turkey, Russia, UAE, India, and to a lesser extent South Korea and Japan extending their tendrils across the globe competing for capital projects abroad. Hasn't been in "explosive antagonism" yet, mostly because all these investments are still in USD playing by the rules set by the United States, but that undercurrent is there and growing.

  • I am still a bit mystified on the mechanism of why trade surpluses for exporters to the US MUST be spent on US Treasuries, could anyone reframe it in their own words?

    • My understanding is that it is beneficial for the nations that export to the United States to buy US Treasuries as it keeps demand for the dollar high, which maintains the US dollar as a strong currency - meaning that a dollar has a high purchasing power. The strong US dollar compared to the currencies of exporting nations allows the exporting nations to remain competitive.

      Here is my rough understanding of the process. It may not be completely correct though as I'm still trying to figure out all this alchemy...

      Typically if a nation, let's call it Exportia, exports more than it imports (trade surplus) the demand for its currency increases (directly or indirectly) and that causes its currency to appreciate. Exportia's currency becomes stronger which means it has more purchasing power. And because it is stronger and can purchase more, it may require more of another nation's currency to be exchanged to get Exportia's currency.

      So if another nation, let's call it Importia, wants to import Exportia's goods, and if Exportia's currency is stronger than Importia's, then it will require a higher volume of Importia's currency to be converted into Exportia's currency in order for Imprortia buy Exportia's goods (i.e. in order for Importia to import the exports from Exportia). This means that the prices of goods from Exportia that Importia imports will be expensive when priced in Importia's currency.

      As Exportia exports more and more and it's trade surplus grows, its currency appreciates, and from the perspective of other nations like Importia they find these exports from Exportia to be more expensive with time. So over time Exportia's products become less competitive to nations like Importia. Importia find that it require more and more of its own weak currency to exchange for Exportia's strong currency in order for Importia to import Exportias goods.

      The opposite logic holds for Importia's currency. As it imports more than it exports, there isn't strong demand for its currency. So it's currency is weak. While it takes more and more of Importia's currency to be converted to Exportia's currency, it doesn't take much of Exportia's steonger currency to be converted to Importia's weaker currency. So from the perspective of Exportia, products from Importia would be cheap.

      So the general rule: an exporting nation tends to have an appreciating currency which would tend to make its exports less competitive with time. An importing nation tends to have a deprecating currency which makes its exports more competitive with time. At least that's the textbook theory... reality doesnt always work this way.

      If the United States were like any other country with a deficit (importing more than it exports) then it would behave like Importia. Over time it's currency would devalue and it would find imports from the rest of the world growing more expensive while it's own exports to the world would become more competitive than goods from nations with stronger currencies.

      If you are a nation that is exporting to the United States, say you are Exportia, then you will find that over time your exports will grow less competitive as the United States' dollar weakens and yours stengthens...

      ... but you have a way out. Buy US Treasuries. Keep it functioning as the reserve currency. It keeps the demand for the dollar high, which stops it from appreciating. This keeps the dollar strong compared to your (Exportia's) currency, and so your exports remain competitive and America's exports are too expensive to compete with yours.

      Here is Hudson in a recent interview:

      You’ll pay dollars to an exporter, from China or Germany — when there was still a German industry — and they turn the dollars over to their central bank, and the central bank would then say, “What are we going to do with these dollars? If we don’t send them back to the United States, our currency is going to go up against the dollar, and that is going to make our exports less competitive. So we have to keep our currency, our exchange rate, down; and we do that by buying Treasury securities”.

28 comments