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WSWS : News & Analysis : Europe : The Balkan Crisis
Lord Skidelsky's criticism of NATO: the driving forces of "ethical imperialism"
By Nick Beams
10 May 1999
There is a particular significance to the criticisms of the NATO war against Serbia by
Lord Robert Skidelsky and his warning that its doctrine of "ethical imperialism" could
result in a breakdown of the economic and polit
ical order of world capitalism.
Skidelsky, who issued his criticisms in a series of lectures in Sydney and Melbourne
last week, is the author of a widely-acclaimed two-volume study of the life and work
of the British economist John Maynard Keynes. He is
currently writing a third volume dealing with Keynes' role in the Bretton Woods
Agreement of 1944, which played such a central role in the economic restabilisation of
world capitalism following World War II.
In the popular mind Keynes is most directly associated with the policies that bear his
name, based on government stimulation of the economy and "demand management" to
prevent the emergence of slump and depression. But thi
s was only part of his theoretical work, which was aimed at trying to establish the
mechanisms to effect a stabilisation of world capitalism.
Keynes first came into public prominence in the aftermath of World War I. A member of
the British delegation at the Versailles negotiations he resigned his post in June
1919 and issued a devastating critique of the Versai
lles Treaty under the title Economic Consequences of the Peace. Keynes had two central
objections to the Versailles arrangements: that the policy of harsh war reparations
imposed on Germany would destroy the economic mech
anisms on which pre-war Europe had been based, leading to a war of vengeance by
Germany, and that the terms of the treaty increased the power of American finance
capital over Europe.
Following his criticisms of Versailles, Keynes became increasingly critical of the
free market orthodoxy which dominated official government circles and in 1925 wrote a
scathing attack on the decision of the then British
Chancellor of the Exchequer, Winston Churchill, to return Britain to the pre-1914 gold
standard. Issuing a pamphlet entitled The Economic Consequences of Mr Churchill, he
warned the policy would require a 10 percent cut i
n British wages and could only be achieved by "intensifying unemployment without
limit."
As the economic problems deepened in the 1920s, Keynes was increasingly concerned with
devising measures which, in Skidelsky's words, could "reconstruct the capitalist
social order on the basis of improved technical manag
ement."
In the aftermath of the economic collapse of 1932, he appealed to the incoming US
President Roosevelt to reverse the policies of the previous Hoover administration,
which threatened to bring social revolution. In an open
letter to Roosevelt on the New Deal early in 1933, he wrote: "If you fail, rational
change will be gravely prejudiced, leaving orthodoxy [the doctrine of the free market]
and revolution to fight it out."
In 1936, Keynes published his most famous work, the General Theory of Employment,
Interest and Money in which he denounced the assertion of the defenders of free market
orthodoxy that the capitalist system could automatic
ally reach equilibrium at full employment, arguing that government intervention was
necessary to increase "effective demand" to lift national income and employment.
His policy prescriptions for state intervention were based on a key assumption--that
finance capital should remain within the confines of the national state. As he had
written in 1933, ideas and culture should, by their n
ature, be international, goods should, where possible be "homespun", but capital had
above all to be national in scope.
The necessity for the strict regulation of finance capital in order to facilitate
national economic regulation by governments was to form a key component of the Bretton
Woods Agreement of 1944, drawn up by Keynes and his
American counterpart in the negotiations, Harry Dexter White.
Under the agreement, the value of major world currencies were tied in fixed exchange
rates to the US dollar, which, in turn, was to be backed by gold at the rate of $35
per ounce. Loans were to be provided to countries th
at experienced balance of payments difficulties, ruling out the need for the
imposition of tariffs, and currency devaluations, which had brought about the
devastating contraction of world trade in the 1930s.
While providing the framework for free trade, the Bretton Woods system embodied strict
government controls on the movement of finance capital. As US Treasury Secretary Henry
Morgenthau told the conference, the aim of the
agreement was to "drive the usurious moneylenders from the temple of international
finance."
In less flamboyant language, Keynes explained that: "Not merely as a feature of the
transition but as a permanent arrangement, the plan accords every member government
the explicit right to control all capital movements.
What used to be heresy is now endorsed as orthodoxy."
Both Keynes and White insisted that the unrestricted international movement of capital
was incompatible with the establishment of government measures to regulate the
national economy. The new welfare state, which the Bret
ton Woods architects aimed to set in place, would be undermined if capital were free
to move to escape the effects of taxation measures and social policies introduced by
national governments.
"In my view," Keynes explained, "the whole management of the domestic economy depends
upon being free to have the appropriate rate of interest without reference to the
rates prevailing elsewhere in the world. Capital cont
rol is a corollary to this."
For 25 years, the Bretton Woods system provided a stable framework for the most
sustained period of economic growth in the history of world capitalism. But this very
expansion undermined the system of national regulation
upon which the post-war order was based.
Beginning with the removal of the gold backing from the US dollar in August 1971 and
the final dismantling of the system of fixed currency exchange rates in 1973, the past
quarter of a century has seen the complete disint
egration of the Bretton Woods arrangements.
With the abandonment of fixed currency relations in the 1970s, capital controls were
progressively dismantled in the 1980s.
Throughout the 1990s, and particularly since the advent of the Clinton administration
in 1992, the over-riding economic agenda of the United States, reflected in the policy
prescriptions of the International Monetary Fund
, has been the demand for the scrapping of all national restrictions on the
penetration of foreign capital. Finance capital must have a global reach, free to move
anywhere at any time in order to take advantage of continu
ously changing economic conditions and thereby maximise its rate of return.
But as critics of this new orthodoxy, such as Skidelsky, point out, such a system
threatens to bring a return to the violent disorder of the 1920s and 1930s which
Keynes sought to control. According to Skidelsky, the expe
riences of the recent period have demonstrated that without a new system of rules
governing exchange rates and capital movements, the experiences of the 21st century
will resemble "the worst of our own" including not only
economic turmoil but military conflicts.
During his lectures, Skidelsky drew attention to the connection between the vast
changes in the global economy and the new doctrines upon which the NATO war against
Serbia has been based.
The British Prime Minister Tony Blair had based his new ethical foreign policy
directly upon globalisation which, he maintained, had not only economic but political
and security implications.
But, according to Skidelsky, if NATO now asserted the right to intervene militarily in
any country where there were actual or potential ethnic conflicts, this meant the
overturning of the doctrine of national sovereignty,
which had formed the basis of political relations in the post-war period.
While Skidelsky, as a defender of the capitalist free market system, did not draw out
the full implications of his own remarks, their logic is nevertheless clear enough.
Just as the imperialist colonisations of the latter part of the 19th century were
"justified" by references to the "white man's burden" so the driving force of the
"ethical imperialism" being practised against Serbia is n
either humanitarian concerns nor the protection of minorities. Rather, the overturning
of the doctrine of national sovereignty is the political expression of the deepest
interests and global drive of finance capital.
See Also:
US escalates terror-bombing of Yugoslav cities
[8 May 1999]
The fraud of NATO humanitarianism
What are the reasons for the war in Yugoslavia?
[5 May 1999]
Blair outlines his vision of the new military world order
[29 April 1999]
IMF "shock therapy" and the recolonisation of the Balkans
[17 April 1999]
US-NATO attack on Yugoslavia
[Complete list of WSWS articles]
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