The military-industrial complex and the hegemony of the dollar: the big killer of the United States to let go and make money in the world
[Special attention: Scholars talk about the situation in Russia and Ukraine]
Since the outbreak of the Russia-Ukraine conflict, the sanctions imposed by Western countries on Russia have led to a surge in global commodity prices, which has made the world economy already hit by the epidemic even worse.
The more important impact is that the theme of peace and development of the times has been destroyed, and countries have fallen into the fear of war.
At the same time, the United States continues to fuel the conflict through various means, and its "peace defender" mask can no longer hide the true face of making a fortune in war.
The military-industrial complex is the driving force behind America's war fortunes
Under the current political system in the United States, public policy is the result of the game between the government and interest groups.
On the surface, this embodies the characteristics of American democracy: all groups can become interest groups and have access to political decision-making.
But in reality, the main way that interest groups influence government decision-making is through political donations, that is, using money to support and lobby politicians to make policies that benefit their own groups.
Even some powerful groups have direct spokespersons in the government, which influence the formulation and implementation of policies.
That is to say, the essence of American democracy is money politics, and the political forces represented by money determine the status of a group in society and the trend of American public policy.
It is during the evolution of money politics that specific interest groups in the United States interact with the government to form a unique military-industrial complex.
The so-called military-industrial complex refers to the cooperation between the US military, industry, government, Congress and other groups, and joint think tanks, media and other groups to form interest groups.
This group is good at publicity, constantly shaping the image of an "enemy" around the world, and profiting from it by triggering conflicts in other countries.
The creation of the military-industrial complex dates back to World War II.
At that time, the five giants of the US military industry - Lockheed Martin, Raytheon, Northrop Grumman, Boeing and General Dynamics made a fortune because of the war, and the interests of the military industry and the US government have been tied since then.
After World War II, the U.S. military, military-industrial enterprises, government, Congress, and even academic institutions, think tanks, and the media worked closely together, and extended their power to emerging industries. As a result, a huge military-industrial complex grew. Go directly to the state power organ, and use the power at hand to seek benefits for the group in defense policy.
Entering the 21st century, the United States has launched successive wars against Afghanistan, Iraq and other countries, which is the direct result of the military-industrial complex manipulating the U.S. defense policy and blatantly delivering benefits to domestic arms dealers.
The military-industrial complex represents special capital interests, and the essence of capital is the pursuit of infinite value-added.
When the United States has no reason to send troops directly to other countries, the country's demand for weapons declines, and the sales of arms becomes a problem, so arms exports become another way out.
Facts have proved that the United States has long created threats and panics around the world, especially in those regions where conflicts and contradictions are intertwined, and opened up markets for the weapons produced by the United States.
According to statistics from the Stockholm International Peace Research Institute in Sweden, in 1991 the United States' arms exports reached $12.5 billion, accounting for 3% of its total exports.
Since then, U.S. arms exports have remained high for many years, reaching a peak of $15.7 billion in 1998.
At the beginning of the 21st century, despite the decline in US arms sales, it has maintained an average annual level of more than 8 billion US dollars.
In the just past 2021, the US arms exports reached US$10.6 billion, and the export targets were scattered all over the world, becoming an important hidden danger to global peace and stability.
According to the statistics of the United Nations Statistics Office, from 1991 to 2021, the main targets of US arms exports were Saudi Arabia, South Korea, Japan, Taiwan, Turkey, Egypt, Israel, Australia, the United Kingdom and the United Arab Emirates.
Among them, the total export value to Saudi Arabia was as high as 32.5 billion US dollars, the total export value to South Korea and Japan was 25.4 billion US dollars and 23.6 billion US dollars respectively, and the arms sales to Taiwan reached 18.5 billion US dollars. The UAE, which ranked tenth, also imported 122 billions of dollars in U.S. arms.
It is not difficult to see that the main targets of US arms sales are the complicated Middle East countries, its own allies and East Asian economies.
In particular, it should be pointed out that the US government has been involved in Taiwan affairs for a long time. In addition to trying to use the Taiwan issue to suppress and contain China, it is also an important reason behind expanding arms sales to Taiwan and taking advantage of other countries' contradictions to make money.
The Russian-Ukrainian conflict is also an example.
Since 2008, the United States has continuously encouraged Ukraine to join the European Union and NATO, and promoted Ukraine's transformation into an anti-Russian and pro-American country. Step by step, the crisis between Russia and Ukraine was inevitable and eventually escalated into a military conflict.
After the conflict broke out, the United States not only failed to provide any plans and measures that were conducive to the truce, but instead continued to support the fire, trying to expand the war, make money from the war, and fully safeguard the interests of the military-industrial complex.
For example, Germany announced the purchase of American fighter jets and allocated an additional 100 billion euros as a special budget to boost armaments. Not surprisingly, this large piece of "fat" should mainly fall into the mouth of the American arms giant.
On March 16, U.S. President Biden signed the federal budget for the 2022 fiscal year worth up to $1.5 trillion, of which defense spending reached $782 billion, an increase of 5.6% over the previous fiscal year, and was used to solve domestic problems in the United States. The budget is only $730 billion, $50 billion less than defense spending.
Biden also released a list of aid support to Ukraine worth a total of $800 million, including military aid such as air defense systems, anti-tank systems and drones.
The budget that was finally submitted to Congress for a vote removed another $15.6 billion in the budget for fighting the new crown pneumonia epidemic, and included $13.6 billion in aid to Ukraine and other Eastern European countries, of which nearly $7 billion was used for the United States to send additional troops and provide assistance to Europe. arms.
Obviously, the conflict between Russia and Ukraine has become a new opportunity for the U.S. government and related interest groups to make money.
U.S. dollar hegemony supports U.S. wealth accumulation
An important feature of the U.S. economy is its high degree of financialization, and the hegemony of the U.S. dollar is an important foundation to support financialization.
The hegemony of the U.S. dollar and the military-industrial complex are integrated together to provide support and guarantee for the crazy accumulation of money by the United States around the world.
In the early 1970s, the Bretton Woods system collapsed and the dollar was decoupled from gold.
However, the development of world trade requires a common currency. In order to maintain the US dollar's status as the world currency, the United States has bound the US dollar to oil, so the gold dollar has been transformed into a petrodollar.
The basis for the successful binding of the United States is military strength, and the United States has frantically suppressed petrodollar challengers.
The United States has reached an agreement with the world's major oil exporting countries, and oil transactions are settled in US dollars, establishing a petrodollar system and establishing US dollar hegemony.
At present, the proportion of U.S. dollar settlement in world trade is much higher than that of other currencies. The average proportion of U.S. dollar reserves in the foreign exchange reserves of various countries in the world is more than 65%, and the proportion of U.S. dollars in emerging market economies is even higher.
In foreign exchange transactions, the average proportion of US dollar transactions is about 90%, and the US dollar transaction share in some foreign exchange markets is even as high as 99% or more.
In foreign trade activities, the United States plays the role of "white wolf with empty gloves", because the United States only needs to issue virtual dollars to exchange for goods of equivalent value.
When world trade is booming, countries around the world need more and more dollars, and the United States can gain more benefits through dollar hegemony.
The United States can not only obtain seigniorage revenue worldwide, but also obtain the pricing power of major industrial raw materials, including oil, through the financial market.
The United States also takes advantage of the basic currency characteristics of the US dollar, periodically taking advantage of the rise and fall of the value of the US dollar and the rise and fall of interest rates to seize the economic interests of other countries in the world.
With the reserve demand of other countries for dollars, the United States levies seigniorage to the whole world, and obtains products and services of other countries at low cost.
The U.S. pays U.S. dollars to acquire other countries’ economic resources. If other countries reserve U.S. dollars, the U.S. receives international seigniorage income, at the cost of the U.S. government’s need to pay interest for other countries’ holdings of U.S. dollar reserves.
At the same time, the U.S. issued U.S. Treasury bonds guaranteed by the government's credibility, further reaping the interests of all countries in the world.
When the debt burden is too high and the domestic economic situation is poor, the Fed can adopt quantitative easing policies, export inflation, depreciate debt, reduce its own debt burden, and cut the "leeks" of other countries.
In addition, because of the hegemony of the dollar, the United States can act arrogantly in the world, impose financial sanctions on other countries, and freeze assets.
The New York Clearing House Interbank Payment System (CHIPS) leads the clearing of cross-border US dollar transactions, and undertakes more than 95% of the world's interbank US dollar payment and clearing, and more than 90% of foreign exchange transactions.
SWIFT is the world's financial message exchange network, and the US government can track transaction information involving US dollars based on SWIFT messages.
If a financial institution is cut off from the payment channel by CHIPS, it will not be able to conduct cross-border US dollar business; and once the message conversion channel is cut off by SWIFT, all foreign exchange business will be interrupted.
After the outbreak of the Russia-Ukraine conflict, the United States imposed sanctions on Russia under the pretext of maintaining peace and justice. One of the important moves was to kick out seven important Russian banks from the SWIFT system, trying to forcibly plunder Russia's wealth and quickly destroy the Russian economy.
However, many acts of injustice will lead to suicide, and frequent sanctions against other countries may shake the hegemony of the US dollar.
Russian State Duma Chairman Volodin reiterated on March 30 that "if you want natural gas, go to the ruble" and pointed out that "export products paid in rubles will also expand to oil, grains, metals, fertilizers, and coal. and wood".
In addition, the Russian Ministry of Finance proposed to use rubles to buy back dollar-denominated European bonds due next week, which means that the "ruble settlement order" is likely to be further escalated.
Supported by this series of measures, the ruble continued to appreciate, and the dollar-ruble exchange rate fell to 83 to 82.54 at one point, close to the exchange rate before the conflict.
The U.S. government originally thought it could rely on its financial dominance to kick Russia out of the SWIFT settlement system.
But Russia's counterattack is directed at dollar hegemony and provides an example for other countries to bypass the dollar for settlements.
One day, the U.S. money-making model supported by dollar hegemony and the military-industrial complex may end with counterattacks from countries around the world.
(Author: Wang Xiaosong, a researcher at the Institute of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and a professor at the School of Economics, Renmin University of China)