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1 A 'Technological Fix' for the Crisis of US Hegemony?

The United States in the 1980s has often taken the world by surprise. The decade opened with a new 'Cold War' wind between East and West, and shortly after came the election of Ronald Reagan at the White House. His promise to 'make America stand tall again' brought the United States into the deepest recession since the 1930s and to the greatest arms race of recent history. Europe, needless to say, was affected by both, with economic stagnation and the deployment of new US nuclear weapons, Pershing II and cruise missiles, in five West European countries.

After the initial hardship, the promise of 'Reaganomics' seemed fulfilled by a new cycle of growth, the fastest in decades, and the rise of the dollar in all the world's exchange rates. Then US policy became even more adventurous: the first missiles were not yet in Europe when the US president announced a gigantic programme to bring the arms race into space: the Strategic Defence Initiative, that immediately became 'Star Wars'. The economic marvels and the political successes brought Reagan back to the White House in 1984 with a second presidential mandate.

The latter part of the 1980s has been less triumphant. The US had to control the downfall of the dollar and engage in difficult negotiations on the arms race with the new dynamic Soviet leadership of Mikhail Gorbachev, that resulted in the December 1987 treaty for the elimination of 'Euromissiles.' In November 1986 the Democratic Party victory in the US mid-term elections for the House and the Senate and, immediately after, the scandal on the supply of arms to Iran and the secret funding of the Nicaraguan 'Contras' marked the beginning of the end of the Reagan's 'restoration' in American politics. The Stock Market crash of October 1987, the continuing danger of 'trade wars' and the falling confidence in the US leadership, on the eve of the 1988 presidential elections, may lead to a watershed in American politics.

Now that 'the party is over', the US is presented with the costs of its superpower craze of the 1980s. While economic growth is vanishing, the US continues to have record deficits in the balance of payments and in the federal budget. The US is now a debtor nation, borrowing more than what it is investing abroad, while the federal debt is also at record levels. In the meantime, productivity has stopped growing and US competitiveness continues to fall. The innovative capacity is declining and the US technological leadership is being lost.

It may be surprising that an America 'standing tall again' is having such hard times, but if we look at recent economic processes with some perspective, the present situation is simply the result of the progressive erosion of the US economic and technological leadership on Western Europe and Japan. Since the end of the Second World War, the US performance has been regularly surpassed by the European and Japanese economies. The US had a slower growth and, year after year, smaller shares in the world's industrial production and trade; the US has also ceased to be the major source of technological innovation. Step after step, Western Europe and Japan have completed the 'catching-up' with the US economy and technology. The levels of productivity, production, real income and consumption are now similar in all advanced capitalist countries. Starting from a position of undisputed economic and technological leadership, the US finds itself in the company of other major countries, in an increasingly integrated world economy, with a more articulate division of labour.

If the US was experiencing such a decline, how could the dramatic recovery of US international economic power occur? It was possible because the US still controls the 'rules of the game' of the international economy, rules that were set at the end of the Second World War, dictating free markets, open trade and a monetary order based on the US dollar, with the system of American military alliances as the enforcer of the economic order. In monetary and military relations, the US in fact has maintained its international leadership; it has even 'specialized' its economy in these functions, with a growing supply of financial services and weapons.

On the basis of these priorities, US policy in the 1980s did not address the structural processes of its economic decline vis--vis Europe and Japan. The road chosen by the US government has been to reassert American leadership using the most accessible means, with the most direct effect on international power relations: military and monetary policies, and later technological strategies, have provided the tools for such a project.

In the early 1980s Europe and Japan had to confront a major US offensive, that used dollars and missiles to reassert US power and its hegemony over the West. The European acquiescence allowed a temporary 'restoration' of the old order within the West. The next step in the US strategy aimed at laying a new basis for a renewed hegemony over the West. A crucial part of this strategy has been to reorganize the relationships among advanced countries through a technological strategy that influences the direction of innovative efforts, the path of technological progress and the resulting economic structures. This has been the answer to the relative economic and technological decline of the US: not the reconstruction of a capacity to produce and innovate, but a use of international power and technological specialization, especially in the military field, to redirect economic and technical progress in the most favourable terms for the US. A strategy that is searching for a 'technological fix' for the crisis of US hegemony.

In the current transformations of the world economy, the activities of research and development, innovation and investment, together with the technological policies of governments, are increasingly important in shaping a country's position in the international division of labour and hierarchy of states. In sectors such as microelectronics, computers, telecommunications and other new technologies, the strategy of the US government and of many US corporations has aimed first of all at maintaining the leadership in a set of 'strategic technologies' that are considered the key to international power relations for their military applications and their economic importance.

The development and control of new technologies has therefore become a crucial area of US policy; this has led to strict controls over international transfers of technology and to corporate and government strategies that use technology as a weapon in international relations. Obviously, a central part of this strategy has been the launch of the Strategic Defence Initiative, the largest research programme ever financed by a Western government. In military terms, 'Star Wars' aims at recovering the US superiority on the Soviet Union; in technological terms, the objective is a new US leadership on Europe and Japan, to be achieved by setting the ground for innovation and competition within the West.

The result is what could be defined as a strategy of 'Technological Star Wars' against the other advanced countries. Its aim is to renew a US hegemony on the basis of a technological leadership limited to 'strategic' sectors - the military, space, other high technologies - and that is enforced by the political power that comes with military force. This falls short of recreating the overall economic and technological leadership that provided the basis for the US hegemony in the post-war period, and resulted in a regime of accumulation that spread all over the world. This time, the US strategy does not even address the decline of its economy, that is rather accelerated by the concentration of resources in areas that do not contribute to the competitiveness of the US economy.

For Europe and Japan, such a strategy raises fundamental questions not only concerning the direction of economic and technological change, but also about the future of their relations with the US. The European and Japanese passivity in the years of American political and military activism should not lead to underestimate the strength of their economies and the importance of the greater political role they can play in international relations. These processes are going to continue in the future, making more acute both the US decline and its attempt to restore power, and, on the other hand, the need for a new economic and political order within the West, opening new alternatives for the future of Europe.

In the current restructuring of the world economy and of relations among states, each country's position is defined by a combination of technological advances, economic strength, political prominence and, to a certain extent, military power. In order to investigate this combination of factors, an appropriate framework for analysis is developed in Chapter 2. It describes the changing modes of accumulation in the economy and modes of intervention of the state; an interpretative hypothesis is also formulated.

In Chapter 3 the recent economic processes are reviewed. The relative decline of the US economy is documented, with the comparative performances of Europe and Japan in terms of growth, productivity and competitiveness. Special attention is devoted to the effects of the military economy of the US, and to the debate on the US economic decline, concluding with an assessment of the US corporate and government strategies in the international economy.

The technological strategies are investigated in Chapter 4. Opening with an analysis of the dynamics of technological change and its international role, the chapter examines the innovative performances of the US, Europe and Japan, and the effects of military technology. Corporate technological strategies are then reviewed, with the analysis of two key case studies, in the semiconductor and telecommunications industries. The US government strategies are also investigated, assessing their impact on international relations, with two more cases: the US controls over technology transfers and the US Strategic Defence Initiative.

The conclusions, in Chapter 5, assess strength and contradictions of the US strategy and the alternatives for the future of Europe, between accepting a restoration of the US hegemony and building a new future beyond the American decline.

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