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The United States Boom,'Clintonomics' and the NewEconomy Doctrine: A Neo-Gramscian ContributionEmad El-Din AyshaPublished online: 18 Aug 2010.

To cite this article: Emad El-Din Aysha (2001) The United States Boom,'Clintonomics' and the New Economy Doctrine: A Neo-Gramscian Contribution, NewPolitical Economy, 6:3, 341-358, DOI: 10.1080/13563460120091342

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New Political Economy, Vol. 6, No. 3, 2001

The United States Boom, ‘Clintonomics’and the New Economy Doctrine: ANeo-Gramscian Contribution

EMAD EL-DIN AYSHA

The central question that will be addressed in this article on US resurgence is asfollows: to what degree has the recent long US boom been an outcome ofaccident or of deliberate US strategy? There is no doubt that some form ofresurgence is at hand in the USA, both at the national and internationallevels—comparing US performance to past performance, and comparing theUSA to its main rivals, the European Union (EU) and Japan, but how are we to‘theorise’ this so-called resurgence? We theorise it here with reference to theconcept of hegemony and the related concept of world order. The standardassumption in the international relations community, whether mainstream orradical, is that world orders cannot come into being unless there is a predominantworld power that constructs this order by guaranteeing political stability andopening up the world’s markets. Discussion of the speci� cs of what goes into ahegemonic project is not possible here since it ties into complex methodologicaldebates between different theories of hegemony in international relations theory(realist, neoliberal, neo-Gramscian), but I do necessarily have to take a method-ological stance because of the obvious impact of theory on the evaluation ofempirical evidence. When discussing the decline, or resurgence, of hegemony,the very ‘choice of evidence’ is based on what are considered to be theappropriate ‘elements of power’.1 Therefore, the methodologica l position wehold about the nature of international politics determines how we conceptualisepower and, subsequently , hegemony.

I deal with concepts of power, hegemony and world order from the perspec-tive of ‘New’ International Political Economy (IPE), and with speci� c referenceto the neo-Gramscian school of New IPE. In mainstream internationa l relationstheory (or old IPE) the concept of hegemony denotes a situation in internationalaffairs that emerges when one nation-state is characterised by an overwhelmingpreponderance in the material resources of power. Power is seen as primarilycoercive, where material resources (military and economic potential) form thebasis of the ability of the hegemon to ‘dictate’ the terms of internationa l relations

Emad El-Din Aysha, Department of Economics, The American University in Cairo, 113 Sharia KasrEl Aini, P.O. Box 11511, Cairo, Egypt.

ISSN 1356-3467 print; ISSN 1469-9923 online/01/030341-18 Ó 2001 Taylor & Francis LtdDOI: 10.1080/1356346012009134 2

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to the other states through force or the threat of force. Neo-Gramscians take adifferent view, seeing power as a dual mix of coercion and consent, force andpersuasion. In this perspective the hegemon constructs an order where consen-sual aspects ‘come to the forefront, although coercion is always potentially in thebackground’.2 This emphasis on consent develops out of the Marxian concernsof neo-Gramscian thought, namely, the various roles played by ideology, thecapitalist class and the state in the maintenance of the inherently contradictoryand unstable capitalist economic system. The poverty and economic chaos thatcapitalism creates could very well generate so much opposition that capitalismitself would perhaps not survive. In the international context the perennial issueof ‘stability’ takes on a larger and more complex reality, given that relationsbetween states are inherently anarchic. War waged by the industrialised, capital-ist states is as much of a threat to the system as are its economic contradictions.Consent ensures stability in the long run, something that coercion alone cannever do. Therefore, it is actually in the interest of the hegemon to base itsdominance on the consent of others.

Consent itself rests upon a ‘perception of common interests by nations withinthe sphere’ of the hegemon.3 This ‘perception’ of common interests, though,rests on more than ideology, the intellectual ability of the hegemon to makeothers ‘think’ that their interests are consist with those of the hegemon. Thisperception has to be grounded in actual material fact. Gramsci � rmly believedthat, if hegemony was to be ‘ethico-political , it must also … have its foundationin the decisive function’ and ‘nucleus of economic activity’.4 For Gramscihegemony included a central policy dimension where the hegemonic orderconstructed ‘offers some prospect of satisfaction to the less powerful’ states andtheir ruling elites.5 It is the decisive nucleus of economic activity that is the mainsubject of this article. Is the USA economically powerful enough, given itsrecently booming economy, to run the international system in a way thatsimultaneously satis� es the demands of both the USA and its partners andsubordinates? Consequently , the nature and causes of the US boom becomerelevant. If it is the product of strategy, then it can be seen as something thatcould be harnessed to run the world. If not, then it can never be harnessed toachieve goals of a global and long-range nature.

Even though the basic impetus of this article is political, a signi� cant portionof my analysis is economic, developing a detailed economic critique of therecent exceptional performance of the USA and a generalised account of thepresent state of the US economy. The political side of my analysis will focus on‘Clintonomics,’ given that President Clinton has been credited with the boom,which began during his administration. The economic side of my analysis willfocus on the issue of the ‘new economy,’ a doctrine developed by political,economic and intellectual elites in the USA to explain this prosperity. Refutingthe new economy thesis is central to the task of analysing the longevity of thisboom, given that the doctrine argues explicitly that ‘fundamental’ changes haveoccurred in the USA and globally to create this boom in the USA speci� callyand deny its existence elsewhere in the world.

‘Clintonomics’ and the new economy thesis are not separate issues, but aredeeply interrelated and accordingly will be dealt with in tandem below.

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‘Clintonomics’ and the New Economy Doctrine

The measure of the economic success of the Clinton administration rests on theargument that this administration was able to make a fundamental break withthe past by cultivating new sources of wealth creation that put the USA aheadof the rest of the world. Clinton did not just ‘� ne tune’ the economy and manageit better than his predecessors, since all that would amount to is an adequatemanagement of relative economic decline. There is no doubt that the USA isprimus inter pares, the � rst amongst equals, but is it primus solus? Is it aunipolar economic power that is capable of managing the world economy largelyby itself? A stable world economic order can exist without unipolarity providedthat the most powerful countries in the system agree to run it, but, if they do not,then there is nothing that the most powerful nation can do to ensure that thisorder continues to exist.

This observation has particular salience in the speci� c case of the USA, giventhe nature of US decline, and given our understanding of hegemony. Decline isnot merely a matter of measures of per capita income, growth and productivity,as important as these measures are. From the perspective of national compari-sons the economic problems of the USA really began in the 1970s when growthand productivity began to slow down, the trade de� cit developed and unemploy-ment grew while the economy became more prone to in� ation. In particular,1972 is the break-off year when the USA entered the low growth lane and leftthe ‘golden age’ of postwar growth. More importantly, though, US declineinvolves the constraints placed by changes in these measures on the ability of theUSA to manage the world’s economy and its own economy in tandem. In termsof economic activity and economic decision making the world today is tripolarand, because of this, the USA has been ‘less willing and able to lead the system’since the 1970s.6

This does not just cover the internationa l trading order, but also the inter-national monetary system and the macroeconomic management of the worldeconomy. Since the Carter administration the USA has realised that the dollar byitself was no longer powerful enough to stablise the internationa l monetaryorder. This meant that the USA ‘recognized the right (and duty) of other powersto share in the responsibilit y of running’ the world economy.7 What the USAalso realised in the period that has followed the Carter administration was thatit could not even maintain the value of the dollar, and so determine USmacroeconomic policy, without the aid of other industrialise d powers and theircentral banks and capital markets. Reagan made this problem even worse byincreasing the country’s � nancial dependency, thanks to the twin de� cits and thetransformation of the USA from a net creditor to a net debtor. Next to theobvious dif� culties these developments created for the US economy, they alsomade it impossible for the USA to cure its trade de� cit and equilibrate itsbalance of payments through the traditional instrument of devaluation. In thecontext of low productivity , the only way the USA could eliminate its de� cits,particularly its trade de� cit, was through a large increase in growth ‘ac-companied by a sizeable reduction in interest rates’.8 Growth would increaserevenue in a way that would avoid increasing taxes, thus reducing the budgetwithout reducing incomes and expenditure. A fall in interest rates woulddecrease the debt burden and stimulate domestic investment, but this increase in

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growth would have to be international , since an increase in US income on itsown would just widen its trade de� cit. In short, US growth had to be groundedin an export-led boom.

The USA could do neither. It could not decrease interest rates because ‘it runsthe risk of a � ight from the dollar’.9 As a net debtor the USA critically dependedon large capital in� ows to keep its economy a� oat, capital that is attracted to theUSA speci� cally because of its high interest rates. As for stimulating growth,this had to be done at the international level if the USA was to expand its exportsand so eliminate the trade de� cit, but it could not re� ate the world economyeither since this demanded the cooperation of Germany and Japan, its two maincreditors, who refused to re� ate their economies in order to keep their in� ationrates under control. Even though Germany and Japan had the power to helpextract the USA out of its predicament, they had no interest in doing so—quitethe contrary, in fact, given that the German and Japanese balance of paymentssurpluses were the counterpart of the US trade de� cit. Generally speaking, then,just as the USA has lost much of its power due to tripolarisation , neither the EUnor Japan have been ‘prepared to assume a leadership role’.10 They garner manyadvantages from operating within the US-built open world economy, but not tothe point of helping the USA, the country that helped rebuild them after the war.As Frank Langdon puts it, the ‘gratitude’ these countries felt towards the USAhas no reality in modern day politics because gratitude is ‘apt to be a transientfeeling’.11 In other words, economic tripolarisation , the political apathy of alliesand domestic economic problems led to the ‘empirical relationship betweendollar de-valuations and US trading performance’ to ‘come unstuck’.12 Hege-mony in the neo-Gramscian schema demands that the interests of the hegemonare ‘coterminous with the internationa l system itself rather than with a narrowerpurely national security zone’.13 From the 1970s onwards relations between theUSA and its allies have been far more zero-sum and mercantilist in nature, withthe advantages garnered by one side coming at the expense of the others.Satisfying the aspirations of others has come at the expense of US prosperity andvice versa, creating a mismatch between the interests of the hegemon and theinterests of the system as a whole. This is a classic symptom of what Gramscicalled ‘decadent’ or declining hegemony.14

This historical background gives us the appropriate information needed todetermine whether US hegemony has reasserted itself through the contemporaryboom. The appropriate question is: has this unprecedented boom cured thebudget de� cit, trade de� cit and capital dependency of the US economy? Is itlarge enough and substantial enough, particularly at the level of productivity , tofree the USA from its � nancial dependency? Favourable national comparisons—US boom vs European and Japanese bust—by themselves do not mean that theUSA has reasserted its hegemony and overcome its economic dilemmas. Giventhe nature of these problems it becomes quite obvious that political leadershipis indispensable to the reassertion of US hegemony. These problems cannotsolve themselves by virtue of the laws of the marketplace. There simply is ‘nosubstitute for good political and economic leadership’, especially given thatmany of these problems developed out of ‘unwise policies and poor leadership,with or without’ the rise of Europe and Japan.15 This is true of the trade de� cit

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‘Clintonomics’ and the New Economy Doctrine

in particular, since the USA has the ‘resources—capital, skilled labor, techno-logical sophistication , and entrepreneurial competence—to meet’ any foreign‘challenge directly and successfully’.16 Bill Clinton could in principle havereversed decline and re-established an internationa l system where the long-terminterests of the USA were identical to those of the overall system. Whether hesucceeded is the subject of the rest of this article.

A second American century? ‘Clintonomics’ and the new economy

There is little doubt that for the past eight to nine years the USA has experienceda tremendous economic upturn, in marked contrast to US performance before1992, the year that Clinton became president by promising to focus ‘like a laserbeam’ on the economy. According to the US Bureau of Labor, from 1993 to1999 real GDP grew at the rate of 3.7 per cent, productivity (for the non-farmsector) grew at 1.8 per cent, while the unemployment rate averaged 5.6 per centand the in� ation rate 2.5 per cent. In 1998 the unemployment rate went below5 per cent, for the � rst time since the 1960s.17 A particularly important economicachievement has been the elimination of the country’s mammoth federal budgetde� cit, which was achieved so successfully that the de� cit actually turned intoa surplus. The comparison between the economic performance of the USA andthe EU and Japan is even more marked, with both Europe and Japan unable toachieve high growth rates and reduce their unemployment rates. The generalconsensus among economists is that the USA has experienced the most sustainedand continuous boom of its history.18

This has led many in the USA—journalists , business leaders, politicians—toargue that there is a ‘systemic’ difference between the USA and the ‘rest of theworld’.19 According to Fred Moseley, even ‘some Marxian and radicaleconomists’ have been swept up in the euphoria and concluded that the 1990srepresent a ‘turning point’ in the history of US capitalism ‘similar to that of theearly postwar “golden age” ’ of sustainable high growth and low unemploy-ment.20 The argument for this systemic difference has been referred to variouslyas the new economy view, the new economic paradigm and the new economydoctrine. At the heart of this theory is the assumption that a productivityrevolution has occurred which has fuelled the recovery, and that this revolution’sorigins lie in the twin factors of the information economy and the forces ofglobalisation . Advances in hardware, software, telecommunications and otherhigh-tech sectors led by the USA are supposedly ‘spilling over to the economyas a whole, creating a structural break with the dismal slowdown years of1972–95’ when the rate of productivity growth was only just over one per cent.21

As Chairman of the Federal Reserve, Alan Greenspan, has put it, the ‘recentacceleration in labor productivity is not just a cyclical phenomenon or astatistica l aberration’.22 Instead it ‘re� ects, at least in part, a more deep-seated,still developing, shift in our economic landscape’ based on the accelerating paceof technological innovation.23

Globalisation in particular has a very important role to play here given thatglobal competition is supposed to have ‘qualitatively altered the rules of thegame’.24 One of the most distinguishin g features of the US boom is the stability

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of prices in the face of lower unemployment rates and high growth. This � ies inthe face of conventiona l economic theory which assumes that prices rise asunemployment goes down (labour shortages increase the bargaining power ofworkers, thus increasing wages and thus prices). It is this anomaly that has ledmany to describe the US economy as a ‘new’ economy, an economy thatfunctions on the basis of ‘new’ rules where the ‘old speed limits on growth havebeen repealed’.25 It is now assumed that the US economy can grow inde� nitelywithout any threat of in� ation forcing the government to de� ate the economy tokeep prices in check. On the contrary, it is believed that low in� ation itself willguarantee further expansion because it means ‘lower interest rates, more capitalinvestment, rising productivity , and high growth—a virtuous cycle’ pushing theUSA towards a ‘zero-in� ation economy’.26 Globalisation is supposed to beresponsible for this, given that exposure to global competition has forced UScorporations to be wary of price increases, something that will give their globalrivals an advantage over them in the world market.27 With globalisation keepingin� ation under control no barriers exist to prevent the new high-tech sectorsfrom increasing productivity continuously . The business cycle, it is argued, is athing of the past.

According to these new economy advocates, these factors have heralded a‘second American century’ where the USA ‘will remain number one’.28 Journal-ist and corporate executive Mortimer Zuckerman argues that the USA today isin much the same position it was in on the eve of the twentieth century. Today’sglobal economy ‘richly rewards countries and societies that meet its needs … butin� icts devastating punishment on those who fail to live up to global stan-dards’.29 The USA is the only country in the world that is adequately suited tocompete successfully in the new global economy because of the � exibility of itslabour markets, the vastness of its � nancial resources, its commitment tolaissez-faire and free trade, and so its ability to exploit the productivityrevolutions in which it leads the world. Europe, Japan and much of the ThirdWorld cannot match the USA: hence ‘Eurosclerosis’, the Japanese economicslowdown and the East Asian � nancial crisis. This, in summary, is the argument‘for’ the resurgence of US hegemony.

The Clinton administration’s management of the US economy in a way thatis congruent with the realities of globalisation has also been seen by many as thefacilitator of the productivity boom and the new economy. ‘Clintonomics’ wasbased on the embrace of the information economy through an ‘information-agegovernment’ which ‘must be smaller … less bureaucratic … � scally disciplined,and focused on being a catalyst for new ideas’.30 From the very beginning of hispresidency Clinton argued that reducing the de� cit (� scal discipline ) was anindispensable condition for lowering interest rates, which was seen as the onlyway to stimulate investment and, on that basis, overall growth. Clinton was alsothe � rst US president openly to endorse globalisation . For many in the adminis-tration the ‘nation-state as an economic unit had lost a good deal of its meaning;there was effectively no such thing as a distinct or separate American econ-omy’.31 Clinton’s endorsement of the North American Free Trade Area(NAFTA) and the GATT Uruguay Round, both Republican initiatives , were alsogrounded in his commitment to globalisation .32 The broader issue of ‘economiccompetitiveness ’ was ‘at the heart’ of his view of US foreign policy, as he

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‘Clintonomics’ and the New Economy Doctrine

himself made clear.33 Clinton certainly took up the mantle of � nancial deregula-tion inherited from the two previous Republican administrations , � nally remov-ing one of the last major regulatory barriers, the Glass–Steagall Act of 1932.These regulatory barriers were put in place during the Great Depression as partof the Democrat New Deal project of regulating and civilising capitalism—aheritage upon which Clinton thus turned his back.

Although the Clinton administration did not invent the new economy doctrine,it ‘hopped’ on to the bandwagon and claimed that much of the country’s ‘new’economy was the product of ‘Clintonomics’, the ‘New’ Democrat agenda andthe ‘Third Way’ between old Democrat ‘New Dealism’ and Reaganite neoliber-alism.34 The new economy advocates, for their part, have drawn connectionsbetween the development of the new economy and Clinton’s wise managementof the US economy and his commitment to deregulation, globalisation and freetrade. Zuckerman thus lists de� cit reduction as one of the most important reasonsfor the current boom and uses the same economic logic used by the Clintonadministration (the importance of low interest rates). He also congratulated theadministration’s relatively ‘tight’ monetary policy which has functioned as a‘brake against in� ation’.35 The new economy advocates also take up much of therhetoric of the Third Way. Business Week, the loudest advocate of this doctrine,has argued that the information revolution will ‘make possible rapid growth andrapid increase of real wages more or less inde� nitely into the future’.36 Zucker-man has also made this point.

Given this connection between US economic performance and the doctrinesadhered to by the Clinton administration , the apparent resurgence of UShegemony has thus been accredited by many to the Clinton administration . Theclaim is that Clinton has reasserted US hegemony through this economic boomand ensured that this hegemony will last since the base of this boom will alsolast—both being the product of ‘systemic’ differences between the USA and allother nations.

The nature of the US boom: productivity, in� ation and foreign capital

There is no doubt that US economic performance has improved considerably inthe 1990s, particularly during the Clinton administration . But this improvementin the area of productivity growth speci� cally has fallen short of the ‘golden age’of productivity stretching from 1913 to 1972. Productivity growth from 1990 to1994 was just over one per cent per annum, essentially the same � gure growthachieved since the slowdown in the 1970s. From 1995 onwards signi� cantadvances were made, but this recovery only achieved two thirds of pre-1972� gures, according to of� cial Bureau of Labor � gures. Productivity growth duringthe Clinton administration as a whole (from 1993 to 1999) has been 1.8 per cent,far below the 3.4 per cent of the Kennedy–Johnson administrations before the1972 slowdown. Productivity growth during the Reagan–Bush administrationswas 1.7 per cent, practically the same rate as under Clinton. Real GDP growthhas been impressive (3.7 per cent compared to 4.8 per cent during the Kennedy–

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Johnson era), but this GDP growth clearly has no substantia l basis in productiv-ity growth.37

This apparent inconsistency between the growth of real GDP and the lack ofgrowth in productivity has puzzled many of the new economy advocates, giventhat they assume that it was a resurgence of productivity that was behind GDPgrowth. In response to this anomaly they have argued that the USA is experienc-ing a ‘hidden boom’ of sorts. They have charged that the productivity � gures arebased on measures that do not take account of the effect information technology(total quality management, the internet, intranets, growing economies of scaleand scope, etc.) has had on productivity . As Stephen Shephard of Business Weekputs it, ‘we do not know how to measure output in a high-tech serviceeconomy’.38 However, this explanation will not do, simply because all thatproductivity means in economics is measured real GDP per worker. GDP andproductivity are measured the same way, which means that, if productivitygrowth is understated, so will real GDP growth. In fact, it could be thatmeasured productivity growth is overstated. According to economist RobertGordon, new measures of price changes applied by the US government in 1999have ‘boosted measured productivity growth relative to actual productivitygrowth’.39 It could very well be that productivity is actually lower than theseunimpressive � gures, making the new economy account of US prosperity evenharder to sustain.

Taken a step further, this deconstruction of productivity measures reveals thatproductivity advances in the high-tech sectors have not engendered a ‘structuralbreak’ with the past. When discussing the productivity slowdown of the 1970swe must bear in mind that this slowdown was ‘entirely located outside ofmanufacturing’, with ‘no productivity growth slowdown in manufacturing atall’.40 Part of the reason for the slowdown was the shift of the US economy frommanufacturing to services. More importantly, in the 1990s the expansion inproductivity has been limited to the sectors that produce durables, and to themanufacture of computers speci� cally. Around 87 per cent of the US manufac-turing base is non-durable, and production here has ‘decelerated in 1995–99when compared to 1972–95,’ while manufacturing in durables ‘stripped ofcomputers has decelerated even more’.41 In other words, there has been nospillover from the new high-tech sectors into the rest of the economy (approxi-mately 98.8 per cent of the economy that does not manufacture computers). Ifthere is a new economy, it is circumscribed to these ‘new’ sectors only.

After arguments concerning productivity , the core of the new economythesis lies in its analysis of how globalisation has supposedly led to low in� ation.According to Paul Krugman, the US economy is not exposed enough toglobal competition to justify the kind of arguments put forward by neweconomy theorists. This is because most global competition occurs within thegoods-producing sector and not the service sector. As said above, most of the USeconomy is service-based, meaning that ‘no more than 25 and probably less than15 per cent of employment and value-added are actually subjected’ to the levelof competition needed to keep prices under control.42 There is also the issue ofthe overall exposure of the US economy to foreign competition in general, giventhat historically only 12–13 per cent of US GDP has been tied up in international

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trade. Interestingly enough, Zuckerman himself acknowledges this fact. He saysthat the virtuous cycle set in motion by globalisation and high-tech industries is‘not likely to be broken by external forces’—the ‘slower and riskier globaleconomy’—given that the USA has the ‘world’s most buoyant domestic demandand a more limited exposure … to exports, which account for only 13 per centof U.S. GDP’.43 In other words, the causes of US prosperity have been domesticin origin, given that the global economy is sluggish and unstable, and this isgood too because a larger exposure could have hurt the US economy. Globalisa-tion is therefore not the source of US prosperity, cannot be the source of its lowin� ation and should also be seen as a possible threat to its new economy. Heeven goes on to say that US exports are less vulnerable, are of higher quality,are more diversi� ed and, as a consequence, ‘do not have to compete on pricealone’.44

If this so, and apparently it is given the admissions of new economy theorists,then why is in� ation so low? The answer is that wages have not been rising withthe decline in unemployment. Wages have not been increasing, despite theshortages of labour, because of the overwhelming reality of ‘job insecurity’. AsAlan Greenspan himself made clear in testimony to Congress in 1997, the‘extraordinary’ and ‘exceptional’ US recovery was partly based on a ‘heightenedsense of job insecurity and, as a consequence, subdued wages’.45 The trade unionmovement has not recovered from the setbacks it experienced during the Reaganera; ‘downsizing’ is still widely practised; and much of the welfare state hasbeen dismantled and privatised by the Clinton administration . Globalisation isalso praying on the national psyche, forcing workers to fear that rising wagedemands will lead to their companies moving overseas to low-wage Third Worldcountries. An increasing proportion of those employed are only employedpart-time, putting further downward pressure on wages. A number of additionalfactors have also blunted in� ation, namely the East Asian � nancial crisis and theappreciation of the dollar, which have reduced the costs of imports. Accordingto Krugman, wages and prices have actually been rising since 1995–96, and itwas only these external factors that prevented major price increases.46 Some neweconomy theorists have in fact conceded the validity of this analysis. Zuckermanadmits that wages have not increased in tandem with employment, in contrast tothe predictions of new economy theorists, and argues that low in� ation and highpro� ts ‘could be attributable to the apparently slow growth in wages’.47 He alsosays that low wage growth is due ‘in large part to job security having becomemore important than wage increases’.48

Probably the only area in which Clinton has achieved results rivalling thoseof the golden age is job creation. These reductions in unemployment have beenparticularly impressive when compared to the EU, but even here we have to bearin mind that the USA has always been better at generating employment than theEU countries, even during the Reagan administration, because of the � exibilityof its labour markets and the weakness of its unions. The USA has always beena ‘world-beater in employment creation’, which leads us to question ‘whyAmericans were concerned enough about their economic lives to choose Clinton’given that the Reagan–Bush administrations had reduced unemployment.49 Theanswer, again, is job insecurity. Clinton was elected speci� cally to ensure that

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jobs were more stable, paid better, and that unemployment bene� ts wereincreased. Given that job insecurity is one of the foundations of the Clintonboom, this would indicate that there is no qualitative difference between the oldUS economy and the new US economy. The rules of the game are essentially thesame. It is only fortuitous circumstances that have kept matters in check. AlanGreenspan has also played a considerable role in keeping wages and prices undercontrol. In one of his speeches to the � nancial community he warned that the USeconomy was ‘steadily depleting the pool of available workers’, making labourmarkets ‘so tight that the rise in nominal wages’ may ‘start increasinglyoutpacing the gains in labor productivity ’, forcing wages, and so prices, up.50

Greenspan’s remarks immediately raised fears that the Federal Reserve wouldraise interest rates to control the threat of in� ation, which would lead to a slumpin bond prices, thus pushing prices down without having to raise interestrates—a self-ful� lling prophecy. Given Greenspan’s considerable role in keepingin� ation under control it is safe to say that the low in� ation US boom is not‘self-perpetuating’, and consequently that there is no systemic difference be-tween the US economy and the economies of the rest of the world.51 EvenZuckerman admits that the slowdown in wage growth could be ‘transitory’ innature.52

Now that the new economy account of the US boom has been thoroughlydiscredited, we must ask these questions: why is the US economy booming at allif no real productivity revolutions have occurred and what role did Clinton playin making the economy boom? If the US boom was orchestrated by the Clintonadministration , against all the odds, overcoming the economic dif� culties anddilemmas of the past, then we can expect the boom to last and conceivably formthe foundations of a new era of US hegemony. The � rst point that needs to bemade, however, is that, even if the new economy doctrine was true, Clintoncannot take credit for causing the boom. According to the February 2000Economic Report of the President, high-tech productivity growth was respon-sible for two-thirds of the growth in GDP, but this report also stated that it wassectoral market factors, and not policy, that were the main source of thishigh-tech productivity surge.53 Clinton certainly tried to take advantage of thenew economy doctrine after it was developed and became popular, but thedoctrine did not originate in the con� nes of his administration , and he hadnothing to do with implementing its dictates. On the contrary, he could actuallybe classed as a victim of it. Clinton was elected on a declinist platform thatcalled for interventionis t economic policies under the mantle of ‘strategic tradetheory’.54 At Clinton’s pre-inaugural economic summit held in 1992, ‘speakerafter speaker invoked the end of the American Century’.55 Clinton himselfproclaimed the twenty-� rst century to be European, quoting from LesterThurow’s pessimistic Head to Head. Laura Tyson—Clinton’s � rst head of theNational Economic Council—proudly proclaimed that the USA could not ‘affordthe soothing but irrelevant position that market forces alone’ could solve USproblems.56

All of the other factors suggested by new economy theorists as explanationsof the boom—� nancial deregulation, laissez-faire, de� cit reduction—came aboutlargely against Clinton’s will. The policies of his administration were also

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‘shaped by Wall Street, Congress and a host of other forces that converge in thelobbying vortex at Washington’.57 Most of the policies with which Clinton hopedto cure unemployment and slow growth ‘were not in fact implemented’ at allbecause of pressures from Wall Street and lobby groups.58 Alan Greenspan, inparticular, was instrumental in preventing Clinton from following through on hisinterventionis t agenda, thereby transforming his administration into—in Clin-ton’s own words—a ‘centre–right … “Eisenhower Republican” ’ administra-tion.59 Greenspan convinced Clinton and his cabinet that, if the de� cit was notreduced and in� ation kept under control, bondholders would panic and start anew recession, thus forcing him to eliminate most of his social agenda to cutexpenditure. It was because of this that Clinton protested: ‘I can’t do what Icame here to do’.60 Given that the Federal Reserve is an independent centralbank, its chairman has tremendous in� uence over macroeconomic policy. In fact,if any single person is responsible for the US boom then it is Alan Greenspan.61

It was only the reduction of the de� cit that gave Clinton the breathing spaceneeded to convince Greenspan to ease monetary policy through reducing interestrates and tolerating a lower rate of unemployment than his predecessor PaulVolker.

To demonstrate how fortunate Clinton was and how narrow his successes are,we have the testimony of his � rst-term Labor Secretary Robert Reich. Reichdescribed Greenspan as the ‘only’ person who had his ‘foot on the pedal’—theonly person who had the ability to expand the economy, thanks to the budgetde� cit.62 In a conversation with Greenspan the issue of his reappointment asFederal Reserve Board chairman came up. Greenspan said that his job wasguaranteed because Clinton needed the ‘con� dence of Wall Street, and only’ hecould ‘deliver’ it ‘to him’.63 He also said that was ‘why Bush reappointed’ himin ‘1992, even though he hated’ him ‘for keeping interest rates high as theeconomy slipped into recession in 1990’.64 Greenspan ended the conversation bywarning Reich that he ‘could do it to your man too. I could do worse. He’llreappoint me. He’ll do whatever I want’.65 This is why Reich describesGreenspan as the ‘most powerful man in the world’, an honour usually reservedfor the US president.66 Greenspan is quite literally a power unto himself. TheFinancial Times described him in January 2001 as ‘America’s Beloved Dic-tator’.67 Reich’s account also demonstrates that the bad economic performanceof the Bush administration , which led to Clinton’s election, was not the productof Bush’s policies, but rather the business cycle and Greenspan’s refusal to riskin� ation. Just as fortune was behind Bush’s loss of the presidency, fortune wasbehind Clinton’s economic successes.

Lower interest rates were also facilitated by (fortuitous) external factors,namely an unprecedented and unexpected surge of capital � owing into thecountry from 1993 onwards. During the Clinton administration the net in� ow ofcapital increased from US$59 billion in 1990–93 to US$264 billion in 1997,expanding investment considerably and thus helping to take pressure off interestrates. This did not come about because of any Clinton policy initiative. Insteadit came about as a result of an ‘increase in the perceived risk of investments in‘emerging markets,’ especially in Latin America and more recently in Asiathanks to the � nancial crises there.68 This in� ux in capital also helped reduce the

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budget since much of it went into US Treasury bonds. Economic prosperity ingeneral helped reduce the budget by increasing the tax revenues of the federalgovernment.

From this account we can safely conclude that Clinton had very little to dowith the recent boom the USA has experienced. Even his success at reducing thebudget came as a result of pressure from Greenspan and the RepublicanCongress, in addition to the favourable economic circumstances that helpedincrease government revenue. As Krugman has put it, new economy or no neweconomy, it was ‘simply Bill Clinton’s good luck that America Inc. � nally’solved many of its problems by itself ‘out on his watch’.69 It was not the productof design but circumstances and, as those circumstances fade, so will the boom.Is the recovery sustainable at an economic level? If the new economy cannotexplain US performance, then what can, and does our alternative explanationlead us to conclude that the recovery is substantial and sustainable over the longrun? Given that Clinton has followed in the footsteps of his Republicanpredecessors by letting the markets sort out the country’s problems, could it besaid that the US recovery is self-sustaining? Clinton’s non-interference in theeconomy could be a recipe for economic success and hegemonic resurgence.Henry Nau made similar arguments in his account of the Reagan administration,The Myth of America’s Decline, published in 1990.70 Michael Cox has also madea similar argument, believing that Reagan was able to reassert US hegemonythrough deregulation and his attacks on the unions.71 Answering such questionsdemands further analysis of the nature and basis of the US boom.

If overall productivity has only risen marginally, then this means that therecovery does not have � rm foundations in the real economy. According to thenational income and product accounts the main component of US GDP that didexpand considerably in the Clinton era was consumption. Government expendi-ture declined signi� cantly, while investment did not increase much and exportgrowth was negative. The US boom, then, was largely a product of a spendingspree and, what is more, a spending spree not grounded in rising incomes oraccumulated savings. According to Perraton, US personal incomes have not risenmuch since 1989 and savings are negative because there is still a large taxburden facing US households. Debt makes up more than 90 per cent ofhousehold income in the USA today.72 The spending spree is � nanced byborrowing and the money borrowed comes from abroad—the net capital in� owdiscussed above. The US boom is, in effect, a debt-� nanced private consumptionboom. The US is living beyond its means, spending more than it can afford andmake. The most tantalising piece of evidence in support of this thesis is thepersistence and indeed worsening of the trade de� cit under Clinton, despite theprogress made in rectifying the country’s other economic problems. From 1992to 1997 the US trade de� cit rose from US$39 billion to US$114 billion.73 In1999 it reached the � gure of US$250 billion.74 The startling growth of the USeconomy is largely behind this increase in imports, as more goods have beensucked in to meet rising demand. No economy is totally self-suf� cient andincreasing imports with growth is to be expected. But a trade de� cit, and anexpanding de� cit of this proportion, is evidence that there has been no produc-

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tivity revolution and that consumption of these imports is the result of borrowingand capital in� ows. The minuscule proportion of the economy that makes up theinformation industries would explain why the increases in productivity in thesesectors have not affected the trade de� cit. As Eamonn Fingleton puts it,information industries are ‘sexy, but they make lousy exporters’.75

Looked at from an historical perspective, we can see that low productivityfrom 1972 onwards was actually a product of hegemonic decline and theproblems discussed earlier at the outset of the article. The shift from manufactur-ing to service economy in the USA did not come about just because of thenatural progression and maturation of a developed economy. It also came aboutas a result of the overvaluation of the dollar perpetuated by the Bretton Woods� xed exchange rate mechanism. A trade de� cit and de-industrialisatio n resulted.President Nixon’s destruction of this system in 1971 should have facilitated areversal of these fortunes, with the dollar being pushed down to readjust thebalance of payments. This may have happened if it had not been for the twinde� cits of the Reagan era and the massive de-industrialisatio n that resulted fromhigh interest rates and an overvalued dollar. Although Clinton has done much torepair the economic damage brought on by ‘Reaganomics’, the persistentinability of the US economy to grow without sucking in imports means that theUSA is still susceptible to the ‘ “ratchet-like” deindustrialization ’ of the 1980s.76

The persistence and expansion of the trade de� cit is all the more startling andindicative of the limits of the US economy, once we bear in mind thetremendous cost advantages US corporations have over their high-wage Euro-pean and Japanese competitors. The basis of the US boom is low wages, afterall, but—despite this—US companies cannot compete successfully enough toreduce the de� cit! The massive surge in the stock market also bears out theseconclusions, given that stock prices have grown at a rate 13.9 per cent higherthan the growth rate of real GDP.77 There is a massive mismatch between stockprices and the actual earnings of stocks. The US stock market is making moneyby making money.

In sum, the US economic recovery has been based to a considerable extent ona ‘� nancial bubble’. From this we can conclude that Reagan did not reassert UShegemony because he was unable to bring back productivity rates to theirpre-1972 rates. Therefore, Clinton’s continuation of Reagan’s legacy does notconstitute a reassertion of hegemony simply because he also continued thislegacy when it comes to productivity . Taken a step further, we discover that thecurrent boom is actually very similar to the boom the USA experienced duringthe Reagan administration . That boom was also funded by borrowing foreignmoney. We must also remember that the Reagan boom was also characterised bylow in� ation, thanks to high interest rates. Just as there is no reason to think thatthe economy under Clinton was new, there is no reason to think that theeconomy under Reagan was new either. Overall, most of the policies advocatedin the 1980s and 1990s—such as the ‘heavy-handed industria l policies urged bythe Democrat left, or the return to the gold standard urged by the Republicanright’—were never implemented, leading to the conclusion that the ‘Americaneconomy would have ended up in more or less the same place’ whoever ran thecountry.78

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Conclusion: hegemonic resurgence or continued decline?

This progression in my analysis of the bases of the US recovery leads to the � nalpart of this article, which is the assessment of this recovery from the perspectiveof our understanding of hegemony. Has the US recovered enough to extract itselffrom the economic dilemmas of the 1970s and 1980s? Simply put, the answeris no. There is no doubt that the US economy is much better off than it was inthe 1970s–80s, but this does not justify the claims of the new economy theoriststhat there has been a fundamental break with the past in terms of the economy’sability to generate wealth over the long haul. The business cycle is not a thingof the past. This suggests that the boom does not have a solid foundation in theability of the USA to produce domestically and compete globally, but has beendriven instead by capital in� ows, cheap wages, rampant � nancial speculation andthe weakness of Clinton’s resolve in the face of Greenspan. These are factorsthat are a product of circumstance and have no grounding in political leadershipor the real economy. The central problems facing the USA today, minus thebudget de� cit, are essentially the same as those that developed in the 1970s and1980s. The USA is still a net debtor that needs foreign capital and high interestrates to keep its economy a� oat. Greenspan’s reduction of interest rates duringClinton’s presidency is not substantia l enough to create the kind of boom neededto solve the country’s problems. Despite these reductions interest rates have‘remained well above historical levels’ in order to keep in� ation and wage risesunder control, following the same policy begun by Volker during the Reaganadministration.79 Even Zuckerman admits that the Federal Reserve kept in� ationunder control through a 4 per cent real interest rate, ‘double the usual margin,’noting that ‘monetary policy has, in fact, tightened in recent years’.80 The USdependency on foreign capital actually increased during the Clinton era, giventhe massive surge of capital in� ows discussed above.

It is true that Clinton eliminated the de� cit and replaced it with a surplus,which does put the USA on the right track if it intended to reassert its hegemony,but this by itself is not enough without a signi� cant increase in productivity , asubstantial reduction in interest rates and an international increase in growth.Without such changes there is no guarantee that the budget will remain insurplus. Moreover, if it was not for the end of the Cold War—the need for largemilitary expenditures—the de� cit could not have been reduced this substantially(something which Zuckerman acknowledges). With George Bush, Jr � nallywinning the 2000 presidential election, we will have to wait and see if his plansfor expanding the military budget will lead to another budget de� cit. This ishighly probable given that he intends to reduce taxes as well, which was therecipe that led to the de� cit during the Reagan administration. A re-emergenceof some form of geopolitical competition or con� ict would also ruin thisachievement by forcing up military expenditures.81 Although this seems unlikely,it is important to remember that unipolarity is a highly arti� cial situation andthat, by de� nition, it generates opposition and balancing alliances.82

The shaky economic and political foundations of the new economy and theClinton boom have also been con� rmed by recent events. With the beginning ofthe new year, 2001, growth has slowed to pre-1996 rates, while a number of

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other indicators (manufacturing activity, consumer con� dence, sales, employ-ment growth) have also experienced a downturn. Because of these developmentsthe Federal Reserve was forced to reduce interest rates by half a per cent in orderto keep the stock market con� dent that the economy will keep booming. FederalReserve of� cials also admitted that they ‘may have gone too far in reining ineconomic growth through interest-rate increases between June 1999 and May2000’.83 This would imply that it was the macro-management of the USeconomy that led to this slowdown and the boom before it, and not any majorunderlying transformations in productivity. As indicated earlier, the businesscycle is a fact of economic life and Alan Greenspan still has the decisive say asto what is done in response to the business cycle. The 2000 presidentia l electionitself con� rms Greenspan’s continuing power. During the election Bush’s chief� nancial adviser, Lawrence Lindsey, ‘made much of his relationship with AlanGreenspan, and appeared to claim that Mr Greenspan endorses Mr Bush’seconomic plan’.84 Later Lindsey claimed that he never discussed Bush’s econ-omic plans with Greenspan because it was not for ‘Chairman Greenspan toendorse one tax plan or another … or to endorse one candidate or another’.85 Thereason for this ‘back-tracking’ on the part of Lindsey is the ‘independence’ ofthe Federal Reserve, which assumes that it is non-partisan in principle. Lindsey’sinitial remarks suggest otherwise, as does his embarrassment at the realisation ofthis fact. Interestingly, there has been considerable speculation in the � nancialpress and among former Federal Reserve of� cials about the full range of motivesbehind Greenspan’s decision to reduce interest rates in response to the downturn.It is rumoured that he was trying to send George Bush a message, a ‘warning,’concerning his plans to reduce taxes by US$1.3 trillion in an effort to stimulatethe economy.86 Too large a stimulus package could generate in� ation, somethingGreenspan is still committed to preventing.

Taking our economic critique further we discover that the USA has in manyways acclimatised itself to the realities of decline, learning to live with them andtake advantage of them. The trade de� cit is a case in point. According to theCouncil of Economic Advisors, the ‘trade de� cit has been a “safety value” forexpanding the … economy’ because imports of goods ‘have kept in� ation low,while imports of capital have kept interest rates low’, thus facilitating the‘full-employment economy’ of the USA.87 This attitude predates the Clintonadministration . Ever since the 1970s many of the country’s leaders have actuallybecome increasingly happy with the growing in� ux of imported goods from UScompetitors. This is because postwar internationalism was based on a bargainbetween US elites and its public, a bargain based on the ‘development andcontinuance of a consumption economy’.88 With the slowdown of growth ratesin the 1970s ‘cheap imports became vital—they supplied the bread and circusesthat kept the American empire in business’.89 ‘Consumer heaven’ was still areality even with stagnating and declining family incomes. Kunz also describesthese imports as providing a ‘safety value’ for the US economy and society.90

Therefore, not only is the USA still the ‘� rst among equals’, but it is alsoincreasingly happy with this predicament.91 The USA no longer even has thedesire to be a hegemon, let alone the ability. The mismatch between US interestsand those of its allies has continued, and the fact is that the US hegemonic elite

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is content with this state of affairs, thereby positively encouraging decline. TheClinton presidency has not witnessed the resurgence of US hegemony, but hasrather presided over continuing decline.

Notes

1. John O’Loughlin, ‘Fact or � ction? The evidence of the thesis of US relative decline, 1966–1991’, in:Collin H. Williams (Ed.), The Political Geography of the New World Order (Belhaven, 1993), p. 154.

2. Stephen Gill, American Hegemony and the Trilateral Commission (Cambridge, University Press, 1990), p.55.

3. Stephen Burman, America in the Modern World: The Transcendence of United States Hegemony(Harvester Wheatsheaf, 1991), p. 27.

4. Gramsci, quoted in Joseph V. Femia, Gramsci’s Political Thought: Hegemony, Consciousness , and theRevolutionary Process (Clarendon, 1981), p. 24.

5. Robert Cox, Production, Power and World Order: Social Forces in the Making of History (ColumbiaUniversity Press, 1987), p. 7.

6. Joan Edelman Spero & Jeffrey A. Hart, The Politics of International Economic Relations, 5th edn(Routledge, 1995), p. 62.

7. Riccardo Parboni, ‘U.S. Economic Strategies Against Western Europe: From Nixon to Reagan’, Geoforum,Vol. 19, No. 1 (1988), pp. 45–54.

8. Ibid., p. 52.9. Ibid.

10. Spero & Hart, The Politics of International Economic Relations, p. 62.11. Frank Langdon, ‘The post-hegemoni c Japanese–U.S. relationship’, in: Tsuneo Akaha & Frank Langdon

(Eds), Japan in the Posthegemoni c World (Lynne Rienner, 1993), p. 83.12. John Agnew & Stuart Corbridge, ‘The US Trade and Budget De� cits in Global Perspective—An Essay

in Geopolitical-Economy ’, Environment and Planning D, Vol. 9, No. 1 (1991), pp. 71–90.13. Knusten, quoted in Tsuneo Akaha & Frank Langdon, ‘Introduction: Japan in the post-hegemoni c world’,

in: Akaha & Langdon, Japan in the Posthegemonic World, p. 4.14. Alan W. Cafruny, ‘A Gramscian concept of declining hegemony: stages of U.S. power and the evolution

of international economic relations’, in: David P. Rapkin (ed.), World Leadership and Hegemony (LynneRienner, 1990).

15. Langdon, ‘The post-hegemonic Japanese–U.S. relationship’, p. 87.16. Fred L. Block, The Origins of International Economic Disorder: A Study of United States International

Monetary Policy from World War II to the Present (Macmillan, 1977), p. 146.17. Robert Pollin, ‘Anatomy of Clintonomics’, New Left Review, No. 3 (Second Series) (2000), pp. 17–46.18. Paul Whiteley, ‘US elections & US political economy’, unpublished paper delivered to PERC seminar,

University of Shef� eld, Shef� eld, November 2000.19. Mortimer B. Zuckerman, ‘A Second American Century’, Foreign Affairs, Vol. 77, No. 3 (1998), pp.

18–31.20. Fred Moseley, ‘The United States Economy at the Turn of the Century: Entering a New Era of

Prosperity?’, Capital & Class, Vol. 67 (1999), pp. 25–45.21. Robert J Gordon, ‘Has the “New Economy” Rendered the Productivity Slowdown Obsolete’, 14 June 1999

at http://faculty-web.at.northwestern.edu /economics/gordon/334.html, pp. 1–27.22. Alan Greenspan, quoted in ibid., p. 1.23. Ibid., p. 1.24. Paul Krugman, ‘How Fast Can the U.S. Economy Grow?’, Harvard Business Review, Vol. 75, No. 4

(1997), pp. 123–9.25. Ibid., p. 123.26. Zuckerman, ‘A Second American Century’, p. 19.27. Jason Pontin, ‘There is No New Economy’, Red Herring Magazine, 29 September 1997 at wysiwyg:45/

http://www.redherring.com/mag/issue46/rap.html, pp. 1–4.28. Zuckerman, ‘A Second American Century’, p. 28.

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29. Paul Krugman, ‘Global Vision Du Jour’, Review of The Lexus and the Olive Tree, by Thomas Friedmanat http://ww.pkarchive.org /news/lexus.html, pp. 1–2.

30. Bill Clinton, quoted in Pollin, ‘Anatomy of Clintonomics’, p. 17.31. Michael Cox, US Foreign Policy after the Cold War: Superpower without a Mission? (Pinter, 1995), p.

26.32. Bob Woodward, The Agenda: Inside the Clinton White House (Simon & Schuster, 1994).33. Clinton, quoted in Douglas Brinkley, ‘Democratic Enlargement: The Clinton Doctrine’, Foreign Policy,

No. 106 (1997), pp. 111–27.34. Pollin, ‘Anatomy of Clintonomics’.35. Zuckerman, ‘A Second American Century’, p. 27.36. Moseley, ‘The United States Economy at the Turn of the Century’, p. 27.37. Pollin, ‘Anatomy of Clintonomics’.38. Stephen Shephard, quoted in Paul Krugman, ‘Speed Trap’, 18 December 1997 at http://ww.pkarchive.org /

new/speed.html, pp. 1–2.39. Gordon, ‘Has the “New Economy” Rendered the Productivity Slowdown Obsolete’, p. 3.40. Ibid., p. 10.41. Ibid., p. 23; italics in original.42. Paul Krugman, ‘Superiority Complex’, The New Republic, Vol. 217, No. 18 (1997), pp. 20–1.43. Zuckerman, ‘A Second American Century’, pp. 19–20.44. Ibid., p. 20.45. Alan Greenspan, quoted in Pollin, ‘Anatomy of Clintonomics’, p. 39.46. Krugman, ‘Superiority Complex’, p. 20.47. Zuckerman, ‘A Second American Century’, p. 29.48. Ibid., p. 29.49. Richard B. Freeman, ‘Jobs in the USA: America Creates More Jobs than Europe, But are they Worth

Having’, New Economy, Vol. 1 (1994), pp 20–4.50. Alan Greenspan, quoted in Paul Krugman, ‘Labor Pains’, 25 May 1999 at http://ww.pkarchive.org /

economy/wagepain.html.51. Zuckerman, ‘A Second American Century’, p. 29.52. Ibid., p. 29.53. Paul Krugman, ‘Dynamo and microchip’, The New York Times, 20 February 2000.54. David McKay, ‘Essays on the US-Economy: Overview’, in: The USA and Canada 1998 (Europe

Publications, 1997), pp. 93–7.55. Krugman, ‘Superiority Complex’, p. 20.56. Laura Tyson, quoted in Cox, US Foreign Policy after the Cold War, p. 25.57. Pollin, ‘Anatomy of Clintonomics’, p. 18.58. Candace Howes, ‘Long Term Economic Strategy and Employment Growth in the US: An Analysis of

Clinton’s Economic Policies’, Contributions to Political Economy, Vol. 14 (1995), pp. 1–31.59. Clinton, quoted in Pollin, ‘Anatomy of Clintonomics’, p. 1760. Clinton, quoted in Robert Reich, Locked in the Cabinet (Alfred A. Knopf, 1997), p. 105.61. Jonathan Perraton, ‘US elections & US political economy’, unpublished paper delivered to PERC seminar,

University of Shef� eld, Shef� eld, November 2000.62. Reich, Locked in the Cabinet, p. 79.63. Alan Greenspan, quoted in ibid., p. 82.64. Ibid.65. Ibid.66. Reich, Locked in the Cabinet, p. 286.67. ‘A � tting legacy for America’s beloved dictator’, The Financial Times, 9 January 2001.68. Moseley, ‘The United States Economy at the Turn of the Century’, p. 35.69. Krugman, ‘Dynamo and microchip’.70. Henry R. Nau, ‘Making United States Trade Policy Truly Strategic’, International Journal, Vol. 46 (1994),

pp. 509–35.71. Michael Cox, ‘The USA: hegemonic still? Towards an international political economy of American

power’, unpublished paper delivered to PERC seminar, University of Shef� eld, Shef� eld, November 1999.72. Perraton, ‘US elections & US political economy’.

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73. Daniel T. Griswold, ‘America’s Maligned and Misunderstood Trade De� cit’, USA Today Magazine, Vol.127, No. 2642 (1998), pp. 14–7.

74. Clyde Prestowitz, ‘The Trade De� cit is a Red Herring’, Intellectual Capital.com, 26 August 1999 athttp://www.intellectualcapital.com/issues/issue284/item6203.asp, pp. 1–4.

75. Eamonn Fingleton, ‘The New Economy’s Troubling Trade Gap’, Harvard Business Review, Vol. 77, No.6 (1999), pp. 25–6.

76. John Killick, ‘Essay on the US Economy: The External Trade of the US’, in: The USA and Canada 1998,p. 144.

77. Pollin, ‘Anatomy of Clintonomics’.78. Krugman, ‘Dynamo and microchip’.79. Pollin, ‘Anatomy of Clintonomics’, p. 27.80. Zuckerman, ‘A Second American Century’, p. 27.81. James Schlesinger, ‘Fragmentation and Hubris: A Shaky Basis for American Leadership’, The National

Interest, No. 49 (1997), pp. 3–9.82. David P. Calleo, ‘A New Era of Overstretch? American Policy in Europe and Asia’, World Policy Journal,

Vol. 15, No. 1 (1998), pp. 11–25.83. Jeannine Aversa, ‘Jobless-claims fall but still pointing to weakening economy’, Boston Globe, 11 January

2001.84. Paul Krugman, ‘Don’t ask Alan’, The New York Times, 6 August 2000.85. Lawrence Lindsey, quoted in ibid.86. Gerard Baker, ‘US slowdown: tax cuts or rate cuts—or both?’, The Financial Times, 8 January 2001.87. CEA, quoted in Griswold, ‘America’s Maligned and Misunderstood Trade De� cit’, p. 17.88. Diane B. Kunz, Butter and Guns: America’s Cold War Economic Diplomacy (Free Press, 1997), p. 310.89. Ibid.90. Ibid.91. Paul Krugman, ‘America the Boastful’, Foreign Affairs, Vol. 77, No. 3 (1998), pp. 32–45.

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