6. The Soft Line

With the end of the Cold War, the US is more free to use force to control the South, but several factors are likely to inhibit the resort to these traditional methods. Among them are the successes of the past years in crushing popular nationalist and reform tendencies, the elimination of the "Communist" appeal to those who hope to "plunder the rich," and the economic catastrophes of the last decade. In light of these achievements, limited forms of diversity and independence can be tolerated with less concern that they will lead to a challenge to ruling business interests. Control can be exercised by economic measures: the IMF regimen, selective resort to free trade measures, and so forth. Democratic forms are tolerable, even preferable, as long as "stability" is ensured. If this dominant value is threatened, the iron fist must strike.

Another inhibiting factor is that the domestic base for foreign adventures has eroded. An early Bush Administration National Security Policy Review concluded that "much weaker enemies" (meaning any acceptable target) must be defeated "decisively and rapidly," because domestic "political support" is so thin.⁴⁰ Another problem is that other centers of economic power have their own interests, though the Defense Planning study cited earlier is correct in noting that basic interests are shared, notably, the concern that the Third World fulfill its service function. And the increasing internationalization of the economy gives a somewhat new cast to interstate competition, as already discussed. These are factors of growing importance.

The use of force to control the Third World is a last resort. Economic weapons are more efficient, when feasible. Some of the newer mechanisms can be seen in the GATT negotiations. Western powers call for liberalization when that is in their interest, and for enhanced protection when that is in their interest. One major US concern is the "new themes": guarantees for "intellectual property rights," such as patents and software, that will enable TNCs to monopolize new technology; and removal of constraints on services and investment, which will undermine national development programs in the Third World and effectively place economic and social policy decisions in the hands of TNCs and the financial institutions of the North. These are "issues of greater magnitude" than the more publicized conflict over agricultural subsidies, according to William Brock, head of the Multilateral Trade Negotiations Coalition of major US corporations.⁴¹

In general, each of the wealthy industrial powers advocates a mixture of liberalization and protection (the Multifiber Arrangement and its extensions, the US-Japan semiconductor agreement, Voluntary Export Arrangements, etc.), designed for the interests of dominant domestic forces, and particularly for the TNCs that are to run the world economy. The effects would be to restrict Third World governments to a police function to control their working classes and superfluous population, while TNCs gain free access to their resources and monopolize new technology and global investment and production -- and of course are granted the central planning, allocation, production, and distribution functions denied to governments, unacceptable agents because they might fall under the influence of popular pressures reflecting domestic needs. The outcome may be called "free trade" for doctrinal reasons, but it might more accurately be described as "a system of world economic governance with parameters defined by the unregulated market and rules administered by supranational banks and corporations" (Howard Wachtel), a system of "corporate mercantilism" (Peter Phillips), with managed commercial interactions within and among huge corporate groupings, and regular state intervention in the three major Northern blocs to subsidize and protect domestically-based international corporations and financial institutions.⁴²

The facts have not been lost on Third World commentators, who have been protesting eloquently. But their voices are as welcome as those of Iraqi democrats.

Meanwhile, the US is establishing a regional bloc that will enable it to compete more effectively with the Japan-led region and the EC. Canada's role is to provide resources and some services and skilled labor, as it is absorbed more fully into the US economy with reduction of the welfare system, labor rights, and cultural independence. The Canadian Labour Congress reported the loss of over 225,000 jobs in the first two years of the Free Trade Agreement, along with a wave of takeovers of Canadian-based companies (see chapter 2.5). Mexico, Central America, and the Caribbean are to supply cheap labor for assembly plants, as in the maquiladora industries of northern Mexico, where harsh working conditions, low wages, and the absence of environmental controls offer highly profitable conditions for investors. Internal repression and structural adjustment will ensure ample cheap and docile labor. These regions are also to provide export crops and markets for US agribusiness. Mexico and Venezuela are also to provide oil, with US corporations granted the right to take part in production, reversing efforts at domestic control of natural resources. The press failed to give Bush sufficient credit for his achievements in his Fall 1990 tour of Latin America. Mexico was induced to allow US oil companies new access to its resources, a policy goal of a half-century. US companies will now be able "to help Mexico's nationalized oil company," as the Wall Street Journal prefers to construe the matter. Our fondest wish for many years has been to help our little brown brothers, and at last the ignorant peons will allow us to cater to their needs.⁴³

Such policies are to be extended to appropriate sectors of South America. And, crucially, the United States will attempt to maintain its dominant influence over Gulf oil production and the profits that derive from it. Other economic powers, of course, have their own ideas, and potential sources of conflict abound.

There are many familiar reasons why wealth and power tend to reproduce. It should, then, come as little surprise that the Third World continues to fall behind the North. UN statistics indicate that as a percent of developed countries, Africa's GDP per capita (minus South Africa) declined by about 50 percent from 1960 to 1987. The decline was almost as great in Latin America.⁴⁴

For similar reasons, within the rich societies themselves, large sectors of the population are becoming superfluous by the reigning values and must be marginalized or suppressed, increasingly so in the past 20-year period of economic stagnation and pressures on corporate profit. As noted earlier, societies of the North -- notably the United States -- are taking on certain Third World aspects. The distribution of privilege and despair in a society with the enormous advantages of ours is not, of course, what one finds in Brazil or Mexico. But the tendencies are not hard to see.

In general, prospects for the overwhelming majority at home and abroad are not auspicious, in the "new imperial age."

⁴⁰ Maureen Dowd, NYT, Feb. 23, 1991; see DD, "Afterword."

⁴¹ Khor, Uruguay Round, 10. See also Raghavan, Recolonization.

⁴²Wachtel, Money Mandarins, 266; Peter Phillips, Challenge, Jan.-Feb. 1992.

⁴³ Virginia Galt, G&M, Dec. 15, 1990. John Maclean, CT, May 27, 1991; WSJ, Nov. 28, 1990.

⁴⁴ Monthly Review, March 1992.