250 YEARS: The United States – from independence to empire (part three)

From hegemony to decline 

by Michael Roberts

Part one here. Part two here

In just some 200 years from winning independence from the British empire in 1776, the United States had become the most successful capitalist state, leading all the major economies in the world in national output, in income per head, in productivity of labour, in financial dominance and in military power. 

That hegemony in global capitalism was established by the end of WW2, which had left Europe and Japan in ashes, Britain hugely in debt, and much of Asia, Latin America and Africa in poverty. Only the Soviet Union remained as a military rival to the US – but not in industrial output, trade, or financial power. From 1945 to the mid-1960s was the Golden Age for the major capitalist economies, as cheap and plentiful labour after the war combined with the spread of new technologies developed before and during the war. The profitability of capital was high and even rising through the 1950s and 1960s, especially for US capital.

However, this was not to last. The Marxist theory of capitalist crises argues that, as capitalists invest more and more into technology in order to lower the costs of production and boost the productivity of labour, the overall profitability of capital will tend to fall because profits only come from labour. If investment in labour power declines (relatively) to the investment in plant, equipment and technology, profitability will eventually fall. And so it did with a vengeance from the mid-1960s, generating the first simultaneous international slump in 1974-75, followed by the deep manufacturing double recession of 1980-82.

During this period, the first signs of a decline in US hegemony were exposed. Europe’s industry based on cheap labour, American credit and the latest technology, started to gain global market share from US industry. In the 1970s, Japan also began to eat away at US manufacturing’s global output and export share. Politically, America’s defeat in Vietnam and the fall of Saigon weakened their international dominance. Throughout the 1960s, the US current account surplus was gradually eroded until, by the early 1970s, the current account registered a deficit. The US began to leak dollars globally not only through outward investment, but also through an excess of spending and imports as domestic manufacturers lost ground. 

US current account balance to GDP (%), 1976-2020

The US became reliant for the first time since the 1890s on external finance for the purposes of spending at home and abroad. By the 1980s, the US was building up net external liabilities that have now reached 90% of US GDP. 

In 1971, President Nixon announced that the US was going to devalue the dollar and end its peg to the gold price. In effect, this was the end of the Bretton Woods agreement that had established a framework committing all to fixed exchange rates for their currencies and set in terms of the US dollar. With Nixon’s announcement, the US abandoned Bretton Woods and, with it, the whole post-war Keynesian-style international currency regime. 

The fall in profitability in the major economies, the accompanying stagflation in the 1970s and the slumps of the early 1980s led to a complete change of economic policy.  From the 1980s, during the so-called neoliberal period, capitalists ended macroeconomic management and moved to cutting public spending, privatising state assets, deregulating finance, weakening trade union power and above all, switching manufacturing out of the US into Asia, in particular China, to take advantage of cheap labour.

US imperialism had managed to see the collapse of the Soviet Union, but in th 1990s it was losing relatively in trade and output to other major economies, particularly China. Europe had integrated further into the Eurozone and widened towards eastern Europe using the cheap labour supply available there.  And the Asian tigers leapt forward with new technologies. China took over as the manufacturing and trading global power (partly driven by US multi-nationals which had located there in the 1980s).

This neoliberal policies helped to raise the profitability of capital in the major economies, including the US, for nearly two decades, during which the new technologies of computers, digital software and eventually the internet, were applied to boost productivity. But again, Marx’s law of profitability eventually exerted its downward pressure and by the end of the 20th century, all the major economies struggled to sustain the economic growth rates they had achieved in the 1990s (let alone the 1960s).  They entered what I have called a Long Depression, particularly after Global Financial Crash and the ensuing Great Recession of 2008-9. In the first three decades of the 21st century, the major economies have experienced slowing economic growth, falling investment and productivity growth, along with the two largest slumps in the 250 years of US capitalism: 2008-9 and 2020.  

G7 rate of profit on capital (%)

But at 250 years old, the United States still generates 26 percent of global GDP and is home to 59 of the world’s top 100 firms.

The US dollar is still the main reserve currency internationally.  Roughly 90% of global foreign exchange transactions involve a dollar leg; approximately 40% of global trade outside the US is invoiced and settled in dollars; and almost 60% of U.S. dollar banknotes circulate internationally as a global store of value and medium of exchange.  Over 60% of global foreign exchange reserves held by foreign central banks and monetary authorities remain denominated in dollars.

Having said that, the underlying relative decline in US competitiveness has gradually worn away the strength of the US dollar against other currencies, as the supply of dollars outstrips demand internationally.  Since Nixon’s momentous announcement, the US dollar has declined in value against other currencies by 20% – a good barometer of the relative decline of the US economy.

In the 21st century the US empire now faces a much more dangerous rival to its hegemony than the Soviet Union, Japan or Europe. China began expanding its industrial capacity in the 1980s, then ramped it up on a large scale in the 2000s, surpassing the United States in the share of global manufacturing output in 2010. China is now the world’s manufacturing superpower. Its production exceeds that of the nine next largest manufacturers combined. It took the US the better part of a century to rise to the top in manufacturing; China took about 15 or 20 years. In 1995, China had just 3% of world manufacturing exports. Now its share had risen to well over 30%. While China runs a surplus on payments and receipts with other countries of around 1-2% of GDP a year, the US runs a current account deficit of 3-4% of GDP a year.

All attempts to restrict China’s expansion into tech products, semi-conductors, etc have miserably failed.  China is catching up in the ‘chip war’and has launched its own ‘open source’ AI models like DeepSeek that are seriously undercutting the likes of ChatGPT and Claude, America’s expensive AI models.

China also dominates the entire range of renewable energy manufacturing.

And China leads by far in the use of robots, with installations rising at 7% a year, while in the US they are falling by 9% a year.  China now has more robots in industry than the rest of the world put together.

Source: International Robotics Institute

There is still a long way to go before the mighty US economy will be on its knees.  It may have the largest net liabilities globally, but it can manage that because it is also the only country that can issue dollars – and the dollar is still the international currency for trade, investment and reserves.  Trade surplus nations like Germany, Japan and China must use most of their dollar earnings to buy dollar assets.  So the ‘exorbitant privilege’ of the dollar keeps the US empire ticking over.

Moreover, US investments abroad may be less in value than foreign investment into the US, creating the negative investment position, but foreigners earn less income on those US assets than US investors do on their foreign assets.  So there is a net surplus in income for the US of at least 0.5% of GDP on average since 2008, to add to its domestic economy.  The US has not yet reached a ‘tipping point’ where the size of its net liabilities to foreigners is so high that its net income surplus disappears

In the 21st century, geopolitics increasingly boils down to a battle between a weakening hegemonic power, the US, and a rising economic giant that is China. The US still dominates in military prowess, spending more on armed forces than the rest of the world put together. It runs nearly 800 foreign bases worldwide – while China has one.  But even here, the war in Iran has exposed the inability of the US military to impose its will over a third-level economy and state and which has no nuclear weapon (shades of Vietnam over 50 years ago).

For the US ruling elites, China is the ultimate enemy and threat to its global hegemony.  That applies to both the MAGA wing supporting Trump in the White House and the ‘globalists’ in America’s ‘deep state’ and ‘neo-con’ circles in government. The policy difference is that the Trumpists want to concentrate US power in the Western hemisphere with a view to taking on China across the Pacific just as America did with Japan in the 1930s.  For the MAGA crowd, Europe can deal with Russia and Ukraine on its own and Israel can deal with the Middle East on its own. 

The globalists on the other hand still have serious ambitions to dominate globally. They want the war with Russia to continue until Russia is brought to its knees and there is ‘regime change’; and they aim to back Israel and participate militarily until Iran’s regime falls. Trump vacillates between the two policies, currently swinging to the globalists over Iran. But both wings are agreed: China must be eventually be ‘dealt with’; it must be weakened economically and finally forced to accept Western policies and control.

The US empire has no official emperor, although Trump is increasingly trying to establish himself as one, as he rides roughshod over Congress, the courts, financial rules and the electoral process. But the US empire is in trouble. This is why a significant section of America’s ruling elite are prepared to accommodate Trump and his MAGA supporters in trying to Make America Great Again, by ending international free trade rules and resorting to protectionist tariffs; by sharply increasing military spending; and by cutting taxes for the rich and mega companies while reducing healthcare and public services for the rest.  So the rich get even richer and the rest get poorer.

No wonder Americans now have a bleak outlook on the nation’s future after 250 years, with most saying the US has already seen its best days and a record-low number saying they are extremely proud to be Americans.

President Trump has the lowest approval level of any president.  But he rolls on regardless towards the mid-term Congressional elections.

He kicked off the 250th birthday weekend with an attack on what he called the “communist menace” in America, framing its supporters as “the enemy of July 4th, 1776”. He was speaking in the Black Hills, Dakota which the US government illegally seized from the Sioux Nation in 1877 after Congress forced the tribe to cede land it had been guaranteed under treaty. Apparently, communism is a greater threat to American liberty than both world wars (including the defeat of Nazism) and the September 11 2001 terrorist attack (made by Islamic fanatics previously funded by the US to defeat Russia in Afghanistan). Trump argued that communists do not love God or religion and have no respect for law, justice, principle, tradition or God-given rights (looking in the mirror here). 

“You can be loyal to Karl Marx or you can be loyal to America. You can be a communist or you can be a patriot. You cannot be both.” Pledging to “vanquish communism quickly” and “send them into exile”, he told a cheering MAGA crowd: “We will send them quickly away, and we will continue to build our country bigger and better and stronger than ever before. America will never be a communist country.”

The ancient Roman republic was the model adopted by the Founding Fathers for the US constitution. But its ‘checks and balances’ to share power were abandoned when one of the elite achieved total power and Rome became an empire (with an emperor) around zero BC. The empire reached its pinnacle some 200 years later, but then began to decline through a combination of internal contradictions in its slave economy (no more slaves), hugely widening inequalities (land in the hands of an aristocratic elite) and externally from its weakening ability to police its empire from resistant forces (German tribes).  

The same trends exist now for the US empire.  Its capitalist economy is no longer a powerhouse of prosperous expansion; inequalities of income of wealth have never been so extreme in 250 years and are worsening. And the US has increasingly lost its power to police the world, as Vietnam, Iran, Ukraine and China show. Rome took two centuries to decline and fall. It won’t be so long in the modern capitalist world. It might yet become a communist country well before the end of this century – or we shall all be driven into the dark ages as the world was when the Roman empire collapsed – this time either by climate catastrophe or nuclear annihilation. 

Ken Klippenstein: Exit Mitch McConnell, Enter Abdul El-Sayed

Exit Mitch McConnell, Enter Abdul El-Sayed

McConnell's wife leaves country; Democrats leave old school politics

Ken Klippenstein July 6, 2026. On Substack

McConnell sits behind his wife, Elaine Chao

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“Elder abuse” — that’s what Charles Booker, the outsider Democratic candidate to replace Senator Mitch McConnell, calls the effort to keep the bedridden 84-year-old in office.

By saying what everyone is thinking but Washington refuses to acknowledge, he embodies the new generation of Democrats rejecting the time-honored tradition of saying nothing in favor of saying something. 

From Zohran Mamdani to Melat Kiros, the old guard extinction event is here. These new Democrats are unapologetic about their views. That stands in glaring contrast to their predecessors’ neurotic obsession with focus-grouped sound bites that might poll well but radiate insincerity. You might not agree with the new Democrats, but you don’t need a decoder ring to decipher their positions.

Charles Booker

If the polls are to be trusted, these new Democrats could make up nearly 10 percent of the Congress after the midterms. Wondering what’s driving this upheaval? Look no further than the old guard’s refusal to address the obvious reality that McConnell is circling the drain.

“I don’t want to speculate on anyone’s health,” Kentucky’s Democratic Gov. Andy Beshear said last week when asked during a press briefing about McConnell’s hospitalization.

I, on the other hand, have no problem “speculating,” like about the fact that only a tiny fraction (fewer than five percent) of octogenarians survive an out-of-hospital cardiac arrest like the one McConnell suffered.

I’ll speculate further: even if he’s part of that lucky few, he’ll have brain damage, as the vast majority of survivors do.

Speculation is necessary here because McConnell’s office has refused to say why he’s been in the hospital for the past three weeks, what his current status is, or when he’ll be out. This has led to a lot of confusion, as seen in the following post from an X/Twitter account that provides daily updates on whether McConnell has passed. 

All of this “speculation” is common sense to just about any ER nurse or medical expert, who are all over TikTok expressing their bafflement that the media is entertaining the possibility that McConnell will soon be wheeled down the Senate chamber like Hannibal Lecter.

This Weekend at Bernie’s routine explains the success of all the current insurgent candidates: they’re willing to say and do the thing that’s obvious and necessary, rejecting the ways of those with political “experience” (read: expedience) whose slogan might as well be: The buck stops somewhere else. The old guard believes in procedures over results and hide behind things like decorum and civility as an excuse for doing and saying nothing. 

Let’s talk about decorum and civility.

McConnell, who has held his Senate seat since 1985, embodies the old ways perfectly. In his final years he became one of the only Republicans willing to break with Trump — voting against his most controversial nominees, including Pete Hegseth and Robert F. Kennedy Jr. — and took to the Senate floor to call Trump “practically and morally responsible” for January 6 (while voting against his impeachment). He lamented that his party had grown too populist, too isolationist, too Trump. The decorous man was, by the end, a man without a party.

It’s hard to imagine now, but McConnell was once a moderate — a Rockefeller Republican, pro-choice and pro-labor, who in his first run for local office courted unions so aggressively that he won the AFL-CIO’s endorsement by promising to back collective bargaining for public employees. (Once elected, he reneged.) His biographer Alec MacGillis titled his book, bluntly, The Cynic, tracing McConnell’s shift “from a moderate Republican … to the embodiment of partisan obstructionism” — driven less by any change of conviction than by a bottomless appetite for power.

His first wife, Sherrill Redmon, a Democrat, divorced him in 1980 as he calcified into that operator; she became a feminist scholar at Smith, where she ran the Sophia Smith Collection and worked with Gloria Steinem on an oral history of the women’s movement. In 1993 McConnell married Elaine Chao, who would serve as labor secretary under George W. Bush and transportation secretary under Trump I — and whose family’s China-based shipping fortune, and the millions it delivered to the couple, has trailed him for decades. 

As transportation secretary she drew a criminal referral from the department's inspector general for using her staff and office to benefit her family; the Justice Department declined to pursue it. Chao resigned in the days after January 6, one of the “decorous” exits that changed nothing.

McConnell — a lifelong Washington operator who started as a legislative aide to Kentucky Senator Marlow Cook before becoming a deputy assistant attorney general under Ford — hated public speaking and courting voters, preferring a data-driven war room to the stump. This is exactly the politics voters are rejecting. They want to be in the room where it happens, as participants rather than spectators

Which brings us to the insurgent leading the Democratic primary for Michigan's open Senate seat: Abdul El-Sayed. He's a rejection of everything McConnell stands for, distilled into a single slogan: "Money out of politics, money in your pocket, and Medicare for All." Agree or disagree, you know where he stands.

An MD and epidemiologist, El-Sayed comes not from politics but from medicine — a world whose failures he's clearly passionate about fixing. He ran Detroit's health department after the city's bankruptcy gutted it, then led Wayne County's, serving 1.8 million people. This is not the usual lawyer-to-Washington pipeline of most career politicians like McConnell.

The dinosaur establishment, meanwhile, is spending real money to stop him, which tells you everything.

And McConnell? This weekend it was reported that just three days after his resuscitation and hospitalization, Chao traveled to Beijing to meet the Vice President of China, Han Zheng — for talks Chinese state media described as strengthening U.S.–China ties. Business ties, that is.

McConnell’s wife meeting with China’s VP last month

Contrary to the movies, CPR is brutal: it breaks ribs, cracks the sternum. McConnell, in what are very likely his final days, has been in excruciating pain — alone, at least from his wife.

How’s that for civility?

Subscribe if you prefer the ugly reality to pleasant lies

250 YEARS: The United States – from independence to empire (part two)

250 YEARS: The United States – from independence to empire (part two)  Follow this link for part 1.

by Michael Roberts

It took some time after independence and the defeat of the British before the new economy of the United States got going.  War continued on and off with the British over Canada and ithrough a short British invasion and destruction of Washingto DC in 1812. 

During this period, trade was volatile, rising to over 20% of GDP after the revolution and then collapsing during the subsequent war with the British. After that though, the US economy started to expand fast.  Trade as a share of GDP stayed low only because domestic output rocketed as agricultural production exploded. 

The US administration under its early Presidents encouraged the settlement of the West  and South at the expense of the native Americans who were driven further and further west.  The US expanded its territory by purchasing Louisiana from the French in 1803.  With the Indian Removal Act of 1830, native Americans were forced to relocate, leading to the devastation of thousands in a ‘Trail of Tears’.

In 1823, President Monroe proclaimed his famous ‘doctrine’ that the Western hemisphere would be under American control and the old former European colonial powers were not welcome. 

In 1846, the US expanded its territory by signing the Oregon Treaty with the British to allow settlements and went even further by launching a war against Mexican control of Texas, eventually taking over vast areas in the South-West right to the Pacific Coast.  

But there was one important factor holding back the United States from becoming a major industrial and trading nation: slavery in the southern states.  When the southern states tried to secede from the Union, the north launched a long and bitter war lasting nearly five years.  But the resulting victory for the industrial north with its much larger ‘free’ working population laid the basis for a huge expansion of output.  The Civil War shifted political power to the Republican party from the North, which instituted high tariffs to raise revenue and to protect domestic industry.  The US economy became more diversified, with a growing manufacturing sector that reduced the nation’s dependence on imported manufactured goods.  By the end of the civil war, the US had already become the largest capitalist economy in the world in GDP terms.

The advent of the railway boom after Civil War which culminated in the transcontinental rail connecting East to West in 1869 was a huge step forward for domestic production and trade.

By the 1900's, US per capita income exceeded that of then current but declining hegemonic power, the UK.  So in just one century, the American capitalists had overtaken their former masters.

Beginning in the 1850s, the United States took its first steps toward developing an overseas empire in the Pacific.  In 1867, the US bought Alaska from the Russians. Trade with Asia now became possible and the US elite began to open their eyes to gaining control of the vast Pacific Ocean.  

The new empire was driven by economic interests. When there was a commodity boom, entrepreneurs raced into Pacific islands to set up shop, creating farms and plantations or staking claims for mining.  The first islands were annexed in the 1850s and 1860s starting with Midway. By the 1870s, American citizens were effectively running the Hawaiian government, steering the course toward annexation. And by the 1880s, the US government was directly administering Samoa and behaving like a traditional imperial power in cooperation with the British and German governments.

The late 19th century marked a transition from a continental nation to an established global power, largely galvanized by the Spanish-American War of 1898.  Using the excuse of an unexplained explosion of the US battleship Maine in February 1898, the US declared war on Spain and quickly took over Cuba.  Soon after, the Philippines, Guam, and Puerto Rico were occupied and the independent Republic of Hawaii was annexed by the US.

The construction of this American empire was riddled with racism from the start. For some in the elite, building an empire in the Pacific was a problem because it could lead to “polluting and weakening our system of government by taking to our bosom a horde of Asiatic savages.”  Others favoured a missionary approach.  American control was necessary because Filipinos are “children utterly incapable of self-government.”  The US role in the Philippines was a “divine mission” to establish a “system where chaos currently reigns.” Imperialists doubted the capacity of the Philippine people for self-government; they would “need the training of fifty or a hundred years before they shall even realize what Anglo-Saxon liberty is.”

Although the US economy expanded throughout the 19th century, it did not do so in a steady and harmonious way.  The boom and bust cycle of capitalist accumulation operated, engendering a long depression from 1883-97 (note in the graph below the stagnant growth in the 1880s).

Even as late as 1880, nearly half of all American workers were still farmers, with only about 15% working in manufacturing. But in the next 40 years that ratio was reversed. By the 1920s, the US was the world’s manufacturing powerhouse and financial centre. The American working class was now the largest in the world. But as ‘going West’ was no longer an option if you were unemployed or on low wages, trade unions were formed and class struggles intensified in the cities. 

The weakening and destruction of large parts of Europe and Asia during WW1 and WW2 put the US firmly in the driving seat of global capital.  In 1945, the US was dominant in manufacturing, finance and military power (only the Soviet Union could rival the latter). The US controlled the post-war institutions set up at the Bretton Woods meeting in the US that established the UN, the World Bnk and the IMF.  The world entered a period of ‘Pax Americana’.

‘Pax America’ was world peace only on America’s terms: the ‘cold war’ continued against the Soviet Union; and the US intervened to stop leftist governments gaining power, not only across South America, but also in the Middle East and in Asia – but not always with success as the war in Vietnam proved.  

Indeed, that ignominious defeat coincided with the beginning of an underlying decline in America’s economic power, first with the rise of European industry from the ashes of war; and then with Japan’s meteoric industrial revival in the 1970s.  The dollar began to lose its almost total dominance in world markets and was devalued in 1971 as US manufacturing declined and was forced to shift overseas to find cheaper labour.  The Vietnam disaster led to the economy running trade deficits and the US government running budget deficits for the first time since WW2. The profitability of capital had began to fall and the Golden Age of US investment was over. 

The fall of the Soviet Union in the early 1990s was supposed to give US imperialism complete control forever. It would be ‘the end of history’.  Ironically, it was just the start of US decline in the face of an even stronger new economic rival: China.

In the third part of this story, I shall cover the current threat to the US global empire, generated first, by weakness within the domestlc economy and second, by emergent rivals without – not unlike the ancient Roman empire’s decline after the 2nd century AD.