Capital Power: Post Script on Joseph Nye’s Soft Power Theory

In 2003, on the heels of the United States invasion of Iraq, professor Joseph Nye delineated two distinct applications of United States foreign policy as a recommendation to shift Middle East strategy, that has since served the realist, state-centered view of American global action. On one hand: hard power – the carrots and sticks of coercion that utilize bombs, sanctions, and arm twisting deliberations to force a nation to respond to the interests of the United States government. On the other, a new concept: soft power. According to Nye, soft power spreads hegemony from the heart of the people. He hypothesized that spreading our culture abroad through products and principles can make our liberating mission a more popular one. Nye postulated that an effective balance of both was critical to defeating Islamic terrorism and smoothly transitioning Iraq under the American sphere of influence. What he failed to realize was that his dim view of foreign policy grossly over played the hand that the United States has in the application of “cultural hegemony.”

Nye’s analyzation of power may have been apt a century ago but, in the Iraq War, he simply heeded a whisper of the past. To categorize militaristic power and cultural power as distinct entities that the state can strategically shift its application of is, at best, an optimistic notion. It’s the notion that the state has control over the proliferation of ideology after it has used its military might . Even better, it’s a hope that the American state itself is not already under the spell of the capitalist sovereignty that builds the McDonalds’ and controls the airwaves through private television stations abroad. It seems deliberately clear that the pixie dust was sprinkled down on us while we slumbered. The flow of capital has always oiled the machine of American empire, and in turn the American empire kept avenues for the flow of capital open. Interventions in Latin America in the early 20th century didn’t shroud their nature as “Dollar Diplomacy”. To draw heavy irony from the use of the term diplomacy may be an understatement to the tens of thousands of Hondurans who died from the bullets of American marines and the dictatorship that was rectified in the sake of reinstalling the United Fruit Company’s banana monopoly. In turn, the eye of industrial power floated in the federal governments orbit. So called “soft power” could be strategically initiated to increase the effect of coercive actions, as the federal government controlled the rules of America’s international trade and put forth companies into markets where they saw fit. The productive factories that synthesized the collected resources gathered by our military were based in the United States and their money was in American banks. If corporations grew too large or too powerful, threatening the sovereignty of the nation state, they could be forcibly broken up by utilizing extensive anti-trust laws. In short, corporations were subject to the same state-discipline as any other American institution.

However, the recent developments of the flow of capital has allowed the corporate entities to free themselves of this national centralization creating drastic consequences to the role of the nation state and international power. The post-Cold War era of globalization has seen the creation of international institutions and the expansion of existing ones that seek to regulate the world of international commerce. The rebalancing of the public domain was set in stone through the administrations of Ronald Reagan and Margaret Thatcher that reverberated throughout the late 20th century. They utilized the contradictions of state capitalism itself – inevitable inflation, a disciplinary government, a dependent welfare class – to turn the liberating potential of the commons into an enemy of “individual liberty” and centered the competitive market as the heart of human freedom. As this ideology, dubbed “neo-liberal”, escaped the fringe economics classrooms of the University of Chicago, it became the driving force of policy making. The transformation of the role of the state took a revolutionary turn – dismantling and fragmenting itself. As the state attempted to re-focus its purpose it centered itself in international institutions such as the World Bank, which postulate the role of the state as a ‘limited but effective’ apparatuses used to ‘build institutions for the market.’ [1] Purged of a purpose of common ownership and collective action, the state, gasping for a reason to justify its own power, served to the definitions written by transnational bankers.

Non-Governmental entities like the World Trade Organization and the International Monetary fund, originally created to allow states to centralize the rules of interaction between one another, have found independent power in the ability to develop post-colonial nations along economic parameters that are affable to their profitability [2]. Although northern capitalist countries control the voting procedures and rule creation, securing the influence of homegrown operations, capital’s flow is now borderless. No longer is the basis of American capitalism in the factory, but the one-click internet stock market where money is never engaged in a singular fund or investment; always-already reassigned nature and purpose. In short, nations have become more loyal as customers of corporations, as the corporation has in-principle abandoned loyalty to any nation state. In turn, the state has in-principle abandoned loyalty to itself.

Nye’s formulation that the American government is “engaged in a tug of war over how to work with other countries” implies that the federal government can have effective interaction with other central states, vacuumed from the non-territorialized actors that have emerged in the 21st century from cyber hedge fund managers to the radical anti-state ‘terrorist’ groups. The flow of capital has so delineated itself from the interest of “America” that the state’s struggle is to find where its legitimacy lies any longer. Surely it is not in pure militarism, but what else have we left? The United States diplomatic decisions for three decades have consistently based themselves off the expansion of trade – only furthering the obsolesce of itself– rather than taking advantage of a globalizing world to develop principled democracy. Even democracy promotion is a show for private interests as the National Democratic and World Republican Institutes received state backing to privatize the “destined” mission of the United States. That the remaining effective utilization of U.S foreign policy is now as a military tool to pry open markets is clear in our obsessive spending priorities. The federal government will spend ten times as much on its military spending in the 2016 fiscal year, at $579 billion, as it does on the state department’s foreign development and aid programs, at $50.3 billion [2]. Meanwhile, we heed the recommendations of voting-member corporations in the International Monetary Fund to give out high interest loans to developing states in accordance with mass privatizations and deregulation of trade that consistently shocks fragile southern countries’ economies. In the same pivot, we brush aside the pertinent crises of environmental destruction and rampant poverty as the solvable end points of economic reforms, things the market will eventually work out if the government backs off, instead of utilizing the potential for multilateral cooperation that was the intention of these assemblies. But that’s distant to our consumerist interest, we think, until we recognize the truth of Nye’s thesis on soft power – that corporations synthesized these strategies here before taking them abroad.

Nye may have touched truth when he postulated that, “The military victory in Iraq seems to confirm a new world order.” But it was not the re-coronation of American Empire. Rather, present de-stability in Iraq is proof that coercion is now an irrelevant policy; there are no security dilemmas when the consumer is disarmed from self-defense against the upheaval put forth by invasive multi-nationals. To state that the federal government must adopt a non-coercive cultural policy in response to other nation states is to assume too much potential to our ability to influence anyone without using the existing institutions, who are doing an effective job at shaping the global order in their own right. To chart a future where individuals have power of their collective futures then we must realize the obsolete nature of old debates, and the new nature of power, use our dwindling influence within international institutions to reform international economic policy to favor fair-democratic resolutions, and radically reanalyze the role of the state and capital in a new, globalized, realm of international policy. It is up to us to recognize what our community is becoming and seize its creation. Fluidity may be fleeting, but it follows properties the common man is familiar with.

[1] Lee, S., & Mcbride, S. (n.d.). Introduction: Neo-Liberalism, State Power and Global Governance in the Twenty-First Century. Neo-Liberalism, State Power and Global Governance, 1-24.
[2] Lee, M. (n.d.). Multilateral Institution-Building in a Neo-Liberal Era: The Case of Competition Policy. Neo-Liberalism, State Power and Global Governance, 187-199.
[3] Congressional Budget Justification Department of State, Foreign Operations, and Related Programs. (n.d.). Retrieved October 7, 2015.

-Dean Patterson

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