Letter to The Guardian

From: Ann Pettifor, Jubilee Research @ New Economics Foundation, 6-8 Cole Street, London SE1 4YH Tel: 0207 089 2853 07770 886 146 


Dear Sir, 

George Monbiot argues that the US suffers from a surplus of capital. He does not define "capital" a phrase we suspect includes both US savings and credit. Credit is not capital; indeed, as its root "credo" suggests, it is little more than a belief that one is going to be repaid. Yes, there has been a credit bubble in the US, used to finance excess consumption. But it is largely unreal (as unreal as our own credit card expenditures, until we pay up); and does not represent a surplus. 

So George is wrong to give the impression that the US is awash with capital, striding the earth in search of markets in which to invest surplus savings. On the contrary, it is the rest of the world that is bankrolling US consumption. 

Whereas earlier empires bankrolled their colonies (and used the profits and "accummulation through dispossession" to enrich themselves) this empire is bankrolled by, and therefore vulnerable to its "colonies". The US requires the rest of the world to channel $4bn a day into its own coffers, to enable its people to live beyond their means. (See our report, "The US as a HIPC"). 

The British government is modelling the UK economy on the same principle. Our leaders have allowed the trade deficit to grow, confident that prudent savers in e.g. Asia, France and Germany will continue to hand over their savings, so that we, like the Americans, can live beyond our means. If these "colonies" were to withold their savings, we in the US and UK would have to structurally adjust our economies i.e. lower living standards. That is a prospect strongly resisted by our leaders, and dare we say it, by civil society in the two empires. 

It should therefore come as no surprise that these two powerful, but heavily indebted empires have strengthened their belligerent alliance. It may also help to explain why the rest of the world is beginning to gang up against them/us. 

Yours sincerely, 



Ann Pettifor 

More information:

See The United States as a HIPC - how the poor are financing the rich.  (19-04-02)