A truly international capitalism, based on relatively open mobility of goods and capital across national lines, existed in only a rudimentary or embryonic form prior to World War II. In that era the business class of each nation used its control of its own state to rope off its national market, making penetration by businesses of other nations very difficult.
The small size of the markets in a single nation posed a limit to business growth, however. By each national business class pursuing its own narrow advantage, the result was fragmentation of the world market along national boundary lines, which tended to restrict the possibilities for growth of all businesses by restricting world trade.
Faced with this problem, the European and Japanese business classes, on the one hand, and the American business class, on the other hand, pursued different strategies to expand their markets.
The main expansionist strategy of the European business classes during the 19th century was colonialism; that is, each country would try to carve out areas of control in the third world, using its technological superiority translated into military terms. The raw materials and labor and markets of these colonies were for the exclusive exploitation of businesses centered in the home country. The inherent weakness of this colonialist strategy, from a capitalist point of view, is that the bulk of the populace remained in poverty and therefore provided not much of a market for the goods of the home country. In the absence of industrial development, many people lived by subsistence farming and were thus minimally involved in the market economy.
The most successful of these colonial systems in the 19th century was that built up by Great Britain. In addition to the external control of third world countries like India, Britain also pursued the development, in some areas, of new settler states (Australia, Canada), transferring people, skill and capital from the home country. Though the settler states provided more of a market than third world countries, this strategy was limited because of the relatively small populations of the new settlements.
Britain's settler state strategy was also set back a bit by the anti-colonial revolt in America. Partly as a result of that revolt, there were strong currents in the U.S., right up to the eve of World War II, that preferred a "neutralist" foreign policy, opposing a permanent military buildup or expansion of American intervention beyond its home "turf" in the Americas. The Permanent Arms Economy of today simply didn't exist in the U.S. prior to World War II.
The consensus in favor of a global imperialist role for the U.S., and the development of the postwar Military/Industrial Complex, was forged out of the American victory in World War II and the destruction of the native Left during the Cold War. But before the war, the absence of such a political consensus forced the U.S. business class to pursue a different strategy for market expansion than its European and Japanese competitors.(9)
Forged out of its settler state experience, the American business class developed a strategy based on the expansion of the home country itself. Through the ruthless destruction of the indigenous American Indian communities and the violent conquest of the northern third of Mexico, and peopled by endless waves of European immigration (and Africans brought over in chains), the American business class pushed the westward expansion of the American state and the internal integration of this vast area and burgeoning population into a single national market.
This huge, integrated state provided the American business class with a vastly larger national home market than that enjoyed by their European or Japanese competitors. This permitted American industry to achieve much greater "economies of scale" than European or Japanese industry, which reduced per unit costs of production. The high U.S. profit rate also fueled innovation and investment in technical changes aimed at further increasing the productivity of labor.
This meant that the cost structure of European and Japanese industry at that time was uncompetitive with American industry -- a factor that militated in favor of the trade barriers that fragmented the world market. This fragmentation into insulated national market systems also tended to translate into frequent military conflicts between competing capitalist powers. By World War II American industry had built up a huge investment of capital to operate on the vast scale permitted by the continent-wide American market, which permitted the American workforce to produce more market value per worker than any other country. This higher productivity, combined with the traditions of struggle for personal and organizational freedom in this country, was the reason for the higher levels of material consumption enjoyed by the American working class at mid-century.(10)
With their mercantilist/colonialist strategies exhausted through two world wars and world-wide depression, the European and Japanese business classes were forced to adapt to the American project of world-wide open trade. With greatly reduced trade barriers, and a mechanism in place to resolve trade disputes (GATT), and various world financial institutions also in place (World Bank, IMF), business was now confronted with the possibility of operating on a world scale. Within not too many years after the war the former colonies of European powers were granted their independence since their colonial status was no longer required to ensure access for European business.
The American business class, with over half of the total world production capacity at the end of World War II, was initially in the best position to take advantage of this new situation. This fact was, of course, the main material motive for the American efforts to construct this new world order. However, the fact that the American business class had never been seriously committed to a mercantilist/colonialist strategy, unlike European and Japanese capital, was an important factor as well.
Ironically, this postwar world market system has been the undoing of the American business class, eroding their hegemony on the world scene. Japanese and European capital are now able to operate on a world scale and thus enjoy for the first time the same "economies of scale" as their American competitors. In short, the historic basis of the higher prosperity of America has been destroyed. Faced with the stark realization that the U.S. no longer has any particular advantage in the area of production of industrial and consumer goods, the main sectors of the business class can now see no way out other than relying on this country's one remaining advantage: Military Muscle. This addiction to military coercion clearly shows the moral bankruptcy and incompetence of American business class leadership.
Over the long run the ability of a country to maintain military power is directly dependent on its economic capacity. The transformation of the U.S. into a debtor nation dependent on petro-dollars and the Tokyo financial markets shows the serious stresses from America's role as "world cop"; the U.S. can't maintain its position by borrowing money forever.
The American working class has nothing to gain by the maintenance of this imperialist role. The bloated military machine is a drag on American prosperity, siphoning funds that could be used for investment in increased productivity in industry or badly needed social services such as health care.
The U.S. role as the world's Number One ass-kicker tends to sustain the third world as an area of low wages and non-existent environmental restrictions for ready exploitation by American capital. This provides incentives for American companies to relocate operations to these areas and puts downward pressures on wages in the U.S. and discourages anything that increases cost structures for companies operating here, such as health benefits or environmental protections.
For a continuation see, the article Every Nation-state is Imperialist by Nature.
10. America tended to have higher wage levels than Europe even prior to the massive industrialization of the late 19th and early 20th centuries. The ready availability of free land in North American prior to the 20th century, and the widespread knowledge of farming skills among immigrants, meant that it was hard to get people to work for wages; they often preferred to work their own farm rather than be under the thumb of a boss. Indeed, this was the reason for the introduction of slave-labor (initially using both white and black slaves) for large-scale plantation farming in Virginia in the 17th century: it was the only way to get the necessary labor force.
Labor scarcity in America tended to bid up wage levels . The higher wage structure of the U.S. tended to provide a better home market for native manufacturing which facilitated the industrialization of the late 19th century. Though free land was no longer available in the 20th century, the higher wage structure in America was sustained by the higher productivity of American industry.