The Real Progressive interview of Michael Hudson (with transcript!)

November 08, 2022

RP Live with Michael Hudson: The Destiny of Civilization

Real Progressive webinar Sept 2022

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Intro

[00:00:06] Luke Parcher: All right. For those who might not know me, I’m Luke Parcher, I’m a student and activist. I volunteer with Real Progressives. I’m on our leadership team and I also do a show on Sundays covering politics and current events, and I do some interviews throughout the week and things which you guys can find on Real Progress in Action.

I want to quickly talk about Real Progressives. If you’re interested in learning more about us, you can go to realprogressives.org. We have articles, content, podcasts, all sorts of things. And if you’re interested in helping us out, we are a nonprofit. You can go to realprogressives.org/donate. I also want to plug our founder and CEO, Steve Grumbine’s shows. He does the Rogue Scholar on YouTube on Real Progress in Action. He also does the Macro N Cheese podcast, where you can find our guest today, Michael Hudson, as one of many fantastic guests on that podcast.

So without further ado, I’d like to introduce our guest today. Michael is an economist, a professor of economics at the University of Missouri, Kansas City. He’s also a researcher at the Levy Institute at Bard College. He’s a former Wall Street analyst, political consultant, and commentator and author. Michael, thank you so much for taking the time.

[00:01:06] Michael Hudson: Well, thanks for inviting me.

Question | Luke Parcher

[00:01:08] Luke Parcher: I wanted to kick things off for the first question. The title of your book is The Destiny of Civilization: Finance Capitalism, Industrial Capitalism, or Socialism.

Can you just explain how you came to such an all-encompassing title?

[00:01:20] Michael Hudson: Well, the world economy is now fracturing between two parts, the United States and Europe is the dollarized part. And this Western neoliberal unit is driving Eurasia and most of the Global South into a separate group. The conflict really is between finance capitalism in the United States and Europe against other countries – China, Russia, Iran, India – that are following the more traditional ethic and strategy of industrial capitalism.

The question is: how are countries going to be economically planned? Because every economy is planned by somebody. In the United States, the central planning has been taken out of the hands of government and put in Wall Street. In the City of London. A very rightwing philosophy. In other countries, there is a mixed economy – China and the rest of Eurasia – and their objective of planning and money creation and credit is to create industrial capital to create the means of production.

Obviously, also environmental cleanup now, not merely the means of production but an overall economic system, not simply to make fictitious capital, finance capital, without any reference to the industrial capital base, the earning of labor and industry together.

So there are two economic philosophies and I began the book by contrasting the dynamics of industrial capitalism with finance capitalism. And industrial capitalism in the United States, Germany, England, and every country where it took off, was to promote a public investment in basic infrastructure monopolies in transportation, communication, education, healthcare.

The idea is that if the government would provide these basic services and basic human rights at subsidized rates – or freely, as in the case of education and healthcare – then employers would not have to pay labor a high enough basic wage to make labor pay for healthcare – as in the United States where 18% of GDP is for healthcare – or to pay for education, the 1.7 trillion that goes for student debt in the United States, not mentioning the education that is not debt-financed.

Finance capitalism basically sought to break away all of the public infrastructure. Most financial fortunes and financial fortunes in history were made just in the way that Zola had described, by prying thefts from the public domain.

But the financial capitalism doesn’t say… You don’t have to steal it; you actually make it your policy, giving away the financial domain in the way that President Yeltsin gave away all of Russia’s natural resources, public utilities, electric companies, anything that yields an economic rent that can be just easy income without any investment. And you financialize it.

You’ve had, for the last – really since the 1980s, but even since World War 1 – this movement to prevent industrial economies from being low cost. But the objective of finance capitalism, contrary to what’s taught in the textbooks, is to make economies high cost, to raise the cost every year.

That actually is the explicit policy of the Federal Reserve in the United States. Turn over the central planning to the banking system to essentially inflate the price of housing, with government guaranteed mortgages, up to the point where buying a home is federally guaranteed up to absorbing 43% of the borrower’s income.

Well, you take that 43%, you take the wage withholding for social security and healthcare, you take the taxes; the domestic market shrinks and shrinks. And the finance capital strategy is exactly what it is in the United States today, in Europe. Shift all of the money away from the profits of industrial capital that are reinvested in making new means of production. To expand capital into a shrinking economy where the financial sector intrudes more and more into the economy of production and consumption and shrinks the economy.

The rest of the book all spells out how this transformation from industrial capitalism to finance capitalism occurred and how the fight between the United States and Russia, China, Iraq, Iran, and India – it’s really a conflict of economic systems. There’s no rivalry because they’re not trying to do the same thing. The objectives of the U.S. and Europe are completely different from the economic objectives of Eurasia. It’s a war of economic systems. And that’s why the United States is trying to prevent other countries from following the same path to industrial prosperity that made the United States, Germany and other countries originally rich.

So you have on the one hand a high productivity, high standard of living economy that used to be in the West and is now in Eurasia, as opposed to an economy of austerity planned by the IMF and central banks, as you’re finding in Europe.

Question | Virginia Cotts

[00:06:38] Luke Parcher: Fantastic. Thank you for that. First here we have Virginia Cotts, one of the people helping us backstage, has a question – if Virginia wants to come on screen and ask.

[00:06:47] Virginia Cotts: Michael, I’m not an economist. Can you explain debt deflation – but also how debt siphons money away from the real economy.

I once heard you say that the finance sector is the overhead of the real economy. I think these questions are related? If you could explain that.

[00:07:09] Michael Hudson: Well, the classic discussion of debt deflation was in Volume 3 of Capital, by Marx. And Marx said that debts tend to grow by compound interest.

He gave a citation of everybody from Martin Luther onwards about how any interest rate is a doubling time, it doubles in a given number of years. And it grows exponentially in an up-curve, like X equals Y squared. But the economy grows in the shape of an S-curve; it tapers off.

And one of the reasons that it tapers off in the business cycle is that as the cycle gains momentum, people go further and further into debt. And if you have to pay debt to a banker, if you have to pay student loans, if you have to pay credit card debt, if you have to pay mortgages on rising house prices, then the money you pay to the banker is not available to be spent on goods and services.

So as you have the debt ratio growing in every economy, that crowds out the ability to spend your income on goods and services. So right now many graduate students – you graduate from school, you have a student debt, and you have to live at home with your parents because you can’t get a mortgage to buy a house because the banks say, “Well, you’re already paying so much of your income for student debt that you don’t have any money left over to buy a mortgage, so you can’t buy a mortgage.”

Right now, you’re having the debt-ridden American economy being squeezed. More and more money is paid, not only for debt, but also for other overhead, like healthcare and various monopoly services that are not available to buy goods and services.

Debt deflation is when the growth of debt exceeds the rate of growth of the economy. And that’s true of every economy. The most sophisticated mathematical models that I’ve seen were the ones that were taught to every student in Babylon in 1750 BC.

We have the models that they were told. They say, how fast does a debt at the going rate of interest, at 20%, double? Well, it’s five years. How long does it take to redouble? Well, that’s 10 years. How long to quadruple? Well, that’s 15 years. You see how fast it is. They also would have students calculate the growth of a herd of sheep for instance, and it would all taper off. And when Assyriologists began to translate these cuneiform tablets, they thought, well, this must be an actual report of how the herd actually grew.

But then they found out that the Sumerians already in the third millennium had quadratic equations and very sophisticated mathematics. The mathematics that they used 5,000 years ago were far in advance of what the National Bureau of Economic Research uses.

The National Bureau here is officially in charge of explaining when there’s a recession, when there’s a boom, and explaining the business cycle. The basic theory was outlined and traced by Joseph Schumpeter. It’s a sign curve going up and down regularly, up and down. And the whole philosophy of the National Bureau is a right wing anti-government philosophy saying the economy has automatic stabilizers.

It can never get out of balance because the free market is always going to prevent any kind of chronic downturn. If you have a boom, well, prices will rise and that will cut into profits and that’ll slow investment. And that’ll means that wages will fall until it’s more profitable to begin employing labor again. And you’ll have a recovery, and things go on and on and on, like a sign curve, at a given frequency, forever and ever.

Well, what this deliberately leaves out of account, deliberately expurgates, is the fact that every recovery in the United States and every other Western economy since 1945, has occurred with a rising level of debt. And as debt grows each time, each recovery has been slower. And the reason it’s slower is because as the volume of debt rises, this leaves less and less income available to spend on goods and services. And so, the so-called recovery is weaker until finally it grinds to a halt.

Well, Ricardo anticipated something like that in 1817 in his Principles of Political Economy. He said: well, look at what’s going to happen to land rent. If we don’t prevent the landlords from being the planners of the economy, then the more and more population increases, the price of food will rise, the rents to the landlords will rise more and more until the entire economic surplus is paid for rent and there won’t be any opportunities available to industrial employers. And Marx said, well, this was the Armageddon of capitalism.

In Ricardo’s day, people didn’t borrow to buy housing. It was still hereditary landlords. If your ancestors conquered England and killed enough Englishmen to become aristocrats, you’d inherit it and you didn’t have to borrow. But now that real estate has been democratized in the United States, England and Europe, you have to go into debt in order to buy a house.

And the largest amount of debt in every economy is for real estate, which accounts for 80% of bank loans in the United States and England. Essentially, if you want to buy a house you go to a bank they’ll calculate — well, here’s the rental value of that house. The winner, if you’re trying to bid for a house or an apartment against somebody else, the winner is the buyer who promises to pay the most for the property by taking out a bank loan that absorbs most of the rent as interest. So today, the rent that Ricardo said was going to drive industrial capitalism to a halt, is turned into interest. So it’s the rise in interest that is the Armageddon of industrial capitalism driving the economy to a halt.

I chart most of these in my book Killing the Host, where I give a history of compound interest. But basically the Western economies are all subject to debt deflation today.

And that’s why they’re shrinking. And living standards here are not rising and the economy is not growing, in contrast to China, Russia, Iran, India, and the other countries that don’t have this kind of financial sector doing their planning.

Question | Luke Parcher

[00:13:47] Luke Parcher: I was hoping you could expand on a point you actually mentioned just before we went live, distinguishing between different kinds of debt and which kinds of debt are parasitic and need to be rid of and which ones do not. Can you just quickly distinguish between different types of debt?

[00:14:00] Michael Hudson: Well, in textbooks that students read, corporations will borrow from a bank and they will use this borrowing to build a factory, and to buy machinery, and to produce something.

And the profits will be paid – shared 50/50 or so – with the creditor. So a productive debt is debt which, actually, enables the creditor to repay the loan with the interest and still keep something for himself. Banks don’t lend money to build factories. The stock market does that. The money the banks lend is unproductive debt.

Unproductive debt is when the debt doesn’t enable you to earn more money to pay the creditor. In an unproductive debt, you have to earn the money elsewhere and take money that you may earn as wages or profits and pay the bank. And it’s your loss. It’s a zero sum game, not a positive sum game.

Now this distinction between productive and unproductive debt was built into Sumerian and Babylonian laws. Only unproductive debts were canceled under the Jubilee year the rulers announced. Their word was, andurarum and, the Hebrew, cognate was deror and that was the word used for the Jubilee year.

It meant the rural debts – that when there was a crop failure, and the borrower could not pay the advance of the land rent and the other means of production. Obviously, if the borrower couldn’t repay because there was a crop failure, or a drought, or a disease, or a flood, then the debts were wiped out because that debt did not enable anyone to repay.

And if you didn’t cancel the debt, then the poor cultivator would be forced into a debt bondage to the creditor. And if he did that, then his labor would belong to the creditor and he couldn’t serve in the army. He couldn’t go to work on building public infrastructure. The business debts were all left in place. Debt denominated in silver were left in place and not canceled. The debts denominated in grain were canceled.

Well, in the 12th and 13th century, crusades flooded Europe with money. The Christian Church saw that commerce was reviving. You needed credit. The church theorists said, okay, there’s a productive debt. You’ll make loans to a merchant to trade. He’ll have the money to repay you, that’s productive. But, a debt to a consumer who can’t, is usury. And so ancient languages had no words to distinguish interest from usury.

But the churchmen said, okay, usury is unproductive debt. Interest is a productive debt. Those two words, those were the original meanings of the distinction between interest and usury. That’s been eradicated today when everything is considered productive and part of the free market. And, if it makes the billionaire class rich, it’s productive. That’s basically the thing today.

And the only debts that are supposed to be canceled are debts that the financial sector owns. The banks don’t have to pay the billionaires. Only people with less than a billion dollars have to pay debt. The poorer you are, the more debt you have to pay. They’ve reversed the whole last thousand years of Christian morality as the church has become privatized and financialized.

Question | L Lewis

[00:17:21] Luke Parcher: Fantastic. We have a question here in the chat. This is from L Lewis. It says China has opted for industrialization and the U.S. corporate class clearly has not. Why is the U.S. so belligerent if it doesn’t even want an industrial system?

[00:17:35] Michael Hudson: Because it doesn’t want any other country to have an industrial system. Just like the West fought against communism threatening a new social system after the 1917 revolution, America’s terrified that if China can succeed by following the exact same policy that the United States got rich on in the late 19th century, then they might try to make America rich. And, oh my God, if they do that then there’s no more free lunch for the billionaires.

This is life and death for the billionaires. They make their money by exploiting the economy without producing. The Chinese billionaires make their money by producing and exploiting the economy. But they also produce a lot. And then they have to give up much of what they exploit. So the United States doesn’t want there to be any success in any country achieving prosperity in a way that doesn’t siphon off all of the income to the 1%.

Question | Andy Kennedy

[00:18:28] Luke Parcher: And we have a question here from Andy Kennedy.

[00:18:32] Andy Kennedy: Michael, I believe that you coined the phrase monetary hegemony. I believe it was in Super Imperialism, a book that you wrote a while back. But I think that’s something that a lot of people really have a hard time grasping what that even means. Can you talk a little bit about how the U.S. dollar hegemony has been a large part of why the U.S. became de-industrialized.

[00:19:01] Michael Hudson: Well, that is what my book, Super Imperialism, was all about, that I published in 1972. Dollar hegemony really began in 1972. Hegemony is a word that I can never really work into conversation very easily. It was actually Henry Liu that emphasized that term. He’s a friend of mine and we were colleagues for many years. The dollar hegemony means the United States can issue dollar bonds, IOUs, and it never has to repay them. If we run a balance of payments deficit in the United States, the dollars end up in the foreign central banks. Most of the U.S. balance of payments deficits since the Korean war have been for military spending.

While America is spending money on creating military bases all over the world, these countries will end up with the dollars that we spend to build the bases and buy off client oligarchies. And these dollars are turned over to the local central bank for domestic currency. And the central bank is going to say, “What do we do with the dollars?” Well, they will tend to hold the dollars in the form of buying a U.S. Treasury bond because central banks aren’t supposed to take risks.

So they will essentially buy the Treasury bonds and the United States has no intention of ever paying the Treasury bonds. How is it going to pay? It was paying in gold until 1971. So when the United States would spend money in Vietnam, the dollars that were spent in Southeast Asia, in Japan, in other countries, would be sent from Vietnam to their head office in Paris.

And General de Gaulle would say, “Well, here are these dollars. Now give us gold.” And the U.S. gold stock was going down and down and down. The American strategists worried that this was going to really hurt the country’s ability to dominate the world. So when they went off gold in 1971, everybody thought that this was going to end American financial leadership.

Instead, it was a great increase. It created dollar hegemony because there was nothing for foreign central banks to hold their reserves in except U.S. Treasury bills, Treasury bonds. In other words, Treasury IOUs. So the more money that America would spend abroad in a balance of payments deficit, this money would end up being recycled to the United States in the form of Treasury securities. And so it was actually the balance of payments deficit by military spending that helped finance the U.S. domestic budget deficit. Other countries really didn’t have an alternative. And so when the United States took the lead in creating the Eurozone, it made sure that the Eurozone would never make the Euro an alternative currency to the U.S. dollar because it limited the Eurozone’s ability to run a budget deficit to just 3% of GDP.

Well, what that means is that when Europe goes into a recession and needs to increase government spending like the United States does when it’s in a recession, or like the United States is doing today, running a budget deficit way in excess of 3% of the GDP, Europe is not. So there are not enough Euro bonds by the central bank to ever become a rival for the United States dollar.

Well, all of this is now being changed by Russia and China that they have discussed for the last few years. “In order to stop U.S. hegemony, we have to avoid financing our own military encirclement by lending to the U.S. Treasury that turns it over to the military industrial complex and Pentagon to build bases here.So we’re going to have an alternative to the U.S. dollar.”

Well, they were talking about it – Russia, China, other countries – really for five years. And amazingly enough, the end of dollar hegemony occurred last year when the United States itself said if any country pursues a policy that we don’t like, we can grab all of the dollar reserves that they hold in the United States.

We can grab all of the Treasury bonds they hold. We can just take them. All the bank deposits they have, we can grab. They grabbed that of Venezuela first. They grabbed that of Iran. They grabbed that of Afghanistan. And then they grabbed the $300 billion of Russia. So now the United States has told any country, if you do anything that we don’t like, if you do not let our companies buy control of your economy, or if you try to sue one of our oil companies that pollutes your land, we will grab all of your money and you’ll be isolated.

Well, this ends other countries’ ability to finance the American empire anymore. Other countries are terrified now. If they’re all saying “Let’s not denominate our trade in dollars. Let’s not use the dollars. Let’s use each other’s currencies. We will finance other governments’ treasuries.”

And these treasuries that they’re financing – between China, Russia, Iran, India, and their neighboring countries – are loans to help their treasuries build infrastructure and internal improvements to actually increase the economy growing. Well, the United States itself has brought this about by all the sanctions that it’s imposing. It’s an example of the self-defeating character of the U.S. strategists.

Fortunately, none of them understand how an economy actually works anymore than they understand how military strategy really works. So we’re having armchair amateurs essentially ending a whole system that was giving America a free lunch for the last 50 years.

Question | Jordan S

[00:24:54] Luke Parcher: So we have one here in the chat from Jordan Soreff. He asks, how do you see the interaction between major shareholders of large financial institutions and major shareholders of industrial enterprises? Do you see a lot of common ownership between these kinds of institutions? And if so, wouldn’t they collaborate in order to avoid starving industrial enterprises of access to credit and guarantee some basic form of growth, not only for financial institutions, but also for industrial enterprises.

[00:25:20] Michael Hudson: Not at all. They’re collaborating in destroying the industrial sector. They collaborate in turning industrial corporations into financial firms. and when you turn the management of a corporation away from the engineers and turn it over to the chief financial officer, the chief financial officer says, “Our job is not to increase our industrial production. Our job is to increase the stock’s price. And we can maximize the stock’s price by, instead of spending on research and development that’ll take years to pay off, we can spend our income on buying the shares.”

92% of the profits of the Fortune 500 are spent on share buybacks and dividend payouts, not on new investment. Once you financialize an industrial corporation, you’re trying to make money by financial engineering, not industrial engineering. And you do this by essentially using your income to buy up the share price. This is short term – and finance lives in the short term. The reason finance has no interest in building up industrial power is that that takes years and years to actually plan a factory, plan the production. You have to develop a whole marketing system.

How are we going to sell the product once we produce it? How are we going to distribute it? It takes a lot of planning. It’s beyond the ability of the financiers. You don’t need brains to be a financier. All you need is greed. And you really don’t need a business school. All you need is greed.

And greed is short term. I want it now. Greed is not long term planning. And so, you have a completely different mentality of a financial corporate leader, as opposed to an industrial leader. Someone like, let’s say, Henry Ford, or like the old type of industrial leaders that would try to increase the overall profits to expand production more and more. Today the objective is to shrink production more and more.

Question | Jonathan Kadmon

[00:27:18] Luke Parcher: And we have a question here from Jonathan.

[00:27:21] Jonathan Kadmon: There’s a concept you mentioned in the book that’s also very near and dear to my heart. The commodification of essential goods and services, and extortionist incentives that come when you…

[00:27:32] Michael Hudson: Is that the title of a book?

[00:27:33] Jonathan Kadmon: No, it’s definitely a theme you touch on a bunch of times in your book.

[00:27:37] Michael Hudson: Oh, okay.

[00:27:37] Jonathan Kadmon: And I was hoping you could talk a little bit about how the hostage situation created by commodifying things like housing, healthcare, food, transportation, fuel, things like that – that people need rather than want – is used to extract rents and siphon wealth out of the productive economy to service the wealth demand of the FIRE sector [Finance, Insurance, Real Estate]

[00:28:00] Michael Hudson: Well, the free trade ideology that backs monopolies says that all markets are a function of choice. But the way to control a market is not to give the consumers a choice. And when you say hostage, what that means is people don’t have a choice between whether to eat or to pay a bank.

If they have to buy food or if they have to buy medical care, they have to pay whatever the going price is. Anatole France said that the rich person was as free as the poor person to sleep under the bridge when he didn’t have a house. So the objective of rent seeking is to essentially create a situation where people have no alternative but to buy the service or the good that you’re producing.

If they have no alternative, then you can charge whatever you want. This is the case with most public infrastructure. If you want to mail a letter, you have to pay whatever the going postage is, or whatever parcel service costs. Well, this is why, for about a thousand years leading up to the late 20th century, all governments kept basic services in the public domain – the post office, education, healthcare. You don’t want to privatize them and leave them to the market because if you leave them to the market, then it really isn’t a matter of choice at all.

It’s a matter of letting a monopolist take something that everybody needs, no matter what the price, and charge as much as the market will bear. And that’s a rent-seeking monopoly. That basically is the philosophy that Margaret Thatcher, Ronald Reagan, and the free marketers developed since the 1980s, when you had a privatization of basic needs, especially in housing. And the most important utility that’s been privatized of course has been money and credit creation – the banking system. What has enabled China to avoid the financialization that’s occurred in the United States is because the Central Bank of China is run by the government, not by a financial oligarchy of bankers that get together to run the credit system for their own benefit. But if the government treats money as a public utility, everybody needs money, everybody needs credit, and the government will provide the credit as needed for the economy to grow.

And if the economy has a slowdown, or if a company runs into a financial problem, if you’re the government as a creditor, you can write down the debt. In the United States, if you’ve made loans to a company like General Electric and all of a sudden it can’t pay, the company either goes bankrupt or begins to sell off its assets piece by piece to other people and you have industry being turned into gentrified luxury housing.

So the same thing with healthcare. If you privatize healthcare, everybody needs to go to the hospital. Everybody needs doctor care. If you privatize it then in the United States, 18% of your GDP is going to go to healthcare. The objective is to make healthcare as inefficient and cheap as possible to maximize the profits of the health insurance companies. And the sicker you get, the more money they make.

Also, by the way, the sicker you get, the more GDP goes up. GDP goes up because you have to spend more money healing yourself. So, that’s, a growing part of the American GDP – along with rent and debt service and interest. Well, if you keep healthcare in the public sector, the public sector is going to try to actually keep people healthy instead of sick. And they’re trying to minimize the expense of getting sick so that you leave more money in the hands of households to spend on the real economy of production and consumption, not on giving money to the monopolies.

But in the United States the main utility beside money that’s been privatized is government. Under the Citizens United ruling, the government is now really up for sale and auctioned off to the highest campaign contributors. In the Democratic Party, for instance, every Democratic representative has to raise a given amount of money from campaign contributors to give to the Democrat National Committee.

So whoever can raise the most money gets to be the committee heads. Well, you’ll have the pharmaceuticals industry giving a lot of money to some representative they want to be head of the health committee. You’ll have the bankers giving money to whoever they want to be the head of the banking committee and so on. So, the function of government itself once it’s privatized is to make money for the donor class, which basically is the financial class and the monopoly class that finance creates. Banks have always been the mother of monopolies and the financial sector’s largest business market is in creating monopolies. So, you have basically the privatization of monopolies.

And the monopoly rent of these monopolies is used for paying interest to the banks that finance the corporate raiders, or whoever wants to take over and buy these monopoly privileges.

Question | Luke Parcher

[00:33:14] Luke Parcher: We have a question here from Paul Birtwell. Paul, go ahead.

[00:33:18] Paul B: Hi, Dr. Hudson. Could you briefly touch on the concept of economic rent and unearned income as well as how the establishment became established by conquering Europe, privatizing the commons all the way up through colonialism, and how they use all these little privileges through copyrights, patents, formula, and it’s not really through effort or innovation, but it’s through rake off.

I remember you in an interview, I’m paraphrasing, saying something like: For the crime of being conquered, the 99% and all of the descendants are obligated to take care of the 1% and all of their descendants into perpetuity.

But it would be great if you could touch on those historical elements because most folks think, “Hey, these folks that are really rich are smarter, they worked harder.” And as we know, it’s not based on effort or individual contribution but rather just milking society.

[00:34:16] Michael Hudson: Well, it’s very hard to answer that question very briefly in a question and answer. I’ve written two chapters of the Destiny of Civilization describing exactly what you’ve asked: economic rent. All classical economics – from Adam Smith through Ricardo, John Stuart Mill, Marx, Alfred Marshall – was all about value and price theory in order to segregate how much of the price is not reflected by a real cost of production. Economic rent is unnecessary income.

Economic rent is what you’re able to charge more than just the cost of producing goods and service with a profit. It’s “What is a free lunch?” And the free marketers say, “There’s no such thing as a free lunch.” That’s what Milton Friedman said. But a rentier economy is all about a free lunch. The concept of economic rent in the 19th century was aimed at landlords because they inherited the land. The land does not have a cost of production. And yet, if you have an ownership right to the land, a privilege of legal ownership of the land, you have a legal boundary and you can charge rent without any effort of your own.

John Stuart Mill said economic rent is what landlords make in their sleep. They don’t have to make a productive effort. Well, actually a theory of rent went way back to the churchmen in the 13th century describing what is a fair return to bankers. The economy needs credit, all economies work on credit, traders need credit. They need the money exchange from one currency to another. The value of banking services is the cost of living, the cost of doing business, the cost to have a certain lifestyle that’s becoming of a banker.

But everything that’s over and above normal living prosperity and costs is called usury. That’s not a valid cost. And so that was deemed illegal already in the 13th century. Well, Ricardo in the 19th century used the landlords as the main rent recipients of the hereditary landed aristocracy. Rent is what a landlord would get just for the ownership privilege of having a land. And so if you go out and buy a house today and the price of land goes up because the city will increase bus service or a transportation service. For instance, in New York City, a few years ago, they extended and built the Second Avenue subway that went uptown, along Second Avenue. Real estate prices all soared for real estate on Second Avenue. That was a free lunch.

The landlords didn’t do anything at all to increase the real estate rents that they were charging. Rents went way up. If you lived on Second Avenue or First Avenue, even Third Avenue, you had to pay much higher rent because you no longer had to walk half a mile to get to the Lexington subway that was very overcrowded. You could have the nice uncrowded, Second Avenue subway.

And yet, this rent increased not by the expenditure of any cost. It was rent without value. It was the price of housing without cost value. So rent is the unnecessary element of price over and above what it actually costs to produce something. And rentier income is the income that is unnecessary.

To actually pay a industrialist for building a factory… industrialists would be happy with making the normal rate of profit. But if you have a special technology monopoly like the drug companies, then you can make super-profits. So rents are super-profits, basically. That’s the difference. Anyway, that’s to your question.

Question | Roxanne D

[00:37:58] Luke Parcher: Right on. We have, a question here from Roxanne Devereaux. She says, if you’ve answered this, maybe just elaborate on your answer, but in a perfect world where government actually served the people, what would a debt jubilee look like and how could it reverberate through society?

Most examples I’m familiar with happened before the industrial revolution.

[00:38:14] Michael Hudson: Well, the best example is the German financial miracle of 1947, 1948, the allied monetary reform. All internal debts were canceled except for people’s bank accounts up to a given amount and except for the money that employers owed their employees.

And the reason is that most of the wealth, most of the bank deposits, most of the creditors’ claims, were by the Nazis. And the American occupation said, well, we don’t want the Nazis to get rich. So the good thing about canceling debts is you cancel the savings of bad guys. In 1947 it was the Nazis; today it’s the 1%.

If you cancel the debts that I’ve said should be canceled – the sort of bad debts that are not necessarily production – then you cancel all of this vast accumulation of savings by the 1%. For instance, if you cancel student debts, that would free income for spending on democracy.

If you cancel all the debts that US banks owe to the offshore banking centers in the Caribbean, Panama, Liberia. All of this is flight capital. This is criminal capital. Cancel out all the debt of criminal capital and fraud. When Greece was running into its financial crisis seven years ago, Greece owed 50 billion euros of debt that it was trying to write down.

And the IMF produced a list called the Lagarde List that had deposits of Greek crooks and tax evaders in Switzerland were $50 billion. That 50 billion could have been wiped out. One of the first debt cancellations that went wrong was in Sparta in the third century, BC, under Agis and Cleomenes. When they canceled the debts, the people who wanted to cancel the debts were people who’d bought land on credit and they wanted their debt.

They wanted to own the land free and clear and cancel the mortgages. So some debts you don’t want to write down. If you were to write down mortgage debts, Donald Trump and real estate speculators would be the richest people in the country. So you don’t want to write down their debts.

Their debts will remain on the books. But if they were written down, well, first of all then, their debts are the banking systems assets. So Citibank would be even more insolvent than it is already and the banks would go under. They would be taken over by the public sector because if you have the mortgage debt wiped out, there’s still economic rent. Because people are willing to pay more money for a well-situated property that would, uh, in place of the banks getting the rental value as mortgage debt, the government would get the same rental value in the form of a land tax. That was what classical economics was all about. That was Adam Smith. That was John Stuart Mill. That was the whole reform movement of the late 19th century. So you want to cancel the bad debts, but you don’t want to make debtors who are just speculators rich in the process.

You want to make sure that you only cancel the bad debts and you don’t create a new rentier class. The idea is to look at the economy as a system and see what should the government receive as economic rent. And it can decide what is it going to receive for healthcare. The government… if the government took over the healthcare industry, it probably would not charge the prices that healthcare charges today. It would charge less. Same thing for housing. If housing were run like England ran its council housing before Margaret Thatcher, it would be very low. In Germany, Germany pays only 10% of its average family income for rent, not 30 or 40% as in the case of the United States.

That’s what used to make Germany, until last month, so competitive an economy. So, you’d restructure the economy so that it would only have debts that were socially necessary to keep the economy operating. Debts will begin to grow all over again.

Debts will always begin to grow over and over again. If you don’t ban interest, you permit debts to grow, but when they get so problematic that they threaten economic growth, then you have to write them down to a level where they will no longer prevent economic growth from occurring as they’re doing today.

Question | Doug G

[00:42:45] Luke Parcher: So we have one from Doug Greer here. He says many people seem to confuse the lessons of MMT with the super imperialism of the US dollar being the reserve currency of the world. Is the ability to create dollars to finance domestic needs of the US, like healthcare and infrastructure, dependent on the US dollar being the reserve currency?

Can you clarify?

[00:43:05] Michael Hudson: They’re completely separate. Any country can use its credit creation, either by the central bank or by commercial banks, to create credit. It doesn’t have to be linked to the balance of payments, except that if a country’s running a balance of payments deficit its currency will fall, unless it can balance the payments somehow.

So they are different questions.

Question | Fabiano D

[00:43:30] Luke Parcher: We have one from Fabiano D. Being that politicians, therefore government, are in the pockets of the rentier class, how do you think we could get rid of such rentier influence in order to implement socially oriented policies?

[00:43:43] Michael Hudson: That has never happened without a revolution. That’s the problem. How do you get rid of them? Well, I don’t see any way for the United States to get rid of them. It took a revolution in China. It took a revolution in Russia. That’s the problem right there.

You did have the beginning of a peaceful revolution in England in the 19th century and, leading to a constitutional crisis in 1909 and 1910, when the House of Commons actually passed the land tax and the House of Lords, being the landed aristocracy, canceled it. That caused a crisis.

And the upshot was the House of Lords was never, again, going to be able to negate a revenue act passed by the House of Commons. So that was actually a peaceful resolution of a constitutional crisis. Then World War I came and changed everything. But today I don’t see that kind of a peaceful resolution occurring in the United States.

They’re not going to repeal the Citizens United act, and, from what it looks like to me, the economy is going to get more and more highly squeezed and more polarized between the 1% and the 99%. I would say it’s a class war except finance isn’t really a class because everybody is a creditor as well as a debtor in some sense or another. So it’s really a financial dynamic against the rest of the economy. One of the points that Marx made in Volume 3 of Capital was that finance grows by purely mathematical laws of its own, having no relation to the growth of the economy. It’s an autonomous economic system.

And I think that autonomous economic system is independent of the government here and yet, unless you have a study of economics as an economic system – understanding what’s causing the polarization and the poverty in the United States – you’re not going to be able to have a reform movement to change the system.

The role of economics departments is to dumb down the understanding of the economy. You’re not going to have any kind of a peaceful reform movement here.

Question | Cristina

[00:45:47] Luke Parcher: We have a question here from Cristina who asks, what are the steps we can take to fix the housing crisis? Kind of a broad question, but if you have any policy prescriptions there, that would be great.

[00:45:57] Michael Hudson: There’s very little that individuals can do. The 19th century dealt with this question increasingly. And their solution was if you have a calculation of the land rent, as opposed to what it costs to build a building – we all know that if you build a building the contractor and the builder or developer have to make a profit, but if the government will tax the land rent, then it will not be available to the banks to charge as interest.

So, if you tax the land rent, then the land rent is not going to be capitalized into a bank loan, and housing prices will be kept down to the actual cost of construction plus normal profits. And as housing becomes more desirable, or as the economy becomes more profitable, or as cities build more Second Avenue subways and the rental value goes up, the taxes will go up. That will prevent this increased rent from taking a financial form and will simply be the source of a government revenue. It requires a tax system to tax away the economic rent, so that housing does not reflect the speculation and the economic rent that is caused by the privatization that’s been occurring. Especially since 2008.

Question | Tim

[00:47:11] Luke Parcher: So this one is from Tim. Tim says one argument against de-dollarization is the liquidity and stability of the US dollar. For example, oil is based in dollars and many OPEC countries have their currencies pegged to the dollar, such that they benefit from a strong dollar. At this age, the transition into trade in local currency pairs against these advantages of dollar as reserve currency.

[00:47:32] Michael Hudson: Well, that’s exactly what this last weekend’s Shanghai cooperation meetings were all about. Any country that holds its central bank reserves in dollars has a stake and in wanting to lose the money. China has the largest dollar holdings of any government and its currency has gone down and down and down.

China’s willing to take a loss on this by moving out of the dollars. The solution is, as both President Xi and President Putin pointed out, we’re going to move out of the dollar so we don’t have a stake in the dollar. It can go up or down. It is not going to bother us. They’re not buying or selling to us anymore.

Anyway, they’re sanctioning us. So let’s go with what president Biden wants. He says, you go your way, we’ll go our way. Fine. Let’s go our own ways and use each other’s currency, and that way, it won’t matter. So, it won’t matter to them. If moving out of the dollar means that there’s less demand for the dollars and it goes down, what they’re gaining is freedom.

So, this is the price of their economic liberty from dollar diplomacy.

[00:48:34] Luke Parcher: We have another question here from Virginia Cotts.

Question | Virginia Cotts

[00:48:36] Virginia Cotts: Michael, I feel like we have… some people have a lot of nostalgia for the post World War II social democracies of Europe. I can’t remember if it was in your book or in an interview you described Thatcher’s process of privatizing in England. Could you talk about that? Because I didn’t know a lot of that.

[00:49:00] Michael Hudson: Well, Margaret Thatcher said that her greatest contribution was Tony Blair. And Tony Blair was an opportunist who got enough support from the United States to move the British Labour party to the right of the Conservative Party and do what Margaret Thatcher never could have done. By even privatizing the railroads, by being more viciously anti-labor, the social democratic parties in every country have been so pushed by what the CIA called “the mighty Wurlitzer of public opinion” – meaning bribes to the politicians – that they’ve financed the campaigns of neoliberals to pretend to be pro-labor, to pretend to be socialist, while actually they’re the far right wing of the political spectrum. I won’t call them fascist. But let’s just say there’s nothing the fascists would not like in the social democratic parties. So, here you have the most right wing parties in Europe are the social democratic parties. Way to the right.

I guess the most right wing neofascist party is, of course, the Greens in Germany that are the pro-war party. And anti-labor. But basically, there is no longer a real labor party representing the interests of labor. They’ve all been co-opted by demagogues. The social democratic parties in a way have been like the peace parties.

The first thing that every peace party does when there’s a war is they’re at the head of the pro-war patriotism parade. That was what Trotsky noted about World War One. The peace parties jumped on the bandwagon in Germany, Austria, England, America. Social democratic parties have done the same thing when there’s a neoliberal right wing corporatist financialization. They’ve all been persuaded to do it.

The equivalent was like what the Clintons did to the United States since the 1990s. In the United States, the Democratic Party is the far right wing party now. And I guess when I answered the question about what can Americans do to help the housing crisis… You cannot solve the housing crisis until you end the Democratic Party. You cannot solve the labor problem without ending the Democratic Party. Because that is the party of Wall Street. That is the party of the 1%. Its function is to make sure that there cannot be any left wing opposition to block the Republican Party’s program.

What Bill Clinton did, the Republicans never could have done. Backing Alan Greenspan and the right wingers in getting rid of the acts preventing banks from owning insurance companies and brokerage houses. Getting rid of the Glass Steagall Act. And no Republican could have done anything as viciously anti-black and anti-Hispanic as President Obama, whose policies are basically identical with those of the Ku Klux Klan.

Obama’s role was essentially to reverse the attempt by blacks and hispanics to become homeowners. His objective was to replace black home ownership and hispanic home ownership with ownership by private capital companies. His role in 2009 was to bail out the banks – the fraudulent banks that had written the junk mortgages – and to keep the junk mortgages on the hook to evict almost 10 million American families. And not fine the banks, not throw a single crooked banker in jail. This ended the hopes of the low income Americans – and especially the minorities – to have housing.

If you say, what can we do about housing? Well, if you’re black or Hispanic, you must avoid the Democratic Party like the plague. And you must come to terms with the fact that it was Obama that was the most anti-black president of the 20th century, except of course for Woodrow Wilson. The damage that he’s done has not been widely recognized here.

And, he has put in place a Democratic Party leadership that is so anti-labor, so white racist. and so pro-Wall Street that I don’t think it is reformable.

Question | Luke Parcher

[00:53:18] Luke Parcher: And just to build on what you were just talking about there, Michael, I’m kind of stunned by the extent to which people buy into the partisan false dichotomy in this country and seem to think there are all these massive differences between the parties.

And that obviously is an issue-by-issue thing, but I’m curious where you think that buy-in comes from and how we might be able to cut into it. The fear mongering about Trump is I think overstating the differences between Trump and Biden on these issues. Can you talk a little bit about that?

[00:53:43] Michael Hudson: Yes. The Republican Party’s role is to say to Wall Street, “Yes, please.” And the Democratic Party’s policy is to say “Yes, thank you.” But that’s basically it. You’ll notice, like in Ohio, the Democratic National Committee is backing a right-winger who is going to play the role of West Virginia Senator Manchin or Arizona’s Sinema. The Democrats want to make sure that it has enough Republicans running as Democrats, that if there’s ever a danger of promoting a bill that is good for the working class or the racial minorities or ethnic minorities, that you’ll have the Republicans running as Democrat to cancel it, to play the role.

There’ll always be many senators right behind Manchin and Sinema in the wings to prevent the Democrats from doing anything that does not serve the short-term immediate interests of their Wall Street bankers… Backers.

Question | Bruce W

[00:54:39] Luke Parcher: Rotating villain is a very real concept for sure. We have a question here from Bruce Wall who asks, which of the public banking and monetary reform movements do you support, if any? I have in mind Public Banking Institute, American Monetary Institute, the Alliance of Just Money, Christine Desan’s Just Money. What about figures like Robert Hockett?

[00:54:58] Michael Hudson: Well, I’m on the board of directors of the Public Banking Institute. Steve Zarlenga was a good friend of mine.

I was at all of his early conferences. So they both have very good ideas. And… I’m blocking out the name. Who’s the head of the public banking?

[00:55:15] Virginia Cotts: That’s not Ellen Brown, is it?

[00:55:17] Michael Hudson: Yeah. Ellen Brown. Ellen would be all in favor of many of the things I’ve talked about, but she doesn’t think that a debt cancellation is politically feasible right now. And of course, she’s right. So she’s said that, well, public banks can provide the model for what could be. The result of what happens if Obama would have let Citibank go bankrupt.

The Republican head of the FDIC [Federal Deposit Insurance Corporation] urged that Citibank, being run by crooks… but, Obama put an even bigger crook in charge. Geithner, who was working for his banker Robert Rubin, basically did not let Citibank go bankrupt because that would’ve wiped out the stockholders.

And as Sheila Bair, the head of FDIC, said, well, it was all about the bond holders. And Sheila said, if Citigroup would’ve gone under, then that meant the government would’ve had the biggest bank in the country, and it could actually run a commercial bank along making good loans instead of making loans to corporate raiders. Instead of making crooked mortgage loans and fake loans, it could actually make loans to help the economy grow. Well, she’s quite right. That would’ve been a good idea.

So she’s concentrated.on public banks for what they can do. And she said, at least by having a public bank, you’ll keep the deposits of the public sector – the government, the state agencies, and hopefully the local city agencies – in the public domain, out of the hands of, the commercial bankers and Wall Street, so that you can use the money for a good purpose.

So, I’m all in favor of what she’s doing. Steve Zarlenga at American monetary Institute was for the hundred percent reserve plan that was proposed in the 1930s. And that is, commercial banks would actually be reduced to the status of savings banks.

A hundred percent reserves. Could not create credit. They could only make loans from deposits. Of course, if they had a productive loan made, the government, the Treasury, would act as the depositor – simply increase the deposits in the bank to enable them to make productive loans.

And that also, in principle, is a very good idea. That’s why I supported that. And of course that was the program that was introduced by Dennis Kusinich in his presidential run. I was Kusinich’s economic advisor. So those are the two groups that I’m most familiar with and the most in favor of.

Question | Rasha 

[00:57:41] Luke Parcher: We have a question here from Rasha. What role does defining money play in shaping the economy? How do you define money? Is it a record of value transferred between economic actors or is it a commodity? If you agree that money is a record of value transferred between two or more economic actors, isn’t it possible to create money on demand by any two or more economic actors in a decentralized manner, as opposed to central private banks providing there is a scientific formula by which value of goods and services is assigned.

[00:58:10] Michael Hudson: Oh, my God. I can’t even begin to answer that. The jargon is so misleading. Money has nothing to do with value. Money is debt. That’s the opposite of value. It’s a transfer of debt among people, it’s not a transfer of value. You’re using a very right wing, quite frankly, a fascist economic terminology, maybe without meaning to. But it’s not value, it’s debt created out of thin air. It’s credit.

When you go into a bank and you take out a loan the bank doesn’t say let me see how much money I have on deposit to lend you. They will just write you a loan. They’ll create a bank deposit and in exchange you’ll give them an IOU. It’s debt, loans, that create deposits, not the other way around. Anyone who talks about money and value, you want to stop talking to them immediately. Because you know that it’s just going to be patter talk for propaganda.

Question | Tom

[00:59:03] Luke Parcher: So we have one here from Tom. Tom asks: all prices of all things for sale are not rising. Therefore, the term inflation is not what we are experiencing. For example, the market is working. Money is moving from those without oil to those with oil.

Why does no trained economist understand and label this a normal market redistribution period or some term listed in textbooks for reference? And why is the concept called inflation, which scares unknowing economists and today’s consumers who needlessly suffer from money famine, so poorly taught and so poorly understood?

[00:59:33] Michael Hudson: The question is so bizarre, I cannot answer it. It’s just how do you, how do you answer a swamp and straighten out what they’re saying to give them an answer? It’s a swamp. I can’t answer that.

[00:59:42] Luke Parcher: I suppose in general, what would you prescribe the price increases that we’ve seen today to?

[00:59:47] Michael Hudson: Very largely monopoly positions. The reason oil prices are going up is not because there’s an oil shortage. It’s because the oil companies find an excuse to use the newspaper reports that there will be an oil shortage at some point to raise the prices right now. Adam Tooze wrote a good article a few days ago, comparing the inflation in Europe to the inflation in the United States. In Europe, the price inflation is almost exclusively for energy and for oil and gas derivatives. In the United States, the inflation is much broader – it’s over the whole course.

Again, you want to look at the economy as a system. You don’t want to reduce everything to one-dimensional “here’s the price level”. You want to look at the multi-layered economy. What are the cost prices? What are the economic rents? What are the monopoly prices? What’s the tax system? You have to look at the economy as a system, not in a one-dimensional way. So, I can’t untangle all of the jumble any clearer than that.

Question | Paul B

[01:00:55] Luke Parcher: We have one here from Paul Birtwell again. Could Dr. Hudson touch on and acknowledge the validity of MMT? What do you think is the importance of MMT and how does it apply to this discussion?

[01:01:04] Michael Hudson: Well, I was on the faculty of the UMKC, which is MMT center for many years. I’m all in favor of MMT. The point of MMT is that just as banks create endogenous credit on their own computers, the government can create credit. The government doesn’t have to borrow money from the 1% or from bond holders in order to spend it; the government can simply print it as it did under the greenbacks.

The government can create its own credit. And there’s nothing wrong with running a budget deficit because a budget deficit does not have to be paid by taxpayers paying taxes. A government deficit can be funded by simply creating the money on your own computer – not by taxes. That’s the point that Stephanie Kelton has been making again and again in what she writes.

And that really is the essence of MMT. But of course the leading exponent of MMT was Donald.Trump, when he said deficits don’t matter, we can just create whatever we want. And I think, Vice President Cheney also said we can spend whatever we want. It doesn’t matter. George Bush said, you know, it’s all really fictitious anyway; we can do it.

The difference between Donald Trump and the Republicans and the MMTers is, we want the government to run deficits to actually spend into the economy. We do not want deficits to be run for $9 trillion to subsidize quantitative easing for the 1% to promote real estate prices and stock and bond prices.

We want them to actually employ workers and to promote full employment. So the difference is that the MMTers are basically in favor of tangible economic growth, not creating money bad MMT of Cheney and Donald Trump style.

Question | Luke Parcher

[01:02:51] Luke Parcher: Can you talk a little bit about how the IMF [International Monetary Fund] and financialization have contributed to what’s going on right now in Ukraine? I know that’s a little bit broad, but if you could tie in what we’ve been talking about here to the situation in Ukraine.

[01:03:02] Michael Hudson: The IMF’s job is to make sure that the economy is impoverished and that all the money that it gives is to support the currency – to enable the kleptocrats, Kolomoyskyi and others, to take the Ukrainian currency they have and transfer it into dollars and pound sterling at a high exchange rate.

So they will lend Ukraine the dollars – essentially to support the hryvnia, however you pronounce its currency – and enable the kleptocrats to make money and then pull the rug out from under them if any alternatives to the Nazis take power. They want.to make sure that, once the kleptocrats have emptied out the economy, they can let the economy collapse.

They’re of course backing the new labor law president Zelensky has pushed, abolishing labor unions, abolishing the rights of labor to negotiate, and making basically the most fascist labor law in any country’s history. So the role of the IMF is to support client oligarchy, to get their money out of a country before there is a possibility of a leftwing government coming in, and then to deny all credit and organize a currency raid on the leftwing government, to say, “You see, socialism doesn’t work”.

The IMF is one of the institutions that is the arm of American hegemony, preventing economic growth occurring outside of the United States. Essentially the IMF is a… it’s a small office in the basement of the Pentagon, run by the neocons, to make sure that other countries cannot have any policy that would not let American firms come in and buy their raw materials and their natural resources and their monopolies.

So, think of the IMF as a tool of the military, but much more right wing than any general would dare to be.

[01:04:55] Luke Parcher: Thank you so much, Michael. We really appreciate you taking the time today.

I also, once again, want to remind people to please go to realprogressives.org to learn more about us, or find our podcasts and articles, including again, Michael, as a guest on Macro N Cheese. With that, we will go ahead and call it a discussion here. Virginia, did you have anything you wanted to add?

[01:05:12] Virginia Cotts: Yes. I wanted to ask Michael where people can find his work.

[01:05:17] Michael Hudson: Well, Amazon, I guess, is the easiest place to go. It’s all available there.

On my website, michael-hudson.com. And you can go to that and join me on Patreon. I do have a Patreon group, and if you’re a contributor at a given level, then you get to talk to me directly every few months.

[01:05:36] Virginia Cotts: Well, we can all use support. Real Progressives also has a Patreon. So, support us all, please.

I just want to say, Michael, you wrote an article with the greatest title I’ve ever seen, which was something like the US Defeats Germany for the Third Time in a Century. I just thought that was such a perfect title. I think you wrote it right when the Ukraine war was beginning.

[01:06:02] Michael Hudson: Right. It was apparent what was going to happen at the very beginning. And I’m amazed that nobody else was writing about that. I’m not very good on military analysis. I can follow what Andrei Raevsky at the Saker says, and Moon of Alabama, and Andrei Martyanov. The one thing I can tell about military operations is the balance of payments aspects and how it all is spelled out.

[01:06:24] Virginia Cotts: Well… and you talked about how the three main sectors benefited.

[01:06:30] Michael Hudson: Yes. Oil is the key to American diplomacy. And I guess if we’re talking about American hegemony, it comes from America’s control of the oil trade. That was one of the reasons that America wanted to isolate first Venezuela, and then Russia, because if the only source of oil are companies controlled by the American oil majors, then…

Every economy needs energy to grow. And in every economy since the beginning of the industrial revolution, there’s a connection between the growth of GDP and energy use per capita. So I talk about the monopoly rent and the victim economy. If you can control oil then you can control, basically, the world economy.

That has been a key to the American policy. The Americans realized that if Europe cannot buy Russian oil anymore, or Venezuelan oil, then it’ll have to spend 10 times as much buying American liquified natural gas. This means the sanctions against Russia have ended German industrial supremacy. It has ended the German steel industry. It has ended German heavy industry.

They’re now going to be dependent thoroughly on the United States. And the euro is going to become a weakening satellite currency of the US dollar as a result of killing off the German economic and industrial leadership of the European economy, along with that of Italy and France.

[01:07:53] Virginia Cotts: Oh, thank you. I hope we didn’t abuse your generosity with your time.

[01:07:59] Michael Hudson: No. I assume if I said anything controversial, you’ll just take it out.

[01:08:03] Virginia Cotts: Oh, no, we like it. We will actually clip it and plaster it all over the internet.

[01:08:12] Luke Parcher: Oh… [laughs]

[01:08:13] Virginia Cotts: Michael Hudson isn’t controversial, is he?

[01:08:18] Luke Parcher: Well, you certainly don’t mince words, and we very much appreciate that about you. Michael, thanks again for giving us so much time today. And I want to give a brief shout out to Jonathan Kadmon, Andy Kennedy, and Virginia Cotts, who’ve been helping behind the scenes today to make this happen.

Thanks to all involved. Great.

[01:08:31] Michael Hudson: Thanks for having me. I liked the discussion.

Finance Capitalism’s Self-Destructive Nature

July 20, 2022

Posted with Michael Hudson’s permission

Transcript of Interview on The Left Lens with Danny Haiphong May 25th, 2022

DANNY HAIPHONG: Good afternoon, everyone. Happy Wednesday, May 25th, welcome to the stream, to another left lens. Today we have a very special guest so as you’re coming in make sure you are liking the stream sharing it, make sure that you are subscribing to the channel and hitting that notifications bell, and as always you know please do support this work here at this channel and all the work that I do at patreon.com/dannyhaiphong. But with that said I want to introduce our guests because we have a lot to talk about over the next hour and it is economist Michael Hudson.

He is the author of the new book, The Destiny of Civilization: Finance capitalism, Industrial Capitalism or Socialism and I’ll pull that up from his website very soon but I want to just say about Michael Hudson is that he’s been someone I’ve been following for quite some time. He has been making the rounds on various programs talking about political economy and he’s one of the foremost voices of understanding political economy today. Hi Michael, good to be with you thanks so much for joining us today

MICHAEL HUDSON: Good to meet you, Danny.

DANNY HAIPHONG: Very very good to meet you. So I’m going to pull up your new book in a second just on your website so people know where to go and I’ll make sure to link that in the chat so people know where to get it but I want to talk about first, so I mean we’re in an economic catastrophe in a lot of ways currently and there’s a lot of talk about, inflation and money, prices are skyrocketing, and one thing I really appreciate about your work is that you really do focus on political economy and you have been talking a lot about finance capital and something called super imperialism which you’ve written a book about and that has been updated several times even just last year so I wanted to get your take on the role of finance capital uh under this imperialist arrangement and in this time of the neo-liberal era in the united states and across much of the West in the world.

What is finance capital’s role? It seems so dominant now, it seems like the dominant class at this moment that really does control the levers of economic development. Could you talk about what role it plays and how it has spurred the crises that we’re going through today and you could talk about inflation but I definitely want to just kick it to you there so our viewers can get an understanding of the economics and an analysis of this.

MICHAEL HUDSON: Well, most people think of all kinds of capitalism as being the same and the assumption is that industrial capitalism of the nineteenth century somehow was always financialized because there were always banks but financial capitalism is you just pointed out is a political system and as a political system it’s very different from the industrial capitalism dynamic. In industrial capitalism, the whole aim or the hope of the industrial capitalists in the late nineteenth century, especially in Germany and central Europe was that banking would no longer be just usury, it wouldn’t be just consumer lending to exploit labor, and it wouldn’t be lending to the government somehow.

The financial system  would recycle the economy savings and money creation and credit into industrial production and would finance the means of production to make that productive instead of predatory and parasitic as it became and that seemed to be the way that industrial capitalism was evolving up until World War I. Everything changed after that all of a sudden you had the financial system take over as a result of the crisis caused in the 1920s by the German reparations debt that couldn’t be paid and the inter-ally debt that was insisted upon to repay the United States for the arms that have supplied Europe for a century into World War I. Well, the result was a huge depression.

The allies said, well, we didn’t expect to actually have to pay the United States. If we have to pay the United States, then we have to charge reparations on Germany and for a decade there was a debate between John Maynard Keynes and Harold Moulton and others saying that these debts can’t be paid. How are you going to handle a situation where the debts can’t be paid?

The finance capitalists then were the basically the ancestors of today’s neoliberals and they said any amount of debt can be paid by any country if it just lowers the living standards and squeezes labor enough and that’s what basically the philosophy of the IMF ever since world war II when third world countries can’t pay the debt, the IMF comes in with an austerity program and say you have to lower wages, you have to break up labor unions, if necessary you have to have a democracy, and you can’t have a democracy unless you’re willing to assassinate and arrest the labor leaders and the advocates of land redistribution because a democracy means basically rule by the financial sector  centered in the united states. And so finance capitalism ever since WWI and especially WWII and especially since 1980 is the nationalistic doctrine of American banks and the American one percent, and the American financial sector that is sort of merged into a symbiotic unit with the finance insurance and real estate.

In other words, finance capitalism instead of trying to promote overall economic growth for the 99 percent, instead of financing the industrialization of an economy with rising productivity and rising living standards, is now cannibalizing the industrial sector, cannibalizing the corporate sector. As you’re seeing in the U.S., finance capitalism is the economic doctrine of deindustrialization that has occurred in America in England and is now occurring in Europe.

Well, the problem is how do you survive if you’re not industrializing, if you’re not producing your own means of subsistence and how are you going to get this from other countries? Well, the answer is you don’t go to war with them like countries used to go to war with each other to grab their money and their land, you use finance as the new means of war so finance capitalism is the tactic of economic warfare by the United States against Europe and the global south to sort of draw all of the economic surplus of these countries in the form of debt service and the debt service is supplied by basically economic rent seeking from land rent, natural resource rent,  and just plain interest charges on economy. So, none of these are really the result of industrial profits that are made by employing labor and uh selling its products at a markup.

Finance capitalism is not based on surplus value like industrial capitalism was. In fact, it destroys industry and in this cannibalizing of industrial capital, it basically dries out the economy and makes it unable to break even or even to function and in the United States today, for instance, if you look at the balance sheets of corporate revenue much of it is spent on stock buybacks. You buy back your own stock or dividend payouts. Only eight percent of corporate earnings are spent on new capital investment research and development: factories, machinery, and means of production to employ labor.

How did General Electric (GE) go broke? Basically, Jack Welch said let’s use our income not to continue to invest in making more electronic goods and services and appliances, let’s use it to buy our own stock that’ll push up our stock and essentially, we’ll just sell off our divisions and we’ll use the money of selling off our washing machine companies and stoves and sell it off and we’ll just pay it to the stockholders. That’ll push it up and by the way his salary was based on how much he could push up the stock of GE and he was paid in the form of stock options. Well, all of this is now the normal corporate behavior in the United States and corporations are no longer led by industrial engineers as they were a few centuries ago in the nineteenth and twentieth century.

They’re led by financial engineers of the chief financial officer and the ideal of these corporations is to make money financially not by industrial investment….. so on the narrow microeconomic level finance capitalism is a way of basically selling out a company and giving the proceeds to the stockholders and the bondholders but as a political system, because it is so destructive of the economy as you’ve seen in the United States and you’ve seen in Britain through de-industrializing it, it becomes belligerent in an attempt to make other countries just as equally paralyzed by making these countries pay tribute to the U.S. and England and the financialized economies by means of financial engineering, by means of debt service, by means of selling their mineral resources, their public utilities, their land, their roads all to foreign investors–basically to who borrows the money that’s just simply created in the U.S.  and to save all of their money in their central bank reserves in the forms of loans to the U.S. treasury holding treasury bonds which is how the international monetary system worked until just a few months ago when everything changed.

So if you’re England and America right now you can look at President Biden’s speeches and he said well, China is our number one enemy because it’s competing unfairly. China is actually subsidizing industrial development by having its own infrastructure. It gives free education instead of privatizing education and making its labor pay for it. It has public health instead of privatizing social medicine like we do in the United States and making employers and workers pay for it.

Well, industrial capitalism in the nineteenth century was all in favor of strong government infrastructure. The ideal of industrial capitalism was to keep the wage costs of production down not by reducing wages but having government provide a basic infrastructure to cover the basic
needs of employees. The governments would provide free education so that employers didn’t have to pay for it. The governments would provide medical care so that employees didn’t have to pay for it and employers wouldn’t have to pay employees enough money to cover the education costs and to cover the medical care costs. The government would build roads and infrastructure and everything to facilitate the overall cost of doing business by industrial capital.

Well finance capitalism is just the reverse. Finance capitalism wants to privatize and take education, medical care, roads, turn the roads into toll roads, and take all of these and privatize them and make them financial  corporations that will essentially pay out their economic rent to the bondholders and the stockholders and this economic rent adds to the cost of education and everything else that workers need to live on so the result is to make it a high cost economy and that’s why Biden has said China and Russia are America’s enemies because the only way that America can succeed given our privatized economy, given the fact that Americans have to pay up to forty three percent of their income for rent, given the fact that eighteen percent of America’s GDP is for medical care, given the heavy student loan debt–only if other countries tie themselves in the same knot, only if other countries impose the same economic overhead on their labor force and on their industry can there be equal competition.

If other countries have a mixed economy and are more efficient because they have an active government providing basic needs, that’s “autocracy” and that’s the opposite of “democracy.” Democracy is where everything is privatized and ultimately the one percent own everything.

Autocracy is any government that’s strong enough to have its own public investment. Any government strong enough to tax or regulate the financial sector is called “autocracy” so the U.S. in the 19th century would be called an autocracy as I guess the Austrian school called it  – civilization is basically an “autocracy.”

There never has been an unmixed economy without government regulation, without a government investment, although Rome began to get to that point at the end of its empire and we all know what happened to it. So basically, finance capitalism is a predatory international economic policy aimed at draining the rest of the world all to pay the leading one percent of wealth holders in the U.S. and their satellite oligarchy in England and a few European countries.

DANNY HAIPHONG: Well, I mean that was an incredible summary with so much in there. I mean what you describe reminds me of what we have called at Black Agenda Report, this Great Race to the Bottom, like that is what finance capital facilitates because it’s you know there’s a lot of talk about outsourcing and production going from the U.S. and the West to other places, the global south, poor countries, oppressed nations, and all of it is underwritten by finance capital because it’s this international monetary system that you describe which is actually plundering the Global South for super profits and also plundering the United States and the West’s economic base for super profits.

So it’s like the super profits come rolling in from all sides and oftentimes the jingoists and the chauvinists will frame things as oh well China is taking our jobs. They rarely say Bangladesh or some other country that is actually being super exploited. So in many ways it’s framed like that to distract us from everything that you described. The fact that this class and this policy are plundering from all sides.

MICHAEL HUDSON: Well, you use the word super profit and, in a way, what is super profit? Super profit is what the classical economists called economic rent. It’s over and above profit. Profits are made by employing labor and basically that’s not how most wealth is created in today’s world. A financialized economy sees wealth is not created by making profits by investing in factories and plant and equipment and employing labor to make a profit, it’s made on getting a third world country, a global south country in debt and saying well if you can’t pay the debt yeah that we’ve given you then you have to sell off your raw materials, your land, all of your natural monopolies and the way to make money in finance capitalism is to buy up the monopolies and the whole idea of industrial capitalism was to get rid of economic rent.

The main aim was to get rid of the landlord class that was the carryover from feudalism, the warrior warlords that had conquered England and France and other countries. Land was to be brought into the public domain. That was the first item in the communist manifesto. You tax the land rent and then nationalize and socialize the land. The idea was to get rid of monopoly rent because monopoly rent is unearned income and to get rid and essentially to get rid of financial rent of interest that is just made as John Stewart Mill said and you ‘make it in the sleep’ if you’re a bond holder or a landlord. You get the rents not from playing any productive service at all but making this money in the sleep and so that has nothing to do with profits.

Unfortunately, the national income accounts don’t label economic rent as a distinct category they call any income that someone makes whether it’s a Goldman Sachs and Citibank or GE or any country and call it earnings and the theory is that everybody earns what they make but that wasn’t the idea of industrial capitalism.

The idea of industrial capitalism is from the physiocrats and Adam Smith and John Stewart Mill and Marx was that earnings were something that was actually made productively with money by employing labor to produce a surplus that would be reinvested but economic rent was unearned and that’s why natural monopolies should all be kept in the public domain instead of being available to be monopolized. So, like in America when Indiana ran into trouble it privatized and sold out the roads to be made into a toll road and now almost everybody avoids the toll roads and drives on the side roads.

When Chicago had problems paying its local debt, they sold the rights to the sidewalk and parking meters causing vast increases in the cost of living and doing business if you live in downtown Chicago where you have to park a car. So the ideal of industrial capitalism was I guess what Schumpeter called creative destruction by lowering the cost of production the way that a country would, an industrial country would win out in the world market, first England then the United States, Germany, Japan, and the way that they went out was by underselling competitors.

But finance capitalism adds as much as it can to the cost of production. It adds as much as it can to the cost of living because instead of treating education and healthcare and transportation as a public right, a natural human right, it’s all privatized by the one percent.

DANNY HAIPHONG:  Yeah, I mean it’s so true. Even in the Communist Manifesto there’s a section where Marx outlines the very idea of what socialism would look like and in it, it’s explicit how socialism will begin with the commanding heights of the economy, as you said these natural monopolies, they were going to be public owned like that’s the only way that you can have anything remotely socialist and now we’ve gotten to the point where finance capital has usurped them, has completely privatized them or is attempting to with whatever is left of the public domain, the public sector so to speak globally. And you bring up this really interesting point about the cost of everything going up, especially the cost of production.

I mean that’s just seen in how a lot of these big corporations have enormous amounts of debt now, corporate debt is at this astronomical level and you think well, look at all these super profits they’re making, look at all these huge profits they’re making. We always hear about all these corporations making these huge profits but we rarely hear about all the debt that these corporations are accumulating because of finance capital and so it’s really incredible.

I love talking about this because it’s these things that we don’t hear about because finance capital really is writing the rules and they have such undue influence over the media and over so many things. So I wanted to ask though about China so let’s just jump there because I want to ask you a question because I recently got into a debate with this, I don’t even know if I want to call a journalist but he’s a commentator, Matt Stoller. He’s very anti-China and this is a talking point especially on the far right but I would say that a lot of people think this, a lot of people think China and Wall Street are merged together, that they work together to undermine workers across the world especially in the capitalist epicenters, of the finance capitalist epicenters so to speak, U.S. and the Western countries.

Could you talk about China and its monetary system? You mentioned it briefly about why the U.S. is so hostile right now, why Biden can’t stop talking about competition and autocracy versus democracy. You talk about the differences in the monetary systems and how China treats finance because I think this is not really well understood and it has global implications. I think it has huge implications because I think there’s a general shift in a direction of how we address this flailing dollar-led economy, the global economy of imperialism and China is really at the center of this so could you speak on this if you would?

MICHAEL HUDSON: Well, what gets Americans so upset is that China’s getting rich by doing
exactly what the United States did in the 19th century. I’ve written a book America’s protectionist takeoff where I described the whole idea of American protectionism was tariff protection for its industry, government subsidized research and development, government subsidy of industry by having infrastructure as a fourth factor of production alongside land labor and capital – and it was supposed to have public banking.

So basically China, like the United States, said we want to raise the living standards of labor not because of an abstract ideal but because highly paid labor is more efficient labor, a highly paid labor is more educated, it’s better fed, it’s healthier and the Americans in the nineteenth century pointed out that America was the highest paid labor in the world but it was also the most productive and high paid labor outsold pauper labor.

Well China began under Mao with, you’d look at pictures back in the fifties, and even early sixties and you’d see masses of beggars and I’d look at the pictures and I said how on earth are they going to solve this problem? Well, they actually did it and China realized that in order to survive in the modern world you had to have uh well-paid, well-housed, well-fed, well-educated labor and they’ve done it.

The difference is that America had kept money creation in the hands of the treasury ever since the greenbacks in America’s Civil War. Basically, the government created money but in 1913, JP Morgan and the financial sector got together and they said we’ve got to get the government out of money and credit. If we can control money and credit, we can control the economy so they convinced President Wilson to have the Federal Reserve. They said we’re not even going to let a treasury official be on the Federal Reserve.

We’re going to move the Federal Reserve banks out of Washington. We’re going to have the key bank in New York where Wall Street is the ideal of a Federal Reserve to make a centrally planned economy and America is a much more centralized planned economy than China but its centralized planning is on Wall Street by the financial sector, by the leading financial corporations instead of the government.

So, where America took economic forward planning out of the hands of the government in 1913, China has kept the financial system in the hands of the government. Let’s look at how these two countries create money in a different way since the Obama depression began in 2008.

The Federal Reserve has created a tidal wave of credit, all into the stock market, in the bond market, all of this recent zero interest policy. This flood, these nine trillion dollars of federal reserve credit has only been to support banks, real estate prices, bond and stock prices, to support property prices. That’s not what they do in China, although the prosperity that China has created has increased uh housing prices and there has been private credit increasing housing prices. China has kept money creation in the hands of the government itself so that when the government creates money it can finance the creation of factories plant and equipment, dams, transportation infrastructure, public housing.

It doesn’t create money to lend to financial speculators and stockholders to increase their holdings, it creates actual tangible means of production. Now of course, if you create tangible means of production and employ labor and have high speed railroads and research laboratories,  you’re going to overtake countries that are busy closing down the factories and cutting back research and development because they want quick payouts.

So the chief public utility to be kept in the public domain, (China realizes and has realized from the beginning) is the banking system and credit creation even so there’s still private credit creation to some extent. They’ve also let some participation by American Wall Street firms such as Goldman Sachs because it’s hoped, it wants to avoid war and it hopes that it can by providing opportunities for financial profit to American companies that will somehow uh convince Wall Street to resist the Biden administration’s race hatred of China and the attempt to move towards a new war against China.

Obviously, the assumption that China made that seemed rational at the time was well the American economy is run by Wall street so if we can have Wall Street say we’re doing just fine with China, everything’s going to be okay. But Wall Street and the Federal Reserve bank and the  treasury have not even been consulted on this year’s war, NATO’s war with Russia in Ukraine at all. It’s Blinken and Biden and the neocons basically are waging a war that has sidelined finance and the result is to create the present crash in stock market prices and the parallel decline in bond prices.

So, finance capitalism is intrinsically self-destructive whereas industrial capitalism is self-expansive. Finance capitalism is self-destructive and that’s exactly what’s happening today and that’s what China wants to avoid by basically following the logic of what used to be called industrial capitalism.

By the 19th century, everybody used the word socialism and it wasn’t only the Marxists that were using the word socialism. There were Christian socialists, libertarian socialists, anarchist socialists and all different kinds of socialists. They recognized that you have to have the government sponsorship of a balanced and fair economic development. You have to prevent people from getting rich not by providing any productive service at all but just by being good rip-off artists and that’s basically what finance capitalism is: opportunity for rip-off artists to get rich uh by taking money away from the 99 percent, into their own hands.

DANNY HAIPHONG: Yeah, and that’s exactly what has happened and we’ve seen the differing results between China and the United States since that crash. China was able to sustain growth despite the worldwide economic crisis. As you said, living standards still rose. I think wages were going up something like seven to ten percent every year after the financial crisis and a lot of that was because of investment in jobs.

I’ve spoken to people in China and they say well in China if you go work for a factory, wages tend to rise and actually workers want to go there and sometimes they don’t want to leave even though China is trying to move more into the high-tech sector and the service sector. A lot of people want to stay in the factory jobs because it’s paying and it has some of these benefits and subsidies that are very alien here now.

I tell people there’s a housing allowance and they’re like what’s that? Like how could you say that? It’s China! China’s horrible! It’s like, well, you know factory workers have a housing allowance. How are you going to reproduce labor? We look at Marx and China’s very big on Marx. Look at what Marx was saying you got to reproduce the worker, you got to make sure that the worker has what they need, like that’s the bare minimum of what any economy should do but that’s what capitalism was originally supposed to do.

You reproduce the worker so you can extract the surplus. Finance capital is a great race to the bottom that workers oftentimes are not reproducing themselves. There’s a huge crisis of life expectancy and all sorts of things that didn’t used to be characteristic of capitalism. Standards used to rise as capitalism developed more advanced productive forces.

You mentioned this current crisis of the dollar and finance capital kind of being sidelined in the Ukraine crisis. I find this very interesting because finance capital is so hegemonic and it has so much influence over Washington and Europe but what you’re saying is very true because and we just see it that there’s just a catastrophe. There’s this huge inflation and there’s the crisis of the dollar like what’s happening here?

How come it seems that the further and further the United States gets into this proxy war with Russia over Ukraine, the more and more it deepens its involvement, and it’s been a long involvement, it’s not just since February, but ever since this period we’ve seen just this impending economic collapse. So, what’s happening here? Why is it that finance capital is sidelined and how do you see this going with the Ukraine crisis especially around the dollar?

MICHAEL HUDSON:  What do you mean by crisis of the dollar?

DANNY HAIPHONG: Well, it seems like what the United States is trying to impose its hegemony through its foreign sanctions, is having this blowback effect where now you have countries seeking alternatives to the dollar and the U.S. seems to be more economically vulnerable even though it’s expanding and trying to dominate. It’s this very strange contradiction that feels very unstable and it feels like the dollar is artificially inflating itself as it is also dealing with the fact that there is no end game here in Ukraine. It seems like messing with a big country like Russia and its relationship to Europe is moving us toward economic catastrophe, an economic crisis if there’s not already one underfoot.

MICHAEL HUDSON:  No that’s not what’s happening with the dollar at all. People with all of the emphasis on America’s war against Russia to try to break it away from China before going to war with China, the first thing that America wanted to do was to lock in its control over Europe because that’s the easiest way to get things is you want to take over the richest economies in the
world and lock them into the United States and that means taking over the Eurozone, England and Japan. And the dollar has been soaring against these currencies.

To put it another way, the Euro has been plunging toward one dollar per Euro. The pound sterling has been plunging to one dollar per sterling. The Japanese yen has been plunging even more so there’s a huge movement to safety into the dollar.

The Americans have successfully destroyed the basis of European industry. They’ve finally beaten Germany. They’ve left Germany without energy and GDP in any country compared to energy per worker and basically the productivity that makes goods is basically embodied energy and Europe has been getting its energy from Russia in the form of gas and oil.

Well, the United States has asked Europe to commit economic suicide basically by saying, “don’t buy Russian gas, wait three or four years, spend five billion dollars on building new ports so that you can import American liquefied natural gas at seven or eight times the price and meanwhile let your chemical industry, your car industry, your basic industries go bankrupt.  Take it on the chin for America and Europe said, “okay not Europe but the politicians that America have meddled in European politics to promote to sign on the dotted line for treaties” made that decision so even if the Europeans don’t want to commit suicide, America has its proxy politicians in its Tony Blairs, in the head of the social Democratic Party in the advocates of pollution and global warming at the head of the Green Party.

You have in England you have a Boris Yeltsin and in Japan you have leaders who are willing to continue to sacrifice Japan’s growth to serve the United States. So these countries, the investors in Europe, England, and Japan are moving their money into the United States especially because the United States is raising its interest rates through the Federal Reserve and that’s telling Japan and Europe not to do it so the Eurozone has very low rates.

People are borrowing at under one percent and moving it into the United States to make two, two and a half percent. Japan has almost interest-free money from the central bank. It’s moved its money into the U.S. so the dollar, while I won’t say it’s soaring against these currencies, other currencies in the U.S. orbit are collapsing against the dollar because they’re following U.S. advice.

So, I think when you say other countries are breaking away, you’re talking about the bulk of the world, Central Asia and Latin America and China and the key to the present New Cold War is America has to achieve its almost dictatorial dominance over Europe and Japan. It’s the client oligarchies and client dictatorships and without realizing that this is American democracy, where the leaders of the whole world follow what the United States tells them to do because the United States identifies itself as the democratic center.

So democracy no longer means a political system where voters get to determine who is in charge, democracy is the policy dictated by the United States State Department. Any country that goes its own way or develops the power potentially to go its own way such as China and Russia is called an autocracy. So, you have to realize in today’s world democracy is autocracy and autocracy is democracy.

You could say yeah, the question is of course will the world really break into two halves and it looks like it is breaking into parts and there will be the U.S. and its allies, the U.S., Europe, and Japan against a Eurasian core that will go hand in hand with Africa and Latin America and other Asian countries who are able to rely on trade and investment among themselves. And the United States by seeming to isolate Russia and China and Iran and other countries actually is isolating its own dollar from the rest of the world. So, there is an iron curtain but it’s not to keep other countries out, it’s to keep its own allies within.

DANNY HAIPHONG: Do you see this succeeding? We’ve been hearing a lot about Russia’s relationship with Europe and just how deep its energy sector is with Europe and how that relationship is a very difficult relationship to break economically. Although Europe is doing everything it can, everything you’ve described. It made me think about how throughout this crisis Europe, because of the dominance of the U.S. and just listening to whatever the U.S. said, was actually going way above and beyond what the U.S. would commit to in terms of Russia and how economically they would wage this kind of warfare. But China and Russia, with Russia’s energy and its natural resources but China I think in a broader kind of portfolio, have so much to offer to Europe, do you think that this will succeed?

Europe has been going the road of austerity for many years but this seems like such a huge step in that direction. Europe could look very much like the United States very soon. Do you see this working given how China has so much to offer it and already has a lot of countries in Europe maybe not the biggest of the clients like the UK for example but a lot of European countries have big relationships with China even the UK does despite all of the nonsense, all the New Cold War stuff. What do you think? Do you think this will work?

MICHAEL HUDSON: There’s a lot of crap that futurists tend to fall into and that’s imagining that countries are going to act in their self-interest. This is the mistake Stalin made with Hitler. He thought if Germany attacks Russia in World War II, it’s obviously going to lose. No sane country would attack Russia just as winter’s coming but Hitler attacked Russia. You’d think that if you tried to say what is a logical future.

Let’s go back to 1991 when the Soviet Union self-dissolved. The whole idea, the dream at that point according to Russia’s leaders was well, if we can have peace, we’re not going to have a war budget anymore. Europe is going to invest in us and help us rebuild a rationalized, efficient industry and we will trade with Europe and we’ll both get rich on mutual trade.

Well, this terrified the United States. It said, “oh my! We want it, we Americans want to be the beneficiaries of Russia.” We don’t want to trade with it. We want to carve it up and privatize it and take over. Basically, have Wall Street take over its oil resources, its gas resources, its nickel resources, its electric utilities. The last thing America wanted was this symbiotic mutual gain between Europe and Russia and I think that Putin and most of the leaders at that time expected that Europe would act in its self-interest and they could both end up gaining.

But that’s not what happened obviously. Europe followed American dictates and continues to because it’s, again, its leaders follow, its leaders are really just like Zelensky in Ukraine, they’re just as dependent on what the State Department dictates to them to do as Zelensky is. And there’s something evangelistic about it.

The Europeans I’ve spoken to really believe that America is the land of the future and that neoliberalism, that finance capitalism, somehow is going to be an ideal of private enterprise. They’ve bought the rat poison, they’ve eaten the rat poison, and they actually believe it and think of themselves not simply as servants of the United States following what it’s doing. As the Pakistan former Prime Minister said a few weeks ago, slaves of the United States policy, they actually are evangelistic promoters of neoliberalism and as sort of disciples, just as bishops you could say really. It’s like a religion and they treat the American-centered neoliberalism as the new religion . It’s literally a crusade against Russia and Europe and I think this has shocked Putin.

I would imagine the Chinese leadership also thinking: How can Europe be so completely unrealistic? How can its media lie so constantly about what’s really happening in Ukraine? How can Europe deify the neo-Nazis in Ukraine as freedom fighters, as heroes, as wonderful people to be supported? I think this has been such a shock to the Russian leadership that they realize finally that, well, Europe is not going to act in its self-interest.

There is not going to be any mutual gain.  Europe again and again is just going to grab any money that we have there like they’ve grabbed our whatever was in European or American banks. There’s really nothing we can do. So there’s been a fundamental reorganization with Russia and the rest of the Shanghai Cooperation Organization (SCO), meaning not only with China but with Iran, with India, with all of the other Eurasian countries. So, in that sense the United States has brought about exactly what it feared. The whole rest of the world is going its own way productively in a capital investment way, raising living standards, things that democracies are supposed to do well.

In the United States, we really don’t have democracy because the political parties are controlled by the donor class, the one percent, that’s what the Citizens United Supreme Court ruling meant. The United States is left without any means of self-support and Europe will be left without any means and self-support at some point. Europe may say, gee we made a mistake, maybe we should have tried to profit from Russia because everybody else is profiting with and getting Russian gas and nickel and China and other countries are rebuilding Russian industry and we could have had our car industry build up Russia but we don’t have a car industry anymore because it doesn’t have the gas that it needs and the raw materials and titanium it needs from Russia so now, we’ve seen other countries replace us.

And so, Europe has been rendered pretty much obsolete and even if it says we made a mistake, let’s be friends again, I don’t think Russia or other countries will trust it mainly because they can afford not to trust it.

They say, why take a risk with trusting Europe may not just continue to be America’s poodle?

Why take a risk? Why not just say, we’re doing just fine the way we are? Why not just work with each other peacefully? And all that the United States can do about this is threaten to bomb it and the way to stay away from this threat is simply to say look, you go your way, we’ll go our way and to have enough of the military between them to defend themselves against the American potential military attack despite the almost eight hundred military bases the United States has. If the United States is not getting foreign exchange from these countries anymore, the dollar with the euro and the yen and the sterling will all go way down against the Eurasian currency block and they’re going to move into a common block with their own counterpart to the IMF, their own counterpart to the World Bank, their own trade organization and the world will be split into two parts – just like the world split when the Roman empire fell apart and the east went forward, Western Europe went down. This is really the final submergence of western Europe.

DANNY HAIPHONG:  Yeah, I mean you have more activity now in the BRICS plus, right. The BRIC countries are trying to move forward and add more partners and expand their financial operations. I mean there’s so many multilateral institutions mainly led by China with Russia’s heavy involvement and in other countries that are building a kind of independent monetary system and economic development system that can as you said ‘avoid the risks’.

The Ukraine crisis is such a huge deal in part because of how geopolitics like you were saying, geopolitics plays such a big role. What the United States has done and what Europe has done during this Ukraine crisis is show countries like Russia and China that they not only cannot be trusted but it’s almost a guarantee that not only will this Ukraine situation have no quick ending right, there’s no like, we’re pulling out! The ball is rolling and they can’t catch it. They’re not going to be able to stop what they’re doing. There’s so many issues with that but they’ve even escalated the situation. You have countries like Finland and Sweden saying we’re going to join NATO. You have just so many, just all of these points that show that the United States and Europe can’t be trusted.

What are you to do other than make sure that you can keep the right, as China says, to sovereign economic development safe? And the only way you do that is by increasing that sovereign part, sovereignty, and I think Russia learned a big lesson here. I mean you mentioned those assets that were stolen. They were just stolen. It was bigger than Afghanistan which had the same situation happen to it but with Russia it was probably the biggest problem with all the economic moves that were made against Russia, the assets being stolen right out from under it. That’s a huge blow economically and it facilitated so much change.

But I wanted to and you know this is the last question because I feel like a lot of these developments are leading to a positive thing that we see countries like China and Russia increase the sovereignty of their economic development models. Can you end with talking about socialism and you know, where do you see this concept of socialism going as an economy, as
a political economy?

We know China has its model, other countries are trying their own models, but what do you think are its prospects now in this environment because China has its particular model, it seems like a lot of countries want to emulate that. You see Cuba and other countries wanting to understand how to do what China has done because it is an economic miracle in a lot of ways.

You were talking about how China was living, how people were living in China just in the sixties and seventies, it’s just a completely different situation. What do you see the prospects of it in this a very chaotic environment, the geopolitics imperialist finance capital it’s creating all this chaos, what do you think the prospects are and could you I guess enlighten our audience about socialism and your work on it?

MICHAEL HUDSON: Well socialism is really how industrial capitalism of the 19th century was
supposed to evolve. Everybody thought that it was going to evolve into a more democratic system because the first aim of industrial capitalism, what it really needed politically was to get rid of the landlord class because there’s no way that, as David Ricardo pointed out, there’s no way that England could become the workshop of the world if you let the landlord class continue to get more and more land rent and force labor to pay more and more for its food.

Today, it’s housing as well as food. There’s no way that it could be competitive so in order to get rid of the landlord class, you had to get rid of the house of lords in England and the upper house in every European country because the upper house and the senate were controlled by the hereditary landlords and so industrial capitalism backed democracy.

Already by 1848, the year that the Communist Manifesto was written, that led to revolutions all over European countries getting rid of the old aristocracy. Well, the rentiers fought back and actually it was wasn’t until World War I that the monarchies were overthrown and the aristocracies connected to the monarchies and land no longer was owned by a hereditary class. It was democratized but it was democratized on credit and that you had the banking system replay the role that the landlord class had played out before and the bankers were the new rentier class. The bankers were the new people whose interest charges and debt services and privatization of economic rents prevented economies from underselling non-rentier economies.

So, socialism was basically getting rid of the free lunch. Marx described capitalism as being revolutionary because he said what was revolutionary was getting rid of all of the unnecessary cost of production and that meant the unnecessary rentiers, the rent seekers, the coupon clippers, the financiers, and the monopolists. Everybody could agree that socialism was getting rid of this parasitic class that was not necessary for economies to grow and actually whose takings slowed the economy.

Socialism was to free economies and free markets from rent seeking, not freedom for rent seeking. After the 1890s, socialism was to get rid of a free lunch income whereas finance capitalism is all about how to get a free lunch if you’re a member of the one percent.

So in one sense, socialism is freeing economies from the legacy of feudalism which fought back in the modern world into a kind of neo-feudalism operating through financial control, not simply land ownership and monopoly ownership. And China has been able to get rid of this and at the same time avoid the central planning that gave socialism a bad name under Stalinism because China said well, let one hundred flowers bloom and we’re going to we realize that we can’t plan all sorts of innovations because there are so many possibilities of productive innovations.

We’re going to let people get rich by being creative, by being productive, by adding but we’re not going to let them get super rich. They can get pretty rich but then at a certain point they’re so rich that they’re getting rid of a monopoly we’re going to sort of cut down the high grains of wheat as they say so they’ve got a sort of consensus government where this occurs.

Other countries will have great difficulty putting this in place because there really isn’t any economic doctrine of socialism that’s been developed recently. There’s been just an out of hand rejection of all discussion of what socialism really was and what makes a socialist economy more efficient than a finance capitalist economy and that really is the key.

If countries, if economic theory, would talk about what makes a socialist country more efficient- lower cost with higher living standards-then it wouldn’t be economics anymore because economics are what gets published in the University of Chicago economic journals. I don’t know what you should call it, futurism or reality economics. There has to be a new discipline that our countries are going to develop to try to explain how to think about developing a world that doesn’t have parasites in it.

DANNY HAIPHONG: Right, so true. I mean what you were saying about all this, it just gets you thinking about what China has done to be able to control these forces. You see it in the tech sector especially, now you see it with this common prosperity drive. Like there is a drive to control these forces that can, as industrial capitalism found out of the old in America and Europe, you let those forces get out of control and then finance capital turns around and takes everything. And China has prevented that and you don’t hear it, even in like the Bernie Sanders social democracy milieu, you don’t hear them talk about this.

They’ll say like socialism is when you have Medicare for All but it’s not just that, it’s how as you were saying, what are the forces that need to be arrested? What are the forces that need to be strengthened to be able to ensure that the public good and public wealth is protected? That’s not in the discussion. It’s still not in the discussion.

I mean, it’s not on discussion even among the most so-called progressives. But they don’t talk about it like that because as you said earlier, it’s like autocracy or authoritarianism or something when a government is strong in the interests of economic development for people. It’s almost like finance capital has dominated even just the idea of it and the idea of what socialism is and what it could be.

But Michael, do you have like five to ten more minutes for a couple of questions? We had some in the audience and I think one of them is very good and I wanted to know your take on it.
Thank you for the super chat. So, they said that the People’s Republic of China has three trillion in USD foreign exchange reserves. What measures, I know that you’ve done a lot of work in China and you’ve done a lot of work around this. This person’s asking, what measures should the central government take to ensure they don’t get seized just like how the U.S. seized Russia’s foreign exchange reserves but I’ll let you answer that because I think that’s a great question.

MICHAEL HUDSON: Well, I bet this is just what they’re discussing right now in China. Because of COVID, I haven’t gone there since 2019 because I’d have to be isolated in a hotel room for two weeks so I’m not party to their discussion but they’re obviously worried that the Americans can do to them what they did to Russia. What are they going to do?

They need to keep some dollars just to intervene in the foreign exchange market to stabilize their exchange rate but they don’t need too many dollars and in fact in the third edition of my book Super Imperialism, which is coming out in Chinese now, the first edition sold about sixty thousand copies there and it is the first book of mine translated in China. So that was all about this question that you asked. This is very much in discussion now.

How do they run down their dollar holdings and what are they going to replace it with? Well, in principle they can replace it with holding each other’s currencies: Rubles, Indian currency and Pakistan currency and with gold because gold doesn’t have a liability attached to it. It’s a pure asset.

The world, the whole world is now de-dollarizing. America has, or Biden has, killed the dollar standard. This was America’s free lunch, being able to print dollars and never have to pay them back and now countries are all going to be dumping the dollars. They realize that America is just a gangster state financially and obviously they’re going to dump the dollars and this probably will push up China’s exchange rate and countries selling the dollars will increase their exchange rate against the dollar and that will hurt their relative exports. So, I think they’re trying to figure out how we can all do this together and keep a rough parity among our own currencies while really de-dollarizing. I don’t know what they’re doing but you can be sure this is what is on the forefront of everybody’s mind there.

DANNY HAIPHONG: Indeed indeed. It’s a huge question. I mean it really is trying to unravel and get oneself out of this hegemonic system, the dollar system. It’s something that you cannot escape and there’s been so much unfair, I feel like unfair condemnation and criticism of China and other countries trying to go their own path, for just their participation, it’s something you need to participate in right now to survive absent of another system.

Last question and I mean this isn’t so related to what we’re talking about but it is I think a good super chat question and I think it gets into economics too. What are the chances that China will simply not open back up for the next ten years or so looking at this long term because of COVID-19. I don’t know what you think Michael. My opinion of that from what I’ve learned about China there is a huge domestic tourism industry and foreign tourism is very important but I don’t know for me it feels like it’s going to open up before that. It seems like the economic situation that COVID-19 restrictions are difficult to continue on permanently but what do you think? Do you think that China could maintain these kinds of hard travel restrictions for a long period? I hope not. I want to go back; I need to go back and learn more but what do you think?

MICHAEL HUDSON:  Well, I asked that very question of the universities that I’m associated with yesterday. We had a long discussion and the answer is nobody has a clue. They’ve been criticized in the West for avoiding COVID-19 but there’s no discussion in America or Europe of
long COVID and now that there’s a report that a million Americans have long COVID and it really seems awful, your IQ goes down by ten percent and it’s almost like inheriting a trust fund. You’re stupefied. As a result of that they’re also tired. Some professors I know there say that they still have not fully recovered from COVID months and months ago. They still had very low energy. There’s no way of knowing. This doesn’t look good and if the thought of staying in you know traveling all the way over there, staying in an isolated hotel for two weeks just to have a few days of meetings and then come back and be isolated again, nobody has a clue but it doesn’t look good.

DANNY HAIPHONG: No, it doesn’t and I myself, I’ve avoided COVID unironically like the plague like I am so lucky not to have caught it and part of it is U don’t want, exactly what you’re saying, long COVID. I don’t want that. I don’t want that in my life and I feel like you know I know so many people who have gotten COVID-19 and they lived through it and while they had it, it was awful. It was bad but they lived but now they have all of these other symptoms like I know people who had their whole lives kind of turned upside down because they just can’t get the energy back or the motivation or whatever it is.

It has an effect on your breathing and mental health and there’s so many aspects of long COVID that are difficult to understand and I think China you know at one point it was like a twenty one day quarantine. I know people who are traveling there and who go there often and they were staying twenty-one days you know in a quarantine hotel. I mean you know China has done such a great job containing and addressing COVID as best that they can under these circumstances. And so well of course I have my own deep desires to go back, but I totally understand why the government and why the people there who support this policy would be very careful because you have in China a population so huge. If they did what the United States did, I think the recent estimates are like one point seven million would die and then how many would have long COVID? Millions upon millions more because the case numbers would be astronomical through the roof.

MICHAEL HUDSON I am sure they’re watching what happens in North Korea which is just experiencing its first outbreak. I mean that’s sort of an example. The difference of course is that China is inoculating people and there are also pills the Chinese have sent me and many kinds of medicine in case I get COVID.

DANNY HAIPHONG: That’s great. Amazing, so before we depart Michael, I’ll stay on for another fifteen minutes or so but I definitely want you to plug whatever you’d like to plug now I will pull up the book again and your website. So, if there’s anything you’d like to plug please everyone, keep liking the stream, keep sharing and subscribing to the channel all that good stuff supporting the work at patreon.com/dannyhaiphong but Michael is there anything you would like to plug?

MICHAEL HUDSON: All of my articles are on my website michael-hudson.com and I’m also on patreon and they can join on patreon and I have an ongoing discussion there so the website, patreon are my favorite sites where I publish, and Naked Capitalism, the Saker, Counterpunch, my articles are usually on a lot of these different websites and you’re showing it now so yeah and the books are available on Amazon or Xlibris and you can all buy them and they’re well printed and priced not very expensively.

DANNY HAIPHONG: Great conversation Michael. Thanks so much for coming. We will have to talk again as things continue to develop so thanks so much.

MICHAEL HUDSON. It’s good to be here Danny. Thanks for having me.

هكذا غيّر بوتين ونصرالله قانون الحرب

 الإثنين 20 حزيران 2022

ناصر قنديل

منذ العام 2000 والعالم يعيش إيقاع صعود حركتين، حركة يقودها الرئيس فلاديمير بوتين في روسيا، وحركة يقودها السيد حسن نصرالله في لبنان، وقد اعتمدت كل منهما منهجاً خاصاً ومختلفاً وجديداً في صناعة التوازن، وصولاً لتحقيق التفوق الاستراتيجي، ما أتاح لهما التربع على عرش القوة، وتغيير قانون الحرب.

انطلق بوتين من روابط الدين والقومية التي تجمع مواطنيه على استعادة أمجاد تاريخ العظمة التي أصيبت في الصميم مع انهيار الاتحاد السوفياتي، ما أعقبه من إذلال ومهانة للروس بصفتهم ينتمون للدولة الروسيّة لا غير، واستثمر بوتين على هذه النهضة ليبني معادلة القوة على توظيف الأصول الثابتة للأمة الروسية، بوجه معادلات العالم الافتراضي التي تصنع قوة الغرب. فاستند إلى الطاقة البشرية لبناء جيش مقاتل يستعدّ ضباطه وجنوده للموت والتضحية، مقابل شركات متخصصة للخدمات العسكرية والأمنية واللوجستية وشركات تجنيد المرتزقة والجامعات الإرهابية الرديفة القابلة للتوظيف مثل تنظيمات داعش والقاعدة وفرق النازيين الجدد، تحل مكان الجيش الوطني بمفهومه المتوارث من الحربين العالميتين، ووظف بوتين موارد روسيا من الأصول الثابتة في المعادن والخامات والقمح والحبوب والنفط والغاز، لتكوين اقتصاد يخدم بناء فائض القوة الذي تستدعيه الحروب، مقال اقتصاد المصارف والأسهم والبورصة الذي يستند إليه الغرب ويسيطر عبره على العالم.

بالتوازي انطلق السيد نصرالله، من منسوب الكرامة الذي حملته ومثلته المقاومة وعزّزه انتصارها الأول في تحرير الشريط الحدودي المحتل عام 2000، وانتصاره بالصمود والثبات والقدرة على منع جيش الاحتلال من دخول الأرض اللبنانية وتحقيق أهدافه بتدمير المقاومة عام 2006، ومعادلات الردع التي أنتجتها الانتصارات، لتشكيل نواة جيش صغير لا ينام وهو يتجهّز ويستعدّ بكل ما تحتاجه منازلة حاسمة مع الكيان الذي يمثل صفوة ونخبة وطليعة جيوش الغرب المقاتلة، راسماً معادلات التسليح والتمكين التقني بمعايير حرب حديثة تستند الى مشاة البر والصواريخ الدقيقة والطائرات المسيّرة، مقابل جيش يملك مئات الطائرات وآلاف الدبابات وقوة نار هائلة ونصف مليون جندي، ويصنف من أقوى جيوش العالم، وقد سبق وخاض حرباً شاملة على جيوش خمس دول عربية مجتمعة على ثلاث جبهات وانتصر فيها بصورة ساحقة خلال ستة أيام، وقد جاءت وقائع الحرب في أوكرانيا تقول إن الحرب الجديدة باتت حرب مشاة البر والصواريخ والدقيقة والطائرات المسيّرة، بعدما كانت كل الحروب التي سبقت منذ الحرب العالمية الأولى حرب الطائرات والدبابات.

جاءت حرب أوكرانيا لتضع وجهاً لوجه قانون الحرب الأميركية مقابل قانون الحرب الروسية، وفي مقابل عجز جيوش الغرب عن تحمل نزف الدماء قياساً بالجيش الروسي، بفعل تباين التكوين والبنية والأهداف، ولتجنب حرب نووية مدمّرة وغير مضمونة النتائج، مع الفوارق التي راكمها بوتين لصالح التفوق الروسي، بينما اعتمد بوتين على ضباطه وجنوده وتضحياتهم وثباتهم ومن خلفهم شعبهم، واعتمد الغرب وعلى رأسه الأميركيون، على الجيش الأوكراني، ومنظمات القومية المتطرفة والنازية الجديدة، وشركات تجنيد المرتزقة، وشركات الحروب الرديفة والاستخبارية، وقدموا أسلحة وذخائر بمليارات الدولارات لتأمين أعلى نسبة توازن ممكنة في الميدان، حتى يتسنى ربح الحرب في ميدان آخر، حملته حزمات العقوبات القاتلة الأميركية والغربية، التي تستند بصورة محورية على فعالية أنابيب المال الافتراضية والى جانبها أنابيب الاعلام والمعلومات الافتراضية ايضاً، لإسقاط روسيا بالضربة القاضية؛ وبالمقابل حافظ بوتين على برودة إدارته للحرب في الميدان المباشر لضمان تقدم ثابت وتدمير منهجي لمصادر القوة المقابلة، وكان محسوماً ان يأتي التفوق لصالح روسيا في ميدان الحرب التقليدية للجيوش بفعل فوارق القدرة البشرية والتسليحية الهائلة لصالح روسيا، ولذلك وضع بوتين مطمئناً ثقله في ميادين الحرب الموازية، والرئيسية، حرب صمود الاقتصاد الروسي، وحرب بدء إنهاك اقتصادات الغرب، ومع مئة يوم من بدء الحرب ظهر أن أنابيب الغاز والموارد الطبيعية أقوى من أنابيب المال المصارف، وان الأصول الثابتة تنتصر على الاقتصاد الافتراضي، وتكرّست معادلة قانون حرب جديد، حيث قوة الأنابيب الافتراضية تكمن في تدفقها، بينما قوة أنابيب الأصول الثانية تظهر عند توقفها، وعندما تتوقف الأنابيب، يربح من يملك أنابيب الأصول الثابتة ويفقد صاحب الأنابيب الافتراضية قدرة التأثير.

في احتفال حزب الله بأربعين ربيعاً على التأسيس وانطلاق المقاومة، يحضر كشف حساب التوازن في معادلة المواجهة بين فائض القوة المادي الناتج عن مراكمة المال والسلاح والقوة النارية، مقابل فائض قوة آتٍ من التأسيس على قيمة مضافة تمثلها القضية والفكرة والمعنويات والروح، ويثبت أن فائض القوة الناتج عن قيمة مضافة قابل بصورة متكررة للتحوّل إلى قيمة مضافة جديدة وفائض قوة جديد في عملية مستدامة لا تتوقف، والحفاظ على التفوّق الأخلاقي، يتيح تكرار العملية وتصاعدها، بينما فائض القوة الصافي قابل للتآكل، فيتحوّل إلى مجرد أكوام من الحديد والمعادن، أقرب إلى الخردة، يديرها روبوتات بلا روح، وحيث تهزم الروح تحسم الحرب لصاحب الروح المتوثبة بوجه الروح الخامدة، وتتكرس معادلة انتصار فائض القوة الآتي من قيمة مضافة لقدرته على العودة الى الأصل مجدداً كقيمة مضافة، بينما يبقى فائض القوة الجاف مجرد أرقام في جداول الحساب، تفقد قيمتها عند اختبار الميدان.

معادلتا الأصول الثابتة والقوة الافتراضية، وفائض القوة والقيمة المضافة من جهة موازية، معادلتان جديدتان نظرياً في علم الحرب، تؤكدان نظرية الاستقطاب التفاعليّ لكتابة التاريخ، حيث الحروب ليست مجرد تقابل بين الجيوش عدداً وعدة، وبين الدول مالاً ومقدرات.

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Will the Global South break free from dollarized debt?

In his latest book, economist Michael Hudson pits socialism against finance capitalism and tears apart the ‘dream civilization’ imposed by the 1 percent.

June 09, 2022

By Pepe Escobar

Let’s jump straight into the fray. Hudson begins with an analysis of the “take the money and run” ethos, complete with de-industrialization, as 90 percent of US corporate revenue is “used to share buybacks and dividend payouts to support company stock prices.”

Michael Hudson’s new book on the world’s urgent global economic re-set is sure to ruffle some Atlanticist feathers.Photo Credit: The Cradle

With The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism, Michael Hudson, one of the world’s leading independent economists, has given us arguably the ultimate handbook on where we’re at, who’s in charge, and whether we can bypass them.

That represents the apex of “Finance Capitalism’s” political strategy: to “capture the public sector and shift monetary and banking power” to Wall Street, the City of London and other western financial centers.

The whole Global South will easily recognize the imperial modus operandi: “The strategy of US military and financial imperialism is to install client oligarchies and dictatorships, and arm-twist allies to join the fight against designated adversaries by subsidizing not only the empire’s costs of war-making (“defense”) but even the imperial nation’s domestic spending programs.” This is the antithesis of the multipolar world advocated by Russia and China.

In short, our current Cold War 2.0 “is basically being waged by US-centered finance capitalism backing rentier oligarchies against nations seeking to build up more widespread self-reliance and domestic prosperity.”

Hudson presciently reminds us of Aristotle, who would say that it is in the interest of financiers to wield their power against society at large: “The financial class historically has been the major beneficiary of empires by acting as collection agents.”

So inevitably the major imperial leverage over the world, a true “strategy of underdevelopment,” had to be financial: instrumentalizing IMF pressure to “turn public infrastructure into privatized monopolies, and reversing 20th century pro-labor reforms” via those notorious ‘conditionalities’ for loans.

No wonder the Non-Aligned Movement (NAM), established in Belgrade in 1961 with 120 nations and 27 observers, became such a threat to US global strategy. The latter predictably fought back with a slew of ethnic wars and the earliest incarnations of color revolution – fabricating dictatorships on an industrial scale, from Suharto to Pinochet.

The culmination was a cataclysmic Houston get-together in December 19, 1990 “celebrating” the dissolution of the USSR, as Hudson reminds us how the IMF and the World Bank “laid out a blueprint for Russia’s leaders to impose austerity and give away its assets – it didn’t matter to whom – in a wave of ‘shock therapy’ to let the alleged magic of free enterprise create a neoliberal free-for-all.”

Lost in a Roman wilderness of debt

To a large extent, nostalgia for the rape-and-pillaging of 1990s-era Russia fuels what Hudson defines as the New Cold War, where Dollar Diplomacy must assert its control over every foreign economy. The New Cold War is not waged only against Russia and China, “but against any countries resisting privatization and financialization under US sponsorship.”

Hudson reminds us how China’s policy “followed almost the same path that American protectionism did from 1865 though 1914 – state subsidy for industry, heavy public-sector capital investment…and social spending on education and health care to upgrade the quality and productivity of labor. This was not called Marxism in the United States; it was simply the logical way to look at industrialization, as part of a broad economic and social system.”

But then, finance – or casino – capitalism gained steam, and left the US economy mainly with “agribusiness farm surpluses, and monopolies in information technology (largely developed as a by-product of military research), military hardware, and pharmaceutical patents (based on public seed-money to fund research) able to extract monopoly rent while making themselves largely tax-exempt by using offshore banking centers.”

That’s the current State of Empire: relying only “on its rentier class and Dollar Diplomacy,” with prosperity concentrated in the top one percent of establishment elites. The inevitable corollary is US diplomacy imposing illegal, unilateral sanctions on Russia, China and anyone else who defies its diktats.

The US economy is indeed a lame post-modern remake of the late Roman empire: “dependent on foreign tribute for its survival in today’s global rentier economy.” Enter the correlation between a dwindling free lunch and utter fear: “That is why the United States has surrounded Eurasia with 750 military bases.”

Delightfully, Hudson goes back to Lactantius, in the late 3rd century, describing the Roman empire on Divine Institutes, to stress the parallels with the American version:

“In order to enslave the many, the greedy began to appropriate and accumulate the necessities of life and keep them tightly closed up, so that they might keep these bounties for themselves. They did this not for humanity’s sake (which was not in them at all), but to rake up all things as products of their greed and avarice. In the name of justice they made unfair and unjust laws to sanction their thefts and avarice against the power of the multitude. In this way they availed as much by authority as by strength of arms or overt evil.”

Socialism or barbarism

Hudson succinctly frames the central issue facing the world today: whether “money and credit, land, natural resources and monopolies will be privatized and concentrated in the hands of a rentier oligarchy or used to promote general prosperity and growth. This is basically a conflict between finance capitalism vs. socialism as economic systems.”

To advance the struggle, Hudson proposes a counter-rentier program which should be the Global South’s ultimate Blueprint for responsible development: public ownership of natural monopolies; key basic infrastructure in public hands; national self-sufficiency – crucially, in money and credit creation; consumer and labor protection; capital controls – to prevent borrowing or denominating debts in foreign currency; taxes on unearned income such as economic rent; progressive taxation; a land tax (“will prevent land’s rising rental value from being pledged to banks for credit to bid up real estate prices”); use of the economic surplus for tangible capital investment; and national self-sufficiency in food.

As Hudson seems to have covered all the bases, at the end of the book I was left with only one overarching question. I asked him how he analyzed the current discussions between the Eurasia Economic Union (EAEU) and the Chinese – and between Russia and China, further on down the road – as being able to deliver an alternative financial/monetary system. Can they sell the alternative system to most of the planet, all while dodging imperial financial harassment?

Hudson was gracious enough to reply with what could be regarded as the summary of a whole book chapter: “To be successful, any reform has to be system-wide, not merely a single part. Today’s western economies have become financialized, leaving credit creation in private hands – to be used to make financial gains at the expense of the industrial economy… This aim has spread like leprosy throughout entire economies – their trade patterns (dependency on US agricultural and oil exports, and IT technology), labor relations (anti-unionism and austerity), land tenure (foreign-owned plantation agriculture instead of domestic self-reliance and self-sufficiency in food grains), and economic theory itself (treating finance as part of GDP, not as an overhead siphoning off income from labor and industry alike).”

Hudson cautions that “in order to break free of the dynamic of predatory finance-capitalism sponsored by the United States and its satellites, foreign countries need to be self-sufficient in food production, energy, technology and other basic needs. This requires an alternative to US ‘free trade’ and its even more nationalistic ‘fair trade’ (deeming any foreign competition to US-owned industry ‘unfair’). That requires an alternative to the IMF, World Bank and ITO (from which Russia has just withdrawn). And alas, an alternative also requires military coordination such as the SCO [the Shanghai Cooperation Organization] to defend against the militarization of US-centered finance capitalism.”

Hudson does see some sunlight ahead: “As to your question of whether Russia and China can ‘sell’ this vision of the future to the Global South and Eurasian countries, that should become much easier by the end of this summer. A major byproduct (not unintended) of the NATO war in Ukraine is to sharply raise energy and food prices (and shipping prices). This will throw the balance of payments of many Global South and other countries into sharp deficit, creating a crisis as their dollar-denominated debt to bondholders and banks falls due.”

The key challenge for most of the Global South is to avoid default:

“The US raise in interest rates has increased the dollar’s exchange rate not only against the euro and Japanese yen, but against the Global South and other countries. This means that much more of their income and export revenue must be paid to service their foreign debt – and they can avoid default only by going without food and oil. So what will they choose? The IMF may offer to create SDRs to enable them to pay – by running even further into dollarized debt, subject to IMF austerity plans and demands that they sell off even more of their natural resources, forests and water.”

So how to break free from dollarized debt? “They need a critical mass. That was not available in the 1970s when a New International Economic Order was first discussed. But today it is becoming a viable alternative, thanks to the power of China, the resources of Russia and those of allied countries such as Iran, India and other East Asian and Central Asian countries. So I suspect that a new world economic system is emerging. If it succeeds, the last century – since the end of World War I and the mess it left – will seem like a long detour of history, now returning to what seemed to be the basic social ideals of classical economics – a market free from rent-seeking landlords, monopolies and predatory finance.”

Hudson concludes by reiterating what the New Cold War is really all about:

“In short, it is a conflict between two different social systems, each with their own philosophy of how societies work. Will they be planned by neoliberal financial centers centered in New York, supported by Washington’s neo-cons, or will they be the kind of socialism that the late 19th century and early 20th century envisioned – a ‘market’ and, indeed, society free from rentiers? Will natural monopolies such as land and natural resources be socialized and used to finance domestic growth and housing, or left to financial interests to turn rent into interest payments eating into consumer and business income? And most of all, will governments create their own money and steer banking to promote domestic prosperity, or will they let private banks (whose financial interests are represented by central banks) take control away from national treasuries?”

The views expressed in this article do not necessarily reflect those of The Cradle.

Michael Hudson: Interview with the newly founded German magazine “ViER”

June 03, 2022

Source

By Michael Hudson

“Taken from an interview with the newly founded German magazine “ViER” which will be published in August 2022.” ViER (FOUR), stands for the media as fourth power in checks and balances.

(1.) Prof. Hudson, your new book “The Destiny of Civilization” is out now. This lecture series on finance capitalism and the New Cold War presents an overview of your unique geo-political perspective.
You talk about an ongoing ideological and material conflict between financialized and de-industrialized countries like United States against the mixed-economies of China and Russia. What is this conflict about and why is the world right now at a unique “point of fracture” as your book states?

Today’s global fracture is dividing the world between two different economic philosophies: In the US/NATO West, finance capitalism is de-industrializing economies and has shifted manufacturing to Eurasian leadership, above all China, India and other Asian countries in conjunction with Russia providing basic raw materials and arms.

These countries are a basic extension of industrial capitalism evolving into socialism, that is, into a mixed economy with strong government infrastructure investment to provide education, health care, transportation and other basic needs by treating them as public utilities with subsidized or free services for these needs.

In the neoliberal US/NATO West, by contrast, this basic infrastructure is privatized as a rent-extracting natural monopoly.

The result is that the US/NATO West is left as a high-cost economy, with its housing, education and medical expenses increasingly debt financed, leaving less and less personal and business income to be invested in new means of production (capital formation). This poses an existential problem for Western finance capitalism: How can it maintain living standards in the face of de-industrialization, debt deflation and financialized rent-seeking impoverishing the 99% to enrich the One Percent?

The first U.S. aim is to deter Europe and Japan from seeking a more prosperous future to lie in closer trade and investment ties with Eurasia and the Shanghai Cooperation Organization (SCO, a more helpful way of thinking about the global fracture from the BRICS). To keep Europe and Japan as satellite economies, U.S. diplomats are insisting on a new economic Berlin Wall of sanctions to block trade between East and West.

For many decades U.S. diplomacy has meddled in European and Japanese internal politics, sponsoring pro-neoliberal officials into government leadership. These officials feel that their destiny (and also their personal political fortunes) is closely allied with U.S. leadership. Meanwhile, European politics has now become basically NATO politics run from the United States.

The problem is how to hold the Global South – Latin America, Africa and many Asian countries – in the US/NATO orbit. Sanctions against Russia have the effect of hurting the trade balance of these countries by sharply raising oil, gas and food prices (as well as prices for many metals) that they must import. Meanwhile, rising U.S. interest rates are drawing financial savings and bank credit into U.S.-dollar-denominated securities. This has raised the dollar’s exchange rate, making it much harder for SCO and Global South countries to pay their dollarized debt service falling due this year.

This forces a choice on these countries: either go without energy and food in order to pay foreign creditors – thereby putting international financial interests before their domestic economic survival – or defaulting on their debts, as occurred in the 1980s after Mexico announced in 1982 that it could not pay foreign bondholders

(2.) How do you see the ongoing war/special military operation in Ukraine? Which economic consequences do you foresee?

Russia has secured the Russian-speaking Eastern Ukraine and its southern Black Sea coastline. NATO will continue to “poke the bear” by sabotage and new ongoing attacks, especially by Polish fighters.

NATO countries have dumped their old and obsolete weapons into Ukraine, and now must spend immense sums modernizing their military hardware. The outflow of payments to the U.S. military-industrial complex will put downward pressure on the euro and British sterling – all coming on topo of their own rising energy and food deficits. So the euro and sterling are headed down toward parity with the U.S. dollar. The euro is almost there now (about $1.07). This means sharply rising price inflation for Europe.

I read and hear conflicting information on the new sanctions. Some experts in the East and West believe this will harm the national economy of the Russian Federation tremendously. Other experts tend to believe this will backfire or have a huge boomerang-effect on the Western countries indeed.

The overriding U.S. policy is to fight against China, hoping to break of the Western Uighur regions and divide China into smaller states. To do that, it is necessary to break away Russian military and raw-materials support for China – and in due course to break it up into a number of smaller states (the Western large cities, northern Siberia, a southern flank, etc.).

Sanctions were imposed in hopes of making living conditions so unpleasant for Russians that they would press for regime change. The NATO attack in Ukraine was designed to drain Russia militarily – by having the bodies of Ukrainians deplete Russia’s supply of bullets and bombs by giving their lives simply to absorb Russian arms.

The effect has been to increase Russian support for Putin – just the opposite of what was intended. There is a growing disillusion with the West, after seeing what the Harvard Boys did to Russia when the United States backed Yeltsin to create a domestic kleptocrat class that tried to “cash out” its privatizations by selling shares in oil, nickel and public utilities to the West, and then spurring military attacks from Georgia and Chechnya. There is a general agreement that Russia is making a long-term turn Eastward instead of Westward.

So the effect of U.S. sanctions and military opposition to Russia has been to impose a political and economic Iron Curtain locking in Europe to dependency on the United States, while driving Russia together with China instead of prying them apart. Meanwhile, the cost of European sanctions against Russian oil and food – much to the benefit of U.S. LNG gas suppliers and agricultural exporters – threatens to create long-term European opposition to U.S. unipolar global strategy. A new “Ami go home” movement is likely to develop.

But for Europe, the damage already has been done, and neither Russia nor China are likely to trust that European government officials can withstand the bribery and personal pressure brought to bear by U.S. interference.

Here in Germany I’m listening to the new Minister for Economy, Mr Robert Habeck from the Green Party, who talks about activating the federal “emergency gas” and asks the Emirates for resources (this “deal” seems to be failed already, news say). We see the end of North Stream II and huge dependency for Berlin and Brussels on Russian resources. How this will all sum up?

In effect, U.S. officials have asked Germany to commit economic suicide and bring on a depression, higher consumer prices and lower living standards. German chemical companies have already begun to shut down their fertilizer production, given Germany’s acceptance of trade and financial sanctions that prevent it from buying Russian gas (the raw material for most fertilizer). And German car companies are suffering from supply cut-offs.

These European economic shortages are a huge benefit to the United States, which is making enormous profits on more expensive oil (which is controlled largely by U.S. companies, followed by British and French oil companies). Europe’s replenishment of the arms that it donated to Ukraine also is a boon to the U.S. military-industrial complex, whose profits are soaring.

But the United States is not recycling these economic gains to Europe, which is looking like the big loser.

Arab oil producers already have rejected U.S. demands that they charge less for their oil. They look to be windfall gainers from the NATO attack on the Ukraine proxy battlefield.

It seems unlikely that Germany can simply give back to Russia Nord Stream 2 and the Gazprom affiliates that have conducted trade with Germany. Trust has been broken. And Russia is afraid to accept payments by European banks since the theft of $300 billion of its foreign reserves. Europe is no longer economically safe for Russia.

The question is just how soon Russia will simply stop supplying Europe altogether.

It looks like Europe is becoming an appendage of the U.S. economy, in effect bearing the fiscal burden of America’s Cold War 2.0, with no political representation in the United States. The logical solution is for Europe to join the United States politically, giving up its governments but at least getting a few Europeans in the U.S. Senate and House of Representatives.

(3.) Which role does the a) New Cold War and the b) neoliberal finance capitalism play in the current war between Russia and Ukraine? According to your recent research.

The US/NATO war in Ukraine is the first battle in what looks like a 20-year attempt to isolate the Dollar Area West from Eurasia and the Global South. U.S. politicians promise to keep the Ukraine war going indefinitely, hoping that this may become Russia’s “new Afghanistan.” But this tactic now looks like it may threaten to be America’s own Afghanistan. It is a proxy war, whose effect is to lock in Europe’s dependency on the United States as a client oligarchy with the euro as a satellite currency to the dollar.

U.S. diplomacy tried to disable Russia in three major ways. First, isolating it financially by blocking it from SWIFT bank clearing, system. Russia responded by smoothly moving over to China’s bank-clearing system.

The second tactic was to seizing Russian deposits in U.S. banks and holdings of U.S. financial securities. Russia responded by picking up U.S. and European investments in Russia on the cheap as the West dumped them.

The third tactic was to block NATO members from trading with Russia. The effect has been that Russian imports from the West have declined, while its exports of oil, gas and food are soaring. That has raised the ruble’s exchange rate instead of hurting it. And as sanctions block Russia’s imports from the West, President Putin has announced that his government will invest heavily in import substitution. The effect will be a permanent loss of Russian markets for European suppliers and exporters.

Meanwhile, the Trump tariffs against European exports to the United States remain in place, leaving European industry with shrinking business opportunities. The European Central Bank may continue to buy European stocks and bonds to protect the wealth of the One Percent, but if anything will cut back on domestic social spending so as to comply with the 3% limit of budget deficits that the eurozone has imposed on itself.

In the medium and long run, the US/NATO sanctions are therefore aimed mainly against Europe. And Europeans don’t even seem to see that they are the primary victims of this new U.S. economic war for self-serving energy, food and financial dominance.

(4.) In Germany the stopped energy project Nord Stream II is still a big political issue. In your recent online article “The Dollar Devours the Euro” you wrote: “It is now clear that today’s escalation of the New Cold War was planned over a year ago. America’s plan to block Nord Stream 2 was really part of its strategy to block Western Europe (“NATO”) from seeking prosperity by mutual trade and investment with China and Russia.” Could you explain this to our readers?  source: https://michael-hudson.com/2022/04/the-dollar-devours-the-euro/

What you characterize as “blocking Nord Stream 2” is really a Buy-American policy. The United States has persuaded Europe not to buy in the lowest-price market, but to pay as much as seven times more for its gas from U.S. LGN suppliers, and to spend a reported $5 billion on expanding port capacity – that will not even be available for a year years.

This threatens a very uncomfortable interregnum for Germany and other European countries following U.S. dictates. Basically, national parliaments are now subservient to NATO, whose policies are run from Washington.

One price that Europe will pay, as noted above, is declining exchange rate against the U.S. dollar. European investors are likely to move their savings and investments out of Europe to the United States in order maximize their capital gains and simply avoid price declines for their stocks and bonds as measured in dollars.

(5.) Prof. Hudson, let’s take a look at further developments in Germany. In May the German parliament – Bundestag – passed a new bill: German lawmakers approved possible expropriation of energy companies. This could enable the Berlin government to put energy companies under trusteeship if they can no longer fulfil their tasks and if the security of supply is at risk. According to REUTERS, the renewed law – which still needs to pass the upper house of parliament – could be applied for the first time if no solution is found on the ownership of the PCK Refinery oil refinery in Schwedt/Oder (East Germany), which is majority-owned by Russian state-owned Rosneft.

It looks like Europe and America will confiscate Russian investments in their countries, and sell off (or have Russia confiscate) NATO-country investments in Russia. This means a de-linking of the Russian economy from the West, and a closer linking with China – which looks like the next economy to be sanctioned by NATO as it becomes an Eastern Pacific Treaty Organization involving Europe in tis confrontation in the China Sea.

I would be surprised if Russia resumes selling oil and gas to Europe without being reimbursed for what Europe (and also the United States) has seized. This demand would help bring European pressure on the United States to give back the $300 billion in foreign reserves that it has grabbed.

But even after such a give-back and reparations settlement, trade seems unlikely to be resumed. A phase change has occurred, a change in consciousness as to how the world is splitting up under U.S. diplomatic attacks on allies and adversaries alike.

My question would be: Socialism is a big topic in your new book. What’s your view on those “socialist” measures taken now by a capitalist country like Germany?

source: https://www.reuters.com/business/energy/german-lawmakers-approve-possible-expropriation-energy-companies-2022-05-12/

A century ago, the “final stage” of industrial capitalism was expected to be socialism. There were many different kinds of socialism: State socialism, Marxian socialism, Christian socialism, anarchist socialism, libertarian socialism. But what occurred after World War I was the antithesis of socialism. It was finance capitalism and a militarized Finance capitalism.

The common denominator of all socialist movements, from the right to the left of the political spectrum, was stronger government infrastructure spending. The transition to socialism was being led (in the United States and Germany) by industrial capitalism itself, seeking to minimize the cost of living (and hence the basic living wage) and the cost of doing business by government investment in basic infrastructure, whose services were to be provided freely, or at least at subsidized prices.

That aim would prevent basic services from becoming opportunities for monopoly rent. The antithesis was the Thatcher-neoliberal doctrine of privatization. Governments turned over public utilities to private investors. Companies were bought on credit, adding interest and other financial charges to profits and payments to management. The result has been to turn neoliberal Europe and America into high-cost economies unable to compete in production prices with countries pursuing socialist polities instead of financialized neoliberalism.

This opposition in economic systems is the key to understanding today’s world global fracture.

(6.) Especially Russian oil and gas are in the focus right now. Moscow demands payments in Rouble only and is expanding their field of buyers filling it with China, India or Saudi-Arabia. But it seems Western buyers can still pay in Euro or US Dollar. What is your take on this ongoing war on resources? The Rouble appears to be a winner.

The rouble certainly is rising. But this does not make Russia a “winner” if its economy is disrupted by the sanctions blocking its own imports needed for its supply chains to operate smoothly.

Russia will end up the winner if it can mount an industrial import-substitution program, and re-create public infrastructure to replace what has been privatized under U.S. direction by the Harvard Boys in the 1990s.

Do we see the end of the petro-dollar and a rise of a new financial architecture in the East accompanied by a strengthening of BRICS and Shanghai Cooperation Organization (SCO)?

There will still be petrodollars, but also a variety of currency-area blocs as the world de-dollarizes its international trade and investment arrangements. In late May, Foreign Secretary Lavrov said that Saudi Arabia and Argentina want to join BRICS. As Pepe Escobar recently noted, BRICS+ may expand to include MERCOSUR and the South African Development Community (SADC)

These arrangements probably will call for a non-U.S. alternative to the IMF to create credit and provide a vehicle for official foreign-exchange reserves for the non-NATO countries. The IMF will still survive to impose austerity on U.S. satellite countries while subsidizing capital flight from Global South countries and creating SDRs to finance U.S. military spending abroad.

Summer 2022 will be a testing ground as Global South countries suffer a balance-of-payments crisis from the rising oil and food deficits alongside the higher domestic-currency costs of carrying their foreign dollar debts. The IMF may offer new SDRs for them to pay US dollar bondholders to keep the illusion of solvency going. But the SCO countries can offer oil and food – IF countries give assurances of repaying credit by repudiating their dollar debts to the West.

This financial diplomacy promises to introduce “interesting times.”

(7.) In your recent interview with Michael Welch (“Accidental Crisis?”) you have a specific analysis on the current events in Ukraine/Russia:
“The war isn’t against Russia. The war isn’t against Ukraine. The war is against Europe and Germany.” Could you please elaborate on that?

source: https://michael-hudson.com/2022/03/accidental-crisis/

As I explained above, the U.S. trade and financial sanctions are locking in Germany to dependency on U.S. exports of LNG, and purchases of US military arms to upgrade NATO into the de facto European Governing Authority.

The effect is to destroy any European hopes for mutual trade and investment gains with Russia. It is being turned into the junior partner (very junior) in its new trade an investment relations with the increasingly protectionist and nationalistic United States.

(8.) The real problem for United States seems to be this: “The only way of maintaining prosperity if you can’t create it at home is to get it from abroad.” What is Washington’s strategy in there?

My book Super Imperialism has explained how, for the past 50 years, ever since the United States went off gold in August 1971, the U.S. Treasury Bill standard has given the United States a free ride at foreign expense. Foreign central banks have recycled their dollar inflow resulting from the U.S. balance-of-payments deficit into loans to the U.S. Treasury – that is, to buy U.S. Treasury securities to hold their savings. This arrangement has enabled the United States to undertake foreign military spending for its nearly 800 military bases around Eurasia without having to depreciate the dollar or tax its own citizens. The cost has been borne by countries whose central banks have built up their dollar loans to the U.S. Treasury.

But now that it has become unsafe for countries to hold dollar-denominated U.S. bank deposits or government securities or investments if they “threaten” to defend their own economic interests or if their policies diverge from those dictated by U.S. diplomats, how can America continue to get a free ride?

In fact, how can it import basic materials from Russia to fill parts of its industrial and economic supply chain that is being broken down by the sanctions?

That is the challenge for U.S. foreign policy. One way or another, it aims to tax Europe and make other countries into economic satellites. The exploitation may not be as blatant as the U.S. grabbing of Venezuelan, Afghan and Russian official reserves. It is likely to involve undercutting foreign self-sufficiency to force other countries into economic dependency on the United States, so that the U.S. can threaten these countries with disruptive sanctions if they seek to put their own national interests over what U.S. diplomats want them to do.

(9.) How will all this affect Western Europe’s (Germany / France / Italy) balance of payments and hence the euro’s exchange rate against the dollar? And why do you think the European Union is on a path to become new “Panama, Puerto Rico and Liberia”?

The euro already is a satellite currency to the United States. Its member countries cannot run domestic budget deficits to cope with the coming inflationary depression resulting from the U.S.-sponsored sanctions and resulting Global Fracture.

The key is turning out to be military dependency. This is “cost sharing” for the U.S. sponsored Cold War 2.0. That cost sharing is what has led U.S. diplomats to realize that they need to control domestic European politics to prevent its populations and businesses from acting in their own interests. Their economic squeeze is “collateral damage” to today’s New Cold War.

(10.) A philosopher from Switzerland wrote a critical essay in mid of March for the German socialist newspaper „Neues Deutschland“, a former news outlet for the GDR government. Ms Tove Soiland criticized the international Left for current behaviours regarding Ukraine crisis and covid management. The Left, she says, is too much pro authoritarian government/state – and thereby copying methods of the traditional right-wing parties. Do you share this view? Or is it too harsh?

How would you answer this question, esp. regarding the thesis in your new book: “… the alternative path is broadly mixed-economy industrial capitalism leading to socialism …”. source: https://www.nd-aktuell.de/artikel/1162247.die-linke-und-corona-ein-postideologischer-totalitarismus.html

The State Department and CIA’s “mighty Wurlitzer” has focused on gaining control of Europe’s Social Democratic and Labour parties, anticipating that the great threat to U.S.-centered finance capitalism will be socialism. That has included the “green” parties, to the point where their pretense of opposing global warming is shown to be hypocritical in light of the vast carbon footprint and pollution of the NATO military warfare in Ukraine and related air force and naval exercises. You can’t be pro-environment and pro-war at the same time!

This has left the right-wing nationalist parties less influenced by U.S. political meddling. That is where the opposition to NATO is coming from, as in France and Hungary.

And in the United States itself, the only votes against the new $30 billion contribution to military spending against Russia came from Republicans. The entire “left wing” Democratic Party “squad” voted for the war spending.

The Social Democratic parties are basically bourgeois parties whose supporters have hopes of rising into the rentier class, or at least becoming stock and bond investors in miniature. The result is that neoliberalism has been led by Tony Blair in Britain and his counterparts in other countries. I discuss this political alignment in The Destiny of Civilization.

U.S. propagandists call governments that keep natural monopolies as public utilities “autocratic.” To be “democratic” means to let U.S. firms by control of these commanding heights, being “free” of government regulation and taxation of finance capital. So “left” and “right,” “democracy” and “autocracy,” have become an Orwellian Doublespeak vocabulary sponsored by America’s oligarchy (which it euphemizes as “democracy”).

(11.) Could the war in Ukraine be a landmark to show a new geopolitical map in the world? Or is the neoliberal New World Order on its rise? How do you see it?

As I explained in your Question #1, the world is being split into two parts. The conflict is not merely national by the West against the East, but is a conflict of economic systems: predatory finance capitalism against industrial socialism aiming at self-sufficiency for Eurasia and the SCO.

The non-aligned countries were not able to “go it alone” in the 1970s because they lacked a critical mass to produce their own food, energy and raw materials. But now that the United States has de-industrialized its own economy and outsourced its production to Asia, these countries have an option not to remain in dependency on U.S. Dollar Diplomacy.

(Updated with transcript) Ben Norton aka Multipolarista interviews Michael Hudson: Destiny of Civilization

May 12, 2022

Source

The decline of the US dollar, the three ‘systems’, the sanctions war on Russia, on the eve of the publication of Prof. Hudson’s new book:  The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism.”

UPDATE:  This wonderful transcript is now available just underneath the video

Transcript

BENJAMIN NORTON: Hey, everyone. I’m Ben Norton, and this is the Multipolarista podcast. And I have the great pleasure of being joined today by one of my favorite guests, one of I think the most important economists in the world today. I’m speaking with Professor Michael Hudson.

If you’ve seen any of the interviews I’ve done with Professor Hudson over the past few years, you probably know that he’s a brilliant analyst. He always has, I think, the best analysis to understand what’s going on economically and also politically, geopolitically, in the world today.

And right now is, I think, a very important moment to have Professor Hudson on today. We’re going to talk about the economic war on Russia and the process of economic decoupling between Russia and China and the West, which is something that Professor Hudson has talked about for many years. And that really has accelerated with the Western sanctions on Russia over Ukraine.

We’re also going to talk about the decline in U.S. dollar hegemony. A recent report from the International Monetary Fund, which is dominated by the U.S., acknowledged that the use of the dollar in foreign bank reserves is gradually declining.

Now, it’s not going to disappear overnight. But even the IMF is acknowledging that dollar hegemony is eroding. And, of course, the IMF acknowledged that the Western sanctions on Russia are going to further erode the hegemony of the U.S. dollar.

We now see Russia doing business with China in the Chinese yuan. Russia is also doing business with India with the Indian rupee. And of course Russia has been telling Europe that if it wants to buy Russian energy, it has to do so with Russian rubles.

So there’s so much to talk about today, Professor Hudson, but I want to begin in the first half of this interview today talking about a new book that you’re just about to publish.

Today is Monday, May 9th. You said on Wednesday, May 11th, the book comes out. And it’s called “The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism.”

And everything that I just prefaced this interview with, discussing the economic war in Russia and sanctions and decoupling, this is all deeply related to what you talk about in this book. And I had the pleasure of getting an early copy and reading through it. It’s a really important book, I think.

And you talk about this fundamental divide internationally – and this is a divide that actually goes back historically as well – between these three models for different economic systems you discuss: finance capitalism, industrial capitalism, and socialism.

And your argument is that the U.S. empire has been a force for imposing neoliberalism, which is a particular form of finance capitalism, which is nonproductive, in which finance capital destroys productive industries in pursuit of rent-seeking, and what you call the rentier class.

So instead of producing, as the classical bourgeois economists had said capitalism would be a productive system instead, finance capitalism is fundamentally a system of destruction and debt.

And your argument is that this is deeply rooted in U.S. foreign policy. This is the U.S. foreign policy strategy for expanding its economic power, is imposing this finance capitalist model on the world.

So can you expand further on your argument about the fight between finance capitalism, industrial capitalism, and socialism, and why you decided to publish this book now?

MICHAEL HUDSON: Well the book came out of a series of 10 lectures that I did for my Chinese audience. I’ve been a professor at Peking University for a number of years in economics, and have professorships at other universities, Wuhan and Hong Kong.

And I have a fairly large audience of about 65,000 people per lecture there. And I was asked to give my general overview, sort of a history of economic development in the West, for the Chinese.

And in order to understand today’s finance capitalism, you have to understand what industrial capitalism was, as it was described in the 19th century.

And it’s often forgotten, or played down, that industrial capitalism was revolutionary. What it was trying to do – from the physiocrats in France in the late 18th century to Adam Smith, John Stuart Mill, Marx, and the whole late-19th century flowering of socialism – the ideal of classical value theory and rent theory, was to say what is the actual value, the cost value of producing goods and services?

And what is earned by the capitalist, when he employs labor to make a profit, and what is unearned? And what is unearned was the landlord class. That was the hereditary warrior class that conquered all of the European kingdoms in the Middle Ages.

And the attempt by England’s industrialists was saying, look, we cannot become the workshop of the world; we cannot undersell foreign countries if we have a landlord class ripping off all of the money in land rent.

And if we have predatory banking, or the wealthy people just lend really for buying property, or making distressed loans or predatory loans that have nothing to do with financing actual capital formation.

Well, what made this capitalism revolutionary was the British industrialists and advocates of industry, even the bankers in Ricardo’s time, said, well, in order to overthrow the landlord class, which controls the House of Lords and all of the upper chambers of government in Europe, we have to have democratic reform.

If we have democratic reform and give voting to the people, they’re going to vote against the landlord class, and then we can have an efficient economy where our prices of our exports and our goods and services reflect the actual cost of production, not the rake off for the rentiers class, not the rake off of what landlords take, not the rake off of what predatory bankers take.

And the whole long 19th century leading up to World War One was this revolutionary value theory that depicted land rent and monopoly rent and financial returns as being unearned income and wanting to strip it away.

And all of this seemed to be moving toward socialism. The industrialists were all in favor of government public utilities, of government enterprise, because they said, if the government doesn’t provide health care, then individuals are going to have to pay it, and it’ll cost a lot of money, like it does in the United States.

And so you had the conservative prime minister of England, Benjamin Disraeli, saying, health, all is health, we’ve got to provide public health for the people.

And it was the conservative Bismarck in Germany that said, we’ve got to provide pensions. If labor has to save up for the pensions, then it’s not going to have enough money to buy the goods and services that we Germans are producing. We have got to make pensions public.

So all of this move towards socialism was not only in favor of increasing living standards, which soared in the 19th century, but also in freeing the economy from the rentier class, from the landlords, from the bankers.

And for the classical economists, a free market was a market free from landlords, free from bankers, free from monopolists.

Well, needless to say, the rentiers fought back. And by after World War Two, we’ve seen a continual anti-classical theory replacing the classical idea of free markets with a value of free theory, saying, well, everybody earns whatever they they have. All wealth is earned, not unearned. And if Goldman Sachs partners are paid more than anyone else, that’s because they’re so productive.

So you had a move rejecting classical economics, a junk economics, and a kind of artificial economics that doesn’t really talk about how finance capitalism has worked.

And as it turns out, the business plan of finance capitalism was so predatory that it was anti-industrial.

That’s why President Clinton in the United States moved to invite China into the International Labor Organization, saying, well, we can fight wage rises in America by a race to the bottom. We can we can hire Asians to do work, and that will cause unemployment here. And that’s wonderful for the industrialists. It will basically cut wages and keep American wages down.

Well, that basically is the strategy of finance capitalism, and the aim of finance capitalism is not to invest in factories, and plant equipment, and research and development, but to live in the short term, but to make money by financial engineering, not industrial engineering.

And it becomes predatory, and so you have the whole ideological attack on public enterprise. You have Frederick Hayek’s “The Road to Serfdom,” where you say, if government provides public healthcare, that’s “the road to serfdom,” where actually it’s finance capitalism that is the road to debt peonage and serfdom.

And you have now a whole disparagement of government. And all of this is a counter-revolution to the revolutionary impetus of industrial capitalism in its early stages.

And it’s true that corporations now are just as right-wing as the the banks and the hedge funds. But that’s because corporate industry has been taken over by the financial sector, and the heads of almost every industrial corporation are rewarded the how high they can push the stock price, to exercise the stock options they’re paid in.

And you increase the stock price not by investing more, not by hiring more labor or increasing productivity or increasing sales, but simply by using whatever income you have to buy back your stocks. And by buying back your stocks, this forces up their price.

And, most of all, by giving political contributions in this country to the Democrats and Republicans alike, who appoint Federal Reserve heads that have spent $7-9 trillion buying up stocks and bonds to increase the price of buying a retirement income, to increase Wall Street prices, to increase housing prices, and make America even less competitive industrially.

So finance capitalism is what has essentially de-industrialized the United States and turned the Midwest into a Rust Belt.

Well, the alternative, obviously, are the societies that have not followed this neoliberal finance capitalist plan. And the most successful economy, obviously, has been China, which is why it has been spending so much time there.

And China has done exactly what 19th-century United States, Germany, England, and France did. It has kept basic utilities, basic needs, housing, and above all, finance and banking, in the public domain, as public utilities.

Instead of having an independent financial sector operating on its own self-interest, the Bank of China creates the money. And the Bank of China lends money by deciding, where do we need to have investment in real estate to provide housing for the population at as low a price as we can make it? How do we build up the industry? How do we provide an educational system with training? How do we provide health?

And the fact is that the central planning in an efficient socialist style, not the Stalinist planning that everybody refers to of Russia, but a mixed economy as you have in China, which is truly a mixed economy, with guidance, like the French planification.

Well, that is obviously the way in which you survive and you avoid the kind of overloading the economy with debt service, with high rents, with high payments to the health-care monopoly in the United States, by avoiding all of this payment to a rentier class that has what the classical economists call unearned income, predatory income.

And instead of unseating them, we’ve put them in charge, and made the banks and Wall Street, and the city of London, and the Paris Bourse, the central planners.

So we do have central planning much more centralized than anything that was dreamed by the socialists. But the planning, the centralized planning is done by the financial sector.

And financial planning is short-termism; it’s short-term planning; it’s take your money and run. And that’s what is stripping and impoverishing the global economy today.

BENJAMIN NORTON: Absolutely. And, in your book, you write about the important distinction between the classical economic idea of a so-called free market, and how, you argue that, neoliberals turn that idea on its head.

So this is what you write in your book. And this is, again, Michael Hudson’s new book, “The Destiny of Civilization,” which is out this week. You write:

“The neoliberal ideology inverts the classical idea of a free market from one that is free from economic rent to one that is free for the rentier classes” – that is the rent-extracting classes – “to extract rent and gain dominance.”

So they they completely flip the idea of what it means to have a free market.

And then you note that, “in contrast to classical political economy, this neoliberal ideology promotes tax favoritism for rentiers, privatization, financialization, and deregulation.” And you discuss all of that.

That is, of course, what we could call the Washington consensus.

And then you argue that “U.S. foreign policy seeks to extend this neoliberal rentier program throughout the world.”

And you have a very interesting section of your book where you discuss this concept as “free-trade imperialism.”

So can you talk about what your idea of “free-trade imperialism” is and how it relates to U.S. foreign policy?

MICHAEL HUDSON: Well, the Nobel Prize is given basically for junk economics. And probably the worst junk economist of the century was Paul Samuelson.

He made the absurd claim that he proved mathematically that, if you have free trade then, and don’t have tariffs, and don’t have any government protection, then everyone will become more equal. At least the proportions between labor and capital will be more equal. Well, the reality is just the opposite.

And the term “free-trade imperialism” was actually created by a British historian of trade theory who pointed out that, wait a minute, when England went for free trade, the idea was, if we have free trade, we can stifle other countries from being able to industrialize, because if we have free trade, then we can tell America, we will open our doors to your markets – meaning the markets of the slave South, that Britain supported – and in exchange, you will open your markets to our industrial goods.

And America followed that until the Civil War, which was fought not only over slavery, but by the Republican Party after 1853 that said very explicitly, if we’re going to win the election – the Whigs never could win – if we, the new party, are going to win the election and industrialize America, we’ve got to integrate ourselves with the anti-slavery issue, with emancipation, but for us, the economic war of America is a war of, either we’re going to have protective tariffs in the North, or we’re going to end up as a non-industrial, raw materials-producing society, as the South wants.

And that was the debate from 1815, when the Napoleonic wars ended and world trade began again, until really the Civil War.

And America became strong in the way that Germany became strong too, by having protective tariffs, in order to have prices large enough to nurture what was called infant industry, to nurture American manufacturing.

And I wrote a long book about this, published some years ago based on my PhD dissertation, “America’s Protectionist Takeoff.”

Well, the English tried to fight against other countries protecting their economy, saying that if you just have free trade, you’ll get rich. Whereas the reality is, if we have free trade, you’ll get poor, if you’re not already able to have industrial and labor productivity and agricultural productivity on par with the most advanced countries.

Free trade was an attempt to prevent other countries from investing government money and building up their agriculture, and building up their industry, and building up their productivity, and creating a school system, to raise wages, to make wages more productive.

And the American protectionists said, well, we’re going to have a high-wage economy because high-wage labor undersells pauper labor. And skilled, well-fed, well-rested American labor can produce much more than the pauper labor of other countries that have free trade.

Well, what the leading American protectionist economist, Erasmus Peshine Smith, went to Japan and helped industrial help Japan break away from British free trade, helped Japan industrialize.

And other American economists, other foreign economists, all picked up the ideas of the American protectionist, like Friedrich List went to Germany promoting protectionism.

And Peshine Smith’s book, “The Manual of Political Economy,” was translated into all the foreign languages – Japanese, Italian, French, German.

And you had Europe realizing that free trade polarizes economies. Well, it was this that after World War One, and especially World War Two, when you had orthodox economics turning into basically propaganda.

That’s where you and Samuelson and others try to convince other countries, governments are bad, leave everything to the wealthy people, to the finance people, trickle-down economies, it’s all going to trickle down, don’t worry, just give more money to the rich, and don’t have any government interference with markets.

Whereas America had got rich by interfering with markets, to shape them in the years leading up to World War One.

But after World War One, America had already achieved its industrial dominance. And it was after World War One that America said, ok, now our protective tariffs have enabled us to outproduce all the other countries, and our protectionist agriculture especially – the most protected sector in America, has always been agriculture, since the 1930s.

Basically it said, well, now we can outproduce other countries, we can undersell them, now we can tell them to go for free trade.

And after World War Two, the Americans created the World Bank for economic impoverishment, and the International Monetary Austerity Fund.

And the World Bank’s leading objective was to prevent other countries from investing in their own food production.

The guiding line of the World Bank was, we’ve got to provide infrastructure for building up plantation agriculture in Latin America, and Africa, and other countries, so that they will grow tropical export crops, but they cannot be permitted to grow grain or wheat to feed themselves; they must be dependent on the United States.

And so the function of free trade, the World Bank, and the International Monetary Fund has been to finance dependency, backed up by the American support of dictatorships throughout Latin America who agree to have client oligarchies supporting pro-American trade patterns and avoiding any kind of self-reliance, so that the United States can do what it has recently done to Russia and other countries, impose sanctions – say, well, now that you depended on us for your grain, we can now impose sanctions, and you can’t feed yourself if you don’t follow the policies we want.

That was the policy that America tried to use against China after Mao’s revolution. And fortunately for China, Canada broke that monopoly, and said, well, we’re going to sell grain to China. And China was always very friendly to Canada in those earlier decades.

So basically, free trade means no government, no socialism. It means central planning essentially by Wall Street – countries should let American firms come in, buy control of their raw materials, resources, control of their oil and gas, and mineral rights, and forests and plantations, and basically let other countries send their whole economic surplus to the United States, where it will be duly financialized to buy out other countries’ raw materials and rent yielding resources.

BENJAMIN NORTON: Yeah, and in your book, you have a very funny passage that I think really encapsulates this ideology that you’re talking about here.

You referred to Charles Wilson, who was the secretary of defense under Eisenhower in the U.S., and he was also the former CEO of General Motors.

And he famously said, “What’s good for General Motors is good for the country.” And that idea has morphed into the idea that, “What’s good for Wall Street is good for America.”

And then you note that “this merged with evangelistic U.S. foreign policy that says ‘What’s good for America is good for the world.’ And therefore the logical syllogism is clear: ‘What’s good for Wall Street is good for the world.’”

And you describe this, you link it to the new cold war, this idea that what’s good for the U.S. is good for the world and what’s good for Wall Street is good for the U.S., therefore, what’s good for Wall Street is good for the world.

You argue, “We must recognize how finance capitalism has gained power over industrial economies, above all in the United States, from which it seeks to project itself globally, led by the financialized U.S. economy. Today’s new Cold War is a fight to impose rentier-based finance capitalism on the entire world.”

And this is such an important analysis. Because among those very few people of us who talk about this idea of the new cold war and how dangerous it is, there are very few people who frame it in economic terms.

Usually we frame it in political terms, right, the geopolitical interests between the US and the EU on one side, and China and Russia on the other.

And going back to Brzezinski and The Grand Chessboard, his 1997 book, where he talks about the importance of preventing near strategic competitors from emerging in Eurasia. That’s of course a geopolitical discussion and economics is part of it, but it’s often not at the forefront.

But your analysis I think is even more important, and more accurate, because your argument is not only is it geopolitical, but the geopolitical struggle is rooted in economics. And this is an economic struggle between systems.

So talk talk more about the new cold war and how you see it.

MICHAEL HUDSON: Well, as we’re seeing now, the world is dividing into two parts. We can see that in the fight against Russia, which is also a fight against China, and against India, as you noted. And it seems Indonesia and other countries as well.

The United States is pushing a world that can be controlled by American investors. The ideal of the American neoliberal plan is to do to other countries what it did to Russia after 1991: take all of your public domain, your oil companies, your nickel mines, your electric utilities, give them all to the wealthy oligarchy, that can only make money once it’s taken control of these companies, by selling the stocks to the West.

The West will buy out oil, just like Mikhail Khodorkovsky tried to sell Yukos oil to Standard Oil in the West. And we’ve got to put an oligarchy that will sell all of the national domain, all of the patrimony and natural resources, and all the companies, to American investors on the cheap.

The Russian stock market led all the stock markets in the world from 1994 up to about 1998. This was a huge rip off. The United States wants to be able to do that to the rest of the world.

And it was furious when Russia said, we’ve lost more population as a result of neoliberalism than we did in all of World War Two fighting against Nazism. We’ve got to stop.

And Russia began to say, we’ve got to use Russia’s population, and industry, and natural resources for Russia’s benefit, not for the United States’ benefit.

Well, the United States was absolutely furious with this. And the fury has erupted in the NATO war against Russia in the last few months, and what’s ongoing now.

And the United States says, U.S. State Department officials have said, what we want to do is carve up Russia into maybe four different countries: Siberia, western Russia, southern Russia or Central Asia, maybe northern Russia.

And once we’ve done that, we cut Russia off from China, then we go into China. We finance, we send ISIS and al-Qaeda into the Uyghur areas, the Muslim areas, and we start a color revolution there. And then we break up China, into a northern part, a southern part, a central part.

And once we break them up, we can more or less control them. And we can then come in, buy up their resources, and take over their industry, their labor, and their government, and get richer to obtain from China, Russia, India, Indonesia, and Iran the wealth that we’re no longer producing in the United States, now that we de-industrialized.

So the world is dividing into two parts. And it’s not simply the United States and its European satellites on the one hand versus the non-white population on the other hand; it’s finance capitalism versus the rest of the world, which is protecting itself by socialism, which in many ways fulfills what was the ideal of industrial capitalism during the 19th century, when industrial capitalism was actually progressive.

And it was progressive. That’s part of the whole theme of my book. It was revolutionary. It tried to free economies from the legacy of feudalism, from the legacy of hereditary landlords.

And now the financial class is no longer the landlord class, but the landlord class pays most of its rent to the financial class in the form of mortgage interest, as it borrows money to buy property and housing and commercial sites on credit.

And you have the kind of financialization that has increased housing prices in the United States to over 40% of income, that is officially guaranteed for mortgages. That has priced American labor out of the market.

Privatized health care, 18% of GDP, that is pricing America out of the world market. Debt, auto debt, student debt, which in other countries education is free; that’s pricing America out of the market.

So you have a basically un-competitive economy that’s committing financial suicide, following the same dynamic that destroyed the Roman empire, where a predatory oligarchy took over and maintained power by an assassination policy of its critics, just very similar to what America has been doing in Latin America and other countries.

So you’re having history repeat itself with this same kind of world split. And this split couldn’t have occurred back in the 1970s, with the Bandung Conference in Indonesia. There were other attempts by the Non-Aligned nations to break free of American imperialism, but they didn’t have a critical mass.

So right now, for the first time, you have a critical mass. And you have the ability of China, Iran, Russia, India, other countries together to be self-sufficient. They don’t need relations with the United States.

They can handle their own; they can create their own monetary system outside of the International Monetary Fund, which is basically an arm of the Defense Department. They can give loans to build up the infrastructure of countries outside of the World Bank, which is basically an arm of the Defense Department, the deep state.

So you have the American economy – essentially a merger between the military-industrial complex and the Wall Street FIRE sector, finance, insurance, and real estate – really cannot develop any more than the Roman Empire could develop, by trying to obtain militarily what it could not produce at home anymore.

Well, China and other countries, now that they have their industrial base, the raw materials, the food, the ability to feed themselves, the agriculture, and the technology, they can go their own way.

And so we’re seeing in the last few months the beginning of a war that is going to go on for, I think, 20 years, maybe 30 or 40 years. The world is splitting away.

And it won’t be a pretty sight, because the United States and its European satellites are trying to fight to prevent an inevitable break away they cannot prevent, any more than Europe’s landlord class could prevent industrial capitalism from developing in the 19th century.

BENJAMIN NORTON: Yeah, and this is a good segue to what I wanted to ask you about, Professor Hudson, which is the economic war on Russia.

And I should say, of course, that today is May 9th. Today is Victory Day in Russia, celebrating the Soviet Union’s victory over Nazi Germany in World War Two. Not the US and British victory over Nazi Germany, the Soviet victory, in which 27 million Soviets died.

And actually I should say that, here on YouTube, in the comment section, there are some Russians who are your fans, Professor Hudson, saying they’re thanking you for your cogent analysis of Russia.

But on the subject of Russia, Professor Hudson, we now have seen that since Russia’s military intervention in Ukraine on February 24th, we saw really what could be referred to as financial shock-and-awe. That’s a term that’s been used.

Just as when the U.S. invaded Iraq, it waged a military shock-and-awe campaign on Iraq. Well, now it is waging economic or financial shock-and-awe on Russia.

And Russia has been referred to as the most heavily sanctioned country in history. Which I think is probably accurate, although maybe the DPRK, maybe North Korea, is more sanctioned. But I mean we’re talking about levels of sanctions not seen against a country of this size ever.

And you can also refer to it as the contemporary equivalent of medieval siege warfare against Russia.

Joe Biden, in a speech in Poland, made it clear what Washington’s goal is: it’s regime change. The U.S. wants to overthrow the Russian government, as it did in the Soviet Union in 1991, and clearly install a a pliant alcoholic neoliberal puppet like Boris Yeltsin.

So can you talk about, from an economic perspective, what do you see as the effects of this economic war on Russia?

And specifically in terms of the concept of decoupling, which you have talked about for years, and you have said that the Western sanctions on Russia and China were accelerating that process of decoupling. And this was before the financial shock-and-awe we’ve seen.

So you talked about a move away from this neoliberal globalization where everything is interconnected, or at least capital is interconnected globally, to the creation of a kind of, what you could say is kind of an economic iron curtain.

But how do you see that also in terms of integrating the Eurasian economies more deeply?

And also what is the effect on the European economies, which my impression is that Europe is going to become what you call an economic dead zone, more and more reliant on the U.S., whereas Russia, China, and Iran, and even potentially India, Pakistan, Bangladesh, Indonesia – we’re seeing much more economic integration of Asia, which is, of course, where the majority of humanity lives.

MICHAEL HUDSON: Well you have used the words shock-and-awe, picking it up from the U.S. statements of shock-and-awe. There hasn’t been any shock-and-awe; there’s been a self-defeating piffle, and laughter.

That’s not all. There was an attempt to grab $300 billion of Russia’s foreign reserves, saying, well, any country that leaves their reserves in American banks or in the American Monetary Fund to stabilize their currency, we can grab if we don’t like their policy.

So the idea was, now Russia is going to go broke. It can’t afford to buy anything without U.S. dollars. And the people are going to get so angry, they’re going to vote against Putin. And then we can pour in our money to twerps like Navalny and other right-wingers who have promised to be the new Yeltsins.

Well, it didn’t work that way. They did grab the $300 billion of Russia’s reserves. Russia immediately said, ok, we have our own money. We now, fortunately, have enough oil and gas that we don’t have to sell to Europe and Germany. If they want to freeze in the dark and let their pipes burst when the weather gets cold, that’s their problem. We’ll sell to India, and China, and other countries.

And there was, for a few days, the ruble plunged, by saying, uh oh, what is Russia going to do? So all the foreign exchange traders thought, you can trust Biden to have a really brilliant policies.

I think Paul Krugman, the Nobel Prize winner, said Biden is the greatest American president since Roosevelt, or since Truman, that he was so smart. Well, that’s why Krugman got the Nobel Prize, for making statements like that.

So immediately Russia said, well, obviously we can’t get paid in dollars anymore, or in euros, because, you’ll just grab them, so you’ll have to buy oil and gas in rubles. We’re going to price it in our own currency. Just like China had talked about pricing its exports in yuan.

And so what has happened is that immediately the ruble not only recovered, but is now selling at a higher rate than it was before the American sanctions. So there was no shock at all. The Americans felt shock.

The Americans are shocked. The Americans are awed. The Russians are laughing and everything is going their way.

So it’s almost as if – I would not accuse Biden of being on the pay of Russia, and I would not say that the leaders of Congress are the Russian agents, but if they were Russian agents, if they were paid by Russia, they could not have done a better job of helping Russia catalyzing its protectionism that it wouldn’t do itself.

The fact is that President Putin and many of the people around him still were neoliberals. I mean, they began as neoliberals, in the ’90s.

They began by hoping that they could make an arrangement with Germany and Europe, that Europe would develop their industry and make Russia as efficient an economy as Germany or the United States. Well, obviously that hasn’t happened.

All the same, they didn’t think of imposing protective tariffs as the United States did. They didn’t protect their agriculture. They bought grain, and cheese, and other agricultural products from the Baltics, and from other countries.

Well, now that, once the Americans put on the sanctions, beginning already under the Trump administration, all of a sudden Russia had to produce its own food.

And it did. It made the investment. It is now the largest agricultural exporter in the world, not a food-deficit country. It’s not importing any more cheese from Lithuania and the Baltics. It has its own cheese segment.

And the sanctions are forcing Russia to do exactly what the United States, Germany, and other protectionist countries did in the 19th century, developing their own industry by isolating it from low-priced foreign imports that would be priced so low that the Russians otherwise could not afford to make the investment in factories, plants, equipment, research, and development.

So what the United States has done is actually catalyze Russia moving together.

And also, for three or four years, I have been talking with Russians, and with the Chinese, and other countries about the need to de-dollarize. If you want to develop your own economy, you have to develop your economy in your own interest with public spending and planning, independent from the United States.

Well, now everybody thought that, well, in a few years it may take a decade for China, Russia, Iran, all these countries to break away from the U.S. But America said, we’re going to help you, we’re going to speed up the breakaway process. We’re going to isolate you. So you’ve got to band together against us.

So that’s exactly what it has done. You can just imagine how the Russians are crying all the way to the bank about this.

And how China is watching what the Americans are doing to Russia, and listening to President Biden saying, you know, Russia is not our real enemy, our real enemy of China. And when we’re finished with Russia, then we’re going to go against China and do the same thing to it.

Well you can imagine what this is leading the Chinese government to try to plan to be sufficiently independent from the United States, so that similar type sanctions will not hurt it.

And President Xi in the last few weeks has said we’ve got to make China as independent as possible. We’ve got to make our own computer chips. We’ve got to not depend on the United States for anything, except maybe Walt Disney movies. That’s basically about it.

So it’s as if – you know, I had mentioned earlier that finance lives in the short term. American policy, being financial policy, lives in the short term. And it’s looking at if it can make a quick, a quick victory, and forget about what’s going to happen next.

I’m told that, years ago, already from the war with Iran, and then Iraq and Syria, in the State Department, if there were Arab specialists who spoke Arabic, they were all fired. Because they said, well, if you can speak Arabic, you must’ve learned Arabic because you’re sympathetic with them. You’re fired. We won’t have anyone who can read Arabic here.

Well, now in the last decade or so, they fired all the Russia specialists from the the State Department and CIA, saying, well, if you can read Russian, why would you want to learn Russian? You must like something in Russia. You wanted to learn it. You’re fired.

So they have people who have no idea of what’s happening in Russia, no idea what’s happening in these other countries. And they’re blinded by their ideology.

And if anyone would say, wait a minute now, public planning and making education a public utility is actually making them more competitive, well, that’s against the ideology. That’s not the corporate type.

And they’re taught, well, we really can’t trust people, maybe they’re tending toward socialism, and they’re out the door.

So you’re having American policy pretty much run by the blind, and the Europeans are simply taking orders, and money in little white envelopes from the United States, to just show their loyalty, and basically are willing to spend three to seven times as much for their energy, for their liquefied natural gas and oil, by buying from the United States, than they are by a long-term contract with Russia.

Europe is willing to spend now $5 trillion on putting together ports that can handle shipping tankers for liquefied natural gas instead of relying on the Russian pipeline, the Nord Stream Two, that’s already there.

So Europe is making an enormous sacrifice. If it doesn’t have Russian gas, and it refuses to pay rubles, it says, if you don’t give us our gas and oil for free, you’re attacking us, because we’ve been getting all of your oil and gas for free, because all the dollars, all the money we pay, you’ve recycled to the United States in your foreign reserves. Thank heavens, the U.S. can grab it all. If you don’t continue to give it to us for free, then you’re attacking us.

To the United States, other countries protecting their economy, other countries trying to raise their living standards, and especially other countries undertaking land reform, are viewed as enemies of the United States, because they’re an enemy of the neoliberal American financial system.

And the idea of the unipolar world where the United States gets all of the profits, and rents, and interests of the world economy, just as ancient Rome stripped its provinces by getting all of their wealth and income for themselves, not producing it at home, while impoverishing their own domestic population. It’s just an exact parallel.

So Europe is willing to say, well, ok, if we don’t have a Russian gas, well, that means that our chemical companies cannot buy the gas to make the fertilizer to make our crops grow, and our agricultural productivity is going to fall by about 50%.

We’re also going to spend a lot more money on America’s military, NATO arms to support NATO. So higher food, higher military spending, higher energy costs.

This ends Europe as an industrial rival to Asia, and Eurasia, I should say, because now the Chinese Belt and Road Initiative and other spending investment, capital investment, throughout Western Asia is creating a new productive plant that is not only self-sufficient, but is leaving the United States and Europe without any industrial competitive power. They’ve priced themselves out of the world market. They’re no longer competitive.

So the world is developing. And I’m sure the only way that the NATO countries can fight against it is militarily, by threatening to bomb. But they can’t fight economically. They can’t fight financially. They tried by disconnecting Russia from the SWIFT system. It put it in its own system very quickly.

It really is left without a strategy, except that it’s done a wonderful job of controlling the public relations dimension of this war, making it appear as if somehow other countries are the aggressors, in not letting America exploit them, and making it appear as if Russia is the aggressor in Ukraine, instead of NATO prodding and prodding Russia to say, we’re going to capture your port at Crimea, and we’re going to attack the Russian-speakers if you don’t fight back, and we’re going to keep bombing them year after year, from 2014 on, we’re going to keep bombing them until you protect them.

So all of this is treated as if America is purely defending itself. Well, this is what the Nazis said in World War Two. Hitler and Goebbels said, we can always mobilize a population to support our war by saying it’s a war to defend ourselves.

And that’s how the United States in Europe are doing it. Not only are they pulling a strategy out of Goebbels’ Nazi book, but a few weeks ago, Germany went to the museums, the military museums, where they had the old Panzer tanks from World War Two, and they sent the Panzer tanks, the Nazi tanks from World War II, to Ukraine, saying this is symbolic, now we can fight Russia with the same German Nazi tanks run by the neo-Nazi groups, that Zelensky is supporting, the same Nazi fight against Russia. We can reenact World War Two with the same tanks, even symbolically, to show that this is a fight of Naziism, and neoliberalism, against Eurasia.

BENJAMIN NORTON: We’ve also seen Germany not only re-militarizing, but also boosting its relations with Japan. There are some terrifying echoes of of World War Two.

But you mentioned something that I want to analyze a little bit more, which is the strength of the Russian ruble. I talked about the concept of financial shock-and-awe that was waged on Russia. And President Biden said, “the Russian ruble has become rubble,” he joked. He said the Russian ruble has become rubble.

Well, that’s actually not at all what happened. This is the value of the dollar to Russian rubles, right now [showing a graph]. Russian rubles are at 69 to the dollar. A few days ago, it was at 64, or 65 to the dollar, which is actually better than it was even before the Russian war in Ukraine, which began in February 24th.

And it did spike, and there was a peak here, at which it was devalued to 139 to the dollar, about half the value it has now. But in the months leading up to the Russian military intervention, in November and December, it was around 75 to the dollar.

So the ruble has actually strengthened despite these sanctions. And here’s a report from Reuters from five days ago, that was May 4th: the “Rouble leaps to over 2-year high vs dollar, euro as EU ups sanctions.” So the ruble is doing quite well.

And you talked about the Russian mechanism to force Europe to buy energy exports from Russia in the Russian ruble. And this graphic here, for people watching, it’s in Russian, but really it just shows this mechanism in which a European firm that wants to buy gas from Russia’s state owned gas giant Gazprom, it has to send the money in euros to the Gazprombank, which is the obviously the bank that works with Gazprom, and then it puts it in a special account in euros, and then that is sold in the Moscow exchange for Russian rubles.

And then those rubles are put in another special account, called a K account, that belongs to that European firm. It has two accounts, two special accounts with Gazprombank, one in euros, one in rubles. And then this special ruble account sends that money to Gazprom. And then once the money reaches Gazprom, that’s when Russia considers that the payment officially went through.

So this is the mechanism by which Russia is getting paid in rubles. And much of Europe claimed at first that they would not do so, but eventually they gave in. So that’s an incredible development.

And related to that, what I wanted to ask you about, is I think another reason that the Russian ruble has strengthened and stabilized is not only because Russia continues to maintain constant exports of energy to Europe and other parts of the world.

You can talk about the central bank policies. But one of the policies is that the Russian central bank has basically put the ruble on gold, which I think is a very interesting and historic development.

And we saw that from the beginning of April until the end of June, the Bank of Russia says that it’s going to buy gold at a fixed price of 5000 rubles per gram of gold. And then the question is whether or not in July, when this policy ends, if it’s going to continue, and if the ruble will basically become fixed, it become pegged to gold like the U.S. dollar was up until 1971.

So you don’t think it will be? So talk about this policy. Do you think that that the gold standard is going to come back? Or apparently you don’t think so.

MICHAEL HUDSON: No, Russia is not going on on the gold standard. What it is doing is investing, its foreign exchange in the only way that is not grabbable. It’s investing it in gold; it’s putting gold in its reserves.

It is not setting its exchange rate according to the price of gold, but it is buying gold with what it has been getting.

I want to go back to your talk about rubble. You talked about, “from ruble to rubble,” what President Biden said.

There have been a lot of pictures of rubble in the news for the last few days. For instance, there are talks of, here’s a Ukrainian picture, and look at this picture of a Russian tank, we shot it down, it’s rubble. Turns out it’s a Ukrainian tank, that they just say it was the Russian tank we shot down.

So basically, they’re taking their own destruction, and they’re saying that, while they’re being destroyed, they’re saying, no, this is a picture of Russia being destroyed, Russian assets, not Ukrainian assets being destroyed.

Well, the similar thing is with the Russian ruble. America says, look, we’ve isolated the the ruble. Well, what has happened? If you isolate the ruble and you say we’re not going to export anything more to Russia, so it’s not going to be able to spend any of its rubles on buying American or European products.

Well, meanwhile, Russia can continue to earn rubles from Germany and Europe, and it can continue to earn foreign exchange from other countries that it’s selling its agriculture to at rising prices, its oil and gas at rising prices, too. So obviously, the balance of payments is going way up.

And they believe that what is in store is a new monetary system that is an alternative to the dollar IMF system.

And in this system other countries will hold their reserves in each other’s currencies. In other words, Russia will hold Indian rupees and Chinese yuan. China will hold rupees and Russian rubles.

There will be the equivalent of what Keynes thought of as something like artificial special drawing rights that the banks will be able to create to help fund governments to undertake capital investment.

But for settlements settling balance of payments deficits among countries, once they don’t have enough foreign exchange to make a swap, they will use gold as the means of settlement, because gold is a pure asset. It’s not a liability.

Any foreign currency basically is held in a foreign country that has the power to do what America did to Russia and just grab it all, and say, we’re just wiping it all out.

It’s as if you have a bank account, and the bank says, we’ve just emptied out your account to give it to one of our friends, and you don’t have it anymore. You can’t do that if gold is held in your own country.

Venezuela made the problem of keeping its gold in England, trusting England, saying that, even if there is war, they’ll never interrupt gold and finance. And England just grabbed Venezuela’s gold.

So, obviously, countries are not going to leave their gold in other countries. Even little Germany has asked America to begin sending back the gold that it has in the Federal Reserve Bank of America because it’s worried that what if it ever buys Russian gas again? America will grab all of Germany’s gold, grab all the German money, and it’ll be like World War One all over again.

So this act that America did of grabbing Russian money, Afghanistan’s foreign reserves it grabbed, this is telling all the other countries, pull all your money out of dollars. What are they going to put it in? There’s not that much they can put it in that it is absolutely safe.

So gold is a flight to safety today, because it’s one of the things that all of the world realizes as having an international value for settling balance of payments deficits, that is independent of world politics.

So that’s the explanation. Russia is not going on gold. It’s going on an independent standard from the United States with gold as an element of its foreign reserve, just as it’s holding Chinese yuan and Indian rupees.

It’s not going on the rupee standard. It’s not going on the yuan standard. And it’s not going on the gold standard. But these are elements of its foreign reserves.

BENJAMIN NORTON: I have a question for you. It’s kind of a more technical question that I’ve always wondered. And I’ve tried to do research on this, because there’s not much information.

So we know that that the U.S. and European Union have frozen over $300 billion from Russia’s central bank foreign exchange reserves. And of course they did this after doing the same to Iran, to Venezuela, to Afghanistan, which is now threatening a famine in Afghanistan that could kill more people than died in the 20-year NATO-U.S. military occupation of Afghanistan, which is another topic that really needs to get more coverage.

And I should add, by the way, that the US and the EU, they’ve frozen nearly half of Russia’s central bank’s foreign exchange reserves, and are now saying they’re not going to give it back. So they stole it. I mean, they stole half of its reserves.

My question is, what is the mechanism by which they effectively freeze and steal those reserves?

Because my understanding is that there is of course a physical element of those reserves, which you’re talking about, which is gold. But not all of the $640 billion in Russia’s central bank reserves is physical currency, right? A lot of it is just computerized? It’s number in computers and bank accounts.

So when when the U.S. and the EU steal this money from central banks like in Russia or Afghanistan – obviously in the case of Venezuela, as you mentioned, they physically stole the gold. But if it’s not gold, is it physical cash stored in Moscow, like physical dollars and euros? Or it’s mostly just numbers in a computer, which is why they can steal it?

MICHAEL HUDSON: Every country needs to manage its exchange rates, and there’s always like an up-and-down and a zigzag in the flow of payments for imports and exports, investment, capital movements, debt service, all of that.

So countries want to stabilize their exchange rate. How do they do that? Well, most of the big exchange markets are in New York and in London.

So countries would leave their money in correspondent banks. Like when Iran, at the time under the shah, kept that foreign reserve in the Chase Manhattan Bank. So when Iran, after the revolution and Khomeini came in, and Iran wanted to pay interest on the foreign debt that the shah had run up, they told Chase, please, here’s our bondholders, please pay them.

Well Chase was told by the Treasury, don’t pay them, just take the money and hold it. So Chase said, we put a freeze on your account. And so Iran defaulted, and then Chase and the State Department said, oh, Iran defaulted, it missed the payment. Now, all the money that it’s due for foreign debt has to be paid all at once. And Chase paid all of the bondholders off. No more money in the account. It was all emptied out.

Suppose you had an account in Chase Manhattan. And they said, ok, now you’ve done something really bad, you put Michael Hudson on the show. We’re going to grab your account. We’re going to give it to Mr. Guaidó, because he needs the money in Venezuela because the people still are not voting for him. So all of a sudden, you won’t have money in your account. It’ll go to Mr. Guaidó’s account.

Well, that’s what happened with Russia. They took the money. They grabbed the money from Russia’s account. And they said, half the money we’re going to give to, I think, to the 9/11 people, because we all know that it was Russia that bombed the World Trade Center on 9/11.

And we’re going to give it to all sorts of other people who suffered all over the world. It’s all Russia’s fault.

BENJAMIN NORTON: But Professor Hudson, when you say that they seized Russia’s assets, you mean the assets held by the Russian central bank in foreign bank accounts?

MICHAEL HUDSON: Yes, yes.

BENJAMIN NORTON: And these are not physical assets, these are numbers in a computer, right?

MICHAEL HUDSON: In Venezuela’s case, Venezuela had used some of its oil company earnings to buy oil stations and refining companies and the United States actually grabbed the ownership of the gas stations and the refineries and distribution system that Venezuela had in America.

BENJAMIN NORTON: It’s called Citgo.

MICHAEL HUDSON: Citgo, yeah. Russia doesn’t really have any capital investments in the United States. It did have bank accounts, and that was all that the United States could grab.

BENJAMIN NORTON: So when you say that, when Russia, at least for now, the central bank is allowing convertibility of rubles at a set rate into gold, that’s a temporary policy to make sure that they have a physical asset that their central bank can hold on to, because if they have dollars or euros in their reserves, my understanding is that’s not physical cash, it’s actually just numbers in a computer, so they don’t have it physically in their bank reserves, so it’s easy to steal that money.

Obviously, if they had billions of dollars worth of cash, of paper cash, it would be much harder to steal it, but if it’s just on a bank account, if it’s numbers in a computer, then they can just freeze it.

So I think this is also a reflection of a point that you’ve also made about the financialization of the economy, is it’s also just a lot of this capital is not even physical capital.

MICHAEL HUDSON: Yes. Savings take the form – one person’s savings is another person’s debt. So these are Russia’s deposits in American banks that it used to buy or sell rubles, or to buy goods from America, or to receive payments in, if Russia exports something such as oil. Americans buyers of Russian oil would put the money into the Russian bank account.

They never dreamed that this would be grabbed. But now Russia says, ok, you’ve grabbed our money, now that means that we get to grab all of your assets in Russia. This is great! All of your stock holdings in nickel, and Yukos, and all these other companies, ok, you’ve got the money, we have the assets, look at us as just buying the assets on the cheap.

And the Western investors in Russia have all been selling their Russian assets to show that they’re good American citizens in NATO, and the Russians are buying up these European and American assets on the cheap, largely by borrowing money from the banks, that get the money from the central bank, now that they’re so wealthy, and all of the foreign exchange reserves is a result of the American shock-and-awe statement, that’s sort of shock-and-awe in reverse.

So Russia is coming through just fine. And you can imagine how the American strategists are gnashing the teeth. They don’t understand how Russia was able to avoid being bankrupted by this.

They really are not economists. They’re not really financiers. They’re foreign-policy strategists. They’re ideologues that are not very well educated in how to think about the future and how to recognize the fact that the world can actually change from what it is today into something else. And sometimes that change is not in America’s interests. That is sort of not a permitted thought over here.

So essentially, Americans and Europe are operating in the blind, and Russia and China, and Iran, and India, are all looking at how are we going to restructure the world so that we come out of it more prosperous than we were before, not more impoverished. That’s really what the world is dividing into.

BENJAMIN NORTON: Professor Hudson, I don’t know if this is directly related, but it’s it’s something that’s always been a very curious question in my mind.

Germany, back in 2016 and 2017, it moved, physically moved, its central bank’s gold reserves, which had been stored in New York, London, and Paris, and it physically moved those reserves, those gold reserves, to Frankfurt.

Now this was before the U.S. and Britain stole Venezuela’s gold reserves and other reserves. But do you know anything about what motivated Germany’s central bank to move the physical location of its gold reserves into Germany itself?

MICHAEL HUDSON: I don’t think it’s all moved yet. It’s still going on. Gold is very heavy, as heavy has lead, basically. And America said, well, we can only do a little bit, trickle by trickle. So America has been returning the gold very slowly.

So I think Germany, with all of its history of hyper inflation, I think just realizes that, now that gold is not used to settle balance of payments deficits anymore – the gold that Germany had in America was all of the exports that it made to the United States during the Vietnam War. This is Vietnam War gold.

You remember that President de Gaulle would every month cash in, the dollars that America spent in Vietnam would all be spent from Vietnam to Paris, the dollars would end up there, the central bank of Paris would essentially buy gold on the London exchange and keep the gold either in New York or in London.

Well, Germany, because America defeated Germany, and it wasn’t going to keep its gold in Russia, that defeated it even more, it said, well, ok, we’re cashing in our surplus dollars for gold, but we’re going to hold the gold in America.

But now it says, well, America is never going to settle its balance of payments deficits and its foreign debt in gold again, because it doesn’t have any balance of payments surplus, any ability to do that.

It’s going to spend its export surplus and its investment surplus on war. So it’s never going to be able to pay. That’s obvious. Let’s get the gold back.

That was the calculation that every country was making already a decade ago. They realized that America can never repay its foreign debt, unlike other countries.

When other countries can’t pay their foreign debt, they have to go to the International Monetary Fund, that tells them, well, we’ll make you a loan, but you have to sell off your natural resource reserves to the Americans, or we won’t lend you the money.

Well, basically, that’s not going to happen anymore. They realized that America is just going to say, haha, we’re just not going to pay.

Well, now other countries are saying, wait a minute, if America’s never going to repay its foreign debt, why do the Global South countries have to pay their debt to the IMF and the World Bank, all this dollar debt to dollar bondholders?

If America won’t pay, we don’t have to pay. Let’s have a clean slate. Let’s start from the beginning. And we’re only going to have debt and credit relations with friendly countries, not countries that want to go to war with us like America did in Afghanistan, Syria, Iraq, Iran, and now Russia.

So that’s basically what’s happening.

BENJAMIN NORTON: Great. And just to wrap up here, I have another question. And I know your time is limited, so I really appreciate you being here.

I have a quick question about the decline in U.S. dollar hegemony. We were talking about the strength of the ruble, the economic war on Russia; we talked about the bilateral trade that’s growing between Russia and China using the Chinese yuan, between Russia and India using the Indian rupee. And Iran also is talking about doing business with a basket of currencies.

I want to point to a report that was recently published by economists who work with the IMF. And I published an article about this over at Multipolarista.com, “IMF admits US dollar hegemony declining due to rise of Chinese yuan and sanctions on Russia.”

And there is this report that was published by the IMF, by these economists, and I cite you, Professor Hudson, in this report. It’s a working paper from the IMF, published in March, titled “The Stealth Erosion of Dollar Dominance.”

And here’s a graph, for people watching, here’s a graph from the report. And it shows not a large, but a noticeable and consistent decline in the use of the holding of the U.S. dollar in the foreign exchange reserves of central banks around the world. So this is around the world.

And it has declined in the past years from about 70% of central bank exchange reserves to about 60%. So a 10% decline. That’s not massive, but it’s steady and I think it’s going to accelerate.

And at the same time they’ve also found an increase in the use of what they call “non-traditional currencies” in the foreign exchange reserves of central banks around the world.

And here you can see this graph. I mean it looks like a significant influence because if you look at the y-axis it’s only from 90 to 100. But there is a significant increase in the use of other currencies in foreign exchange reserves, aside from the U.S. dollar, the euro, the Japanese yen, and the British pound. And the currency that is increasingly popular is the Chinese yuan.

So that’s one half of my question. The other half is about this interesting report that was published in the Financial Times, and it’s titled “Russia Sanctions Threaten to Erode Dominance of Dollar, says IMF.”

And the FT interviewed the IMF’s first deputy managing director, Gita Gopinath, who acknowledged that the sanctions imposed on Russia over its military intervention in Ukraine could lead to what she says “fragmentation at a smaller level.”

And she did say that the dollar is eroding influence, but “would remain the major global currency.”

So, that’s a two part question. I’m wondering if you could talk about the decline in U.S. dollar hegemony and how the sanctions will potentially erode that. And then the other half of the question is, can you comment on the declining use of dollars in foreign exchange reserves?

MICHAEL HUDSON: Well, this is what my book “Super Imperialism” was all about. When I first published it in 1972, I could see how the whole thing was unfolding for the next 50 years. And we just published last year a third edition of it, bringing it up to date.

Dollar hegemony means America’s entire balance of payments deficit in the ’50s, ’60s, and ’70s was military. So the dollars that were being pumped into the world economy were the result of military spending.

But the dollars would end up in foreign central banks, especially from Asia to France, Germany, others. What were they going to do with it? Well after 1971 they could not buy gold anymore, so all they could do was buy U.S. Treasury securities. IOUs.

And so they re-lent to the Treasury all the money that America was spending militarily. And the more money America spent in waging its cold war militarily against the world, the more money central banks would lend to the U.S. government to finance the U.S. deficit that was spent largely on the military-industrial complex and foreign military operations.

So dollar hegemony was a free lunch financing America’s almost 800 military bases across the world, to fight against communism, defined as any country that doesn’t let American industry and finance buy control of its raw materials, agriculture, resources.

And this has now come to an end. Right now America has grabbed Afghanistan’s, and Russia’s gold. All of a sudden it’s obvious that, this summer, there’s going to be an enormous squeeze on Third World countries, on the Global South.

Their energy prices are going to go way up, and that’s going to hurt them just like the oil shock of 1974 and 1975 did.

They’re going to have to pay higher food costs, because of food prices are going to go way up now that the Ukraine war is erupting.

And a lot of their foreign debt, dollarized debt service, is coming due. And they’re facing a choice: if they pay the foreign debt, they can’t afford to buy the oil and energy that they need to run their factories and heat their homes. They can’t afford to buy the food to feed their people. Whose interests are they going to put first?

Well of course their leaders are going to put America’s interests first, and their own interests second, because their leaders, if they’re a client oligarchy, are put in power by the U.S. military, as sort of miniature Pinochets, throughout Latin America and other countries.

So suppose other countries decide, well, we’re going to feed ourselves and we’re not going to wreck our economy just to pay foreign bondholders. We’re a sovereign country. We’re going to put our national interests first.

Well, then the United States can say, aha, we’re going to grab all of your foreign assets in the United States.

Well, other countries can say, oh, they’re going to do to us just what they did to Afghanistan and Russia. Let’s move our money out of the United States quickly. If we don’t have dollars, well, it’s true, we can’t pay our dollar bondholders, but at least we can, in international markets, we can buy the food and the energy we need.

And so the tensions, the disruption of world prices, and inflation, and trade that is a result of the NATO attack on Russia, now threatens to drive all of the southern hemisphere countries into an alliance with Russia, China, India, and all the rest.

So America basically is creating a new Berlin Wall, but the wall is isolating itself from other countries, and driving other countries all together into what I hope will be a happy, self-sufficient, non-U.S. globalized economy.

BENJAMIN NORTON: Well, I want to thank you, Professor Michael Hudson. It’s always a real pleasure having you. I know you’re very busy, so thank you for giving us so much of your time.

I’ll say that the comment section here on YouTube has been very vibrant, with some interesting conversation. And what’s nice is there are people from all over the world, from the U.S., Latin America, Europe, and from Russia. So it’s good to see a mix of people.

And for anyone who wants to listen to this, you can check out the podcast version if you look up Multipolarista on Spotify, and iTunes, and all the other podcast platforms.

And I’ll just say, while I wrap up here, that today we were talking about, at the beginning of this discussion, a new book that Michael Hudson is publishing this week. It is called “The Destiny of Civilization: Finance Capitalism, Industrial Capitalism, or Socialism.”

It’s a very good book. I had the privilege of getting a review copy early. So definitely check out that book.

You can also find all of Professor Hudson’s writings at michael-hudson.com.

Thanks, Professor Hudson.

MICHAEL HUDSON: It’s really good to be here. It was a good discussion.

المشهد الدولي والإقليمي في ظلّ المواجهة الروسية الأطلسية في أوكرانيا

الخميس 21 نيسان 2022

ـ مسار العملية العسكرية يدلّ بوضوح إلى أنّ النتيجة ستكون في منتهى السلبية للنظام القائم في أوكرانيا ومن خلال ذلك للحلف الأطلسي التي قد تكون ضُربت مصداقيته ضربة قاضية ـ كشفت جائحة كورونا التبعية للمواد الأساسية الموجودة في كلّ من روسيا والصين… والاتحاد الأوروبي منكشف تجاه روسيا في موضوع الطاقة ولا يستطيع الاستغناء عنها رغم التصريحات المعاكسة

زياد حافظ

لا يمكن أن نتصوّر تداعيات المواجهة المفتوحة بين روسيا والحلف الأطلسي في أوكرانيا دون التوقف على الأسباب. فهذه الأسباب التي دفعت إلى المواجهة هي التي ستلقي بظلالها على المشهد العالمي والإقليمي. فجوهر الصراع هو صراع بين مذهبين في منظومة واحدة. المنظومة هي الرأس المالية والمذهبان هما أولا الرأس المالية الريعية المالية التي تقوده الولايات المتحدة والحلف الأطلسي وثانياً الرأس المالية الإنتاجية التي تتماهى مع الاقتصاد الموجه التي تقوده الكتلة الأوراسية بقيادة روسيا والصين.

بهذا التعريف للمواجهة نضمّ الأبعاد الجيوسياسية والدوافع التوسعية لدى المحور الأطلسي قابلتها الهواجس الأمنية لروسيا والصين. وفي الإطار الأوسع للمواجهة هناك نموذجان من داخل العائلة الواحدة يتنافسان على قيادة العالم والنموذج الذي تتبناه الولايات المتحدة يخسر لصالح النموذج الآخر.

 يبقى علينا أن نستشرف ماذا بعد؟ والإجابة تتوقف على مسار العملية العسكرية القائمة في أوكرانيا ونهايتها. فالحلف الأطلسي وخاصة الولايات المتحدة غير متحمّسة على إنهاء الصراع بل على تمديده بهدف استنزاف روسيا عسكرياً واقتصادياً وفرض العزلة الدولية عليها. الهدف الأميركي بات واضحاً وهو تغيير النظام القائم في روسيا.

لكن الرياح الروسية لم تجر كما اشتهت السفن الأطلسية والأميركية. فمسار العملية العسكرية يدلّ بوضوح على أنّ النتيجة ستكون في منتهى السلبية للنظام القائم في أوكرانيا ومن خلال ذلك للحلف الأطلسي التي قد تكون ضُربت مصداقيته ضربة قاضية. فكيف ستكون تداعيات ذلك المسار على العالم بشكل عام والإقليم والمشهد العربي بشكل خاص؟

في هذه النقطة بالذات نريد أن نؤكّد أن قدرة روسيا على مواجهة الغرب لم تكن لتحصل لولا الصمود العربي خاصة في محور المقاومة. فالمقاومة في العراق أفشلت المشروع الأميركي واستنزفت قدراته بينما كانت روسيا تعيد بناء قواها العسكرية والاقتصادية. كما أنّ صمود المقاومة في لبنان منع تحقيق مشروع الشرق الأوسط الجديد بينما روسيا كانت أيضاً في إطار استعادة القدرات. كما أنّ صمود سورية في مواجهة العدوان الكوني ساهم في تعزيز الثقة بأنّ الغرب ليس قدراً على العالم. كما أنّ صمود المقاومة في فلسطين أفشل مشروع صفقة القرن والاتفاقات الابراهيمية وأنّ صمود اليمن ساهم في إعادة رسم الخارطة السياسية للأمن الإقليمي خارج النفوذ الأميركي. فهذا الدور العربي مكّن كلّ من روسيا والصين وحتى الجمهورية الإسلامية في إيران من تعزيز قدراتها وترسيخ تضمانها بل تحالفها والآن نرى روسيا تقف بوجه الهجمة الأطلسية في أوروبا الشرقية وتهزمها نيابة عن العالم. فلا بد للنظام العربي ان يتأثر بكلّ ذلك خاصة أنّ الجزء الخارج عن سيطرة ذلك النظام استطاع أن يقلب المعادلات التقليدية في الإقليم وبالتالي في العالم. هناك معادلة جيوسياسية بسيطة. من يريد السيطرة على العالم عليه أن يسيطر على الجزيرة الأوراسية لما لها من موارد وإمكانيات. ومن يريد أن يسيطر على تلك الجزيرة فالبوّابة لها هي المشرق بشكل عام والمشرق العربي بشكل خاص. هنا يبرز البعد الاستراتيجي لمحور المقاومة وما يمثله من دور في إعادة رسم التوازنات الدولية.

صحيح أنّ العملية العسكرية لم تضع أوزارها بعد عند إعداد هذا التقرير لكن هناك نتائج واضحة على الصعيد الدولي وبطبيعة الحال على الصعيد الإقليمي والعربي. أولى النتائج هو شبه إجماع على أنّ القوّامة الأميركية والأطلسية لم تعد كما كانت عليه. صحيح أنّ الولايات المتحدة لن تستسلم بسهولة إلى الواقع الجديد لكن ليس باستطاعتها تغيير موازين القوة والعوامل التي أدّت إلى ذلك التراجع. فهذه العوامل داخلية بالدرجة الأولى كما أنها خارجية تعود إلى التخطيط البعيد المدى الذي قامت بتنفيذه دول المحور الرافض للهيمنة الأطلسية والأميركية. فتقييم المشهد الداخلي لا يوحي بأن هناك إمكانية في تعديل الميزان. فليس هناك جهوزية عسكرية أميركية لمواجهة شاملة وحاسمة لكل من روسيا والصين كما أن قدرة اللجوء إلى الحرب بالوكالة عنها أصبحت شبه معدومة. فالتصدّعات داخل الحلف الأطلسي والاتحاد الأوروبي لا توحي بإمكانية حشد قوّات عسكرية تستطيع مواجهة روسيا وذلك رغم الكلام العالي النبرة لمكوّنات الحلف الاطلسي. ليس هناك من استعداد للتضحية في سبيل أوكرانيا. فالخطة هي فقط الاستنزاف عبر تحفيز الأوكرانيين والمرتزقة من الأوروبيين على مواجهة الالة العسكرية الروسية.

كذلك الأمر على الصعيد الاقتصادي حيث كشفت جائحة كورونا التبعية للمواد الأساسية الموجودة في كلّ من روسيا والصين. والاتحاد الأوروبي منكشف تجاه روسيا في موضوع الطاقة ولا يستطيع الاستغناء عنها رغم التصريحات المعاكسة لذلك. فالبديل للغاز الروسي هو الغاز الأميركي بأسعار مرتفعة تصل إلى أكثر من عشر أضعاف سعر الغاز الروسي ناهيك عن عدم وجود تجهيزات لاستيراد الغاز الأميركي قبل ثلاث سنوات على أحسن تقدير. فماذا تستطيع ان تفعل الدول الأوروبية طيلة الفترة غير الدخول في انكماش كبير أن لم يكن في كساد أكبر مما كان في الثلاثينات من القرن الماضي؟

أما على الصعيد المالي لن تستطيع الولايات المتحدة وحلفاؤها من منع قيام أنظمة مدفوعات دولية لا ترتكز إلى الدولار. كما أن التعامل بالدولار بدأ بالتراجع في دول واقتصادات وازنة كالصين والهند وروسيا على سبيل المثال. حتى بعض الدول العربية التابعة للقرار الأميركي بدأت تفكّر جدّيا بالتعامل مع الروبل الروسي واليوان الصين والروبية الهندية.

بناء على ذلك نستطيع أن نقول إن نتائج العملية العسكرية الروسية في أوكرانيا ستكرّس تراجع دور الولايات المتحدة وأوروبا في الهيمنة على مقدرات العالم.

اما النتيجة الثانية لذلك التراجع هو واقعياً بروز نظام دولي جديد متعدد القطبية يرتكز إلى القانون الدولي وقرارات مجلس الأمن واحكام المحكمة الدولية إضافة إلى الاتفاقات والمعاهدات بينما الطرح الأميركي ومعه الأوروبي هو نظام «أحكام قيم» لا قاعدة قانونية لها وملتبسة في أحسن الأحوال ولا تعترف بسيادة الدول. وهذا النظام سيشهد تجاذبا بين الدول التي تريد الخروج من الهيمنة الأميركية وبين الدول التي لا تستطيع الخروج عنها وعددها يتقلّص يوما بعد يوم ولن يضم في آخر المطاف إلاّ الحلف الانكلوساكسوني، أي الولايات المتحدة والمملكة المتحدة وأستراليا وكندا وربما نيوزيلاندا. أما أوروبا الغربية فهي عدة أقسام: المحور الألماني الفرنسي الذي يقود الاتحاد الأوروبي، دول أطراف أوروبا، ودول أوروبا الشرقية. ليس هناك من انسجام في المواقف داخل هذه الكتل الثلاث لأسباب عديدة تعود منها للتاريخ ومنها لبنيتها السياسية والاقتصادية لا وقت لنا شرحها. ما يهمنا هو أن عدم الانسجام سيحدّ من فعّالية موقف موحد. ولذلك سنرى أوروبا في تجاذب بين النظام المبني على القانون الدولي والمعاهدات وقرارات المحكمة الدولية وطبعا قرارات مجلس الأمن.

في ذلك السياق لا نستبعد إعادة النظر في تركيبة مجلس الأمن حيث الدول صاحبة حق النقض هي خمس فقط بينما قد تدخل إليه دول كالهند والبرازيل وجنوب إفريقيا ودولة عربية بالتداول مع الدول العربية وحتى الجمهورية الإسلامية في إيران. كما نتوقع تقليص دور ونفوذ الولايات المتحدة في المؤسسات العاملة والتابعة للمنظمة الدولية التي أصبحت ذراعا للسياسة الخارجية الأميركية. فهناك دول وازنة تستطيع أن تملأ الفراغ المالي الذي سينتج عن تخفيض مساهمة الولايات المتحدة في تمويل المؤسسة وربما خروجها من المنظمة ككل. لن يحصل ذلك في المنظور القريب بل ربما في فترة لا تتجاوز نهاية هذا العقد من الألفية الثالثة. كما أن منظمة الأمم المتحدة المعدّلة ستعمل بتنسيق واسع مع المنظمات الإقليمية وخاصة الآسيوية كمنظومة شانغهاي على سبيل المثال وليس الحصر. هذا يعني أن القضايا الدولية ستعالج من باب النظر بمصالح الجميع وعلى قاعدة رابح رابح وليس على قاعدة اللعبة الصفرية التي تفرضها والولايات المتحدة.

النتيجة الثالثة هو التحوّل إلى نظام اقتصادي عالمي جديد مبني على تكامل المصالح وليس على تصارعها أو تنافسها. فدول الجنوب الإجمالي أي كل الدول الإفريقية وأميركا اللاتينية والدول الاسيوية غير الصين والهند ستجد في العلاقات الدولية ما يساعدها على نهوضها والحفاظ على سيادتها بينما النظام الاقتصادي القائم مبني على تبعية الاطراف للمركز الذي هو الغرب بشكل عام والولايات المتحدة بشكل خاص وعلى حساب مصالح تلك الدول.

النتيجة الرابعة هي تراجع دور الدولار في المنظومة المالية الدولية. فعملات أخرى كالروبل الروسي واليوان الصيني والروبية الهندية وفيما بعد الراند الإفريقي الجنوبي ستكون ركيزة الاحتياطات النقدية الدولية كما أن تعاظم التعاطي بالعملات الوطنية سيخفّض الطلب على الدولار ليصبح عملة من بين العملات وليست أداة لتمويل الحروب والهيمنة على العالم.

النتيجة الخامسة تعود إلى تراجع المكانة الصناعية الأوروبية. فرغبة قياداتها في التخلّي عن الغاز الروسي سيقضي على القدرة التنافسية الأوروبية ما يجعل الدول الأوروبية تدخل مرحلة تفكيك التصنيع (de industrialization) للدخول في مرحلة ما بعد التصنيع (post industrialization) فتصبح تابعة لمراكز التصنيع الفعلية في دول الجنوب الإجمالي.

هذه النتائج لن تأتي بسرعة ولكن مسارها واضح وحتمي إذا ما كانت الإرادة الجماعية تهدف إلى تحقيق الاستقرار والأمن. فلا بد من التعديلات في المؤسسات الدولية ولا بد من تعديلات في التعاطي والعلاقات ولا بد من ترسيخ قاعدة الرابح رابح ونبذ قاعدة اللعبة الصفرية. وما يساعد على تحقيق ذلك موازين القوّة الجديدة التي تظهرها العملية العسكرية في أوكرانيا والتحالف الروسي الصيني ونهوض الكتلة الاوراسية وتعزيز منظومة البريكس.

لكن إلى أن تحصل تلك التحوّلات فالعالم دخل فعليا في مرحلة ترقّب ومراجعات في العلاقات حيث العديد من الدول تقوم بتقييم النتائج المرتقبة من العملية العسكرية في أوكرانيا. لذلك سنشهد توترات عديدة في الأسواق العالمية في الطاقة والمواد الغذائية وسلسلة المورّدين إلى أن تستقر الأمور وتستسلم الولايات المتحدة للوقائع الجديدة. هنا تكمن المشكلة لان حالة الانكار بين النخب الحاكمة وأو الطامحة للحكم في الولايات المتحدة ما زالت تعتبر أن القدر المتجلّي للولايات المتحدة واستثنائيتها يجعلها موكلة بقيادة العالم. النظرة التوراتية للأمور تتحكم في اللاوعي الأميركي وهنا الخطورة من الانزلاق نحو حماقات كارثية خاصة أن الهروب إلى الأمام هو السبيل الوحيد عند تلك النخب. الرهان لعدم حدوث ذلك هو على تيقّن العقول الباردة، وهي موجودة ولكن معزولة، في التغلّب على موجة الجنون الجماعي التي تتحكّم بتلك النخب. وبالتالي قد لا نستبعد حصول تغييرات داخل البيت الأبيض وفي منظومة الحكم بعد الإخفاقات الكارثية التي حققتها الإدارة الحالية.

أما على الصعيد الإقليمي فنتوقع تحوّلات كبيرة في الملفات الساخنة كفلسطين المحتلة وسورية واليمن. كما نتوقع ترسيخ قواعد لنظام عربي جديد قد يأخذ ما تبقّى من العقد الحالي حتى منتصف العقد القادم، أي منتصف الثلاثينات من القرن الحالي.

فعلى صعيد فلسطين فإن الكيان الصهيوني الاستيطاني المحتل يواجه أزمة وجود بحدّة لم يألفها منذ إقامته. فالخطر الوجودي الذي يشعر به بسبب فقدان الأمن وعبثية الرهان على تطبيع مع أنظمة لا تستطيع أن توفر الأمن للكيان يتلازم مع ارتفاع وتيرة المواجهة المسلحة من أبناء فلسطين. فتداعيات العملية العسكرية في أوكرانيا عرّت المواقف الغربية في توفير الحماية لأوكرانيا في مواجهة روسيا. والدرس بات واضحا للقيادات الصهيونية أن وعود الغرب لا تتجاوز الحبر على الورق وأن الغرب لن يقاتل في سبيل ما هو أهم من الكيان. فمستقبل أوروبا أهم من الكيان وتبيّن أن القادة الأوروبيين لن يقاتلوا في سبيل تصوّراتهم لأوروبا. فهل يعقل أن أوروبا ستقاتل في سبيل كيان تتشوّه سمعته يوما بعد يوم وتظهر على حقيقته البغيضة؟ وكذلك الأمر بالنسبة للولايات المتحدة التي أعلنت أنها لن تقاتل مع الكيان في مواجهة الجمهورية الإسلامية في إيران وأنها لن ترسل إلا السلاح للكيان وكأن مشكلة الكيان هي الضعف في التسليح. كما أن الولايات المتحدة لن تقاتل من أجل أوكرانيا وفقا لتصريحات قادتها. تداعيات الازمة الأوكرانية ستكون وخيمة على الكيان خاصة وان قادته كانوا مربكين في اتخاذ موقف من الأزمة. وعندما حسم الكيان تردّده ووقف مع الحكومة الأوكرانية ضد روسيا فإن لذلك تداعيات مباشرة على العلاقة بين الدولتين وخاصة في مقاربة المشهد العسكري في سورية.

من جهة أخرى نرى تحولين أساسيين في المشهد الفلسطيني. فنهاك تصاعد ملموس في المواجهة الشعبية الفلسطينية مع قوى الاحتلال تجلّى بتطوّر ملحوظ في طبيعة المواجهات. فبعد موجة المواجهات بالحجارة والدهس والطعن بالسكاكين برزت المواجهة بالسلاح الناري. لن نسترسل في مقاربة هذه التطوّرات لضيق المساحة بل نكتفي بملاحظة ظهورها مع العملية العسكرية في أوكرانيا ما يدل أن الشعب الفلسطيني يشعر بضعف الحلف المعادي له فيتجرّأ على الاقدام على عمليات لم تكن مألوفة.

أما التحوّل الثاني فهو تثبيت القوى الردعية لفصائل المقاومة في غزة ما يتيح الفرصة لانتفاضة شعبية ضد قوى الاحتلال في مختلف أنحاء فلسطين المحتلة. كما أن المقاومة وضعت الخطوط الحمراء فيما يتعلق بمستقبل القدس والاحياء العربية التي ما زالت تقاوم عمليات التهجير وأيضا فيما يتعلق بمحاولات المستعمرين لاقتحام الأقصى. أيضا القوّة الردعية للمقاومة تعزّزت مع الشعور بأن الحلف المعادي يعاني من الضعف ما يجعل آفاق النصر أكثر وضوحا وقربة.

ومن تداعيات العملية العسكرية في أوكرانيا الارباك في النظام التركي الذي تردّد بين مصالحه مع روسيا والشرق بشكل عام والتزاماته الأطلسية. لكن الضعف الأطلسي ستجعل تركيا أكثر استجابة للضغوط الروسية والإيرانية في الملفّ السوري خاصة أن أوراق الضغط الروسي ليست ضعيفة كصواريخ أس 400 والتدفق السياحي الذي يشكل خشبة الخلاص في الأزمة الاقتصادية التي تشهدها تركيا. فالخروج من سورية أصبح ضرورة لتجنّب التداعيات السلبية من رفض احترام السيادة السورية على أراضيها.

والتداعيات للعملية العسكرية في أوكرانيا تأتي في سياق أخفاقات كبيرة للسياسة الأميركية انعكست على سلوك العديد من الدول العربية المحسوبة على الولايات المتحدة والتي تدور في فلكها. ويمكن وصف الحال في تلك الدول بداية جادة لمراجعة العديد من مواقفها وتحالفاتها ومقارباتها للعديد من الملفات التي ساهمت في انقسام البيت العربي. نذكر في هذا الإطار الامتناع عن التصويت في الجمعية العمومية للأمم المتحدة لصالح قرارات تدين روسيا. كما نذكر عدم الموافقة على فرض عقوبات اقتصادية ومالية على روسيا. بل العكس نجد حكومات هذه الدول تفكّر جدّيا بالانفصال عن الدولار في تسعير براميل النفط التي تصدّرها وبدأت تدرس إمكانيات التعامل بالروبل الروسي واليوان الصيني. هذه الإشارات الصريحة لم تكن واردة منذ بضعة أشهر ونضعها في خانة تداعيات العملية العسكرية في أوكرانيا التي عرّت الأطلسي وأظهرت ضعفه وعجزه. فالدول العربية التي كانت تتبنّى نظرية ملكية ال 99 بالمائة من أوراق اللعبة الدولية بيد الولايات المتحدة بدأت بمراجعة لتلك النظرية.

وهذه المراجعة التي تأتي في سياق مشاهدة التراجعات الأميركية في أفغانستان وفي مفاوضاتها غير المباشرة مع الجمهورية الإسلامية في إيران في الملف النووي تدفع الدول المتخاصمة مع إيران إلى مفاوضات ما زالت في بدايتها والتي كانت غير ممكنة منذ سنة أو أكثر. كما أن المراجعات في الملفات المتعلقة بسورية واليمن والعراق ولبنان قد تصل إلى انفراجات ضرورية للنهوض من الحالة الكارثية التي تعيشها الدول. كل ذلك لم يكن ممكنا لولا وضوح الإخفاقات الأميركية في أوكرانيا التي لم تكن لتحصل لولا القدرات الروسية وحلفها مع الصين. فهذه القدرات كما أشرنا في البداية لم تكن لتقوم لولا صمود القوى المقاومة العربية في كل من العراق ولبنان وفلسطين وسورية واليمن.

الإخفاقات الأطلسية في أوكرانيا تتلازم مع التصعيد في المواجهة الشعبية في فلسطين ما يلغي جدوى التطبيع مع الكيان المحتل. فإذا كانت الأوراق بيد الولايات المتحدة غير فاعلة فإن البوّابة للحصول على الرضى الأميركي أي الكيان الصهيوني المحتل لم تعد ضرورة. هذا لا يعني التراجع الفوري أو القريب عن التطبيع بل سنرى اشتداد المقاومة الشعبية للتطبيع دون ان عوائق كبيرة ما يفرغ التطبيع من مضمونه.

أما في الساحة السورية فسنرى تصعيدا في المواجهة مع قوى التعصّب والغلو والتوحّش المحتشدة في إدلب وجوارها كما سنرى تصعيدا في مواجهة القوى المتحالفة مع الولايات المتحدة في شرق سورية ومواجهات متصاعدة مع القوات الأميركي التي ستخرج في نهاية المطاف في كل من سورية والعراق. الإخفاقات في أوكرانيا لن تمكن الولايات المتحدة في الاستمرار في العراق وسورية ومواجهات محتملة مع الحلف السورية الروسي.

وأخيرا فيما يتعلّق باليمن فقوى التحالف العدواني على اليمن مضطرة إلى إنهاء العدوان والتفاهم مع القوى اليمنية الصامدة. اما الحل السياسي للمشكلة اليمنية فهو في الحوار بين مكوّنات الشعب اليمني وليس عبر إملاءات خارجية سواء كانت دولية أو غربية أو إقليمية.

المراجعات والتحوّلات الميدانية في المشرق العربي وتراجع موجة التطبيع ستفرض حتما مراجعة للنظام الإقليمي العربي. من المبكر التكلّم عن شكل النظام الجديد بل نكتفي بالقول ان قاعدته ستكون المربع السوري العراقي الجزائري اليمني، وفيما بعد دول الجزيرة العربية بقيادة اليمن وبلاد الحرمين، ثم بلاد وادي النيل والتشبيك المتزايد بي مصر والسودان، وأخيرا دول المغرب الكبير محوره الجزائر والمغرب. وركيزة ذلك النظام هو التشبيك الاقتصادي والسياسي بين دول المجاورة في الأقاليم العربية ولكن لذلك حديث آخر في مناسبة منفصلة.

*باحث وكاتب اقتصادي سياسي والأمين العام السابق للمؤتمر القومي العربي وعضو الهيئة التأسيسية للمنتدى الاقتصادي والاجتماعي

النتائج المرتقبة للأزمة الأوكرانية…

 الإثنين 28 آذار 2022

 زياد حافظ

العملية العسكرية الواسعة التي تقوم بها روسيا في أوكرانيا لها تداعيات مفصلية على صعيد التوازنات الدولية والإقليمية كما أنها تعيد رسم الخرائط السياسية والاقتصادية والثقافية. النتائج الأولية لتلك العملية، التي لم تنته عند إعداد هذه المقاربة تدلّ بوضوح على التغييرات التي رُصدت منذ عدّة سنوات ولكنها لم تكن ظاهرة للجميع. فالغرب في أفول متسرّع والامبراطورية الأميركية في حال تفكّك تنذر بانهيارات داخلية تضع وجود الولايات المتحدة قاب قوسين على الأقل بالنسبة للشكل التي نعرفها.

فالنتائج على الصعيد السياسة والاقتصاد، دوليا وإقليميا، انعكست على التحالفات القائمة وعلى بروز تحالفات جديدة. فعلى صعيد التحالفات القائمة نرى التصدّع داخل أوروبا الغربية بين الدول ومؤسسة الاتحاد الأوروبي، كما نرى تصدّعا بين الدول الأوروبية البارزة كألمانيا وفرنسا مثلا مع الولايات المتحدة رغم التحليلات التي تفيد أن قبضة الولايات المتحدة ازدادت بسبب العملية العسكرية الروسية وضرورة تأمين “وحدة الصف”. فهذه “الوحدة” التي كانت هشّة قبل الأزمة زادت في هشاشتها رغم المظاهر. فدول مثل المانيا وفرنسا أصبحت في واجهة المتلقي للعقوبات التي تفرضها الولايات المتحدة على روسيا سواء على الصعيد الصناعي أو الطاقة أو المال. والسردية الإعلامية ضدّ روسيا في الدول الأوروبية لن تصمد أمام الواقع الاقتصادي الجديد الذي تفرضه سياسة العقوبات التي بدأت مفاعيلها ترتدّ على الدول الأوروبية على صعيد ارتفاع أسعار السلع بشكل عام والطاقة بشكل خاص. فأوروبا تستورد حوالي الثلثين من حاجاتها الغازية والنفطية من روسيا حيث لألمانيا حصة الأسد (40 بالمائة من حاجاتها الغازية تأتي من روسيا).

أما على صعيد التحالفات الجديدة فنرى تقارباً لم يكن متوقّعاً بين الهند والصين وخاصة بعد التهديدات التي أطلقتها مؤخراً إدارة بايدن تجاه الهند. وفي أميركا الجنوبية هناك توجه واضح نحو تقارب مع كلّ من روسيا والصين. أما في أفريقيا، فالدول الأفريقية بدأت تقدّر النموذج الروسي الصيني في العلاقات الدولية المبني على القانون الدولي ومبدأ “رابح رابح” للجميع. تجلّى ذلك بعدم الموافقة على المشاركة في العقوبات التي تريد فرضها الولايات المتحدة والاتحاد الأوروبي على روسيا. أما التصعيد الأميركي المتمثل بمعاقبة كل من يخالف قرارها ويستمر في التعامل معها فكان الردّ الروسي ومعه دول الكتلة الاوراسية بعرض نظام مالي خارج الدولار. ما زلنا في بداية الطريق لنظام مدفوعات جديد خارج الدولار ولكن النتيجة الفورية هي تخفيف وطأة التهديدات الأميركية بعزل الدول “المتمرّدة” عن منظومة السويفت.

هنا لا بدّ لنا من الإشارة إلى أنّ المواجهة القائمة في أوكرانيا هي في الحقيقة مواجهة كونية تأخذ عدة أشكال متكاملة وليست متناقضة. فهي مواجهة بين الرأس المالية الصناعية المتحالفة مع الاشتراكية ((روسيا والصين ومن يتماهى معهما) والرأس المالية التي تتعاطى فقط في المال (الغرب). وهي أيضا بين العولمة المالية (الغرب) والعولمة المبنية على الهويات القومية والخصوصيات. وهي مواجهة بين رؤية للنظام العالمي المبني على “القيم والأحكام” (الغرب) ورؤية مبنية على القانون الدولي (روسيا، الصين ودول الجنوب الإجمالي). هي مواجهة بين الاقتصاد الفعلي الإنتاجي والاقتصاد الافتراضي المالي الريعي. هذه بعض من المواجهات في السياق الفعلي للصراع القائم والتي كل واحدة منها تستحق مقاربة منفصلة قد نقدمها في مرحلة لاحقة.

الغرب لا يعتبر روسيا منه

وفي خطاب في غاية الأهمية الذي القاه الرئيس الروسي في 16 آذار/ مارس أعلن فيه القطيعة الرسمية مع الغرب بشكل عام على الصعيد الاقتصادي والسياسي. أشار الرئيس الروسي في خطابه إلى القرصنة التي مارسها الغرب تجاه الموجودات والأصول المالية الروسية ما قطع شريان الثقة بالمؤسسات والقوانين الغربية. وشّجع المستثمرين الروس في الغرب على العودة إلى روسيا والعمل في روسيا لأن الغرب سيسرق أموالهم كما فعلت الولايات المتحدة والمملكة المتحدة بحق الأموال الإيرانية والفنزويلية والليبية ما يدلّ على الاستسهال في سرقة من يعتبرونهم دونهم حضاريا. الغرب لا يعتبر روسيا من الغرب بل جزءاً من الشرق البغيض. حروب البلوبونيز اليونانية الفارسية في العصور القديمة قبل الميلاد وحملات الفرنجة على بلاد الشرق واستعمار كل هذه الدول من قبل الغرب دلائل تؤكّد على العنصرية المتجذّرة وانعدام معايير الاخلاق عند النخب الحاكمة الغربية.

هذه القطيعة مع الغرب بشكل عام ومع أوروبا الغربية بشكل خاص تعني أن سلامة الاقتصادي الأوروبي مهدّدة بشكل بنيوي سينعكس بشكل تلقائي على الاستقرار الاجتماعي والسياسي في تلك البلدان. فإذا كان تجميد الأصول المالية والاحتياطي الروسي الموجود في الغرب مظهرا من “مظاهر القوّة” فإن ذلك يعكس أيضا سذاجة الغرب الذي وقع ضحية لتلك العنجهية. فلا يمكننا أن نقرأ ونفهم ما حصل إلاّ من منظور لاعب الشطرنج الماهر الذي يضحّي عن قصد وتعمّد لبيدق في افتتاح اللعبة ليحقق مكسباً استراتيجياً في السيطرة على وسط طاولة الشطرنج. هذا ما يُعرف ب “مناورة الملكة” أو (queen gambit). فالرئيس الروسي وفريقه خطّطا للعملية العسكرية على الأقل منذ 2014 وبالتالي كانا يدركان أن الغرب سيقدم على مصادرة الأموال كما حصل مع إيران عندما قامت الثورة الإسلامية، وكما صادرت أموال ليبيا، وفي ما بعد أموال فنزويلا ومؤخرا أموال أفغانستان. تسرّعت حكومات الغرب بوضع اليد على الأصول الروسية ولكن بالتالي قالت لمعظم العالم أن الأموال المودعة في المصارف الغربية أموال تقوم بقرصنتها متى شاءت. هذا سيسهّل إقامة منظومة مدفوعات مالية دولية جديدة خارج إطار سيطرة الغرب بشكل عام والولايات المتحدة بشكل خاص. كما تنذر بأفول الدولار الحتمي حيث الدول قد تتوقف عن طلب الدولار لتلبية حاجات التجارة الخارجية كما تمهّد لتسعير السلع الاستراتيجية بأسعار غير الدولار أو غير مستندة إلى الدولار. هذا ما قصدناه في مقال سابق أنّ الولايات المتحدة حقّقت مكاسب تكتيكية ظرفية ولكن في المقابل تكبّدت بخسارة استراتيجية قد تنذر بزوال إمبراطورتيها الافتراضية تمهيداً ربما لزوالها كدولة أو كيان سياسي. الدرس الأساسي لتلك المناورة هو اعتبار الدولار (الاحتياط النقدي المعمول به منذ السبعينات) لا قيمة له بينما الأساس هو الغاز والنفط!

في هذا السياق لا بد من الإشارة إلى التقدّم في الإجراءات بين دول آسيا الوسطى وروسيا والصين حول إنشاء نظام مدفوعات خارج إطار الدولار. ففي المؤتمر الذي عقد مؤخرا في مطلع شهر آذار/ مارس 2022 في مدينة يريفان في أرمينيا بين مسؤولين من الدول الخمسة للمجموعة الاوراسية (روسيا، بيلاروسيا، أرمينيا، كير غستان، طاجكستان) إضافة إلى دولة كازاخستان تم الاتفاق على إنشاء المؤسسات المالية للمدفوعات على أن تقدّم مسودات هيكلية والنظام الداخلي خلال شهرين. وهذا النظام قد يعتمد العملات الوطنية لدول آسيا مستندة إلى اليوان الصيني. أما على الصعيد الداخلي الروسي فالتعامل بالروبل المستند إلى الذهب سيعيد السياسات النقدية التي كانت تستند إلى نظام التبادل المرتكز على الذهب ولا يخضع لتقلّبات الأسواق المالية والمضاربة. الفكرة الأساسية هنا هي ضرورة ربط العملات بالاقتصاد العيني وليس بالاقتصاد الافتراضي الذي فرضته الولايات المتحدة على العالم خلال العقود الخمسة الماضية.

ما يعزّز التوجّه إلى إيجاد منظومة مالية مختلفة عن تلك التي تعتمد الدولار قرار الرئيس الروسي تجاه الدول “غير الصديقة” بعدم قبول دفع مستحقات مشترياتها من الغاز والنفط بعملة غير الروبل الروسي. هذا قرار كبير وإنْ كان محصوراً بالدول غير الصديقة لأنه ترجمة عملية لرفض التعامل بالدولار. والقرار الروسي يلغي تلقائياً أهداف الهجوم على الروبل بغية خلق اضطرابات داخلية لأنّ القرار يعني ارتفاع الطلب على الروبل وانخفاض الطلب على الدولار. فهذا قرار استراتيجي يعني ان المواجهة مع الدولار أصبحت مفتوحة وانّ موجة العزوف عن الدولار في التجارة العالمية (de-dollarization) يعني نهاية هيمنة الولايات المتحدة على الاقتصاد العالمي، بل أيضاً على السياسة الدولية بفقدانها سلاحها الأساسي أيّ الدولار.

القطيعة مع الغرب ليست سياسية واقتصادية فحسب بل باتت ثقافية. فالعنصرية التي طغت على السردية الغربية لأحداث أوكرانيا اسقطت جميع الأقنعة التي كان تُخفي (لمن لم يكن يريد أن يرى ذلك) ادّعاءات الغرب بـ “الديمقراطية” و “حقوق الإنسان” و “حكم القانون والمؤسسات” و “التنوير” و “الحداثة” و “معاداة العنصرية” وسائر الأوهام والأكاذيب التي تسوّقها النخب الغربية وفقاً لمصالحها الضيّقة. فحتى المواطن الأميركي صُدم من عنصرية مراسلي المحطات الأميركية التي كانت تراسل من “ارض الميدان” في تصنيف المهاجرين والنازحين الاوكرانيين كناس أصحاب العيون الزرقاء والشعر الأشقر والبشرة البيضاء! أيجوز ذلك في دول متحضّرة ليست كالعراق أو أفغانستان أو سورية!؟

لن تكون أوكرانيا كما عرفها العالم

الإجراءات الغربية تجاه روسيا لها تداعيات كبيرة على جميع الأطراف المتصارعة وعلى مجمل العالم. المتضرّر الأكبر هو أوكرانيا حيث مستقبلها أصبح فعلياً قاب قوسين. فعندما تسكت المدافع لن تكون أوكرانيا كما عرفها العالم بل ربما مجموعة من الأقاليم منها تحت السيطرة الروسية، ومنها تحت السيطرة البولونية، ومنها تحت السيطرة المجرية والرومانية. أما أوكرانيا بحدّ ذاتها فقد لا تتجاوز ما يوازي 30 بالمائة من المساحة الحالية وستكون معزولة عن البحر الأسود.

المتضرر الثاني هو أوروبا الغربية بشكل عام وألمانيا بشكل خاص. فأوروبا بحاجة إلى روسيا بينما الأخيرة ليست بحاجة إليها. ليس هناك ما يمكن أن تعطيه أوروبا الغربية لروسيا بينما تحتاج أوروبا للطاقة التي توردها إليها روسيا إضافة إلى المعادن الأساسية للصناعات الغربية وإضافة إلى الحبوب التي تنتجها روسيا وأوكرانيا. أما المانيا فتستورد حوالي 40 بالمائة من احتياجاتها من الغاز الروسي بعد أن أقفلت محطّات انتاج الطاقة النووية. فأصبح اقتصادها مرتبطا بالغاز الروسي. وتجميد خط الشمال 2 (نورستريم 2) سيجعلها تستورد طاقة من الغاز السائل بكلفة تفوق عشر أضعاف أو أكثر وبعد أن تكون بنت محطات تفريغ وتخزين الغاز المستورد من الولايات المتحدة أو قطر وإيجاد الأساطيل التي تستطيع نقل هذه الطاقة بالكميات المطلوبة. وهذا لن يحصل قبل عدة سنوات وبكلفة مرتفعة. أضافة إلى كل ذلك فالشركات اتي كانت معنية بتشغيل نورستريم 2 ستنقلب على الدولة الألمانية وتطالبها بتعويضات تقدر بأكثر من 20 مليار يورو. أما الشريك الروسي غازبروم فقد استطاع التعويض عن خسارة عدم تشغيل نورستريم 2 عبر ارتفاع أسعار الغاز في العالم. وعلى صعيد آخر فإن ارتفاع كلفة الطاقة ستؤثر بشكل مباشر على القدرة التنافسية الصناعية الألمانية وخاصة تجاه الصين والعديد من الدول النامية ما يمكن أن يدخلها في عصر ما بعد التصنيع وتصبح دولة ضعيفة وهزيلة كما أصبحت المملكة المتحدة وفرنسا والولايات المتحدة. فالاقتصاد الافتراضي الريعي لا يمكن أن يصمد أمام قوة اندفاع الاقتصاد العيني المنتج الذي تتمتع به دول كالصين والهند والبرازيل وماليزيا وحتى الجمهورية الإسلامية في إيران وغدا دول المشرق العربي والمغربي.

ارتفاع أسعار الطاقة سيؤدّي إلى ارتفاع أسعار المواد والسلع في كل أنحاء العالم وخاصة في أوروبا والولايات المتحدة. فإضافة إلى ضعف النمو في الإنتاج بسبب جائحة الكورونا جاء النقص في المواد وخاصة المواد الغذائية وأضيف إليها رفع كلفة الطاقة. فبالحد الأدنى ستدخل أوروبا الغربية مرحلة انكماش اقتصادي كبير قد يصل إلى مستوى كساد ويتلازم معه في المرحلة الاولي تضخم في الأسعار الاستهلاكية والإنتاجية مما يخلق حلقة مفرغة من انخفاض الإنتاج إلى انخفاض في الدخل إلى انخفاض في الاستهلاك إلى انخفاض في الإنتاج وكذلك دواليك. أما على صعيد الدول النامية، وخاصة في أفريقيا، فإن العقوبات المفروضة على روسيا ستخلق أزمة غذاء حيث 25 دولة تستورد حوالي ثلث حاجياتها من الحبوب من روسيا. ودولة بنين تستورد مائة بالمائة من احتياجاتها في القمح والحبوب من روسيا. وفي هذا السياق الدول العربية لن تكون بمنأى عن تداعيات الازمة الغذائية. فدول كمصر واليمن وسوريا ولبنان تستورد الحبوب من روسيا وأوكرانيا. فانقطاع التوريد من روسيا وأوكرانيا سيخلق أزمة اجتماعية إضافية على الازمات التي تمر بها كل هذه الدول وخاصة اليمن ولبنان.

لذلك يمكن القول ان العقوبات المفروضة على روسيا ستؤدّي إلى زعزعة الاستقرار في أوروبا الغربية وإلى أزمات عميقة في الاقتصاد العالمي ناهيك عن التداعيات الاجتماعيات في دول العالم الخاضع لسياسة العقوبات. وهذه الزعزعة والازمة الاقتصادية التي ستتفاقم سيكون لها ارتدادات سياسية كبيرة يكون الغرب الخاسر الأكبر. فالولايات المتحدة بدلا من أن توحد العالم ضد روسيا توحد العالم ضدّها. والتحالفات القديمة والقائمة في الغرب بدأت تشهد تصدّعات بينها ومع الولايات المتحدة.

والولايات المتحدة بنفسها ليست بمنأى عن تداعيات الفشل في المواجهة في أوكرانيا. فالتحالف الذي أوصل بايدن إلى البيت الأبيض يشهد تصدّعا لأن الرئيس الأميركي لا يميل إلى التصعيد في المواجهة التي يعرف أنها خاسرة. ويساند الرئيس الأميركي البنتاغون. لكن بالمقابل تحالف المحافظين الجدد والمتدخلين الليبراليين والاعلام وأجهزة المخابرات يريد التصعيد. وهو غاضب من بايدن. لذلك قامت صحيفة “نيويورك تايمز” بنشر خبر يؤكّد صحّة المعلومات عن حاسوب هنتر بايدن، نجل الرئيس الأميركي، المليء بمعلومات تفضح فساد عائلة بايدن في أوكرانيا. وهذا الحاسوب تمّ التستّر عنه خلال الحملة الانتخابية الرئاسية في 2020 لأنّ المعلومات قد تلغي فرص فوز بايدن في الانتخابات. والسؤال الذي يطرح لماذا أقدمت الصحيفة الأميركية على نشر هذا الخبر؟ هناك من يعتقد ان التأكيد على صحة المعلومات الفاضحة قد تشكّل إنذاراً أخيراً لبايدن ليلتزم بما هو مُقرّر. من جهة أخرى أعلنت صحيفة “الغارديان” البريطانية عن نشر كتاب في 3 أيار/ مايو بعنوان “لن يمر ذلك: ترامب، بايدن، والمعركة لمستقبل أميركا” للكاتبين الصحافيين من “نيويورك تايمز” جوناتان مارتن والكس بيرنز يشير إلى أنّ زوجة بايدن لم تكن ترغب بوجود كمالا هاريس كنائب رئيس. أيّ هناك موجة متنامية في الإعلام المهيمن يوحى بأنه فقد ثقته ببايدن. وبما أنّ وضع الحزب والإدارة حرج للغاية فاحتمالات الفوضى الداخلية كبيرة جدا مما يؤثّر على أداء الإدارة في مواجهة مختلف القضايا والأزمات التي افتعلتها.

 أما على الصعيد العربي، فبدأت تظهر تباشير المراجعات السياسية الكبرى عند حلفاء الولايات المتحدة حيث نظرية ملكية الولايات المتحدة لـ 99 بالمائة من الأوراق بدأت تترنح كيف لا نقول تسقط بشكل نهائي عند العديد من الدول وفي مقدمتها دول الخليج ومصر.

من ضمن إرهاصات في التحولات العربية “تمرّد” بعض دول الخليج على القرار الأميركي بالخروج عن قرارات أوبك + التي تضم روسيا. كما ان عدم اخذ مكالمات الرئيس الأميركي لكل من ولي عهد بلاد الحرمين وولي عهد دولة الإمارات العربية المتحدة لم يكن ممكنا تصوّرها منذ ما قبل اندلاع الأزمة الأوكرانية. أضف إلى كل ذلك تصريحات بعض المسؤولين حول تخفيف الاستثمارات في الولايات المتحدة والقبول بالتعامل بعملات غير الدولار في تسعير بعض السلع الاستراتيجية يهدّد مكانة الدولار كعملة احتياط وحيدة أو حتى رئيسية في النظام العالمي.

أنّ كلّ تلك التحوّلات المفصلية في العالم لم تكن لتحصل لولا محور المقاومة وخاصة صمود سورية واليمن وإفشال المشروع الأميركي في العراق وتنامي مقاومة الشعب الفلسطيني. فلا يعتقدّن أحد أنّ الدور العربي كان غائبا بل هو الذي أتاح الفرصة لكلّ من الصين وروسيا والجمهورية الإسلامية في إيران لبناء قدراتها بينما محور المقاومة كان يتصدّى ويُفشّل المشروع الأميركي الصهيوني. فالسيطرة على آسيا هي الشرط الضروري للسيطرة على العالم والمشرق العربي هو البوّابة لها. فمن يتحكم بتلك البوّابة يستطيع أن يسيطر على آسيا. محور المقاومة أفشل المحاولات الأميركية الصهيونية وهو الذي سيكون بيضة القبّان في التوازنات الدولية الجديدة إذا ما أحسن التعاطي مع المعطيات الجديدة على الصعيد المحّلي في كل مكوّن من مكوّنات المحور.

*باحث وكاتب اقتصادي سياسي والأمين العام السابق للمؤتمر القومي العربي وعضو الهيئة التأسيسية للمنتدى الاقتصادي والاجتماعي

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Bridging China’s past with humanity’s future – Part 3

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July 01, 2020

Bridging China’s past with humanity’s future – Part 3

by Straight-Bat for the Saker Blog

This will be presented in 3 parts and in 3 different blog posts

Part 1

Part 2


PART – 3

2008 ONWARDS – PREPARATION FOR FINAL ACT

The financial crisis that started in USA in 2007 became global by 2008 which impacted countries and societies across the world. The year 2008 has already been identified as watershed moment for world economy. However, I would like to put forward a hypothesis stretching the arguments further on why 2008 will be remembered as historic moment that started new preparations:

a) Since 1990s, the latest version of capitalism – Financial capitalism – has been developing strong operations in Anglo countries USA-UK-Canada-Australia and west Europe on the back of Financial services-Insurance-Real estate (termed by economists as FIRE) sectors. That was in line with the political economy of ‘capitalism’ – capital, by definition, needs continuous expansion, the capitalists were/are always in search of new horizons which would provide them more profit that would continue the ‘endless accumulation of capital’.

Before the chapter on financial capitalism got initiated, the businessmen in USA and other Anglo countries carried out two rounds of well-planned outsourcing (by definition, outsourcing brings down the product cost on one hand, and on the other hand outsourcing relieves company management from mundane tasks to devote more time on core competences) of non-MIC non-Energy manufacturing activities: (i) in stage 1 during 1950s and 1960s, they outsourced such economic activities to Japan-South Korea-Taiwan in order to create an economic vassalage through which the living standards of the so-called east Asian tiger economies will be pulled upwards to show ‘miracles’ (happened due to western liberal capitalist democracy), (ii) in stage 2 during 1980s and 190s, they outsourced even larger part of such economic activities to China that in turn would provide massive employment opportunity in China (happened due to western liberal capitalism and technological superiority), which would entice the Chinese government to join the Zionist Capitalist camp.

During 2007 and 2008, all the financial engineering that designed and implemented the FIRE sectors came crashing down. Apparently, ‘financial capitalism’ wasn’t that fault-proof in the face of infinite greed of capitalists. The situation was salvaged through ‘socialising the losses’ suffered by the ‘too-big-to-fail’ banks and financial services companies in USA, and other Anglo countries – the government released trillions of USD to support the crisis-creators. But a much more significant incident was that, the Zionist Capitalist Deep State clique started introspection on how long they can depend on ‘financial capitalism’ to continue accumulation of capital, and as a natural corollary, it appeared to them that ‘industrial capitalism’ was a more secure version of capitalism that was sent abroad with much fanfare. Both the beneficiaries of outsourcing i.e. China and Japan-South Korea-Taiwan block were very well established in the nuances of complete business cycle of ‘industrial capitalism’. The Deep State headquarters (in USA) also remembered that most of the Zionist Capitalist elites of non-Anglo west Europeans were never very serious about outsourcing – as a result, even in late 2000s, Germany-France-Italy-Netherlands-Sweden could maintain a base of ‘industrial capitalism’ (though not a vibrant one under the competitive stress generated by east Asian industrialists)!

The fact that, the Chinese government steadfastly refused to carry out political reforms and to privatize state-owned enterprises came as addition of salt to injury for the Zionist Capitalist Deep State. There was unanimous consent – Chinese manufacturing ‘juggernaut’ would have to be rolled back, and along with that, the unfinished WW II task of destroying CPC would have to be completed.

b) If the Deep State elites were trying in vain, to create environment for Chinese top leadership to switch over to liberal capitalism, the same Deep State elites were dreaming about Russia being colonised by the London-based Zionist Capitalist businessmen and bankers. By the time when they woke up in 2008, Russia developed on all fronts including exports (USD 468 billion primarily from petroleum and natural gas) and Russian government was working all-out to improve the living conditions of the society. After 1991, the Russian capitalist-swindlers were in self-congratulatory mode about how they grabbed the resource extracting sector like petroleum, natural gas, aluminium etc. – with huge mineral and hydrocarbon reserves, using the Anglo-American technologies, the Russian capitalist-swindlers were confident to generate huge revenue and profit year after year. However, post-1991 ‘reformed political environment’ brought such a top leadership who would slowly but surely entrust the custody of most of the natural resources to the state-owned enterprises. Even more interesting event was that, Russian scientists and technologists were again engaged on research and development of military equipment. The military-industrial-complex of Soviet Union was decimated after 1991 mainly because no single successor country of Soviet Union had the entire production chain (it was distributed among different provinces like Russia, Ukraine, and Belarus etc.). Russian leadership intuitively developed the entire supply and production chain in their territory – as a result, very soon Russia became a potent force in arms export. It is not the total amount of export that mattered – the advancements in technology was far ahead in complexity and quality of armaments compared to the armaments owned by military forces of USA-5 Eyes-NATO, particularly in electronic warfare, missiles, and fifth generation military aircraft.

The writing on the wall was clear for the Zionist Capitalist Deep State – the resurgent Russia would utilise the energy export revenue to restructure its own military forces with such magnificent military machines, and Russia will curve-out a share of world-wide military arms export market. This entire cycle would create unwanted competition from technically strong Russia in energy sector and MIC sector, the only sectors of ‘industrial capitalism’ for which the Zionist Capitalist oligarchy still maintained their business portfolio. Again, there was unanimous consent – Russian energy export would have to be rolled back, and along with that, the Russian Federation would have to be dealt a decapitating blow to eliminate current leadership.

c) While all partners of the Deep State cabal were in agreement on the above mentioned points (a) and (b), there was complete lack of convergence on the long-term strategy and plan of action to achieve these objectives.

Such lack of strategic planning and coordination was evident after 2008. For the first time in five centuries the Zionist Capitalist Deep State cabal thought that, they need to include more ethnic groups – Barack Husain Obama (representing Afro-Americans) was selected as the President of USA for two terms from 2009 to 2016. It is doubtful, if that action really increased the strength of the cabal. The Zionist Capitalist cabal made a half-hearted initiative to create political-economic supranational blocks (through signing of TPP, TTIP, and TISA) that will impair all-round security of China-Russia and few other countries where governments were being run by anti-imperialist political parties. Such exclusive trade blocks, if materialised, would have (i) impinged on ‘state’ sovereignty of all member states where MNC business entities took priority over state, (ii) created ‘captive market’ for goods and services produced by MNC business entities owned by Jewish, Anglo, Dutch, French, German oligarchy plus Japanese and Korean oligarchy, and (iii) maintained US fiat Dollar as global exchange currency.

[ Link: http://www.globalresearch.ca/the-transatlantic-trade-and-investment-partnership-ttip-would-abolish-europes-sovereignty-the-eu-would-become-a-us-colony/5417382 ]

If such trade blocks would have been superimposed with EU and NATO, the world would have seen the birth of largest directly controlled empire in history spanning across east and south-east Asia, Europe, North America, most of South America. It is doubtful, if the Deep State elites ever pondered over the absurdity of such planning.

Donal Trump burst into the centre-stage in 2016 end without getting selected by the Zionist Capitalist Deep State cabal. But he was quick to get accustomed with the Deep State objectives and strategy – after all, the role of President of USA have been the façade of the Deep State since 1945 (replacing Prime Minister of UK who used to shoulder that ‘responsibility’ for previous couple of centuries). At the first place, Trump’s election as the President of USA itself showed the lack of coordination among the factions of Zionist Capitalist cabal. After Trump settled in, the policy appeared as ‘bring back the manufacturing industry from China any how’ without any arrangement for upstream and downstream supply chain. Any planning of this type of infantile disorder is bound to fail. On the other hand, Trump thinks that Russia would be immature enough to get mollycoddled by his words on how Russia is important in current world economy while maintaining the economic sanctions (which have been hitting Russian economy hard for past 6 years). Again, Trump alienated most of the west European partners through his repeated calls for increasing military budgets by west European NATO partners. Needless to say that, none of Trump’s action plans are backed by thorough study. Similar to immature strategic plans vis-à-vis China, the Deep State have been showing lack of ingenuity vis-à-vis Russia.

Across the world, the serious fact-based researchers and reporters are divided in their opinion – the larger group is of the opinion that the Deep State cabal is in deep crisis that have been brewing for decades (due to factors like ‘intrinsic crisis’ of capitalism, and ‘limitations’ of fiat US Dollar printing or QE, ‘limitations’ of imperial outreach etc.), while relatively smaller group feels that irrespective of such limitations, Deep State will continue to maintain its hegemonic hold over the world order through new tricks. I tend to side with the logic of the smaller group. Notwithstanding the obvious weaknesses of the Deep State cabal, they have wealth cumulatively built up for past five centuries and they have corrupted the educated group of people in all countries since the end of WW I – hence they would look to perpetuate their hegemonic world order in the foreseeable future.

d) Nevertheless the Zionist Capitalist cabal has made an impressive array of arrangements, even if that won’t be coherent enough to defeat either China or Russia:

i. USA Military forces through its regional commands across the world, along with the 5-Eyes military forces maintain high degree of military alertness and preparedness aimed at fighting at least two wars simultaneously at two different ‘theatres’. They have developed and deployed a ubiquitous comprehensive C4ISTAR system and standard operating procedure that will support ‘first strike’ to decapitate the adversary (with Hypersonic strike vehicles, Russia and China are the only countries that defy this). Among significant military assets, very strong naval force with 11 Carrier Strike Groups (CSG), largest fleet of nuclear submarines, largest fleet of ‘stealth’ multi-role military aircrafts, outdated Ballistic Missile Defence system (BMD) to strike down incoming (up to supersonic) projectiles through launching or midcourse or terminal stage, second largest stockpile of Nuclear warheads that can be delivered from land, air, and sea.

ii.  Apart from above mentioned weaponry (common across the world), USA possess highly sophisticated space based weapons like kinetic kill vehicle, and directed energy weapon which, apparently, can be launched by robotic orbital vehicle (X 37B); monitoring and surveillance of satellites sent by other countries to the high earth orbit (HEO) and low earth orbit (LEO) using four satellites of Geosynchronous Space Situational Awareness Program (GSSAP); special armaments researched by DARPA like robotic combat force, microsatellite-cum-drone, microbiological weapons, weather control techniques (HAARP etc.)

iii. USA (along with forces from Rest of 5Eyes, NATO, Israel, Japan) Deep State has been meticulously carrying out military encirclement of Russia and China around their geographical boundary for past two decades. Nuclear warheads in NATO bases in Turkey, Italy and other European countries, BMD system installation in at Poland, Romania, Japan, and South Korea, CSG in all the oceans, more than 700 military bases in Europe-Asia-Africa-Pacific Ocean-Indian Ocean-Atlantic Ocean, and agreements with dozens of non-NATO but pro-Deep State countries for sharing military facilities and logistics facility

e) The Zionist Capitalist oligarchy has been looking beyond the ‘industrial capitalism’ and ‘financial capitalism’. A set of new possibilities have appeared on the horizon – these are not completely ‘new’ because during past two centuries all of these formed a small segment of all-encompassing ‘industrial capitalism’. In the new century, however, any of these or a combination of these can grow into ‘opportunity’ of a new ‘version’ of capitalism:

  1. Exotic materials like Cobalt, Lithium, and Uranium etc.
  2. Genetic engineering and artificial life
  3. Climate engineering
  4. Artificial intelligence
  5. Surveillance and mind control
  6. Healthcare and medicine
  7. Space travel and settlement

Current geopolitical control-points of Deep State:

1. In East Asia, South-East Asia, South Asia, Pacific Ocean zone, Indian Ocean zone the key strategic control revolves around objectives like ‘All-round Containment of China’, ‘Military Partnership with India’ and ‘Creation of Indo-Pacific NATO’ through the programmes like:

  1. Installing Deep State followers as the ruling elites of Taiwan island who could declare formal independence from Chinese mainland
  2. Fomenting secessionist movements in Hong Kong, Xinjiang (East Turkestan), Xizang (Tibet) regions of China. The Deep State would utilize fault-lines of multi-ethnic and multi-religion society of China to tear apart the country into multiple vassal states
  3. Provoking trouble in South China Sea, East China Sea through mobilising the governments of littoral states like Vietnam, Malaysia, Indonesia, Philippines, Japan and nudging them towards confrontational behaviour with China
  4. Keeping the ‘Korean problem’ alive by manipulating successive South Korean governments to take aggressive stance towards North Korean government so that peace agreement (as logical settlement of Korean War armistice) never happens
  5. Keeping the ‘Kuril Islands problem’ alive by co-opting successive Japanese governments towards taking an illogical stand towards proposals of Russian government so that peace agreement (as logical end of WW II) never happens
  6. Keeping the land boundary dispute between India and China alive through co-opting the Indian ruling party leadership and nudging them towards confrontation
  7. Provoking Salafist Islamic terrorism in India, and then cozying up to the Indian government with offer for ‘generous support’, if India joins the USA-led multi-country military block mainly targeted against China
  8. Manipulating Indian leaders and bureaucrats to play a hegemonic role in the south Asian neighbourhood, which would seek to get elite followers of the Deep State camp elected as top leaders of countries like Sri Lanka, Nepal, Bangladesh, Maldives
  9. Forming an ‘informal’ naval alliance among India-Japan-Australia-South Korea which would keep navy of China and Russia under check, and if push comes to shove the ‘quad’ navy would block the Malacca strait to cripple Chinese trade
  10. Corrupting the political parties in Asia’s south-east and south region (countries like Vietnam, South Korea, Cambodia, Laos, Malaysia, Indonesia, Philippines, India, Pakistan, Nepal, Sri Lanka etc.) which had glorious anti-imperialist struggle for many decades to influence them against economic association with China and Russia
  11. Spreading concocted stories on global media identifying infrastructure projects under Chinese government’s BRI initiative as ‘debt trap’ and maligning Chinese manufacturing industry as ‘sweatshop’ to create a negative image

2. In West Asia, North-East Africa, North Africa zone, the key strategic control revolves around objectives like ‘Reorganize State boundaries’, ‘Turn the Region into Domain of Israel’, ‘All-round Containment of Russia and China’ through the programmes like:

  1. Destabilizing existing states through opposition political party (controlled by Deep State) who would manipulate the popular despair and anger against the autocratic rulers in North Africa, West Asia, North-East Africa;
  2. Creating multiple groups of Salafist terrorists by recruitment among the mostly unemployed and uneducated Arab youth from Sunni Islam communities living in the vast desert corridor stretching from Morocco to Afghanistan
  3. Portraying the army of Arab Salafist terrorists as army of ‘pan-Islamic Caliph’ through recruitment of non-Arab mercenary forces from Caucasus, Central Asia, South Asia to create a ‘legitimacy’ among the mostly unemployed and uneducated Asian and African Muslim population who have been brainwashed by religious preachers for generations about glorious ‘Islamic Caliphate’
  4. Mobilising multiple Salafist terrorist groups to bring down existing rulers and simultaneously creating as many fiefdoms by dividing the existing state boundary – thus existing ‘state’ would be converted into ‘statelet’ managed by the terrorist groups
  5. Positioning Israel as the de-facto politico-military leader for all governments in West Asia, North-East Africa, North Africa regions; Israel would act as coordinator entity for providing economic and military assistance to the series of satellite statelet
  6. Manipulating the Kurdish liberation forces spread over Turkey, Syria, and Iraq to break away from their parent countries and create new state of ‘Kurdistan’ that would be a NATO asset in west Asia
  7. Creating multiple power-centres within the Sunni Arab sheikhdoms which would be crucial to control the ambitious Saudi clan

Keeping Iran as a ‘pariah’ state in global affairs through sanctions and limited military strikes until the internal political situation would be ripe enough to be manipulated to overthrow the government of Shia Iranian revolutionaries

  1. Maintaining a high level of USA naval readiness in Persian Gulf through which would keep navy of Iran and Russia under check
  2. Spreading concocted stories on global media identifying Russian ruling party’s internal policies as corruption of ‘Putin faction’ to create negative image of Russian energy and defence industry

3) In Western Africa, Central Africa, Southern Africa zones, the key strategic control themes have been ‘All-round Containment of China’, ‘Military Partnership with Nigeria’ and ‘Transform Military Foothold into Large Bases’ driven through programmes like:

  1. Destabilizing existing state apparatus by arming various tribal warlords who are divided among religious lines (Christian, Sunni Islam) in central and western regions of Africa; state like Rwanda and Burundi would remain hotbeds for ever
  2. Deploying military detachments by USA, France, Israel citing old Zionist Capitalist rhetoric of ‘maintaining human rights, democracy and governance’
  3. Corrupting the political parties in Africa’s southern region (countries like South Africa, Angola, Mozambique, Namibia, Zimbabwe, Zambia, Tanzania etc.) where anti-imperialist struggle were in the global headlines for three decades (1950 to 1970) to influence them against economic association with China and Russia
  4. Building ‘client state’ in all regions of Africa where the entire spectrum of political leadership would follow the ideology and policies pushed by the deep State – countries like Malawi, Liberia, South Sudan etc.
  5. Keeping the ‘Katanga problem’ alive by manipulating the internal political parties, armed groups, neighbouring countries – either DR Congo would become satellite of the Deep State or Katanga would be curved out as ‘independent’ country
  6. Spreading concocted stories on global media identifying Chinese ruling party’s internal debates as ‘factional fight’ to create factionalism within the ruling party, and maligning Chinese manufacturing industry as ‘sweatshop’ to create a negative image

4. In West Europe, and East Europe zones, the key strategic control revolves around objectives like ‘All-round Containment of Russia’, ‘Every state under supranational EU’, ‘Create African-Germanic-Slavic Hybrid Society’, ‘Ruin the Slavic Civilization’ through the programmes like:

  1. Bringing all countries under ‘EU’ banner either as a direct member or as associate thereby diminishing the sovereignty of European states through shifting all governance and policy matters to EU – it ensures single point of contact for hegemonic empire run by Deep State
  2. Expanding NATO to the borders of current Russia through creating Deep State loyalist governments in ex-Soviet bloc countries like Poland, Romania, Bulgaria, Czechia, Slovakia, Hungary and creating USA army bases with nuclear missile installations
  3. Manipulating Turkey, Saudi, Libya political and bureaucratic leadership to mobilize millions of Arab Sunni Muslim low-skilled people into different countries of Europe
  4. Manipulating EU member states to take those ‘forced refugee’ and settle them in Europe to create a multi-ethnic multi-religion hybrid society in Europe – they will form the ‘working class’ people as well as form the backbone of a future European army
  5. Infiltrating the leadership of European political parties which profess ‘socialist’ ideologies (hence, ‘anti-imperialist’ but not Marxist) so that all these parties become ‘controlled opposition’ – in case Deep State supported elitist party loses election, the new government still maintain the capitalist and imperialist policies
  6. Staging false flag terrorist attacks in countries like France, Germany, Italy whenever the ruling leadership in those countries appear to deviate from policies of Deep State, particularly if these leaders try to develop economic relationship with China and Russia
  7. Spreading false propaganda in European media and academic institutions identifying fascist Germany’s territorial expansion and genocides as equivalent to communist Soviet Union’s defensive manoeuvres and administrative overbearingness, and vilifying present Russian government as authoritarian
  8. Provoking secessionist movements (using any fault-line – religion, language, ethnicity) in all geographical regions that come under erstwhile Yugoslavia and Soviet Union so that both these regions are destroyed beyond repair – thus, if ex-Yugoslavia now comprises of (say) 5 statelet, the Deep State would strive to make 10 splinters, similarly if ex-Soviet Union now comprises of (say) 15 statelet, the Deep State would strive to make 30 splinters
  9. Manipulating the political leadership and bureaucracy in all ex-USSR states towards taking government policy decisions/actions which will actively hurt Russian interests
  10. Creating hindrances for Russian access to deep sea ports in Baltic Sea and black Sea to not only restrict their economic activities but also to check the naval forces

5. In South America, and Central America zones, the key strategic control revolves around objectives like ‘All-round Containment of Russia and China’, ‘Creation of Latin American NATO’, ‘Keep Latin America as USA Playground’ through the programmes like:

  1. Bringing all countries under ‘OAS’ banner through which the Deep State will directly interfere in the governance and policy matters – in fact, this organisation coordinates the appointments to legislature, executive, and judiciary in all South American and Central American countries so that only Zionist Capitalist elites get into the top positions of political parties and bureaucracy
  2. Expanding NATO in South America so that the main anti-zionist anti-capitalist government of Venezuela can be directly invaded – to that effect, the Deep State has enrolled Colombia, Peru and Brazil governments to become host of the USA military bases
  3. Infiltrating the leadership of European political parties which profess ‘socialist’ ideologies (hence, ‘anti-imperialist’ but not Marxist) so that all these parties become ‘controlled opposition’ – in case Deep State supported elitist party loses election, the new government still maintain the capitalist and imperialist policies
  4. In case, political parties with Marxist ideology comes to state power through democratic elections, the Deep State will organise trouble within common people and Defence establishment and instigate them to seize power by overthrowing the elected government (Guatemala, Nicaragua, El Salvador, Chile, Brazil, Argentina, Venezuela, Ecuador, Bolivia etc.)
  5. Keeping Cuba under most severe economic sanction and blockade for over six decades – key objectives have been to wreck the Cuban economy and break the Marxist ruling party
  6. Creating a second ‘homeland’ for the Jewish elites and aristocrats, by acquiring very large tract of land and building townships in Patagonia region of Argentina – considering Israel, the first ‘homeland’ has been facing quite difficulty in accomplishing the target of direct control of the stretch of ‘Nile-to-Euphrates’ land, this move will ensure long-term control of Latin America
  7. Spreading concocted stories on global media identifying infrastructure projects under Chinese government’s BRI initiative as ‘debt trap’ and maligning Chinese manufacturing industry as ‘sweatshop’ to create a negative image

All dressed up, but nowhere to go!

As noted above, the Deep State has been making quite assiduous preparations for teaching China and Russia the final lessons on the consequences of violating the rules of “end of history” – the principles of capitalist market economy and electoral democracy. But nobody among the Zionist Capitalist oligarchy knows how such lessons will be taught – China and Russia together control the largest land area, together they house the largest population, together they store the largest reserve of natural resources, together they have most educated and most disciplined work force, together they process/ manufacture largest share of energy and manufactured goods, and together they deploy the largest and most sophisticated military forces. Considering only China, it has third largest land area, largest population, most educated and most disciplined work force, largest share of manufactured goods, and fourth largest military force.

The Deep State, within a span of 100 years forgot that, not only they became more sophisticated, but their biggest adversaries in ‘Eurasian Heartland’: Russia and China, also became more astute. This is not to conclude that Deep State would put to rest their final assault. They will, because ideology and political economy of the Zionist Capitalist oligarchy would compel them to do so. It is imperative that China (and Russia) plan and implement their strategy in the most opportune time.

8. ROAD AHEAD

Let me recall the first paragraph of the first section (INTRODUCTION) of this document. A question was put forward as “what would be the action plan of the global oligarchy who collectively own banking and industrial sectors and who maintain current unipolar world order through chosen members of the so-called Deep State”; most probable answer was “state policy and implementation of the same would be geared towards accumulation of capital in every country except the six countries”. If the global oligarchy remain busy in wealth accumulation, what would be the strategy and action plan of the local oligarchy (consists of industrialists, bankers, large landlords, leaders of main political parties, bureaucracy)? Answer to this question is complex – local oligarchy being directly integrated with the local society, they can’t act in a complete self-seeking manner like their global counterpart. Local oligarchy is bound to look after the arrangements for minimum subsistence of the citizens, and thereafter carry out wealth accumulation. Hence, there is a necessity of minimum economy and governance in every state in the world. With IMF, WBG, ADB banking institutions retreating into conservative procedures as well as USA, 5-Eyes, EU, Japan applying partial break on aids, at least 150 out of 194 UNO member countries would require loan, aid, other techno-economic help. China with largest GDP PPP, largest forex reserve, gigantic domestic market, and largest STEM pool of students would be in a position to fulfil this historic role, even if the leadership may not find it enviable.

Moreover, as noted in previous sections (CHINA IN DENG ERA, POST-DENG CHINA) China has been moving on a continuous journey initiated by Deng’s reforms and managed by successive leaders through tweaking some policy matters and effective coordination. Key statistical indicators during this entire period is given below:

[ Link: https://www.theguardian.com/news/datablog/2012/mar/23/china-gdp-since-1980 ]

Chinese government would have to reach a ‘logical destination’ in near future – CPC leaders have set their targets on what figure of common socio-economic indicators would be construed as ‘successes. Hence, China will stay on current course till 2028/ 2030 CE impacting global capitalist economy in fundamental way:

  1. Chinese companies will design and develop wide range of consumer products using Chinese patented technology and receive wide acceptance across the world;
  2. China will cease from being ‘factory of the world’ and develop relationship with Asian/African/ South American countries to spread the manufacturing activities there. A mix economy driven by domestic consumption plus exports in China will be healthy for the entire world
  3. Chinese government (along with Russian government) will develop an ecosystem across Europe and Asia in which Banking-Finance and Industry-Economy are intertwined
  4. The system of ‘capitalist market economy through state-owned and private-owned enterprises’ developed in China will evolve as a ‘model’ for many African and Asian countries
  5. Chinese government will continue with the BRI programme as a framework for investments in railways, roads, ports, electricity generation, communication network, mining, manufacturing factory projects in Asia, Europe, Africa, and South America
  6. While making investments in China or in any other country Chinese government will give due importance to environment and take necessary actions so that ecosystem is well-preserved
  7. Chinese government (along with Russian government) will establish an international monetary system to ensure that interests of the non-European and non-5 Eyes countries are maintained This should also include replacement of US Dollar as world’s reserve currency by a basket of currencies of world’s top ten economies (GDP in PPP terms) backed by gold/valuables

The quest for world-wide Zionist capitalist democratic empire (as noted in section GEOPOLITICS 1930 ONWARDS) will never end unless the oligarchy and aristocracy take such decision against their five century old collective psyche. So, it can be safely presumed that the Deep State will continue to look for destroying all sorts of resistance to their hegemony – it is simply immaterial whether the antagonist country profess liberal capitalist (Russia) or socialist (Cuba, China) or Shia Islamic (Iran) or nationalist (Venezuela) philosophy. For the Deep State, complete subjugation is the only way forward. Let’s go back to the first section (INTRODUCTION) again where I mentioned that, China (because of its large landmass and huge population) would be in ideal position to resist the unipolar world order and roll back the onward march of global capitalism in order to build a more equitable society (with crucial support from Russia). Current world order (even when Russia-China-Iran are putting up a brave resistance to the hegemonic Deep State) is anything but equitable. It is one thing to struggle against Zionist Capitalist world order to establish an order with cosmetic change, and it is entirely different thing to struggle to establish an ideal order that brings fundamental transformation. Whichever path Chinese leadership follow, there has to be a detail planning for the same. Let me play the role of a candid analyst.

Looking forward – Option 1:

Option 1 of simulation considers that CPC wishes to struggle against existing Zionist Capitalist world order to establish a parallel world order with cosmetic changes around 2030 CE, and there won’t be any change in ruling party in China during this journey when CPC top leadership maintains their current road – this road would lead the world into the following state of affairs:

  1. China will continue to grow in the path of ‘capitalist market economy’ which will result in further evolution of the private capitalist businessmen class – share of capital asset owned by private enterprises will crawl upwards and share of output by private enterprises will rise faster in GDP. Government will control corruption-inflation-unemployment strictly, will implement new policies to control the capitalist class, and will provide welfare schemes to commoners in order to maintain legitimacy of CPC within the society.
  2. Confrontation in South China Sea, Taiwan and North Korean border will continue to increase to such a level that the Deep State will find it completely embroiled without an easy exit – a ‘hot’ limited war will be fought between two sides: USA-Japan-South Korea and China-North Korea, which will end with effective departure of USA military from Asia region, and Chinese unification with Taiwan.
  3. Zionist Capitalist Deep State cabal would redefine their ‘territory’ by identifying core zone as Europe continent, North America continent, Australia-New Zealand-Japan (islands), and India-Israel (countries living with island mentality) – within these regions, the governance, the economy, the military, and socio-cultural affairs would be under sway of MNCs owned by the oligarchy clique.
  4. In Asia, Africa, South America continents, China will get accepted as the leader in economic and socio-cultural sphere, while Russia will evolve as the leader in military and energy sphere – within these regions, the governance, the economy, the military, and socio-cultural affairs would be more or less driven by the local political parties and local oligarchy who will have majority part of their business relationship with China and Russia; however the local oligarchy will also maintain minor trade and finance relationship with Deep State dominated regions.
  5. Fundamentals of capitalistic economy will remain intact in the China-Russia dominated regions with both state-owned and private-owned enterprises ruling the roost – the cycle of profit and endless accumulation of capital will continue, but under supervision of the state; also, general welfare and social security for all classes of citizens will be ensured by the state.
  6. 2050 CE onwards, the tussle between two ‘worlds’ will be reflected very badly in the realm of space and planetary exploration as well as environment of our planet – the Deep State-controlled ‘world’ will seek domination of space through advanced technology in the field of aerospace and defence, which may not become a priority for Chin-Russ civilizational combination.
  7. the Deep State-controlled ‘world’ will seek final revenge on the other ‘world’ by climate engineering during which weather manipulation in the form of substantial temperature rise, extreme cyclonic storm, long duration of drought, out of season rainfall etc. will be effected to destroy agriculture and urban society within a decade or so. Though the Deep State will attempt to become the uncontested hegemon the other world will continue to struggle independently as a block.

Looking forward – Option 2:

Option 2 of simulation considers that CPC wishes to struggle against existing Zionist Capitalist world order to establish a parallel world order with cosmetic changes around 2030 CE, and there will be unpredicted change in ruling party in China during which CPC will be replaced by a liberal capitalist political party supported by Deep State-led ‘democracy movement’ – this road would lead the world into the following state of affairs:

  1. China will continue to grow in the path of ‘capitalist market economy’ which will result in further evolution of the private capitalist businessmen class – share of capital asset owned by private enterprises will increase substantially and share of output by private enterprises will rise exponentially in GDP. Government will not be effective to control corruption-inflation-unemployment. The capitalist class will create political party with so-called nationalist ideology supported by local academia and media. CPC will move in the direction of legitimising such political party, which will seize power after election (it will be immaterial whether CPC really win or lose election – either way, the opposition will seize power).
  2. Confrontation in South China Sea, Taiwan and North Korean border will diminish after new political party form the government which will be completely under control of the Deep State. Without any ‘hot’ war mainland China and Taiwan will be unified – for USA Deep State this will be a revenge after a century. After all, Kuo Mintang was the favourite of Zionist Capitalist oligarchy from 1927 onwards when Chiang Kai-shek proved that he can fight against CPC ruthlessly. It has been USA’s economic and military support that kept Taiwan as viable ‘entity’ till now.
  3. Zionist Capitalist Deep State cabal will find the entire world (except Russia) as their ‘territory’– the governance, the economy, the military, and socio-cultural affairs, essentially everything under the Sun would be under sway of MNCs owned by the Zionist Capitalist oligarchy clique.
  4. Entire world (except Russia) will accept USA (along with Israel and 5-Eyes) as the leader in military, economic and socio-cultural spheres – everywhere, the governance, the economy, the military, and socio-cultural affairs would be more or less driven by the local political parties and local oligarchy who will be directly appointed by the Deep State; however the local oligarchy will also maintain minor trade relationship with Russia for energy import.
  5. Across the world capitalistic economy will remain intact through the cycle of profit and endless accumulation of capital – however, due to mismanagement of resources and brutal exploitation of common people, there will be wide-spread hunger. Population in Africa and Asia will decline. This will conform to the Zionist ideology which portrays earth as a settlement for the ‘golden billion’ – one billion of Jewish and Anglo population and their flunkies. Automated robots will be utilised for industrial and agricultural production – they neither require food, shelter and healthcare nor do they demand justice and equality!
  6. 2050 CE onwards, the tussle between the ‘one world’ owned by the Deep State and Russia will turn into a serious ‘hot’ war. The Deep State will seek final revenge on Russia by complete obliteration using military technology that apparently will confine the radioactive ashes and dust within the destroyed land itself instead of moving upwards to cover the entire atmosphere of earth – thus the Deep State will attempt to become the uncontested hegemon and will succeed, albeit with major losses.

Looking forward – Option 3:

Option 3 of simulation considers that CPC wishes to struggle against existing Zionist Capitalist world order to establish a parallel but new world order based on basic Marxist philosophy around 2035 CE, and there won’t be any change in ruling party in China during this journey when CPC top leadership changes their current track – this road would lead the world into the following state of affairs:

  1. China will continue to grow in the path of ‘capitalist market economy’ with restrictions on further evolution of the private capitalist class – share of capital asset owned by state enterprises will increase substantially and share of GDP output by state enterprises will surpass the private enterprises by a multiplier of two. Government will control corruption-inflation-unemployment strictly, will chalk out policies on transformation of economy into a Marxist economy in which private-owned and state-owned enterprises will be transferred to community ownership by 2035. However, both private capitalists (local, foreigner) and state capitalists (central, provincial, local) will have marginal share in the enterprises earlier owned by them – such benefits will construe as long-term compensation against the asset transfer, apart from an immediate compensation paid to the erstwhile owners.
    1. By 2030, the technology-based modernisation of the forces of production in China will be complete which can be interpreted as ‘creation of material basis is done’. CPC can plan with earnestness for achieving their original objective of achieving a Marxism-based society through a SINGLE-STAGE TRANSFORMATION. As Stalin and Mao faced socio-economic reality, two stage transformation has immanent difficulties – with completion of stage 1 (during which Capitalist society with bourgeoisie democracy transforms into Socialist society with dictatorship of proletariat), increasingly detrimental geopolitical and economic factors imposed by the opposing forces of monopoly capitalism will not provide opportunity or time for further progress into stage 2 (Socialist society with dictatorship of proletariat transforms into classless Communist society). CPC may make a thorough plan of action for a single-stage transformation with as minimum shock as possible – a point to remember: people never plan to fail, they fail to plan.
    2. While the planning for a single-stage transformation is undertaken by CPC, they need to make the fundamental action – replacement of ‘private ownership’ by COMMUNITY OWNERSHIP. Neither any citizen nor State will own any means of production (land, natural resources, machinery, real estate and other infrastructure, financial capital etc.) apart from their living houses/flats/bungalows/vehicles. Military Industry will be required for production of military machinery which should be owned and managed by the state. Rest everything will be owned by community. Only when the entire world has decisively transformed into an ocean of humanity without any presence of ‘private ownership’ anywhere, the ‘State’ will relinquish its ownership of MIC, and ideally, there should not be any necessity of the same. The cycle of profit and endless accumulation of capital need to stop for the sake of humanity.
  2. Confrontation in South China Sea, Taiwan and North Korean border will continue to increase to such a level that the Deep State will find it completely embroiled without an easy escape – a ‘hot’ limited war will be fought between two sides: USA-Japan-South Korea and China-North Korea. With major losses on both sides, China will reap the benefit of being ‘son of the soil’ while USA will bite the dust by acting as an invader to east and south-east Asia. At the end of such conflict, two of the WW II ‘problems’ will get resolved in favour of socialist and workers parties of China and Korea. This will also initiate the complete retreat of the USA military from Asia continent, North Pacific Ocean, Indian Ocean regions leaving Japan and India to reconcile itself with a new China.
  3. Zionist Capitalist Deep State cabal would redefine their ‘territory’ by identifying core zone as North America continent, west European region, Australia-New Zealand-Greenland (islands), and Brazil-Argentina-Chile-Paraguay. By then, Patagonia in Argentina would have become the second homeland of Jewish oligarchy and aristocracy – it will secede from Argentina to become an independent corporation (i.e. democratic capitalist country). Most interesting change will be in Europe – Germany, Austria, Italy, Hungary, Czechia, Slovakia, Poland, Bulgaria, Romania, and Serbia et. al will be left in the lurch by the Deep State. That action of the Deep State will be intelligent indeed – such ethnic groups who could be easily lured into any geopolitical activities that will finally result in their downfall, can’t be true ally! Since past three centuries the leaders of these countries proved time and again that, they will wreck their own economy and society (by unnecessarily fighting with Russian Slavic land) in lieu of hundreds of millions of Dollars credited into their offshore bank accounts. Within the ‘Anglo and Jewish enlightened world’ the governance, the economy, the military, and socio-cultural affairs would be under sway of MNCs owned by the oligarchy clique. A significant number of south Asians, Koreans, east Europeans will be given permanent citizenship because of their extraordinary greed, and socio-cultural servitude to the Zionist Capitalist ideology and Anglo/Jewish ethnicity.
  4. Across the world (excluding the zones of ‘Anglo and Jewish elite world’) China will get accepted as the leader in economic and socio-cultural sphere, while Russia will evolve as the leader in military and energy sphere – in these regions, the governance, the economy, the military, and socio-cultural affairs would be more or less driven by the local political parties and local oligarchy who will have majority of their business relationship with China and Russia; however the local oligarchy will also maintain minor trade and finance relationship with Deep State dominated regions. In the long run, most of the countries will follow the Chinese system of community-ownership of means of production within their country.
  5. 2040 CE onwards, the world will be the most safe and peaceful compared to the past five millenniums (during which conflicts used to be the rule rather exception). China and Russia will lead the way for research and development related to sustainable economy and environment. There will be significant use of technology in making the individual life and social life better and comfortable than before. New frontiers of space research and planetary exploration will open up. Human civilisation would proceed further in understanding the ‘reality’ of ‘universe’ – we will know how ‘life’ got created and what the ‘mystery’ of creation is!
  6. the Deep State-controlled ‘Anglo and Jewish elite world’ will seek final revenge on the ‘other world’ by complete destruction using military technology that apparently will confine the radioactive ashes and dust within the destroyed land itself instead of moving upwards to cover the entire atmosphere of earth. However, as history repeats itself, such research and development by the Deep State would be known to the leaders of ‘other world’ much before fruition – left with a choice between complete surrender and complete destruction, the Deep State will chose the former ‘to live and let others live’.

Conclusion:

China and CPC are fortunate to get Xi Jinping as the paramount leader. I’m not saying this because of his achievements and successes in governance or economy or defence or any other sphere. My point is – a top leader who remembers the origin and mission of his party and his ideology, can do wonders. In 2017, while visiting Shanghai and Jiaxing building/site where 1st National Congress of CPC was held in 1921, Xi stated “only by remaining true to our original aspiration, keeping our mission firmly in mind, and keeping on striving, could the Party stay young and live”. Such ideological plain-speaking is a sign of very rare honesty and sincerity. Hope, CPC leaders and core group of members will provide required strength and support to Xi.

I wonder, if top CPSU leaders in post-Stalin era ever remembered original aspiration and goal of CPSU. The ideological decomposition initiated by Khrushchev was so effective, that it wiped out all lofty ideals steered by none other than Lenin. Shouldn’t the true patriots in the land of Lenin start their journey once again and join forces with their Chinese comrades in the final stage of the long march?

China Communist Party tells members to celebrate 'political ...

Short profile:

By profession I’m an Engineer and Consultant, but my first love was and is History and Political Science. In retired life, I’m pursuing higher study in Economics.

I’m one of the few decade-old members of The Saker blog-site. Hope that this website will continue to focus on truth and justice in public life and will support the struggle of common people across the world.

An Indian by nationality, I believe in humanity.

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