A guide to the AngloEuroZionist Establishment Lexicon

September 17, 2022

Source

by Eric Arthur Blair

Neoliberal economics:

Establishment version: modern free market freedom, practised by freedom loving people, to freely create freedomaceous wealth everywhere! Woohoo!

Real World Translation: rigged system to funnel wealth from the poor to the rich by imposition of slave wages and debt servitude = economic enslavement of the 99%

Disinformation:

Establishment version: anything contrary to the “truthiness” narrative espoused by Western Mainstream Media Patriots. Is Israel an apartheid state? That’s disinformation!

Real World Translation: anything which portrays the AngoEuroZionist Empire in a bad light and their enemies du jour (Russia, China, Iran etc) in a neutral or favourable light. Absolutely nothing to do with truth or facts.

National Endowment for Democracy:

Establishment version: benevolent fund by the USA to promote rule by, for and of the ordinary people in foreign countries. Yay!

Real World Translation: CIA cutout to finance astroturf campaigns to destabilise foreign governments that do not bend to the US will, in order to install US puppet regimes that will funnel wealth to the USA.

US invasion of Iraq in 2003:

Establishment version: act of “liberation” to save the world from Saddam’s WMDs and bring democracy to the Iraqi people.

Real World Translation: WMD story was a fucking LIE, invasion was done to preserve the US petrodollar and control Iraqi oil assets and give massive contracts to US corporations. Killed more than a million Iraqis by 2010, so I guess you could say those Iraqis were “liberated” (from life).

Russian invasion of Ukraine:

Establishment version: unprovoked aggression by Russian dictator Vlad-the-Impaler Putin on 24 Feb 2022 because he is just plain crazy (also a vampire). So naturally the West needed to ban Russian cats and Tchaikovsky in response.

Real World Translation: belated response by Russian Duma (democratic parliament) to relentless aggression by the US/NATO since 2014 – including the murder of 14,000 civilians in Donbass, ie Russia was forced to intervene to protect Russian speaking Ukrainians from genocide by the US proxies. Also more than 30 bio-pathogen labs funded by the USA (by Victoria Nuland’s own admission) were discovered in Ukraine, so there WERE WMDs in-the-making in Ukraine.

International “Rules based order”:

Establishment version: even the USA cannot properly define WTF this crapulent term means.

Real World Translation: USA makes up their one-sided rules (to always benefit itself) and orders everybody else about, otherwise foreigners face sanctions or coups or assassination of their leaders or invasion. Nothing to do with United Nations International Law.

Far too many Newspeak and Doublethink terms to itemise here!!

Commenters can think of many more!!

WAR IS PEACE

FREEDOM IS SLAVERY

IGNORANCE IS STRENGTH

  • Speaking Truth is an act of Treason in an Empire of Lies.
  • Putin called the USA an Empire of Lies.
  • Who is the most prominent Truth speaker in the Empire?
  • Julian Assange – who is now being suitably punished for such Treason.

EAB.

Michael Hudson: Podcast with Michael Hudson, Steve Keen, Steve Grumbine

July 17, 2022

Posted with Michael Hudson’s permission

Grambine, Macro and Cheese, July 9 2022. https://realprogressives.org/podcast_episode/episode-180-the-end-of-dollar-diplomacy-with-steve-keen-and-michael-hudson/.

https://realprogressives.org/macro-n-cheese-podcast/
For those who would like to hear the recorded conversation

Michael Hudson [intro/music]

A central tenet of the World Bank from the beginning is to convince countries not to grow their own food, but to create plantation agriculture to prevent family-owned farming of food, to grow plantation export crops and they become dependent on the United States for their grain.

[00:00:22.610] – Steve Keen [intro/music]

If you look at just the shipping involved in international trade, it’s something of the order of 20%, I think, of our carbon production comes out of the entire mechanics of shipping goods around the planet. And we realize we’ve massively overshot the capacity of the biosphere to support our industrial sedentary civilization. So, one way to reduce that is by reducing international trade.

[00:01:35.130] – Geoff Ginter [intro/music]

Now, let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.

[00:01:43.110] – Steve Grumbine

All right. And this is Steve with Macro N Cheese. Another great episode for everyone today. I have two guests, two very good friends, and very happy to have them join me today. Professor Steve Keen and Michael Hudson. You can’t get two better guys than this. And we’re going to have a very action packed conversation.

We’re going to be talking about central banking, the IMF, World Trade Organization, World Bank. And we’re going to be looking at how the US uses the monetary system to bring about its imperial powers that it exerts on the world. And we’re going to look at some of the things that are happening with Russia and Ukraine right now that ship the US control over the global commerce and the behaviors of non US countries.

They’re starting to think for themselves and make some decisions, and we’re watching the facade crack a little bit. Steve Keen, who is the author of the book Debunking Economics and more recently The New Economics: A Manifesto, is joining me, as well as Michael Hudson, who has just recently written the book The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism. So, without further ado, Michael and Steven, welcome to the show, sirs.

[00:03:04.530] – Michael Hudson

Good to be here.

[00:03:05.800] – Steve Keen

Thank you indeed.

[00:03:06.960] – Grumbine

So the reason why I brought us together, you guys are both phenomenal on your own, but together, I think that we can maybe tackle this. As an MMT advocate, I find myself friends with an awful lot of people, and you gentlemen have been doing this for a long time, and I know that you have some pushback within the MMT community.

In particular, this concept of “imports are a benefit and exports are a cost.” This is a core MMT staple. And some of the concerns that came out as a result of the Covid crisis showed us the resource based failures of a global supply chain and how some of the aspects of our financial system and the shipping of real resources from areas that had high Covid, how it impacted our abilities to take care of life on life’s terms.

It also became quite clear that the US hegemony over the world using dollar diplomacy is starting to show cracks in the foundation as well, as we watch Russia thumb its nose at US sanctions. So, getting into this, Steve Keen, I know that you have taken some issue with Warren Mosler’s prescription that imports are a benefit and exports are a cost.

Taking Warren’s position on this, I believe Warren is saying exports are real goods and services we’re sending out, whereas imports we’re handing pieces of paper to people. And this is a win for the importing nation. And we’ve seen the power of the US dollar and the ability to basically create colonial outposts, colonized communities living and dying off of US dollars. So there’s a power dynamic as well. What is your pushback with Warren’s import/export model?

[00:05:03.270] – Keen

There are quite a few elements to it. First of all, the idea that exports are a cost and imports are a benefit. One term that I’ve seen one Modern Monetary Theory advocate used to explain is to say, the opportunity cost is all theirs. In other words, they have therefore gone by sending a good to us like an automobile to the buyer in return for currency.

They’re doing without the opportunity of the vehicle. And when you take a good look at the manufacturing side of things, the reality for most firms is they have diminishing marginal cost and excess capacity. So the standard thing when you’re competing in a domestic market is you have spare capacity you’re not using, but you can’t get enough demand domestically.

Now, I know MMT can say that should be handled by the government using additional spending power and creating the spending power to absorb the excess capacity. But they don’t at the moment. So what tends to happen instead is that countries will use export-oriented industrialization to use their additional capacity more effectively, which is what’s led to the industrialization of China and in many ways the de-industrialization of America.

Personally, I don’t think the opportunity cost is the right way to think about international trade at all. It’s a neoclassical way of thinking. It assumes neoclassical conditions about production which are empirically false. I don’t think anything in MMT should be based on bad foundations and I think that is a bad foundation.

Then when you see the discussions about monetary sovereignty and saying that countries who don’t have to issue debt in the currency which is not their own currency, they have monetary sovereignty, those who have to issue debt in a currency which is not their own don’t have monetary sovereignty. One way you end up in not having monetary sovereignty is running large balance of trade deficits and not being the reserve currency of the planet.

So I think the advice that exports are a cost and imports are a benefit doesn’t make sense for countries which have been running a trade deficit, are importing more than they’re exporting, so they’re using their own pieces of paper fundamentally, initially, but if they keep on doing it, they’ve got to start using American pieces of paper, and then they’re in deep trouble. So I just think it’s a nice slogan, but I think it’s a bad idea.

[00:07:20.250] – Grumbine

So it makes sense to me given the nature of the pandemic. You and I spoke, I guess it was almost two years ago, about supply chains and pandemics, and we talked at length about how the iPhone is made in some 37 different countries – and countries that were isolated due to the pandemic. It also impacted production in general. Right now I’m in Information Technology, and I work with Cisco, and Cisco being the backbone of the entire Internet globally.

They have lead times even today of up to a year for some of the equipment, partially because of semiconductor shortages. But this is a piggyback to that in that there is the accounting identities of trading paper for goods and services, but then there is the actual functional output of that. And for countries like the United States, we do have Most Favored Nation status in the sense that we are the primary world reserve currency.

And I think part of that has to do with the fact that the price gas and gas purchases are done through US dollars as well. But overall, I think that we have to be aware that we’re not being a very good partner on the planet in general. A lot of the power plays the United States uses to be able to get those goods and services into the US Is done through warfare and sanctions, as we’ve seen all around the world. We use them to great harm in the global South.

However, we saw Russia here recently thumb their nose at us and say, the only thing we’re really lacking is high tech products, and we got China that can hook us up with that. All you’ve done is accelerated our departure from a dollar denominated world, which I guess brings us to you, Michael. Your book talks extensively about this. Can you help piggyback off of what Steve said regarding the supply chains and the impact of that import/export dynamic with what’s going on right now with Russia, China and Ukraine?

[00:09:34.590] – Hudson

Well, MMT has not spent much time talking about the balance of payments. It’s basically a theory of the domestic economy. The problem of the whole discussion that just took place is that trade is not the most important element of the balance of payments. For the United States, the trade balance has been just about in balance for almost 50 years, 70 years, actually.

What’s in balance is America’s military spending abroad. That’s the deficit that is pumping dollars into the world economy. But now to get back to Steve’s point, realizing that we’re dealing with trade, only a small portion of the balance of payments, Steve’s point is, let’s ignore all the other elements of the balance of payments – the debt service and the capital accounts and others.

If you import more than you export, and you have to actually pay cash for the imports and get cash for the export, then you have to borrow money. And once you borrow money, because most trade is denominated in dollars, this means you have to borrow US dollars. You don’t buy imports with your own currency. Now, MMT is all about how sovereign governments can create their own money and create their own currency, but they can’t print their foreign currency.

That’s the problem with having more imports than exports. And once you begin to borrow dollars, you have to pay interest on it. And all of a sudden, they’re running a deficit, it’s going to reduce your foreign exchange rates. Well, let’s look at what’s going to happen this summer as an example. We know that energy prices, oil prices are going way up.

And President Biden just says they’re going to be with us for a very long time because his major contributors are the oil companies, and he’s promised them that he’s going to enable them to make super profits to help raise the Dow Jones average. And the other element is food. Well, America is going to make a killing on oil exports because the United States controls the world oil trade.

The United States is also a major agricultural exporter, and it’ll make a killing because NATO has imposed sanctions on Russia, preventing Russia from exporting oil and food – it’s the largest grain exporter – into the economy. So you’re going to have South America, Africa, and the global South countries all of a sudden running big deficits.

Well, at the same time, there’s an enormous deficit of debt service that they owe to finance all of the trade deficits that they’ve been running ever since they followed neoliberal ideals to open their markets to depend on foreign food and basically US manufacturers. The Federal Reserve has just begun to raise interest rates. And the result of raising interest rates has been the dollar is going way up against the Latin American currencies, the African currencies, the South African rand, the Brazilian currency.

So you’re going to have the global South being in an absolute currency squeeze this summer. What are they going to do? Well, President Putin has said, well, we’re going to offer an alternative in the form of the BRICS bank. Well, it’s true that a bank can’t create foreign currency. The BRICS bank can enable countries to run a deficit in two ways.

Number one, the bank can be fueled by each member giving, say, a trillion dollars or some kind of proportional currency to the bank. So currency swap agreements, just like the United States has been negotiating for the last 50 years. You can all have a currency swap. Also, the BRICS bank can create its version of Special Drawing Rights – IMF SDRs – or what John Maynard Keynes proposed in 1944: “bancors.”

It can create paper gold of its own and distribute to countries. Well, the problem is, Putin said, we’re willing to sell your grain and oil and to take your currency in exchange, but we don’t want to save your balance of payments simply so that now you can afford to pay the debt service that you owe to US dollar bond holders, bank holders, and the IMF and the World Bank that got you into the mess you’re in to begin with.

So the problem is the stability of insulating your trade from the foreign exchange going up and down requires a split of the world into two different economic zones: US/NATO, the white people’s economic zones, and let’s call it the nonwhite economic zones. And remember, the Ukraine say that Russians are not white and racially different. Basically, the Nazi ideology is that any country that’s not neoliberal is not white.

So you’re going to have the world splitting, and we’re really talking about how to create a monetary system for the world splitting. I want to get back to one other thing Steve said about the opportunity cost. If imports are a great advantage to the United States, is it worth having American corporations move to low wage labor abroad, shifting the production abroad so that America is deindustrialized?

Has that been an advantage? Or let’s look at it from Russia’s point of view. Until this last spring, Russia was importing food, cheese, raw materials. And because of the sanctions, Russia has had to all of a sudden develop import substitution. It’s producing its own cheese. It produced its own agriculture that’s thriving.

And President Putin has said that Russia is going to spend more and more of its oil export receipts on funding import-replacing industry. Well, that sounds like a good idea, because we’re really talking about independence. And the balance of payments ultimately determines a constraint on domestic policy. I think that’s what Steve was talking about for opportunity costs.

You can’t just look at the flows on a balance sheet: “Well, we’re getting something for nothing.” If you import more than you export, you’re running up foreign debt, and you’re becoming more and more dependent on foreign countries who are acting in their own interests, not your own interests. So you have to put this whole discussion in the political context.

[00:16:15.210] – Grumbine

So I would see this as a national security issue in that with these essentials – Fadhel Kaboub talks about the spectrum of sovereignty: energy sovereignty, food sovereignty, technological sovereignty, the ability to live without external supports. And each country has varying levels of that. And so each country would have to be looked at differently just based on what they’re even capable of producing.

I guess my question to you, as we think about countries in the global South that have had the kiss of the IMF on them and the debt peonage that they have been laboring under. In Africa, Sankara’s speech talking about “I can either pay you or I can feed my people.” You can see the role that US interests through the IMF have had to import their goods and services into our country.

They don’t have a choice. They are basically colonial states that have the US thumbprint on them. So the United States has exerted this imperial power in this geopolitical nightmare. We are watching them break away from that today.

[00:17:34.050] – Hudson

But you’re leaving one of the real villains in the piece, and that’s the World Bank.

[00:17:38.290] – Grumbine

Oh, yes.

[00:17:39.020] – Hudson

A central element of the World Bank from the beginning is to convince countries not to grow their own food, but to create plantation agriculture, to prevent family-owned farming of food, to grow plantation export crops, and to become dependent on the United States for their grain. Well, if imports are a benefit and imports mean that the United States can put a sanction on you and starve your people like the United States tried to do in China in the 1950s, do you really want to become import dependent on food?

Let’s compare the World Bank to the Chinese Belt and Road and the BRICS bank that’s proposed. The World Bank would only make foreign exchange loans. That meant it would only make loans to countries who would invest in infrastructure that would help its exports. Well, imagine how this works for agriculture.

If you were going to develop your agriculture in the global South countries, you’d do pretty much what the United States did in the 1930s that had the most rapid increase in productivity of any industry in the last few centuries. And that was because the government took the lead in agricultural extension services, seed testing, educating farmers as to seed variety, setting up local farm management organizations.

Before the time that Cargill and Archer Daniels Midland became the great intermediaries in promotion of domestic self-sufficiency for farms, the World Bank wouldn’t make any loans at all for this, even though the World Bank local commissions and reports all said that this is what they need. The World Bank was almost always headed by someone very close to the US Military, starting with John J. McCloy at the beginning and going through McNamara and all of the subsequent Pentagon people who were put in charge of the World Bank.

And above all, they wanted to continue to base America’s export boom in agriculture and to make other countries food dependent. And that is one of the things that has led them into debt. So if you have a country like Chile that has the richest land in the world because it has the richest supply of guano deposits in the world. It also has the most unequal land distribution in Latin America – latifundia and microfundia – not any kind of balanced food production.

So that all of Chile’s exports and copper, by specializing, have been overwhelmed by the costs of importing food that it could have grown all by itself. So the idea of free trade is shaped by what will the international organizations controlled by the US give credit for, ends up to create underdevelopment and dependency instead of development. And that developmental aspect is a different story from MMT money creation. And we’re talking about something else that is part of a much bigger system.

[00:20:43.410] – Grumbine

Steve, based on what Michael just said, I know that you are concerned with the environment and bringing production back home. And around the world, people that are not hip to the US empire are trying to convince countries to look at building bonds between each other to create trade zones that mitigate some of the US power over dominating their countries.

We’ve got a very tiny window to solve climate crisis as well. So all these things are converging at one time trying to deleverage US interests from the world interests and watching as the nonwhite countries are banding together and the white countries are banding together. And it seems like the opportunity to save ourselves from extinction is passing before our very eyes.

In the vein of what he just said, how do we marry some of the ideas that we have, the climate crisis with the geopolitical crisis that we’re battling here?

[00:21:49.110] – Keen

Well, the large part of it is that the focus of neoclassical economics has always been on specialization and doing it with so-called comparative advantage. And what that gives you is an incredibly fragile system, as we’ve seen with Covid, because if you actually distribute production across the planet and you have a long supply chain, then of course that can collapse in an instant with something like Covid coming along.

And equally, if you have a famine, if the major food baskets get wiped out by a famine or a war. We’ve got the war already. The famine may well come by a drought and a crop failure as well. Then suddenly you can’t feed your people and you have no domestic alternative. So I think we have to get away from the focus on efficiency and even in that sense, the gain of swapping paper for goods, which is part of the MMT slogan.

Start thinking: no, we need to be resilient and capable of handling a range of different disturbances which could come our way. And on that basis you need to have your production local.

[00:22:47.310] – Grumbine

So within that space mitigating some of the travel carbon footprint expenses that clearly solves one problem. But where you had smokestacks to create basic amounts of goods and services in one country, now you’re building smokestacks across the globe and I don’t see any meaningful effort to green technology to make those things happen.

I am curious what decentralizing production does in terms of the carbon footprint and how developing local supply chains will in turn impact our ability to stave off climate crisis.

[00:23:30.090] – Keen

Yeah, if you look at just the shipping involved in international trade. It’s something at the order of 20%, I think, of our carbon production comes out of the entire mechanics of shipping goods around the planet, and we realize we’ve massively overshot the capacity to support our industrial sedentary civilization. So one way you can reduce that is by reducing international trade.

I think that’s what’s going to start happening, partly because you have the example of Cisco. You suddenly wait a year to get a piece you used to wait two weeks for because of the breakdown of the supply chain. The same thing will become even, I think, even more extreme when climate change forces us to drastically reduce our production levels.

If you don’t have the domestic production capability, you’re going to lose the possibility of those goods. And in some cases, we have to drastically reduce our consumption of a range of goods. Automobiles is an obvious instance of that. But in others, we want to continue – and food production is one of those. Clearly, you want to produce your food locally.

So, again, I think we’ve been very blase about the physical side of production, and that’s what I would like MMT to start looking at. And in that context, I think it might change the attitude about imports and exports.

[00:24:57.730] – Intermission

You are listening to Macro N Cheese, a podcast brought to you by Real Progressives, a nonprofit organization dedicated to teaching the masses about MMT, or Modern Monetary Theory. Please help our efforts and become a monthly donor at PayPal or Patreon, like and follow our pages on Facebook and YouTube, and follow us on Periscope, Twitter, Twitch, Rokfin, and Instagram.

[00:25:49.010] – Grumbine

Michael, in the Russia example, where in one fell swoop they get cut off from the SWIFT system and the US is beating their chest, “We’ve got Putin on the run.” It doesn’t look like Putin is on the run at all right now.

[00:26:02.900] – Hudson

I’m glad you’re bringing up the NATO war against countries resisting neoliberalism, because you use the word “green.” And the European Greens basically are advocating two fuels of the future: coal and cutting down the forests. Germany, by blocking Russia’s gas, they are essentially replacing Russian gas and oil with Polish and Ukrainian coal – and digging down the forest.

I’ve walked very often through German villages, and most houses have whole stacks of cut-down lumber that they essentially burn in their fireplaces for heat. You’re having an enormous deforestation and replacement of gas with coal. And the Green Parties are the advocates for the major polluters in the world, and they’re the advocates for global warming.

And that’s because they’re part of the Cold War attack on Russia. And they say it’s worth having global warming as long as we can fight against countries that resist neoliberalism and resist the American European takeover. So you want to realize the politics – that the Greens of Europe are not friends of the environment.

Now, to get back to your question about the isolating of Russia. Isolating Russia hasn’t isolated it at all. It’s driven Russia together with China, in the first instance, and then China and Russia together have joined with India, Iran, Syria, they’re now joining with Brazil and Argentina all to create an alternative economic order and social order and political order.

And the political order is basically based on the main distinction between the non-neoliberals and the neoliberals, and that is: who will control the money supply. And China is the prime example. Instead of private banking creating the credit to create loans basically for financial reasons, China will create credit to spend into the economy the way that MMTers hope to see credit created.

Namely, spend to hire labor, to make new means of production, hopefully in an environmental way, as opposed to the commercial banks that look at “how do we make money in the short term?” Well, you make money in the short term by cutting down the forest of the Amazon. You don’t look at global warming.

And already you’ve had the heads of American oil companies and investment firms say “what do we care about global warming ten years in the future? We care about the next three months’ earning statement, and the next year. Ten years from now, the sea levels go up. We can deal with it then.” So you’re dealing with two different economic philosophies and as the world divides into these two different economies, this is an important element.

And as Steve just pointed out, neoliberal economics doesn’t take into account the environment because that’s long term. Economists call that exogenous, meaning it’s outside our tunnel vision. And the question is whether you’re going to look at the world economy as the overall system interconnected, which is what Steve and I do, or whether you’re going to say we’re going to just cut the financial sector apart and only look at the corporate and financial sector of how to make money quickly.

That’s really the difference. So obviously Russia was not really troubled very much by being cut off – or even by being isolated. What America is doing is driving Russia together with all of the countries that have refused to condemn it. And America basically is creating an iron curtain, locking these countries – isolating them from Europe and the United States – going their own way, which I don’t think Russia and China are unhappy to see occurring.

[00:29:54.480] – Grumbine

I completely agree with that. The idea that the US thinks they are going to knock these giants down and they’ve just said we’re going to invest in our own country. Instead of being a cooperative society, we see this as a combative society. We decided we have to fight them and create cold wars to isolate them so we can catch up.

But you nailed it with the concept of the private short-term thinking that private collateral, banking, loans, filling short-term needs because we can’t see out as far as those folks because they aren’t living and dying the same capitalist way that we do things here in the United States. They have invested in the public purpose.

China has got the ability to do just about everything. Do you think it’s going to take us getting our proverbial asses handed to us by the rest of the world to wake up? Do you think we’ll ever wake up? Or this is just the way it will always be, at least until tsunamis take us out?

[00:30:56.870] – Hudson

Who is the we? Who’s going to wake up? When you say we, it’s as if you mean American citizens in the population. But we are not the government who makes the policy. We are not the Davos Group and the campaign contributors. Their “we” are the oil industry, the big agricultural monopolies, the other monopolies, and Wall Street. That’s the finance, insurance and real estate sector [FIRE].

And they are going to just continue doing what they want. And you’ve seen from the recent Supreme Court rulings in the United States that the government is not permitted to enforce any climate preservation rules. That has been ruled unconstitutional unless Congress can pass environmental law. And in order for Congress to pass a law, as opposed to just an executive branch joining the environment, you have to have 60 out of 100 votes.

American dual politics doesn’t permit either party to get 60 votes unless there’s a landslide. And the only party that has a prospect of getting 60% would be the Republicans. So basically, even if the people wake up, the government people and their campaign contributors are just going to continue to make money to live in the short term. That’s what differentiates neoliberalism and socialism.

[00:32:17.630] – Grumbine

Very well stated. To me, I think of this as war. Murder. I don’t think of this as some polite gentleman’s disagreement. I see this as wanton death and destruction, all in the name of profit. How do we stop this? Can we stop this? Congress is bought and paid for. Our government, our Supreme Court doesn’t represent the people, and the President has proven to be a feckless neoliberal as well.

I see nothing to feel any sense of hope, and I’m not sure that hope is a requirement. It seems like the only alternative we have is in the street, is to become ungovernable, is to get rid of a government that is no longer representative of the people.

[00:33:04.010] – Hudson

[laughs]  Well, Steve’s gone to Thailand and I’m dealing mainly with China. That’s how we’ve coped. [laughter] Neither of us are going to be President of America.

[00:33:15.690] – Keen

No. The American political system is almost designed to stop anything being done. I was involved in the Australian election recently, as you probably remember. And though my party did extremely badly and money still was obviously vitally necessary to get a political profile, even in countries with good electoral systems, Australia does have a good electoral system, and America has got the best electoral system money can buy, and that’s a disaster.

It’s hard to get away from money enabling parties to have political position to be seen in the media. And that’s actually a great reason for MMT: create money for publicly financed election campaigns rather than having it out of private pockets. But given that, you have an electoral system where you don’t actually vote for anybody, the electoral college piece of nonsense, which itself is crazy.

Every state has got a different system, which is crazy. You don’t have the central bureaucracy handling the voting system, which is crazy. And you have gerrymandering because the boundaries are decided by local political groups, which is crazy. So the extent to which America needs to reform its political structure to approximate a democracy is ridiculous. And that’s partly why money interests can so easily dominate what happens in the American political sphere. And right-wing religious ideology as well.

[00:34:43.950] – Grumbine

Absolutely. The Calvinistic bullshit in this country is over the top. But there’s a tone policing aspect to this. I think there are people out there who don’t understand that this election system that we have in the United States isn’t getting us what we want or need. They think they just need to phone bank harder, vote harder.

Fact is, in my 53 years, I have not seen any meaningful legislation passed. I do not consider the ACA meaningful legislation. I’ve seen a lot of bad legislation pass that hurts us. And this is not really intended to be an America-centric show, except that America seems to be the big bully. It’s creating a lot of the problems. It’s got its own citizens in hell and it’s trying to create hell on earth for the rest of the world.

I spend a lot of time trying to get this information out the door. It’s very important information, but it’s only important in the sense that it’s good to know. I don’t see any of it amounting to a movement, a passing of legislation. We can tell people that if we don’t consider the economy in the world as a superorganism and degrowth, we don’t have anybody thinking this way.

[00:36:00.090] – Keen

There is actually – I don’t know the name of it, but I do know that there’s a political group in America which is campaigning to have Australia’s electoral system adopted by America. Have it include an electoral commission that determines borders between one electorate and another, a single centralized system that counts the votes rather than the crazy range of stuff you have at the state level.

And controls on the size of electorates so they can be no more than 20% larger or smaller than a target – and they should be 10%. And then preferential voting so you don’t just vote for one candidate, like if you vote for the Greens in America, you guarantee the Republicans win the election because the Green votes are taken away from the Democrat.

So have preferential voting, which means you can actually put the party you prefer first and know that the party that’s your fallback will actually get the vote if your first party doesn’t get up. So all these sorts of reforms. I know that there are people who are campaigning about it because the frustration that you’re expressing is very widely felt in America. But of course, try getting that through a Republican-dominated Congress. It ain’t going to be easy.

[00:37:01.170] – Grumbine

No. It does leave you wondering if this is not just political theater. I talked to Warren the other day and Warren asked the question to me. He said, “you ask, are they doing a good job? And I answer back, well, for whom?” Somebody’s doing okay right now. It just isn’t the regular people in society. Somebody’s doing great, though. And I don’t see a path. As much as I want to, I see no path forward.

I don’t want to feel this way, but I don’t see a path forward. Michael, with your international perspective, I guess my question to you, given the fact that you’re focusing on China and you see the US through the lens that we’ve just discussed, do you see an ending to this that is positive for the world, that gets us to a successful conclusion, meaning we survive? Do you see any hope whatsoever in changing that narrative? And if not, what’s next?

[00:38:01.530] – Hudson

There’s no path forward in the way that we’ve been talking about because the suggestions that Steve makes cannot be legislated by Congress. They are limited by the Constitution. And in order to do what Steve recommends – very good ideas – you would need a new Constitutional Convention. The right-wing, the polluters, the monopolists, the bankers, have been preparing for a Constitutional Convention for about 30 years, and it wouldn’t be very nice.

[00:38:32.370] – Grumbine

Yep.

[00:38:32.370] – Hudson

Our Constitution in America was written for the slave owners to permit any states to block any federal power because they worried that the federal power might try to free the slaves. Well, now that element of the Constitution, of state’s rights, is enabling the oil industry, the polluting industry, the banks, the credit card companies to essentially prevent any solution along any lines except those of the ultra right-wing.

But the problem goes beyond America and beyond Europe. Western civilization took a wrong track about 3000 years ago. The Near East and almost all of Asia had a tradition of canceling the debts when they threatened the economy. In Japan, you had revolutions, you had the Near East rulers canceling the debts. That’s what my books are about.

And you had essentially the jubilee years throughout the Near East. And this promotion of economic growth and in effect, prosperity, was always run by a central ruler. There had to be a ruler, the job of divine kingship or undivine kingship, throughout the Near East, Asia, all the way to China. And India. All of these cultures sought to prevent a commercial class and a financial class from emerging and taking over.

And the merchant class was realized as playing an important role, but it was not allowed to dominate society. But around the 8th century BC, when Syrian traders began to move into the Aegean and Mediterranean to Greece and Italy. There weren’t any kings. The west didn’t have kings. They had local chieftains who were a Mafia-type society.

And the result is that ever since Greece and Rome, you had a completely different set of laws and legal philosophy than what you had in the Near East and Asia. You had pro-creditor laws making what is called the security of contracts and the irreversibility of land being forfeited to creditors. And the result is you had creditors oligarchy evolving.

So when President Biden said the current war of NATO against Russia and China is a war of democracy against autocracy, what it means by democracy are Western civilization’s oligarchies. There haven’t been any democracies, really – maybe very briefly in Athens – but the Western cultures are all oligarchies. What he calls an autocracy is a government strong enough to prevent a financial oligarchy from developing and taking over the land and taking over politics and making its own laws for itself.

And it’s a civilizational difference. And both Steve and I have spent a lot of our time talking about how the Western economies cannot evolve further without a debt write-down, without writing down the debts that are of the 99%, they’re owed to the 1%, the oligarchy that’s controlling all of Western politics. Asia has a way to go a different way.

China doesn’t have a financial oligarchy because it treats money and credit as a public utility through the Bank of China. And so the Bank of China, as we said, makes loans to actually develop the economy. And that’s what Russia says it’s going to begin doing, not to create a financial class to make money at the expense of the 99%. So we’re dealing with a civilizational problem.

And the question is, which form of civilization? Can you rescue Western civilization from the wrong track? Well, only by creating an alternative on the right track and leaving Western civilization and say, well, you’re missing out on the development. Do you want to continue in poverty or are you going to have a revolution?

[00:42:31.650] – Grumbine

You’ve seen yellow and blue profile pictures for everybody totally sympathetic to Ukraine. And our government saying “we are not going to abandon them no matter what.” Biden has signaled that we have unlimited money to give to Ukraine, and he can’t possibly write down $2 trillion in student debt. This weird split dichotomy of truth and lies passes right by the average person.

With what you just stated, which side is going to win? Sadly, the bad guys seem to always win. I rarely see the good guys win. Who is “the good guys”? In full disclosure, I’m a socialist. We don’t even have a left party in the United States. There’s no appetite for that kind of thing in the United States. And those of us that want it are the minority. How do you envision this playing out?

[00:43:26.670] – Hudson

I thought I just said it: a different civilization going its own way.

[00:43:31.740] – Grumbine

Well, what you said was the question of good and evil, basically, which one is going to win? I’m asking you, how do you see it playing out? Because the US can’t continue doing what it’s doing and grow. You need the debt jubilee. We’ve chosen not to. Asia has those systems built and they have choices. So the question I’m proposing, given that, do you see any chance of the US coming to grips with itself? Or do you see this being a one-way trip to destitution?

[00:44:03.570] – Hudson

The latter.

[00:44:05.010] – Grumbine

Fair enough.

[00:44:05.830] – Hudson

That’s all I can say. There is no sign at all of a change. The fact that Steve and I can be on your show – we are not published in the major magazines anymore. We’re not on the major network shows. What you call the bad guys always call themselves the good guys. What you call evil calls itself good. So the question is, what kind of good guys you’re going to have?

The good guys that want to blow up the world and impoverish society, which is what neoliberalism says are the good guys or the good guys for the 99%, which America says are autocracies that we have to fight?

[00:44:41.830] – Grumbine

Yeah.

[00:44:42.670] – Keen

I think I might put a bit of a perspective. People often say, “what’s your alternative?” And what they really mean is “what’s your alternative that I’m going to like?” And I think there is an alternative, but as people feel, “I don’t like it” then other people won’t like it as well. And that is that given the scale of the environmental crisis we’re facing and the fact that it’s coming far sooner than we’re being led to believe, because courtesy of believing their classical economists on it.

When it hits, the countries that are most likely to survive will hold together are those that the West calls authoritarian. And the defining feature of those cultures when you’ve actually been inside them, is that, yes, there is a very strong state and yes, it tends to get its own way and people do what they’re told to some extent, but it’s because at the same time they know they’ve benefited from that state.

So back in China, when you talk to people in China, they will be critical of the Communist Party and say at the same time, the industrialization since then has been incredible and their lives have improved radically over that period of time. I know people who were literally in Mao suits in 1969 who are having a very comfortable retirement when they faced far worst terms back under the old strictly communist regime.

But what you have with a country like that is if China decides it has to radically ramp up renewable energy resources, also install nuclear if necessary, it’s going to do it and not face the opposition the German Greens give to new nuclear power stations, for example. So the capacity to have a top down society is more likely to be then you’re going to survive the crisis that comes forward from climate change.

I can’t see countries that call themselves democracies succeeding in that situation because they will not be able to agree on the level of cutback that’s necessary and who it gets imposed upon. We’re a more centralized society. We’re more successful at doing that and more likely to hold together during the downturn the climate will cause.

[00:46:40.110] – Hudson

You need a strong enough government to check the power of an oligarchy and to prevent a creditor landowner oligarchy from developing. And libertarians, while pretending to be for liberty, they’re for a centrally planned economy, but a centrally planned economy by the oligarchy, by the financial sector, and by the real estate owners. So every economy is planned. And the question is, who’s going to do the planning?

[00:47:05.190] – Grumbine

Yes. And with that in mind, I want to read to you some stuff that came out of this NATO 2022 Strategic Concept – just so that people understand exactly how bad it is. Document defines Russia as the most significant and direct threat to the allies’ security while addressing China for the first time and the challenges that Beijing poses towards allies’ security interests and values.

Documents also state that climate change is a defining challenge of our time. Strategic Concept is updated roughly every decade as NATO’s second most important document. It reaffirms the values of the alliance, provides a collective assessment of security challenges, and guides the alliance’s political and military activities. Previous version was adopted at the NATO Lisbon Summit in 2010.

Point I’m making is they’re bringing more countries in and now setting up China and Russia as the bad guys. This has been going on for a long time, I guess Reaganism with the Cold War. And you brought it up, I think it’s worth mentioning, towards the end of the Chinese Revolution and the US efforts back then to do these same things to China then.

All these institutions, World Bank, IMF, the Peace Corps, all these different NGOs, these were brought out as a direct counter to Russia’s communism and a fear that communism would spread to the global South to prevent them from getting in bed with the Russians. But our country, the United States in this case, has been instrumental in setting up these shadow organizations to prevent any kind of socialism or people-led initiatives around the world.

And it seems like this is going to become the next war. If it’s not going to be just another Cold War, it’s definitely going to be some war because they are lining up the Axis and allies already. I guess. Take us out on this note.

[00:49:13.290] – Keen

I think I take it over a different angle and say that the global politics we’ve had over the last 80-100 years, actually, since the dominance of America, which we pretty much say from the end of the Second World War, has been completely oblivious to the impact we’re having on the planet. The biosphere itself. And the biggest political player on the planet is the biosphere.

And that’s going to start determining what the wars are in future. And I don’t think any country in the world is prepared for that battle. China has maybe probably the most effective capacity to respond to the challenges that are coming this way, but there’s no way America or Russia or anywhere in Europe are aware of the threats they face.

This is a warfare against an implacable foe which we’ve created by destroying the sustainability of the biosphere, by expanding human industry to three to four times the scale that the planet could actually support. That’s the real war that is coming our way.

[00:50:08.600] – Hudson

And Steve, you mentioned how global shipping and trade adds to the global warming. Obviously, the military spending is a huge, huge factor. So the Americans and the Green Parties of Europe are on the wrong side of history. They are doing just the opposite of preserving de-development. They are the advocates of more and more global warming. So literally, you have a group, a bloc, wanting to destroy the environment and a bloc trying to protect itself from the Western destruction.

[00:50:40.830] – Grumbine

Yeah, very scary. And then we’ve got a lot of folks that think that they’re going to appeal to their greater sense of reason to get them to suddenly stop all this, vote their way to a Green New Deal, and it’s all just going to go away. Gentlemen, thank you so much for this time. I really appreciate it. It’s rare to have two such phenomenal guests at once, so I really do appreciate this immensely. Michael, tell us where we can find more about your work.

[00:51:07.230] – Hudson

Well, on my website, michael-hudson.com, and on my Patreon account. Steve also has a Patreon account. He got me onto Patreon. And the books that I describe what we’re talking about are available on Amazon. The Destiny of Civilization and Super Imperialism.

[00:51:27.450] – Grumbine

Very good. Steve, I know we got you on Patreon, but tell us a little bit about your books and where we can find more of your work.

[00:51:33.710] – Keen

Okay, well, again, my main recent book is The New Economics: A Manifesto, and that’s published by Polity press. So you can get it through Polity or you can get it through Amazon. There’s more than one way to get a hold of it. And the main thing I’m doing is developing the software package to enable us to think about the economy the way we should think about it, which is dynamically, non equilibrium, monetary and so on.

And that’s Minsky, which people can find at SourceForge, the open source software package site, SourceForge. Search for SourceForge and Minsky together and you’ll find it. But those are my main two things. I’ve also opened up a substack account recently – profstevekeen.substack.com – mainly because Patreon loses a lot of customers by stuffing up their credit cards. So Patreon, Substack and Minsky.

[00:52:18.030] – Grumbine

Very good. All right. And with that, my name is Steve Grumbine. My special guests, Steve Keen and Michael Hudson. This is the podcast Macro N Cheese. We’re out of here.

Michael Hudson interviewed by Ben Norton (Multipolarista) Update with transcript

June 30, 2022

Economist Michael Hudson on inflation and Fed plan to cut wages: A depression is coming

Transcript:

BENJAMIN NORTON:

Hey, everyone, this is Ben Norton, and you are watching or listening to the Multipolarista podcast. I am always privileged to be joined by one of my favorite guests, Michael Hudson, one of the greatest economists living today.

We’re going to be talking about the inflation crisis. This is a crisis around the world, but especially in the United States, where inflation has been at over 8%. And it has caused a lot of political problems. It’s very likely going to cause the defeat, among other factors, of the Democrats in the mid-term elections in November.

And we’ve seen that the response of the US government and top economists in the United States is basically to blame inflation on wages, on low levels of unemployment and on working people.

We’ve seen that the chair of the Federal Reserve, Jerome Powell, has said that inflation is being caused by wages supposedly being too high. We’ve also seen that the top economist and former Clinton administration official Larry Summers has claimed that the solution to inflation is increasing unemployment, potentially up to 10%.

So today I’m joined by economist Michael Hudson, who has been calling out this kind of neoliberal snake oil economics for many years. And Professor Hudson has an article he just published that we’re going to talk about today. You can find this at his website, which is michael-hudson.com. It’s titled “The Fed’s Austerity Program to Reduce Wages.” and I’m going to let Professor Hudson summarize the main points of his article.

Professor Hudson, as always, it’s a pleasure having you. Can you respond to the decision by the Federal Reserve to increase interest rates by 0.75%? It doesn’t sound like a lot – it’s less than 1% – but this was the largest rate hike since 1994.

And now we’ve already seen reports that there’s going to be a depression. The Fed chair is blaming this on wages. Can you respond to the position of the Fed and the inflation crisis in the US right now.

MICHAEL HUDSON:

For the Fed, the only two things that it can do is, number one, raise the discount rate, the interest rate; and number two, spend $9 trillion buying stocks, and bonds, and real estate mortgages to increase real estate prices, and to increase the amount of wealth that the wealthiest 10% of the population has.

To the wealthiest 10%, especially the 1%, it’s not only inflation that’s a problem of wages; every problem that America has is the problem of the working class earning too much money. And if you’re an employer, that’s the problem: you want to increase your profits. And if you look at the short term, your profits go up the more that you can squeeze labor down. And the way to squeeze labor down is to increase what Marx called the reserve army of the unemployed.

You need unemployment in order to prevent labor from getting most of the value of what it produces, so that the employers can get the value, and pay that to the banks and the financial managers that have taken over corporate industry in the United States.

You mentioned that while the Fed blames the inflation it on labor, that’s not President Biden’s view; Biden keeps calling it the Putin inflation. And of course, what he really means is that the sanctions that America has placed on Russia have created a shortage of oil, gas, energy, and food exports.

So really we’re in the Biden inflation. And the Biden inflation that America is experiencing is the result basically of America’s military policy, its foreign policy, and above all, the Democratic Party’s support of the oil industry, which is the most powerful sector in the United States and which is guiding most of the sanctions against Russia; and the national security state that bases America’s power on its ability to export oil, or control the oil trade of all the countries, and to export agricultural products.

So what we’re in the middle of right now isn’t simply a domestic issue of wage earners wanting higher salaries – which they’re not particularly getting; certainly the minimum wage has not been increased – but you have to put this in the context of the whole cold war that’s going on.

The whole US and NATO confrontation of Russia has been a godsend, as you and I have spoken before, for the oil industry and the farm exporters.

And the result is that the US dollar is rising against the euro, against sterling, and against Global South currencies. Well, in principle a rising dollar should make the price of imports low. So something else is at work.

And what’s at work, of course, is the fact that the oil industry is a monopoly, that most of the prices that have been going up are basically the result of a monopolization, in the case of food, by the marketing firms, like Cargill and Archer Daniels Midland, that buy most of the crops from the farmers.

The irony is that while food prices, next to oil prices, are the major factor that is soaring, farmers are getting less and less for their crops. And yet farmers’ costs are going up – up for fertilizer, up for energy, up for other inputs – so that you’re having enormous profits for Archer Daniels Midland and the food monopolies, of the distributors, and enormous, enormous gains for the oil industry, and also of course for the military-industrial complex.

So if you look at what’s happening in the overall world economic system, you can see that this inflation is being engineered. And the beneficiaries of this inflation certainly have not been the wage earners, by any stretch of the imagination.

But the crisis that the Biden policy has created is being blamed on the wage earners instead of on the Biden administration’s foreign policy and the basically the US-NATO war to isolate Russia, China, India, Iran, and Eurasia generally.

BENJAMIN NORTON:

Professor Hudson, I want to talk about the increase in interest rates by the Fed. There has been a lot of attention to this, although, again, it’s 0.75%, which is not that big. But it’s of course going to have an outsize impact on the economy.

In your article, again, this is your column at michael-hudson.com, “The Fed’s Austerity Program to Reduce Wages,” you talk about the Fed’s “junk economics,” and you say that the idea behind raising interest rates by 0.75% is that:

raising interest rates will cure inflation by deterring borrowing to spend on the basic needs that make up the Consumer Price Index and its related GDP deflator. But banks do not finance much consumption, except for credit card debt, which is now less than student loans and automobile loans. Banks lend almost entirely to buy real estate, stocks and bonds, not goods and services.

So you argue that one of the effects of this is that it’s actually going to roll back homeownership in the United States. You note that the rate of homeownership has been falling since 2008.

So can you expand on those arguments? What will be the impact of the increase of the interest rates by the Fed?

MICHAEL HUDSON:

Well, in order to get an economics degree which is needed to work at the Fed or at the Council of Economic Advisors, you have to take economics courses in the universities, and all of the textbooks say just what you quoted me as saying they say.

The pretense is that banks actually play a productive role in society, by providing the money for factories to buy machinery, and build plants, and do research and development, and to hire labor; and that somehow the money that banks create is all lent out for industrial economy, and that that will enable companies to make more money that they’ll spend on labor; and of course, as they spend more money on labor, that supports to bid prices up as the reserve army of the unemployed is depleted.

But that’s all a fiction. The textbooks don’t want to say that banks don’t play a productive role like that at all. And the corporations don’t do what the textbooks say.

If you look at the Federal Reserve balance sheet and statistics that it publishes every month, you’ll see that 80% of bank loans in the United States are mortgage loans to commercial real estate and mostly for home real estate. And of course the home mortgage loans have been nothing, like under 1% for the last 14 years, since 2008.

Only the banks and the large borrowers, the financial sector, have been able to borrow at these low rates. Homeowners all along have had to pay very high rates, just under 4%, and now it’s going above 4%, heading to 5%.

Well, here is the situation that the Federal Reserve has created. Suppose that you’re a family right now going out to buy a home, and you find out that in order to borrow the money to buy the home – because if the average home in America costs $600,000 or $700,000, people haven’t saved that much; the only way you can buy a home is to take out a mortgage.

Well, you have a choice: you can either rent a home, or you can borrow the money to buy a home. And traditionally, for a century, the carrying charge for financing a home with the mortgage has been about the equivalent of paying a rent. The advantage is, of course, that you get to own the home when it’s over.

Well, now let’s look at what’s happening right now. All of a sudden, the carrying charge of mortgages have gone way, way up. The banks are making an enormous gap. They can borrow at just around 1%, and they lend out at 4.5%. They get a windfall gain of the markup they have in mortgages, lending to prospective homeowners.

And of course, the homeowners don’t have enough money to be able to pay the higher interest charged on the mortgages that they take out. So they are not able to buy as expensive a home as they wanted before.

But they’ve been a declining part of the population. At the time Obama took office, over 68% of Americans owned their own home. Obama started the great wave of evictions, of 10 million Americans who lived in homes, essentially to throw them out of their homes, especially the victims of the junk mortgages, especially the lower income and racial minorities who were redlined and had to become the main victims of the mortgages.

America’s homeownership rate is now under 61%. What has happened? You’ve had huge private capital firms come into the market thinking, wait a minute, we can now buy these properties and rent them out. And we can buy them for all cash, unlike homeowners, we’re multibillionaires, we Blackstone, BlackRock.

You have these multibillion-dollar funds, and they say, well, we can’t make much money buying bonds or buying stocks that yield what they do today, now that the Federal Reserve has ground down interest rates. What we can do is make money as landlords.

And so they’ve shifted, they’ve reversed the whole shift away from the 19th-century landlordism to an economy based on financialization, and the wealthy classes making money on finance, to go back to making money as landlords.

And so they are buying up these homes that American homeowners can’t afford to buy. Because when you raise the mortgage rate, that doesn’t affect a billionaire at all. Because the billionaire firm doesn’t have to borrow money to buy the home. They have the billion dollars of their own money, of pension fund money, of speculative money, of the money of the 1% and the 10% to spend.

So what you’re having by increasing the interest rates is squeezing homeowners out of the market and turning the American economy into a landlord-ridden rental economy, instead of a homeowners economy. That’s the effect.

And it’s a windfall for the private capital firms that are now seeing that are making money as landlords, the old fashioned way, it worked for 800 years under feudalism. It’s coming back in style.

BENJAMIN NORTON:

Professor Hudson, you point out in this article at your website that more than 50% of the value of U.S. real estate already is held by mortgage bankers. And of course, that percentage is increasing and increasing.

Now, you, Professor Hudson, have argued a point that I haven’t seen many other people make, although it’s an obvious, correct point, which is that there has actually been a lot of inflation in the United States in the past several years, but that inflation was in the FIRE sector: finance, insurance, and real estate.

We see that with the constant increase in real estate prices; they go up every single year; rent goes up every single year. The difference now is that there’s also a significant increase in the Consumer Price Index.

And there is an interesting study published by the Economic Policy Institute, which is, you know, a center-left think tank, affiliated with the labor movement; they’re not radicals, they’re progressives. And they did a very good study.

And they found – this was published this April – they found that corporate profits are responsible for around 54% of the increase of prices in the non-financial corporate sector, as opposed to unit labor costs only being responsible for around an 8% increase.

So they showed, scientifically, that over half of the increase of prices in the non-financial corporate sector, that is in the Consumer Price Index, over half of that inflation is because of corporate profits.

Of course, that’s not the way it’s discussed in mainstream media. That’s not the way the Fed is discussing it all. We see Larry Summers saying that we need to increase unemployment. Larry Summers, of course, was the treasury secretary for Bill Clinton.

He’s saying that the U.S. has to increase unemployment; the solution to inflation is increasing unemployment. Even though these studies show that over half of inflation in the Consumer Price Index is because of corporate profits.

I’m wondering if you can comment on why so many economists, including people as revered as Larry Summers, refuse to acknowledge that reality.

MICHAEL HUDSON:

Most economists need to get employment, and in order to be employed, you have to give a picture of the economy that reflects how well your employer helped society at large. You’re not allowed to say that your employer is acting in ways that are purely predatory. You’re not allowed to say that the employer does not earn an income.

You talked about corporate profits and the classical economists. If you were a free-market economist like Adam Smith, or David Ricardo, or John Stuart Mill – these are monopoly rents. So what you call corporate profits are way above normal corporate rates of return, normal profits. They’re economic rents from monopoly.

And that’s because about 10 or 15 years ago, the United States stopped imposing its anti-monopoly laws. It has essentially let monopolies concentrate markets, concentrate power, and charge whatever they want.

And so once you’ve dismantled the whole legal framework that was put in place from the 1890s, from the Sherman Antitrust Act, down through the early 20th century, the New Deal, once you dismantle all of this state control, saying – essentially what Larry Summers says is, we’re for a free market.

A “free market” is one in which companies can charge whatever they want to charge for things; a free market is one without government regulation; a free market is one without government; a free market is a weak enough government so that it cannot protect the wage earners; it cannot protect voters. A “democracy” is a country where the bulk of the population, the wage earners, have no ability to affect economic policy in their own interests.

A “free market” is one where, instead of the government being the planner, Wall Street is the planner, on behalf of the large industries that are basically being financialized.

So you’ve had a transformation of the concept of what a free market is, a dismantling of government regulation, a dismantling of anti-monopoly regulation, and essentially the class war is back in business.

That’s what the Biden administration is all about. And quite frankly, it’s what the Democratic Party is all about, even more than the Republican Party. The Republican Party can advocate pro-business policies and pro-financial policies, but the Democratic Party is in charge of dismantling the legacy of protection of the economy that had been put in place for a century.

BENJAMIN NORTON:

Yeah, and this is an article in Fortune that was originally based on an article in Bloomberg: “5 years at 6% unemployment or 1 year at 10%: That’s what Larry Summers says we’ll need to defeat inflation.” That’s how simple it is, you know, just increase unemployment, and then inflation will magically go away!

Now, I also wanted to get your response, Professor Hudson, to these comments that you highlighted in a panel that was organized by the International Manifesto Group – a great organization, people can find it here, their channel here at YouTube. And they held a conference on inflation. And you were one of several speakers.

And you highlighted these comments that were made by the Fed chair, Jerome Powell. And this is according to the official transcript from The Wall Street Journal. So this is not from some lefty, socialist website. Here’s the official transcript of a May 4 press conference given by the Fed chief, Jerome Powell.

In this press conference, he said, discussing inflation, he said, in order to get inflation down, he’s talking about things that can be done “to get wages down, and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially.”

So this is another proposal. Larry Summers says 6% unemployment for five years, or 10% unemployment for one year. The Fed chair, Jerome Powell, says the solution is “to get wages down.” I’m wondering if you can respond to that as well.

MICHAEL HUDSON:

Well, the important thing to realize is that President Biden re-appointed Jerome Powell. President Biden is a Republican. The Democratic Party is basically the right wing of the Republican Party, the pro-financial, the pro-Wall Street wing of the Republican Party.

Why on earth, if the Democrats were different from the Republicans, why would would Biden re-appoint an anti-labor Republican, as head of the Federal Reserve, instead of someone that would actually try to spur employment?

Imagine, here’s a party that is trying to be elected on a program of, “Elect us, and we will create a depression and we will lower wages.” That is the Democrat Party slogan.

And it’s a winning slogan, because elections are won by campaign contributions. The slogan is, “We will lower wages by bringing you depression,” is a tsunami of contributions to the Democratic Party, by Wall Street, by the monopolists, by all the beneficiaries of this policy.

So that’s why the Supreme Court ruling against abortions the other day is a gift to the Democrats, because it distracts attention from their identity politics of breaking America into all sorts of identities, every identity you can think of, except being a wage earner.

The wage earners are called deplorables, basically. And that’s how the donor class thinks of them, as sort of unfortunate overhead. You need to employ them, but it really it’s unfortunate that they like to live as well as they do, because the better they live, the less money that you will end up with.

So I think that this issue of the inflation, and what really causes it, really should be what elections are all about. This should be the economic core of this November’s election campaign and the 2024 election campaign. And the Democrats are leading the fight to lower wages.

And you remember that when President Obama was elected, he promised to increase the minimum wage? As soon as he got in, he said the one thing we cannot do is raise the minimum wage. And he had also promised to back card check. He said, the one thing we must not do is increase labor unionization with card check, because if you unionize labor, they’re going to ask for better wages and better working conditions.

So you have the Democratic Party taking about as hard a right-wing position as sort of Chicago School monetarism, saying the solution to any any problem at all is just lower wages and somehow you’ll be more competitive, whereas the American economy is already rendered uncompetitive, not because wages are so high, but because, as you mentioned before, the FIRE sector, the finance, insurance, and real estate sector is so high.

Rents and home ownership, having a home is too expensive to be competitive with foreign labor. Having to pay 18% of GDP on medical care, privatized medical care, prices American labor out of the market. All of the debt service that America has paid is pricing America out of the market.

So the problem is not that wages are too high. The problem is that the overhead that labor has to pay in order to survive, for rent, for medical care, for student loans, for car loans, to have a car to drive to work, for gas to drive to work, to buy the monopoly prices that you need in order to survive – all of these are too high.

None of this even appears in economic textbooks that you need to get a good mark on, in order to get an economics degree, in order to be suitably pliable to be hired by the Federal Reserve, or the Council of Economic Advisers, or by corporations that use economists basically as public relations spokesmen. So that’s the mess we’re in.

BENJAMIN NORTON:

Professor Hudson, in your article at your website, michael-hudson.com, you have an important section about the quantitative easing policies. We were talking about how there has been inflation in the past decade, but then inflation was largely in the FIRE sector, pushing up, artificially inflating the prices of real estate and stocks.

You note that:

While home ownership rates plunged for the population at large, the Fed’s “Quantitative Easing” increased its subsidy of Wall Street’s financial securities from $1 trillion to $8.2 trillion – of which the largest gain has been in packaged home mortgages. This has kept housing prices from falling and becoming more affordable for home buyers.

And you, of course, note that “the Fed’s support of asset prices saved many insolvent banks – the very largest ones – from going under.”

I had you on to discuss, in late 2019, before the Covid pandemic hit, we know that the Fed had this emergency bailout where it gave trillions of dollars in emergency repo loans to the biggest banks to prevent them from from crashing, trying to save the economy.

I do want to talk about this as well, because sometimes this is used by right-wingers who portray Biden hilariously as a socialist. You were just talking about how the Democrats have a deeply neoliberal, right-wing economic program.

But of course, there is this rhetoric that we see from Republicans and conservatives claiming that Biden is a socialist. They claim that the reason there is inflation is because Biden is just printing money and giving money to people.

Of course, that’s not at all what’s happening. What has happened is that the Fed has printed trillions of dollars and given that to stockholders, to big corporations, and to banks.

And this is a point that I saw highlighted in that panel I mentioned, the conference on inflation that was organized by the International Manifesto Group. A colleague of yours, a brilliant political economist, Radhika Desai, she invited everyone to go to the Fed website and look at the Fed balance sheet.

And this is the Fed balance sheet from federalreserve.gov. This is the Board of Governors of the Federal Reserve System website. And it is pretty shocking to see this graph, which shows the total assets of the U.S. Federal Reserve.

US Federal Reserve assets balance sheet 2022

Back in 2008, the Federal Reserve had around $900 billion in assets. Now it’s at nearly $9 trillion in assets.

And we can see, after the financial crash, or during the financial crash, it increased to around $2 trillion. And then around 2014, it increased to around $4.5 trillion. And then especially in late 2019 and 2020, it skyrocketed from around $4 trillion up to $7 trillion. And since then, it has continued skyrocketing to $9 trillion in assets.

Where did all of that money go? And what was the impact on the economy, of course?

MICHAEL HUDSON:

Well, the impact on the economy has been to vastly increase the wealth of the wealthiest 1% of Americans who own most of the stocks and bonds.

Sheila Bair, the former head of the Federal Deposit Insurance Corporation, pointed out that a lot of this $8 trillion is spent to buy junk bonds.

Here’s the problem. The problem really began with President Obama. He inherited a system where you had the largest wave of commercial bank fraud in American history.

As my colleague Bill Black at the University of Missouri at Kansas City has pointed out, everybody knew that there was a bank fraud on. The newspapers referred to junk mortgages and “NINJA” borrowers: “no income, no jobs, no assets.”

So banks had written mortgages way above the actual value of homes, especially to racial and ethnic minorities, without any ability of the borrowers to actually pay.

And then these banks had packaged these mortgages, and sold them to hapless pension funds, and other institutional investors and to the European banks that are always very naive about how honest American banks are.

You had this whole accumulation of what the 19th century called fictitious capital. Mortgages for property that wasn’t worth anywhere near as much as the mortgage is for.

So if the mortgage was defaulted, if homeowners had jingle mail – in other words, you just mail the keys back to the bank and say, ok, take the house, I find I can buy a house now at half the price that Citibank or one of these other banks lent out.

Well, normally you’d have a crash of prices back to realistic levels, so that the value of mortgages actually reflected the value of property, or the value of junk bonds issued by a corporation reflected the actual earning power of the corporation to pay interest on the junk bonds.

So by the time Obama took over, the whole economy was largely fictitious capital. Well, Obama came in and he said, my campaign donors are on Wall Street. He called in the Wall Street bankers and he said, I’m the guy standing between you and the crowd with the pitchforks, the people who voted for me. But don’t worry, I’m on your side.

He said, I’m going to have the Federal Reserve create the largest amount of credit in human history. And it’s all going to go to you. It’s going to go to the 1% of the population. It’s not going to go into the economy. It’s not going to build infrastructure. It’s not going into wages. It’s not going to reduce the price of homes and make them more affordable to Americans.

It’s going to keep the price of these junk bonds so high that they don’t crash back to non-fictitious values. It’s going to keep the stock market so high that it’s not going to go down. It’s going to create the largest bond market boom in history.

The boom went from high interest rates to low interest rates, meaning a gigantic rise in the price of bonds that actually pay interest that are more than 0.1%.

So there was a huge bond market boom, a huge stock market, a tripling of stock market prices. And if you are a member of the group that owns 72% of American stocks, I think that’s 10% of the population, you have gotten much, much richer.

But if you’re a member of the 90% of the population, you have had to go further and further into debt just in order to survive, just in order to pay for medical care, student loans, and your daily living expenses out of your salary.

So if American wages were at a decent level, American families would not be pushed more and more into debt. The reason the personal debt has gone up in the United States is because families can’t get by on what they earn.

So obviously, if they can’t get by on what they earn, and they have to borrow to get by, they are not responsible for causing the inflation. They’re being squeezed.

And the job of economists, and of Democratic Party and Republican politicians, is to distract attention from the fact that they’re being squeezed and blame the victim, and saying, you’re doing it to yourself by just wanting more money, you’re actually creating the inflation that is squeezing you.

When actually it’s the banks, and the government’s non-enforcement of the monopoly policy, and the government support of Wall Street that is responsible for what is happening.

BENJAMIN NORTON:

Very, very well said.

Professor Hudson, I should have highlighted another part of this graph here. This is, again, this is at the Federal Reserve Board website. It’s even more revealing when you look at the selected assets of the Fed, and you see that all of these assets basically are securities, securities held outright by the Fed.

We see that around 2008, the Fed had less than $500 billion in securities. And you have this policy of quantitative easing. And since then, basically all of the increase has been in securities. Of the roughly $9 trillion in assets the Fed holds, about about $8.5 trillion is in securities.

US Federal Reserve assets securities balance sheet 2022

I’m wondering if you can compare this to central banks in other countries. We’ve seen, for instance, that the Western sanctions on Russia were aimed at trying to destroy the Russian economy.

President Biden claimed they were trying to make the ruble into rubble. In fact, the ruble is significantly stronger now than it was before the sanctions. To such a degree that the Russian government and Russian national bank are actually trying to decrease the value of the ruble, because they think it’s a little overvalued; it makes it a little harder to be competitive.

So how does this policy of the US Fed having $8.5 trillion worth of securities compare to the policies of other central banks?

You have experience working with the Chinese government as an advisor. Do other governments’ central banks have this policy?

And and that $8.5 trillion in securities, what are those securities? Even from the perspective of these neoliberal economics textbooks that you were talking about, that people are taught in universities, this seems to me to be totally insane. I don’t see how there is even an academic, neoliberal textbook explanation for this policy.

MICHAEL HUDSON:

Very few people realize the difference between a central bank and the national treasury. The national treasury is what used to perform all of the policies that central banks now do. The national treasury would be in charge of issuing money and spending it.

Central banks were broken off in America in 1913 from the Treasury in order to shift control of the money supply and credit away from Washington to New York. That was very explicit.

The original Federal Reserve didn’t even permit a Treasury official to be on the board of directors. So the job of a central bank is to represent the interest of the commercial banks.

And as we just pointed out, the interest of the commercial banks is to produce their product: debt. And they create their product against existing assets, mainly real estate, but also stocks and bonds.

So the job of the central bank here is to support the financial sector of the economy, and that sector that holds wealth in the form of stocks, bonds, and loans, and especially bank bonds that make their money off real estate credit.

Same thing in Europe, with Europe’s central bank. Europe is going into a real squeeze now, and has been going into a squeeze ever since you had the Greek crisis.

In Europe, because right-wing monetarist designed the euro, part of the eurozone rule is you cannot run a budget deficit, a national budget deficit of more than 3% of gross domestic product.

Well, that’s not very much. That means that you can’t have a real Keynesian policy in Europe to pull the economy out of depression. That means that if you’re a country like Italy right now, and you have a real financial squeeze there, a corporate squeeze, a labor squeeze, the government cannot essentially rescue either Italian industry or Italian labor.

However, the European central bank can, by the way that it creates credit, by central bank deposits, the European central bank can vastly increase the price of European stocks, bonds, and packaged mortgages. So the European central bank is very much like the commercial bank.

China is completely different, because, unlike the West, China treats money and credit as a public utility, not as a private monopoly.

And as a public utility, China’s central bank will say, what are we going to want to create money for? Well, we’re going to want to create money to build factories; we’re going to want to create money so that real estate developers can build cities, or sometimes overbuild cities. We can create money to actually spend in the economy for something tangible, for goods and services.

The Chinese central bank does not create money to increase stock market prices or bond prices. It doesn’t create money to support a financial class, because the Communist Party of China doesn’t want a financial class to exist; it wants an industrial class to exist; it wants an industrial labor force to exist, but not a rentier class.

So a central bank in a Western rentier economy basically seeks to create credit to inflate the cost of living for homebuyers and for anyone who uses credit or needs credit, and to enable corporations to be financialized, and to shift their management away from making profits by investing in plant and equipment and employing labor to produce more, to making money by financial engineering.

In the last 15 years, over 90% of corporate earnings in the United States have been spent on stock buybacks and on dividend payouts. Only 8% of corporate earnings have been spent on new investment, and plants, and equipment, and hiring.

And so of course you have had the economy deindustrialized. It’s this idea that you can make money financially without an industrial base, without a manufacturing base; you can make money without actually producing more or doing anything productive, simply by having a central bank increase the price of the stocks, and bonds, and the loans made by the wealthiest 10%.

And of course, ultimately, that doesn’t work, because at a certain point the whole thing collapses from within, and there’s no industrial base.

And of course, when that happens, America will find out, wait a minute, if we close down the economy, we’re still reliant on China and Asia to produce our manufacturers, and to provide us with raw materials, and to do everything that we need. We’re really not doing anything but acting as a world – well, people used to say parasite – as a world rentier, as getting something for nothing, as a kind of financial colonialism.

So America you could look at as a colonial power that is a colonial power not by military occupation, but simply by financial maneuvering, by the dollar standard.

And that’s what’s being unwound today as a result of Biden’s new cold war.

BENJAMIN NORTON:

Professor Hudson, you criticized the strategy of simply trying to increase the interest rates to bring down inflation, noting that it’s going to lead to a further decline in homeownership in the United States. It’s going to hurt working people. I think that’s a very valid criticism.

I’m curious, though, what your take is on the response of the Russian central bank to the Western sanctions. We saw that the chair of the Russian central bank, Elvira Nabiullina, she – actually this is someone who is not even necessarily really condemned a lot by Western economists; she is pretty well respected by even, you know, Western neoliberal economists.

And she did manage to deal with the sanctions very well. She imposed capital controls immediately. She closed the Russian stock market. And also, in a controversial move, she raised the interest rates from around 9% up to 20%, for a few months. And then after that, dropped the rates.

MICHAEL HUDSON:

A few days, not a few months. That was very short. And now she has moved the interest rates way down.

BENJAMIN NORTON:

Back to 9%.

MICHAEL HUDSON:

She was criticized for not moving them further down.

BENJAMIN NORTON:

Yeah, well go ahead. I’m just curious. So she immediately raised it to 20%, and then has dropped the interest rates since then. I’m curious what you think about that policy. Yeah, go ahead.

MICHAEL HUDSON:

There is very little that a central banker can do when the West has declared a war, basically, a war on a country that is completely isolated.

The response has come from President Putin and from Foreign Secretary Lavrov. And they pointed out, well, how is Russia going to going to trade and get what it needs. And this is what the recent meetings of the BRICS are all about.

Russia realizes that the world is now broken into two halves. America and NATO have separated the West. Basically you have a white people’s confederation against all the rest of the world.

And the West has said, we’re isolating ourselves from you totally. And we think you can’t get along without us.

Well, look at the humor of this. Russia, China, Iran, India, Indonesia, and other countries are saying, hah, you say we we can’t get along without you? Who is providing your manufacturers? Who is providing your raw materials? Who is providing your oil and gas? Who is providing your agriculture, and the helium, the titanium, the nickel?

So they realize that the world is breaking in two, and Eurasia, where most of the world’s population is concentrated, is going to go its own way.

The problem is, how do you really go your own way? You need a means of payment. You need to create a whole international system that is an alternative to the Western international system. You need your own International Monetary Fund to provide credit, so that the these Eurasian countries and their allies in the Global South can deal with each other.

You need a World Bank that, instead of lending money to promote U.S. policies and U.S. investments, will promote mutual gains and self-sufficiency among the countries.

So already, every day in the last few weeks, you have had meetings with the Russians about this, who said, ok, we’re going to create a mutual trading area, starting among the BRICS: Brazil, Russia, India, China, and South Africa.

And how are we going to pay? We can’t pay in dollars, because if we have money in a dollar bank, or a euro bank in Europe, they can just grab the money, like they grab Venezuela’s money. They can just say, we’re taking all your money because, essentially, we don’t want you to exist as an alternative to the finance capital world that we are creating.

So essentially, Russia, China, and these other countries are saying, ok, we’re going to create our own international bank. And how are we going to fund it? Well, every member of the bank will contribute, say, a billion dollars, or some amount of their own currency, and this will be our backing. We can also use gold as a means of settlement, as was long used among countries.

And this bank can create its own special drawing rights, its own bank order, is what Keynes called it. It can create its own credit.

Well, the problem is that, if you have Brazil, for instance, or Argentina, joining this group, or Ecuador, that sells almost all of its bananas to Russia, how is it going to get by?

Well, if there is a BRICS group or a Shanghai Cooperation Organization bank, obviously the Western governments are not going to accept this.

So Russia realizes that as a result of Biden’s Cold War Two, there is going to be a continued rise in energy prices. You think gasoline prices are not high now? They’re going up. You think food prices are not high now? They’re going up more.

And Europe is especially the case, because Europe now cannot buy Russian gas to make the fertilizer to make its own crops grow.

So you’re going to have a number of countries in the Global South, from Latin America to Africa, being squeezed and wanting to trade with the Eurasian group.

And the problem is Russia says, all right, we know that you can’t afford to pay. We’re glad to give you credit, but we don’t want to give you credit that you’re going to simply use the money you have to pay your dollar debts that are coming due.

Because one of the effects that I didn’t mention of the Federal Reserve raising interest rates is there is a huge flow of capital from Europe and England into the United States, so that if you’re a billionaire, where are you going to put your savings? You want the highest interest rates you want. And if the United States raises interest rates, the billionaires are going to move their money out of England, out of the euro, and the euro is going back down against the dollar. It’s almost down to a dollar a euro.

The British pound is heading downwards, towards one pound per dollar.

This increase in the dollar’s exchange rate is also rising against the currencies of Brazil, Argentina, the African countries, all the other countries.

So how are they going to pay this summer, and this fall, for their food, for their oil and gas, and for the higher cost of servicing their dollar debts?

Well, for Eurasia, they’re going to say, we want to help you buy our exports – Russia is now a major grain exporter, and obviously also an oil exporter – saying we want to supply you and give you the credit for this, but you’re really going to have to make a decision. Are you going to join the U.S.-NATO bloc, or are you going to join the Eurasian bloc?

Are you going to join the White People’s Club or the Eurasian Club? And it really comes down to that. And that’s what is fracturing the world in these two halves.

Europe is caught in the middle, and its economies are going to be torn apart. Employment is going to go down there. And I don’t see wages going up very much in Europe.

You’re going to have a political crisis in Europe. But also you’ll have an international diplomatic crisis over how are you going to restructure world trade, and investment, and debt.

There will be two different financial philosophies. And that’s what the new cold war is all about.

The philosophy of US-sponsored finance capitalism, of making money financially, without industrialization, and with trying to lower wages and reduce the labor force to a very highly indebted workforce living on the margin.

Or you’ll have the Eurasian philosophy of using the economic surplus to increase productivity, to build infrastructure, to create the kind of society that America seemed to be growing in the late 19th century but has now rejected.

So all of this is ultimately not simply a problem of interest rates and central bank policy; it really goes beyond central banks to what kind of a social and economic system are you going to have.

And the key to any social and economic system is how you treat money and credit. Is money and credit going to be a public utility, or will it be a private monopoly run for the financial interests and the 1%, instead of a public utility run for the 99%?

That’s what the new cold war is going to be all about. And that’s what international diplomacy week after week is trying to settle.

BENJAMIN NORTON:

Very, very well said. And I really agree about this increasing kind of bipolar order, where the US-led imperialist system is telling the world they have to pick a side. You know, as George W. Bush said, you’re either with us or you’re against us; you’re with us or you’re with the terrorists.

That’s what Biden is saying to the world. And we see the West has drawn this iron curtain around Russia. And now they’re threatening to do the same around China.

Now, of course, the difference is that China has the largest economy in the world, according to a PPP measurement. It’s even larger than the US economy. I don’t know how they can try to sanction the Chinese economy, considering China is the central factory of the world.

But this is related to a question I had for you, Professor Hudson, and this is from a super chat question from Manoj Payardha, and it’s about how Chinese banks say they’re not ready yet to develop an alternative to the SWIFT. He asked, how will the Third World pay Russia for resources?

And we’ve seen, maybe you can talk about the measures being implemented. India has this rupee-ruble system that they’ve created.

But I want to highlight an article that was published in Global Times. This is a major Chinese newspaper, and this is from April. And it quotes the former head of China’s central bank, who was speaking at a global finance forum in Beijing this April.

And basically he said, we need to prepare to replace Swift. He said the West’s adoption of a financial nuclear option of using SWIFT to sanction Russia is a wake up call for China’s financial development. And he said, “We must get prepared.”

So it seems that they’re not yet prepared. But this is something that you’ve been talking about for years. Or maybe you disagree and maybe you think they already are prepared with the SWIFT alternative?

MICHAEL HUDSON:

Well they’re already using an alternative system. If they weren’t using an alternative system – Russia is adopting part of the Chinese system for this – they wouldn’t be able to have banks communicate with each other.

So, yes, they already have a rudimentary system. They’re making it a better system that can also be immune from U.S. computer espionage and interference. So yes, of course there’s already a system.

But I want to pick up on what you said about Biden, how Biden characterizes things.

Biden characterizes the war of the West against Eurasia as between democracy and autocracy. By “democracy,” he means a free market run by Wall Street; he means an oligarchy.

But what does he mean by autocracy? What he means by autocracy, when he calls China an autocracy, an “autocracy” is a government strong enough to prevent an oligarchy from taking power, and taking control of the government for its own interests, and reducing the rest of the economy to debt peonage.

An “autocracy” is a country with public regulation against monopolies, instead of an oligarchic free market. An “autocracy” uses money and credit, essentially, to help economies grow. And when debts cannot be paid in China, if a factory or a real estate company cannot pay debts, China does not simply say, ok, you’re bankrupt, you’re going to have to be sold; anybody can buy you; the Americans can buy you.

Instead, the Chinese say, well, you can’t pay the debts; we don’t want to tear down your factory; we don’t want your factory to be turned and gentrified into luxury housing. We’re going to write down the debt.

And that’s what China has done again and again. And it’s done that with foreign countries that couldn’t pay the debt. When a debt that China has come due for China’s development of a port, or roads, or infrastructure, it says, well, we understand that you can pay; we will delay payment; we will have a moratorium on your payment. We’re not here to bankrupt you.

For the Americans, to the international funds, they’re saying, well, we are here to bankrupt you. And now if we lend you, we the IMF, lends you money to avoid a currency devaluation, the term is you’re going to have to privatize your infrastructure; you’re going to have to sell off your public utilities, your electric system, your roads, your land to private buyers, mainly from the United States.

So you have a “democracy” supporting bankruptcy, foreclosure, financialization, and privatization, and low wages by a permanent depression, a permanent depression to keep down wages.

Or you have “autocracy,” seeking to protect the interests of labor by supporting a living wage, to increase living standards as a precondition for increasing productivity, for building up infrastructure.

You have these two diametrically economic systems. And, again, that’s why there’s a cold war on right now.

BENJAMIN NORTON:

And there’s another super chat question here, Professor Hudson. You mentioned the International Monetary Fund, the IMF. We have talked about that many times. This is from Sam Owen. He asked, why do countries continue to accept bad IMF loans when they have such a poor track record? Is it just the US government meddling in the national politics? Are there cases of good IMF loans?

MICHAEL HUDSON:

Well, what is a country? When you say a country to most people, people think, ok, let’s talk about Brazil; let’s talk about all the people in Brazil; you have a picture in the mind of the Amazon; you have a big city with a lot of people in it.

But the country, in terms of the IMF, is a group of maybe the 15 wealthiest families in Brazil, that own most of the money, and they are quite happy to borrow from the IMF, because they say, right now there’s a chance that Lula may become president instead of the neo-fascist Bolsonaro. And if Lula comes in, then he is going to support labor policies, and he may stop us from tearing down the Amazon. So let’s move our money out of the country.

Well, normally this would push the exchange rate of the cruzeiro (real) down. So the IMF is going to make a loan to Brazil to support the cruzeiro (real), so that the wealthy 1% of Brazil can move their money into dollars, into euros, into foreign currency and offshore bank incentives, and load Brazil down with debt, so that then when there is an election, and if Lula is elected, the IMF is going to say, well, we don’t really like your policies, and if you pursue a pro-labor, socialist policy, then there’s going to be a capital flight. And we’re insisting that you pay all the money that you borrowed from the West right back now.

Well, that’s going to lead Lula either to sit there, follow the IMF direction, and let the IMF run the economy, instead of his own government, or just say, we’re not going to pay the foreign debt.

Well, until now, no country has been in a strong enough position not to pay the foreign debt. But for the first time, now that you have the Eurasian group – we’ll call it BRICS, but it’s really Eurasia, along with the Southern groups that are joining, the Global South – for the first time, they can say, we can’t afford to stay in the West anymore.

We cannot afford to submit the economy to the IMF demands for privatization. We cannot submit to the IMF rules that we have to fight against labor, that we have to pass laws banning labor unions, that we have to fight against laborers’ wage, like Western democracies insist on. We have to go with the Chinese “autocracy,” which we call socialism.

And of course, when America accuses China being an “autocracy,” autocracy is the American word for socialism. They don’t want to use that word. So we’re back in Orwellian double-think.

So the question is what, will the Global South countries do when they cannot afford to buy energy and food this summer, without an IMF loan? Are they going to say, ok, we can only survive by joining the break from the West and joining the Eurasian group?

That is what the big world fracture is all about.

And I described this global fracture already in 1978. I wrote a book, “Global Fracture,” explaining just exactly how all of this was going to happen.

And at that time, you had Indonesia, you had Sukarno taking the lead, the non-aligned nations, India, Indonesia, were trying to create an alternative to the financialized, American-centered world order. But none of these countries had a critical mass sufficient to go their own way.

Well, now that America has isolated Russia, China, India, Iran, Turkey, all these countries, now it has created a critical mass that is able to go its own way. And the question is, now you have like a gravitational pull, and will this Eurasian mass attract Latin America and Africa to its own group, away from the United States? And where is that going to leave the United States and Europe?

BENJAMIN NORTON:

And we saw one of the clearest examples yet of this bipolar division of the world between, you know, the West and the rest, as they say, with this ridiculous meeting that was just held of the G7.

Of course, the G7 are the white, Western countries. And then they’ll throw in U.S.-occupied Japan in there, to pretend they’re a little more diverse.

But we saw that the G7 just held a summit, and basically the entire summit was about how can we contain China? How can we expand the new cold war on Russia into a new cold war on China?

And here’s a report in BBC: “G7 summit: Leaders detail $600bn plan to rival China’s Belt and Road initiative.” Now, I got a chuckle out of this. The idea that the US government is going to build infrastructure in the Global South, I mean, it’s pretty laughable.

It’s also absurd considering that China’s Belt and Road Initiative, which involves over half of the countries on Earth, is estimated at many trillions of dollars in infrastructure projects. So the US and its allies think that they can challenge that with $600 billion in public-private partnerships.

I should stress, of course, what they announced is going to be a mixture of so-called public initiative and then contracts for private corporations.

So it’s yet another giveaway to the private sector, in the name of building infrastructure.

But I’m wondering if if you can comment on the G7 summit that just was held.

MICHAEL HUDSON:

Well, nothing really came out of it. They all said that they could not agree on any more sanctions against Russia, because they’re already hurting enough. India, in particular, stood up and said, look, there’s no way that we’re going to join the sanctions against Russia, because it’s one of our major trading partners. And by the way, we’re getting a huge benefit from importing Russian oil, and you’re getting a huge benefit by getting this oil from us at a markup.

So the G7 could not get any agreement on what to do. It is already at a stalemate. And this is only June. Imagine the stalemate it’s going to be in September.

Well, next week, President Biden is going to Saudi Arabia and saying, you know, we’re willing to kill maybe 10 million more of your enemies; we’re willing to help Wahhabi Sunni groups kill more of the Iranian Shiites, and sabotage Iraq and Syria. We’ll help you back al-Qaeda again, if you will lower your oil prices so that we can squeeze Russia more.

So that’s really the question that Saudi Arabia will have. America will send give it more cluster bombs to use against Yemen.  And the question is, is Saudi Arabia going to say, ok, we’re going to earn maybe $10 billion less a month, or however much they’re making, just to make you happy, and so that that you will kill more Shiites who support Iran?

Or are they going to realize that if they throw in their lot with the United States, all of a sudden they’ll be under attack from Iran, Russia, Syria, and they’ll be sitting ducks? So what are they going to do?

And I don’t see any way that Biden can actually succeed in getting Saudi Arabia to voluntarily earn less on its oil prices. Maybe Biden can say it’s only for a year, only for one or two years. But as other countries know, when America says only for a year or two, it really means forever. And if you don’t continue, then somehow they have a regime replacement, or a regime change and a color revolution.

So Biden keeps trying to get foreign countries to join the West against Eurasia, but there is Saudi Arabia sitting right in the middle of it.

And all that Europe can do is watch and wonder how it’s going to get by without without energy and without much food.

BENJAMIN NORTON:

Yeah, in fact, Venezuela’s President Maduro just confirmed that the Biden administration has sent another delegation basically begging Venezuela to try to work out some deal because, of course, the U.S. and the EU have boycotts of Russian energy.

So it’s really funny to me that, after years of demonizing Venezuela, portraying it as a dictatorship and all of this, the U.S. had to decide, well, the war in Venezuela is not as important as the war on Russia right now; so we’re going to temporarily pause our war on Venezuela to stick the knife deeper into Russia.

But on the on the subject of the the G7 meeting, this was the hilarious comment made by the European Commission President Ursula von der Leyen, in an article in Reuters titled “Europe Must Give Developing Nations Alternative to Chinese Funds.”

So echoing the same perspective that we hear from Biden, U.S. government officials constantly say that the US needs to challenge China in the Global South. So Europe pledged €300 billion – however, once again, important asterisk – “in private and public funds over five years to fund infrastructure in developing countries.”

So once again, we see another neoliberal private-public partnership. It’s going to be another public giveaway to private corporations.

And “she said that this is part of the G7’s drive to counter China’s multitrillion-dollar Belt and Road project.”

Now, this is really just tying everything together that we have been talking about today, Professor Hudson – in your article “The Fed’s Austerity Program to Reduce Wages,” you conclude the article noting that the depression that people in the United States are on the verge of facing because of these neoliberal policies – telling workers in the U.S. that they need to decrease their wages and be unemployed in order to stop inflation – you point out that:

Biden’s military and State Department officers warn that the fight against Russia is just the first step in their war against China’s non-neoliberal economy, and may last twenty years. That is a long depression. But as Madeline Albright would say, they think that the price is “worth it.”

And you talk about the new cold war against the socialist economy in China and the state-led economy in Russia.

So you predict not only a depression is coming. We have seen that in mainstream media outlets. Larry Summers said, you know, a depression could be coming for a few years. But you say, no, not only is a depression coming; it’s going to be a long depression. We could be seeing 20 years.

And basically the U.S. government and other Western leaders, as we see Ursula von der Leyen from the EU, they’re basically telling their populations, tighten your belts; we have decades of depression coming, because we have collectively decided, as Western leadership, that we are going to force the world through a long depression economically, or at least forced the West through a long economic depression, in order to try to halt the rise of China and Russia.

They’re basically telling their populations, suck it up, tighten your belts for decades, because in the end, the price is worth it in order to prevent the collapse of our empires.

MICHAEL HUDSON:

That’s right. When they’re talking about private-public initiatives, they’re talking about Pentagon capitalism. That means the government will give trillions of dollars to private firms and ask them to build infrastructure.

And if they build a port or a road in a Global South country, they will operate this at a profit, and it will be an enormously expensive infrastructure, because to make financial money off this infrastructure, you have to price it at the cost of production, which is Pentagon capitalism, hyper inflated prices; you have to pay management fees; you have to pay profits; you have to pay interest rates.

As opposed to the Chinese way of funding as equity. The Western mode of funding is all debt leverage. China takes as collateral for the infrastructure that it pays, an equity ownership in the port or whatever infrastructure in the Belt and Road that it’s building.

So you have the difference between equity ownership, debt-free ownership, where if it can afford to pay, fine; if it doesn’t make an income, there are no dividends to pay.

Or you have the debt leverage that is intended that the government cannot pay it, so that the government that will be the co-signer for the debt for all of this infrastructure will somehow be obliged to tax its whole population to pay the enormous super-profits, the enormous monopoly rents, the enormous debt charges of von der Leyen’s Margaret Thatcher plan.

Von der Leyen thinks that she can do to Europe and to America what Margaret Thatcher did to England. And if she does, then then America and Europe deserve it.

BENJAMIN NORTON:

And Professor Hudson, as we start wrapping up here, I know you have to go pretty soon, just a few short questions here at the end.

I’m wondering if what we’re also seeing is not only this fundamental crisis in the Western neoliberal, financialized economies, but it’s also this bubble that has burst, or at least this phase that is over.

At least this is my reading, I’m curious if you agree. In the 1990s, the peak of, you know, the so-called golden age of neoliberalism; we had Bill Clinton riding this wave, and it was the “end of history,” in Francis Fukuyama’s nonsense prediction and all that.

How much of that was not only based on this exorbitant privilege, as the French call it, of the dictatorship of the US dollar – we talked about that based on your book “Super Imperialism,” how the US was given this massive global free lunch economically because of dollar hegemony – but how much of it was not just that, but also the fact that in the 1990s and the first decade of the 2000s, the US and Western Europe had access to very cheap consumer goods from Asia and very cheap energy from Russia?

To me, it seems like those two factors are some of the most important reasons why this golden age of neoliberalism in the ’90s and early 2000s was even possible.

It was on the back of low-paid Asian workers, and based on this idea that Russia would permanently be, what Obama called it: a gas station.

Well, we’ve seen that, one, East Asian economies have lifted themselves up of poverty, especially China has ended extreme poverty and raised median wages significantly.

And now, of course, the West has sanctioned itself against buying Russian energy, massively increasing the cost of energy around the world.

So do you think that that bubble, or that brief moment of the end of history, the golden age of neoliberalism, that can never come back?

Because unless the West can succeed in overthrowing the Russian government and imposing a new puppet like Yeltsin, and overthrowing the Chinese government, it seems like that that the golden in the 1990s is never going to come back.

MICHAEL HUDSON:

Well, you’ve left out the key element of the golden age: that is military force, and the willingness to assassinate any foreign leader that does not want to go along with US policy.

BENJAMIN NORTON:

Of course.

MICHAEL HUDSON:

You’re neglecting what America did to [Salvador Allende]; you’re neglecting how America took over Brazil; America’s meddling and control, and in Europe, the wholesale bribery and manipulation of Europe’s political system, to put in charge of the [German] Green Party a pro-war leadership, an anti-environmental leadership, to put in charge of every socialist party of Europe right-wingers, neoliberals.

Every European socialist and labor party turned neoliberal largely by American maneuvering and meddling in their foreign policy.

So it’s that meddling that was intended to prevent any alternative economic philosophy from existing to rival neoliberalism.

So that when you talk about the end of history, what is the end of history? It means the end of change. It means stop; there will be no reform; there will be no change in the neoliberal system that we have locked in.

And of course, the only way that you can really end history is by what Biden is threatening: atomic war to blow up the world.

That is the neoliberal end of history. And it’s the only way that the neoliberals can really stop history. Apart from that, all they can try to do is to prevent any change that is adverse to locking in the neoliberal order.

So the “end of history” is a declaration of war against any country that wants to go its own way. Any country that wants to build up its own economy as a way that will keep the benefits of its economic growth in its own country, instead of letting it go to the global financial class centered in the United States and Britain.

So we’re talking about, neoliberalism was always a belligerent, implicitly military policy, and that’s exactly what you’re seeing in the proxy war of US and NATO in Ukraine today.

BENJAMIN NORTON:

Yeah, very well said. That’s the other key ingredient: overthrowing any government that is a challenge, that shows there is an alternative, to try to prove the maxim that “there is no alternative.”

MICHAEL HUDSON:

Yes.

BENJAMIN NORTON:

Here’s an interesting comment from Christopher Dobbie. He points out that in Australia, the average age for their first homeowner was 27 in 2001; now it’s 35, and increasing more and more by the year.

Now, in the last few minutes here, Professor Hudson, here’s another brief question that I got from someone over at patreon.com/multipolarista – people can go and support this show. One of my patrons asked this question: who who is hurt most by the Fed or other central banks raising interest rates? People, average consumers, or companies?

And obviously, you talked earlier about how the US Federal Reserve is different from other central banks, but it’s kind of an open question. Who is hurt more by raising interest rates?

MICHAEL HUDSON:

Well, companies are certainly hurt because it means that any possibility of getting productive credit is raised. But they’re also benefited, because if interest rates raised go up high enough, then it will not pay corporate raiders to borrow money to take over and raid companies and empty them out, like they did in the 1980s.

So everything cuts both ways. Raising the interest rates have given commercial banks an excuse to raise the interest charges on credit card loans and mortgage debts.

So raising interest rates, to the banks, have enabled them to actually increase their margin of monopoly profits on the credit that they extend.

And that certainly hurts people who are reliant on bank credit, either for mortgages or for consumer debt, or for any kind of loans that they want to take out.

Basically, raising interest rates hurts debtors and benefits creditors.

And benefiting creditors very rarely helps the economy at large, because the creditors are always really the 1%; the debtors are the 99%.

And if you think of economies, when you say, how does an economy benefit, you realize that, well, if the economy is 1% creditors and 99% debtors, you are dealing with a bifurcation there.

And you have to realize that the creditors usually occupy the government, and they claim we are the country. And the 99% are not very visible.

Democracy can only be afforded if they population’s voting has no effect at all on the government, that it’s only symbolic. You can vote exactly which oligarch you want to rule your country. Ever since Rome that was the case, and it’s the case today.

Is there really any difference between the Republicans and Democrats in terms of their policy? When you the same central bank bureaucracy, the same State Department blob, the same military-industrial complex, the same Wall Street control, what does democracy mean in a situation like that?

The only way that you can have what democracy aims at is to have a government strong enough to check the financial interests, to check the 1%, acting on behalf of the 99%. And that’s what socialism is.

BENJAMIN NORTON:

Very well said.

Here is another brief question from patreon.com/multipolarista – people can become a patron and help support the show over there.

This question, Professor Hudson, is about the proposal of an excess profits tax as an alternative to try to contain inflation. What do you think about the proposal of an excess profits tax?

MICHAEL HUDSON:

Well, only the little people make profits. If you’re a billionaire, you don’t want to make a profit; you want to essentially take all of your return in the form of capital gains. That’s where your money is.

And the way you avoid making a profit is you establish an offshore bank or creditor, and you pay out all of your profits in the form of interest, which an expense. You expense all of what used to be, what really is, income. And you show no profits at all.

I don’t think Amazon has ever made a profit. You have huge, the biggest corporations, with all the capital gains, have no profits. Tesla is a gigantic stock market presence, and it doesn’t make a profit.

So the key is capital gains, is financial gains, stock market gains, gains in real estate prices, unearned income. That’s what the free lunch is.

You want to prevent profits being paid out in the form of interest. So I would vastly increase profits, by saying you cannot deduct interest as a business expense. It’s not a business expense. It’s a predatory parasitic expense. So you’re going to have to declare all of this as profit, and pay interest on it.

Pricing your output from a foreign offshore banking center, so that you don’t seem to make any profit, like Apple does, pretending to make all its money in Ireland, you can’t do that anymore. You’re going to have to pay a real return.

So the accounting profession has made profits essentially tax free. So the pretense of making money by taxing profits avoids talking about capital gains and all of fictitiously low profits that are simply pretended not to be profit, like interest, depreciation, amortization, offshore earnings, management fees.

All of these should be counted as profits, and taxed as such as they were, I’d say back at the Eisenhower administration levels.

BENJAMIN NORTON:

And finally, the last question here, Professor Hudson, someone asked about the U.S. government pressuring countries in Africa not to buy Russian wheat. And the U.S. is, of course, claiming that this wheat is supposedly stolen from Ukraine.

This article, this headline at Newsweek, it summarizes pretty well: “U.S. Warns Starving African Nations to Not Buy Grain Stolen by Russia.” Again, that “stolen” is alleged by the U.S.

But you actually have a really good column about this over at your website, which again is michael-hudson.com: “Is US/NATO (with WEF help) pushing for a Global South famine?

I know this could be a long point of discussion; it could be the entire interview. And I know you have to go soon. But just concluding here, I’m wondering if you could comment.

The United Nations itself has warned that there could be a famine, especially in Global South nations.

What do you think the role of these neoliberal policies and Western sanctions are in fueling that potential crisis?

MICHAEL HUDSON:

Well, the wealthiest families in the world used to go every year, now they go every few years, to Davos, to Klaus Schwab’s Davos World Economic Forum. And they say, the world is overpopulated; we need about 2 billion human beings to starve, preferably in the next year or two.

So it’s as if the wealthy families have got together and say, how can we thin out the population that really we, the 1%, don’t need?

And in all of their policies, it is as if they’ve decided to follow the World Economic Forum and deliberately shrink the world population, especially in Africa and Latin America.

Remember, these are white people at the World Economic Forum, and that is their idea of how to retain equilibrium.

They’re always talking about “equilibrium,” and equilibrium is going to be for countries that cannot afford to grow their own food, because they have put their money into plantation crops and cotton to sell to the West, instead of feeding themselves – they’re just going to have to starve to contribute to world “equilibrium.”

BENJAMIN NORTON:

And while we’re on the subject of the World Economic Forum, I guess I should just briefly add – we’ve talked about this a little bit, but I just feel remiss not mentioning it – it’s interesting to see how right-wingers have seized on the World Economic Forum and begun criticizing it a lot.

Obviously, it’s worth criticizing. It’s a horrible neoliberal institution that represents the Western capitalist class. But we’ve even seen, you know, Glenn Beck, the right-winger, former Fox News host, he published a book about the Great Reset and the World Economic Forum.

I’m just wondering really quickly if you could respond to the idea that the World Economic Forum is like some “socialist” organization. Obviously, it’s the exact opposite.

But what do you say to these conservatives who have a right-wing critique of the World Economic Forum, and think it’s like secretly socialist, and Biden is a socialist.

MICHAEL HUDSON:

They look at any government or managerial power as socialist, not drawing the distinction between socialism and oligarchy.

The question is government power can be either right-wing or left-wing, and to say that any government power is socialist is just degrading the word.

However, as I mentioned before, almost all of the European “socialist” parties are neoliberal. Tony Blair was the head of something that called itself the British Labour Party. Gordon Brown was the head of the British Labour Party.

You can’t be more neoliberal and oligarchic than that. And that’s why Margaret Thatcher said her greatest success was creating Tony Blair.

You have the same thing in France; the French “socialists” are on the right-wing of the spectrum. The Greek “socialist” party, on the right-wing of the spectrum.

You have “socialist” parties around the world being neoliberalized.

So what does the word socialism mean? You want to go beyond labels into the essence.

And the question is, in whose interest is the government going to be run for? Will it be run for the 1% or the 99%?

And the right wing wants to say, well, the 1% can be socialist, because they’re taking over the government and that’s the big government, and we’re against it.

Well, the right-wing is taking over the government, but it’s not really what the world meant by socialism a century ago.

BENJAMIN NORTON:

Yeah, very well said. I just always laugh when I see these right-wing critiques of the World Economic Forum. I mean, the World Economic Forum is the embodiment of capitalism. It is the group of the elite capitalists who get together to talk about how they can exploit the working class and help monopolize the global economy on behalf of Western capital.

So with that said, there still are many questions, but I know you have to go, and we’re already at an hour and a half.

I do want to thank everyone who joined. We’re at 1200 viewers right now, so it has been a really good response.

Professor Hudson, you’re very popular. You should do your own YouTube channel. Maybe we can talk about that, because every time I have you on, it’s always an amazing response that I get. And hopefully we can do this again more in future.

Aside from people going to your website, michael-hudson.com, is there anything else that you want to plug before we conclude?

MICHAEL HUDSON:

Well, the book that I just wrote, “The Destiny of Civilization,” is all about what we’ve been talking about. It’s about the world’s split between neoliberalism and socialism. So that was just published and is available on Amazon. And I have two more books that are coming out very shortly.

BENJAMIN NORTON:

Yeah, for people who are interested, I did an interview with Professor Hudson here at Multipolarista a few weeks ago about his new book, The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism.”

And of course, anyone who wants to support this show, you can go to patreon.com/multipolarista. And as always, this will be available as a podcast, if you want to listen to the interview again. I’m certainly going to listen to this discussion again. You can find that anywhere there are podcasts.

Professor Hudson, it’s always a real pleasure. Thanks so much for joining me.

MICHAEL HUDSON:

I enjoyed the discussion.

BENJAMIN NORTON:

And like I said earlier at the beginning, for me, I truly think it’s always a privilege, because I do think you’re one of the greatest living economists. So I always feel very privileged to have the opportunity to pick your brain about all of these questions.

And I want to thank everyone who commented, who watched, and who listened. I will see you all next time.

Yellow Vest Win: Proving that Western Liberal Democracy is the same old autocracy

June 27, 2022

Ramin Mazaheri is the chief correspondent in Paris for PressTV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. He is the author of ‘Socialism’s Ignored Success: Iranian Islamic Socialism’ as well as ‘I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’, which is also available in simplified and traditional Chinese.

Source

by Ramin Mazaheri

If we say that the Yellow Vests are not socialist revolutionaries even latently, then what are they protesting about?

To put it the most simply: they are protesting the end of European Social Democracy, with the limited protections it provided.

(This is the seventeenth chapter in a new book, France’s Yellow Vests: Western Repression of the West’s Best ValuesPlease click here for the article which announces this book and explains its goals.)

The Yellow Vests intuited that the pan-European project has ended the era of European Social Democracy (1945-75) and replaced it with elite-driven, free market, winner-take-all Liberalism.

Seeing that their list of 43 demands doesn’t include the word “Europe” once, however, the Yellow Vests don’t really grasp that the European Union represents the organisational assassin of European Social Democracy. The European Union and Eurozone’s response to the Great Recession made it entirely clear: these are institutions which are perfectly hostile to Social Democracy’s minor redistributions and protections which fundamentally embolden the average worker and citizen.

Social Democracy was not born after World War II, just as “neoliberalism” was first on display back in 1871, with what was imposed after the destruction of the Paris Commune. Marx chronicled the birth of European Social Democracy, in 1848, when the Mountain Party (which initially claimed the mantle of neo-Jacobinism) sided with the small-traders in the June Days massacre instead of with the urban proletariat and rural peasantry, as the Jacobins had done in 1789. They went from supporting Socialist Democracy to calling themselves Democratic Socialists (Démocrate-socialistes) and this – and not the downward slope from Napoleon Bonaparte to Louis-Napoleon Bonaparte – should be considered the truest essence of Marx’s famous line of history repeating itself as farce.

“The revolutionary point was thereby broken off from the social demands of the proletariat and a (social) democrat turn given to them….”

That was the birth of Social Democracy: an ideology where the social demands of the recently-feudal masses (decent pay, health care, education, pensions, etc.) get only partially addressed while the political demands of an aristocracy opposing an absolute monarch (free speech, property rights, trial by jury, etc.) are fully met. Liberalism has always sought to limit progressive changes to the political question of how to move on from feudalism, and to stop progressive changes to the social question of how to move on from feudalism. The reformist ideology of Social Democracy has operated within Western Liberal Democracy for nearly 175 years and only partially prevailed for 30 of them.

The sooner the Yellow Vests realise that Social Democracy will never be a harmonious solution to the elitism dominant in Liberalism, the better, as Marx did:

“The peculiar character of Social Democracy is epitomised in the fact that democratic-republican institutions are demanded as the means, not to remove the two extremes – capital and wage-slavery – but in order to weaken the antagonism and transform them into a harmonious whole.”

Putting capital primarily in the hands of the recently-feudal masses so they can provide the broad economic stability and success which would end wage- and debt-slavery has never been a goal of Social Democracy, from the Mountain Party to Leon Blum to Francois Mitterrand to Francois Hollande to the “Democratic Socialists of America” led by Bernie Sanders in the 21st century United States.

Yellow Vest: “We are not beggars! What is 100 euros only given one time? State taxes compose 60% of the price of gasoline, so calling it 100 euros is totally false – the people truly only receive 40 euros. This is election nonsense, but Macron won’t win votes with these crumbs.”

Marx continued in his examination of France and gave us the key to the capitalist culture of both Liberal and Social Democracies: “This substance is the transformation of society along (Social) democratic lines, but a transformation within the boundaries of the small-trader’s class.” One extraneous sentence later: “It believes rather that the special conditions for its own emancipation are the general conditions under which alone modern society can be saved and the class struggle be avoided.”

Trotsky and the Yellow Vests saw that, due to the rise of financial capitalism, a leftist alliance must include the small businessman, but they reject the goal of Social Democracy to elevate their virtues and needs over those of the average worker and citizen.

Thus even when Social Democracy prevails in Liberalist capitalist cultures the virtues of the usually bourgeois-aspiring, individualistic, managerial small-trader class become the highest virtues to be promoted. Everyone must be a self-interested, competitive entrepreneur who aspires to be a boss and a “job creator”. This veneration of the small trader is the most obvious in American culture, and it is American culture which has been imposed on France via the pan-European project: at the alleged “end of history”, with the fall of the USSR, the United States shepherded the pan-European project, which is rightly said to be even more Liberalist (i.e. Bankocratic) than anything which could be created in the United States.

What we see in the modern era, and as this book proves, is that Liberalism, Social Democracy and Fascism have all joined together and “become bourgeois”. This amalgam of 18th century Liberalism, 19th century Social Democracy and 20th century fascism is ultimately not different from the aristocracy of the 17th century and earlier, which which ruled the 99% in an entirely autocratic manner. The extremely modest expansion of wealth and political power from a blood/marriage line to a line of the super-wealthy 1% still results in the exclusion of the recently-feudal masses from policy making, and this is what the Yellow Vests emphatically reminded. Their primary demand was not Socialist revolution but merely to get more public opinion into public policymaking.

The bourgeois bloc continually dangles Social Democracy as a reformist possibility, and thus they secure the loyalty of both the big and the small bosses and owners. However, when the moment of implementation comes, amid the next guaranteed bust in Liberalist capitalism, the response is the anti-Socialist virulence of Liberalism via the ruthless elite domination of a Fascism which has made peace with big capital.

Yellow Vest: “Macron’s repeatedly evaded the main problems. His solutions are not concrete, and it is certain that in a few months we will just be in the same situation. This is why we will keep protesting, for certain.”

Baudelaire wrote, “The most beautiful trick of the devil is to persuade you that he does not exist,” and this is what modern Western Liberal Democracy has done with the elitism, arrogance and autocracy which is the basis of absolute monarchy. Macron’s “Jupiterian” remove has pulled the sheet off of Western Liberal Democracy, again, and reminded that the idea of an autocratic ruler remains the preference of a Western elite which has always been totally opposed to Socialist-inspired measures.

The republican lie of Liberalism

When Western leaders communicate among themselves and with their foreign counterparts they use the language of Liberalism; when they implement policy they use the ruthlessness of Fascism; but when they communicate with the masses they know that republican language is paramount.When Western leaders communicate among themselves and with their foreign counterparts they use the language of Liberalism; when they implement policy they use the ruthlessness of Fascism; but when they communicate with the masses they know that republican language is paramount.

This is especially true in France and the United States, where royalism has been fully discredited from holding public power. Thus, there is a constant emphasis by contemporary French leaders and their mainstream media on maintaining “republican” values.

However, the republicanism of both is an antiquated one as it is based on Liberal and not Socialist Democracy. A perfect example of the inadequacy of their elite-led republicanism is found in the Orwellian name of the group which wages the actual physical repression of the Yellow Vests: the detested CRS riot police (Compagnies républicaines de sécurité – Republican Security Companies.) A woman wearing a full-body bathing suit – a “burkini” (combination of “burqa” and “bikini”) is breathlessly presented as a bigger threat to French republicanism than the repression of the Yellow Vests. Most obviously, there is the mainstream conservative party’s name change shepherded by Nicolas Sarkozy in 2015 – from L’Union pour un mouvement populaire (UMP) to les Républicains: the party had so many corruption scandals that a rebranding was deemed unavoidable.

Such is the false republicanism in Liberal Democracies.

The lip service towards republicanism allows the perpetuation of the outdated notion in France that the world still views them as the brightest beacon of progressive politics. They are different than almost all of Northern Europe, where royals still – bewilderingly – remain on thrones which hide mountains of the public’s rightful riches and influence. Indeed, an Iranian can find in France a refuge from the common Western toleration and whitewashing of monarchism.

The elite in the United States uses “freedom”, while monarchies like the UK use “human rights” in the same way – to insist that freedom and human rights for their modern aristocracies still represents the pinnacle of progressivism.

The legacy of 1789 exists in France today only in this constant demand to uphold “republicanism”, even if it is not at all the spirit of 1789 and only mouths its forms. The Yellow Vest repression will remind all of history that the freedoms offered by the republicanism of Western Liberal Democracy with French characteristics are a fantasy – there is only the autocracy of the bourgeois bloc.

France’s 21st century belief that “the republic” must jingoistically unite the French is ultimately a means used to falsely claim the legacy of 1789 while also ensuring that talk for progressive politics ends with this very initial answer to the “political question”, and with no answer to the “social question”, as well.

This also explains why there is so much forced discussion in France about what a huge threat Islam poses to this immoral republicanism: Islam correctly insists on God and morality being the highest allegiance, and certainly not laws forced through by a Fascist-allying, imperialist bourgeois bloc.

Nothing is more Liberalist than the European Union, and thus the ‘Social Fascist’ repression of anti-austerity movements and the Yellow Vests

We have already linked the European Union with the birth of neoliberalism and neo-imperialism, we have established how Fascism was subsumed and its tactics adopted, and we have shown how the goal of the third restoration of Western Liberalism is to roll back the modest gains of Social Democracy.

All that’s needed is to show how Western Liberal Democracy wields the power of the state as autocratically as royal families and their coteries used to – for this we simply have to look to the Yellow Vests.

Western Liberal Democracy and pre-1789 autocracy – there is no real difference.

Whether the form is a parliamentary republic based on Liberalism, or an executive-led republic based on Liberalism, or a constitutional monarchy based on Liberalism – the autocracy has been the same. Only the truly elite have the money to buy Liberalist rights and influence in public policy.

Yellow Vest: “As usual, no prison for the rich – everything goes fine for them, always. They never know hunger or poverty, but put everything on the average person’s back. Benalla should have been treated like anyone else – justice should be equal for everyone.”

Just as the trends of 250 years of Iranian or Chinese history can be summarised so too can the trend of the past 250 years of French and Western history, and this book has aimed to do that. Above all the trend of moving away from an autocratic monarch and towards an empowered people’s republic is discerned. The problem has been Western Liberal Democracy’s conception of a republic: what they have always had is an oligarchic republic, inspired by the English, which aims for perpetual repression of the recently-feudal (to Asian conceptions of time!) Western masses.

The early years of all revolutionary republics are always fraught with missteps and mistakes, but made with the sincere goal of broad societal progress. In 1789 the move away from absolute monarchy was met with great difficulty and international opposition. In 1848 the move away from a limited monarchy was met with great difficulty, also caused by great inexperience. In 1871 the move towards a social republic was met with great difficulty and international opposition, also caused by great inexperience. But inexperience is not the primary difficulty of the people today – they know how to rule, but they still face great international opposition. As Marx wrote:

“The cry of ‘social republic’ with which the February Revolution (of 1848) was ushered in by the Paris proletariat, did but express a vague aspiration after a republic that was not only to supersede the monarchical form of class rule but class rule itself. The Commune (i.e. the first appearance of Socialist Democracy) was the positive form of that republic.”

However, the social republic was annihilated by neoliberalism and would not appear until 1917 in the eastern frontier of Europe – Russia.

The Yellow Vests reminded those in the 21st century who believe that the “end of history” had occurred in 1991 that the people’s desires for a social republic are no longer vague. However the Yellow Vests have had the misfortune of living in the world’s only region – the West – where socialist-inspired revolutionary cultures have never won implantation.

To their great credit, the Yellow Vests created a revolutionary condition for all of France. When it was thwarted by Liberal Democratic politicians, media and unions the Yellow Vests continued to march to keep promoting what may truly turn into a revolutionary culture at the next major uprising over Liberalism’s endemic failures. The Yellow Vests have created a vast and reliable network – there’s no doubt they will spring into action at the next opportunity.

The next political progression for the Yellow Vests is the realisation that the pan-European project only dangled the illusion of mere Social Democracy, but that its “neoliberal” basis is actually Fascist and autocratic to its very core.

The analysis of that splendidly successful revolutionary Bolshevik, Trotsky, must be remembered today if the Yellow Vests are to break with the perpetual illusion of mere Social Democracy:

The program of the Communist International has the following to say on this subject: Side by side with the Social Democracy, which assists the bourgeoisie to stifle the proletariat and to lull its vigilance, Fascism appears.’ The Communist International failed to understand that it is not the mission of Fascism to function side by side with the Social Democracy, but to destroy all the existing workers’ organizations, including the reformist. The task of Fascism, in the words of the program, is to ‘annihilate the Communist strata of the proletariat, and their leading cadres.’ Fascism, then, does not at all threaten the Social Democracy and the reformist trade unions; on the contrary, the Social Democracy itself plays a “Fascist” role to an ever increasing degree. Fascism achieves nothing more than the consummation of the labours of reformism, by functioning ‘side by side with the Social Democracy’.” (Emphasis his)

The Communist Bolsheviks rejected mere Social Democracy and instead used Socialist Democracy as their guiding structure ideology, as do Socialist-inspired countries today, who then adapt its primary economic and political imperatives to local cultures and mores. They saw that Social Democracy and Fascism work together to destroy not just Socialist Democracy-inspired groups, unions, parties, countries, etc, but also groups, unions, parties and countries which attempt Social Democratic reforms of Liberalism. As time goes on the Yellow Vests will realise, thanks to their own repression, that Liberal Democracy and Social Democracy offer them no solution except the destruction of the Yellow Vests.

One sentence later – in which Trotsky expressed his usual disapproval with the Moscow-based Comintern – Trotsky continued:

We have here before us all the basic elements of the theory of social fascism. The leaders of the Communist International failed to understand that capitalism in decay is no longer able to come to terms with the most moderate and most servile Social Democracy, either as a party in power, or as a party in opposition. It is the mission of Fascism to take its place not ‘side by side with the Social Democracy’, but on its bones. Precisely from this there flows the possibility, the need and the urgency for the united front.” (Emphasis his)

(Recall that a united front (joining together in society’s leftist struggles), is not the same as a popular front (an electoral alliance).)

Call it what you want: Social Fascism, Liberalism, autocracy, Fascism, constitutional monarchy, rule by the 1% – it is all the same oligarchic autocracy for the recently-feudal masses. I call it Western Liberal Democracy to properly place it in a geographic and historical context.

As soon as the Yellow Vests stop trying to win back the Social Democratic measures which Nicolas Sarkozy, Francois Hollande and Macron rolled back, the sooner they will realise that Socialist-inspired countries have shown a better way, method and goal. Without a major reformulation of the pan-European project – which seems impossible to get off the ground in a Liberalist-dominated media – the pan-European project’s initial lure of even greater Social Democratic gains should be seen only as a chimera.

The Yellow Vests know enough to reject existing establishment institutions, as well as pathetic PFAXIst (Popular Fronts Against Xenophobia but for Imperialism) electoral strategies – they must realise the monarchist-elitist-reformist-fascist alliance which is Western Liberal Democracy must be rejected in favor of Socialist Democracy.

That, of course, will lead to even more repression.

But their bravery will earn them more and more comrades; their correctness will only increase as the repression accumulates; the guaranteed cycles of failure in capitalism and the clockwork greed of high finance all make the move away from autocratic Liberalism certain.

The combination of royalism, Liberalism and Fascism is doomed, but people must be liberated from the long-outdated and pernicious influence of Liberalism before the next political advancement can take place. Thus the Yellow Vests, and thus this book, which is another humble tally of Liberalism’s failures.

Yellow Vest: “The people I speak with express absolutely no desire to stop the movement and remain very positive. The Yellow Vests are, above all, the French people, and the French people recognize this and this is why the movement will have a second wind.”

So admirably, The Yellow Vests have cleared the path for France: the despairing working poor, middle and lower classes have a fighting force which can never, ever be called Fascistic. France is back to being the West’s leaders of progressive politics.

Marx’s most important passage on France – guiding France from 1789 to 2022 and beyond

Here we have the most important passage in Marx’s writings on France – from his writings on the Paris Commune – because it historically summarises a century of turbulent political and socio-economic changes and pinpoints the establishment of modern Western Liberal Democracy.

The passage covers the vital and obscured history of France for a century after 1789. The short parentheticals are mine and designed to add clarity to Marx’s meaning:

“If the parliamentary republic, as M. Theirs said, ‘divided them least’ (the different factions of the French ruling class in 1850), it opened an abyss between that class and the whole body of society outside their spare ranks. The restraints by which their own divisions had under former regimes still checked the state power were removed by their unionand in view of the threatening upheaval of the proletariat they now used that state power mercilessly and ostentatiously as the national (and imperialist) war engine of capital against labor.

In their uninterrupted crusade against the producing masses they were, however, bound not only to invest the executive with continually increased powers of repressionbut at the same time divest their own parliamentary stronghold – the National Assembly – one by one, of all its own means of defence against the Executive. The Executive, in the person of (President) Louis(-Napoleon) Bonaparte, turned them out. The national offspring of the ‘Party of Order’ (the dominant political party of the 2nd) Republic was the Second Empire (of Emperor Louis-Napoleon Bonaparte).

The (Second) empire, with the coup d’etat for its birth certificate, universal suffrage for its salvation and the sword for its sceptre, professed to rest upon the peasantry – the large mass of producers not directly involved in the struggle of capital and labor. It professed to save the working class by breaking down parliamentarianism and, with it, the undisguised subserviency of government to the propertied classes. It professed to save the propertied classes by upholding their economic supremacy over the working class; and, finally, it professed to unite all classes by reviving for all the chimera of national glory.

In reality it was the only form of government possible, at a time when the bourgeoisie had already lost, and the working class had not yet acquired, the faculty of ruling the nation. (As they would acquire, starting with the Paris Commune and then later the USSR, China, Iran, etc.) It (the 2nd French Empire) was acclaimed throughout the world as the saviour of society. Under its sway bourgeois society, freed from political cares, attained a development unexpected even by itself. Its industry and commerce expanded to colossal dimensions; financial swindling celebrated cosmopolitan orgies (Marx uses this last word literally, per scandals of the time); the misery of the masses was set off by a shameless display of gorgeous, meretricious and debased luxury. The state power, apparently soaring high above society, was at the same time itself the very scandal of that society and the very hotbed of all its corruptions. Its own rottenness, and the rottenness of the society it had saved (i.e. the bourgeois elite of the 2nd Republic), were laid bare by the bayonet of Prussia, herself eagerly bent upon transferring the supreme seat of that regime from Paris to Berlin.”

The globalist descendants of the victors of 1871 would eventually comprise on Brussels instead of Berlin. Belgium – the country fabricated so that France and Germany would have a place to fight their wars, it is often joked – became “the seat of that regime”.

Yellow Vest: “We are not proud, at least not yet, because we have many more victories to accomplish. We insist on having referendums initiated by citizens, in order to democratically give a voice to all of France and to the Yellow Vests. We will keep marching to ensure that our common future is serene and peaceful.”

If we make only minor substitutions in Marx’s passage to include contemporary developments, does this not make an up-to-date history of France and Europe covering over two centuries?

If the pan-European project “divided them least” (the different factions of national ruling classes in Europe) least, it opened an abyss between that class and the whole body of society outside their spare ranks. The restraints by which their own divisions had under former regimes still checked the state power were removed by their union; and in view of the threatening upheaval of the Yellow Vests they now used that state power mercilessly and ostentatiously as the international war engine of capital against labor.

In their uninterrupted crusade against the producing masses they (the pan-European project) were, however, bound not only to invest the national executive branches with continually increased powers of repression, but at the same time divest their own national parliamentary branches, one by one, of all its own means of defence against the Executive. The Executive, in the person of a modern Louis Bonaparte (or something new and revolutionary, perhaps similar to the Supreme Leader branch of government in Iran)could not be allowed to have turned them – Brussels – out. The national offspring of the pan-European project was the neoliberal Empire of the European Union.

The empire, with the fall of the USSR for its birth certificate, denying the national referendums which rejected the European Union and which were based on universal suffrage for its salvation and the sword for its sceptre, professed to rest upon the neo-peasantry – the large mass of producers not directly involved in the struggle of capital and labor and who desired to avoid more intra-European wars, free movement around Europe and the strengthening of a Social Democratic safety net. It also professed to save the working class by breaking down national parliamentarianism and, with it, the undisguised subserviency of government to the propertied classes. It professed to save the propertied classes by upholding their economic supremacy over the working class; and, finally, it professed to unite all classes by reviving for all the chimera of supranational glory via colluding with the United States to enforce Liberalist values worldwide.

In reality it was the only form of government possible, at a time when the bourgeoisie had fully acquired the faculty of ruling the nation, something they had no experience with in 1848. It (the pan-European project) was acclaimed throughout the West as the saviour of European society. Under its sway bourgeois society, freed from political cares, such as the profit drags and democratic nuisances created by the era of Social Democracy, attained a development unexpected even by itself. Its industry and commerce expanded to colossal dimensions; financial swindling celebrated cosmopolitan orgies; the misery of the masses was set off by a shameless display of gorgeous, meretricious and debased luxury. The state power, apparently soaring high above society, was at the same time itself the very scandal of that society and the very hotbed of all its corruptions. Its own rottenness, and the rottenness of the society it had saved – the royals threatened by 1789, the bourgeois threatened by 1848, the colluding Social Democrats threatened by 1917 and the Fascists threatened by 1945 – were laid bare by the bayonet of the Yellow Vests, herself eagerly bent upon transferring the supreme national seat of that regime from Brussels back to Paris.”

France is not Cuba, Iran, China or even Southern Lebanon – it will likely take a civil war for the Yellow Vests to ever use bayonets to finally win political and economic redistribution. However, the Yellow Vests emphatically prove the willingness of Western Liberal Democracy to use violence just as brutally as the autocracies of 1788.

The Yellow Vests also remind that Western Liberal Democracy does not even allow the rights which Liberalism claims to protect – how long can that persist in a country which regularly demands the right to publicly exercise such rights, and whose pens have been freed by the digital era?

If the French elite is not going to permit even the basic rights of Liberalism, then France needs a defensive force which can protect the Liberalist rights of protesters. That is the subject of the next chapter.

<—>

Upcoming chapter list of France’s Yellow Vests: Western Repression of the West’s Best Values.

Publication date: July 1, 2022.

Pre-orders of the Kindle version may be made here.

Pre-orders of the French Kindle version may be made here.

Chapter List of the new content

French vote shows the undemocratic rot of the pan-European project 2/2

June 26, 2022

Ramin Mazaheri is the chief correspondent in Paris for Press TV and has lived in France since 2009. His new book is ‘France’s Yellow Vests: Western Repression of the West’s Best Values’. He is also the author of ‘Socialism’s Ignored Success: Iranian Islamic Socialism’ as well as ‘I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’, which is also available in simplified and traditional Chinese.

by Ramin Mazaheri and cross-posted with PressTV

Part 1 discussed how a “hung parliament” isn’t going to happen in France. President Emmanuel Macron won enough seats and can find plenty of allies among the mainstream conservatives, as well as the Socialist Party and Green Party. Thus, on all issues involving far-right economics, neoliberalism and the pan-European project Macron will proceed without parliamentary difficulty.

Part 1 ended with my pointing out how Macron’s coalition-building is actually unimportant.

Because the Mainstream Media is fine with his ends, they rarely discuss how Macron often used the 49-3 executive decree in his first term even when he had an absolute majority. Macron bypassed parliament just to avoid public discussion in Parliament on his hugely unpopular austerity “reforms” – i.e. right-wing rollbacks.

And then the guy would actually sign these bills – which were also entirely written by his own coterie – live on television, rubbing it in everyone’s faces! The French, of course, can’t stand this obviously autocratic – and certainly not democratic – behavior. The elite-driven “bourgeois bloc”, however, adored it.

So who cares about the French legislature? Certainly Macron has not.

Francois Hollande used the 49-3 executive decree multiple times as well, so this is clearly a long-running issue of executive branch power grabs.

The MSM doesn’t want to focus on these facts because they so obviously reveal the incredibly low quality of French democracy and of the pan-European project.

Therefore, even if Macron can’t create a majority to pass neoliberal legislation why would he allow parliament to restrain hims now? In the coming years we should expect his rationalisations along the lines of, “We must avoid dysfunction and stagnation, therefore I decree…”.

All the above explains why the democratic absolute majority winner of the legislative vote was “none of the above” – abstention won 54%. The French know that modern autocracy – rule by the 49-3 executive decree and the overruling of national sovereignty by Brussels – rules, thus rendering Europe’s national parliaments a waste of time, breath and attention. Remember Syriza of Greece, or the “bomb” Jean-Claude Trichet, President of the European Central Bank, promised Ireland? Many European citizens have not.

Elections at just 46% turnout are a hair’s breadth away from not having democratic credibility, but that must be added with the constant use of the 49-3 executive decree and the certainty of a Brussels’ veto for any legislation they don’t like. It combines to modern autocracy – rule by an oligarchical elite.

When is the broad prosperity and stability which Western Liberal Democracy promises ever going to arrive? When is the broad prosperity and stability of the pan-European project ever going to arrive? Certainly the latter’s short tenure has been marked by nothing but economic disaster and democratic repression.

Because Western Liberal Democracy took the defeated fascists of World War II under their wing they also subsumed many of their ideas. One of them is identity politics: the average Frenchman is now being told to focus on the paltry 15% score of the National Front and not the larger issues presented in the paragraph above. It’s nonsense, and to do that would be to play into the hands of the bourgeois bloc.

All of these realities should be clear to people who cover French politics.

Macron has to actually pay attention to parliament now and work a little harder to win over some votes (but only if he actually feels like it) – I guess that’s democracy, but it’s not much. The MSM and bourgeois bloc elite is worried that “reforms” – i.e. rollbacks to the Social Democratic advances implemented from 1945-75 – won’t get through, but after 13 years here, and over 1,500 2-3 minute television reports for PressTV, which includes over 3,000 soundbites from French people, and hundreds of written columns, I’m worried about the democratic will of the French people.

But it’s been foolish to look for the democratic will in Western Liberal Democratic parliaments and in French parliament ever since 1848, when they did away with unelected monarchy.

France’s parliament is going to get louder, but that’s about it. It’ll be more like the United States in that there will be a lot of grandstanding and big talk, and then the same right-wing conclusions will arrive exactly as predicted. If it somehow doesn’t – Macron will use the executive decree. If Macron somehow doesn’t use the executive decree – Brussels will step in to forbid, sanction or legislate around the democratic will of any member nation.

As time goes on this reality will become clear and clearer. Some in the NUPES alliance and some in the National Front will actually say such things in Parliament. Macron promised to govern in a way to decrease “extremism” – i.e. those who point out the failures of Liberalism – but he clearly achieved the exact opposite.

Macronism is my generation’s type of conservatism, but that doesn’t mean it was ever built to last. The former Rothschild banker was a candidate who was fabricated at the last moment of 2016 by the intensely monied powers who have always governed in Western Liberal Democracy. He’s not as all-powerful as he was in his first term, but how could he be, given his discrediting behavior, his lack of merit and the arrogant elite he chooses to guide him? How could Western Liberal Democracy not keep proving to the masses their lack of concern for the problems of the working poor and middle classes?

However, since 2009 France does not control its currency, prices, budget, laws, rails, skies and obviously much, much else. A major failure of the Yellow Vests was to focus their attention entirely on Macron and on parliament and not on the pan-European project. The Western media tells them deceptive lies, but this column has laid out solid conclusions drawn from close observation. The Yellow Vests have protested every Saturday since October 2021 – you likely haven’t heard about that because the MSM refuses to tell the truth about that, too. When the next inevitable bust period occurs in Liberalism, they are ready to be there.

Will France descend into chaos shortly, as many predict? My God – how can it get more chaotic than every single Saturday from November 2018 through June 2019? All that’s left is for the forces of order to open fire on protesters – massacres!

That would change things – at least I hope it would. The West, ever-grandstanding about their moral superiority, certainly ignored the occasionally-lethal brutality towards the Yellow Vests.

The French elections have ended – major changes were not made. Since the Great Recession, and subsequent undemocratic installation of the pan-European project, the world’s third-largest but weakest and least-sovereign economy has only gotten weaker. After damage so great we don’t even know how bad it is, the coronavirus fog has lifted – remember that it was instituted just weeks after the failure of France’s longest labor movement ever, the general strike of 2019-20. France and the EU are marching to war over the unrest in Ukraine, and also sacrificing their economies for that cause.

Such is France today.

No Bonapartism – either Napoleonic or Louis-Napoleonic – is coming to save them from the autocratic bourgeois bloc. They have no revolutionary “Supreme Leader branch” of government, either – they don’t even want to understand what that term means. The French don’t believe in the goodwill of the leadership of the United States, but they follow them anyway. China, which since 2008 has soared in direct inverse proportion to the demise of Europe, is following an independent path, just as Iran has done since 1979. Now Russia appears to be doing the same after three decades of Liberalism.

The world needn’t worry about the results of French parliament, but they should worry for the French.


Part 1 of 2

French vote shows the undemocratic rot of the pan-European project 1/2

June 25, 2022

by Ramin Mazaheri and cross-posted with PressTV

France’s election season finally got interesting, but only marginally.

Even though his brutal repression of the Yellow Vests should disqualify him from being a public servant ever again, Emmanuel Macron was re-elected president, incredibly. However, he has finally been reprimanded at the voting booth – his parliamentary coalition just lost its absolute majority.

The Yellow Vests can claim wresting yet another concession. Unfortunately – like most of their concessions – it’s rather minor.

The Mainstream Media is in a tizzy over an allegedly “hung parliament”, but don’t they always do that when the working-poor class rebels against Western Liberalist diktats?

The man initially hailed as the “new leader of the free world” by Politico (how badly does that hold up four years later?), and who then obviously became a “liberal strongman”, now has to actually acknowledge the National Assembly’s existence after ruling by executive order for five years.

This is such a bad thing? The entire start of modern global politics, in 1789, was the move away from absolute monarchy via the demand for a parliament – a representative body which can, finally, exert some influence over the policy-making of the executive branch.

To the Western elite: yes, this is a very bad thing.

They don’t want absolute autocracy anymore, but they certainly don’t want the poor, working-poor and middle classes exerting any influence over policy-making. They are continually appalled at how the French masses – from the Yellow Vests, to the 2005 “No” vote on the European Constitution, to the election of anti-austerity candidates like Francois Hollande and Francois Mitterrand – keep rejecting the “bourgeois bloc’s” insistence that neoliberalism is the greatest thing since pockets.

The dominant analysis in France now is that it is divided into three blocs: the far-right of Le Pen, a left wing (represented by the NUPES “popular front”, which just over-promised and under-delivered) and a “center” of Macronistas. This is wrong. The best description of French divisions is between a bourgeois bloc (the 25% which supports Macron) and everyone else (the 75% which supported the Yellow Vests/the 70% which didn’t want Macron to have another absolute majority in parliament).

The bourgeois bloc is obviously full of pro-elite, pro-privilege, right-wing ideas – neo-imperialism, free market economics, perpetual austerity, a poor social safety net, regressive taxes on the average person but tax evasion for the rich and corporations, the idea that citizens should vote once every 4 or 5 years for elite politicians and then stop being involved in politics – but what it is actually presented as is “radical centrism”. Much like the idea of the “bourgeois bloc”, such terms are gaining popularity in recent years.

“Radical centrism” is the idea that mainstream Western thought is the only “right” way to view reality. The ideology of Liberalism is “centrist”, or so they allege, but they definitely make this claim with a virulence that is truly radical.

This started post-1991 with TINA – There Is No Alternative. The great unsaid to that popular phrase is that There Is No Alternative to Neoliberalism and Neo-imperialism. Radical centrism has become – to them – “the truth”. Criticise their policies – such as the false benevolence, and certainly the false success, of the pan-European project – and you are classified as “disinformation”. Affirm these policies and you’re a blue-checked “expert” and “independent”.

It’s all nonsense of course, but ever since 1789 created a bourgeois bloc they have always been out of touch with the average person’s experiences and beliefs.

This brings us back to the legislative vote: the Western MSM, owned by the bourgeois bloc in a West which eschews state media, is now worried that without an absolute majority Macron won’t be able to force through his “radical centrist” policies as easily as he did for the past five years.

The Western MSM is, of course, totally unconcerned about the fact that Macron forced through his policies only on top of the broken bones, lost eyes and blood of the Yellow Vests. They only worry about protesters in right-wing places like Hong Kong, or Ukraine, or the MKO, etc.

The intellectual state of France has now been established – are the MSM’s worries justified? Does the vote signify a huge change?

No, but not for the reasons expected by people who don’t closely follow French politics.

Firstly, ignore the usual French drama: Of course newspapers want to sell papers by inflaming the results. The far-right’s Marine Le Pen wants to act like 15% is a parliamentary majority, leftist Jean-Luc Melenchon wants to believe that 25% of seats earns him the prime minister post, and the mainstream conservative Republicans are talking about “still being an opposition party” but these are all lies, exaggerations and self-delusions.

The biggest delusion outside of France since 2017 is that Macron was ever a “centrist”. His subsequent legalisation of Islamophobia and the state of emergency, his far-right economic policies and his authoritarian style all disproved that indisputably.

Macron was always a mainstream conservative, just with a new logo and of his generation. Somehow this eluded many commentators, and I attribute this – among the misled older commentators – to a generation gap.

Macron’s generation was raised to be entirely pro-Europhile, and also to reject xenophobia. Some in the mainstream conservative party are pro-globalisation and some aren’t so much, and some in the mainstream conservative party are Islamophobic and some aren’t so much, but those in les Républicains haven’t joined the National Front (now the National Rally) for a reason, and that reason is: these are not their main issues.

So we should add together the seats of Macron’s coalition and those of the mainstream conservatives – and we get an absolute majority of 53%. Thus, on all issues involving far-right economics, neoliberalism and the pan-European project Macron will proceed without parliamentary difficulty.

People are acting like Les Républicains haven’t been going along with pan-European project diktats since Nicolas Sarkozy? It’s crazy. He’s the one who engineered the passage of the Lisbon Treaty in 2009, which was rejected in that 2005 vote mentioned above, and which put the installation of the European Union in the hands of national parliaments (run by the bourgeois bloc) and not in the hands of voters.

Macron’s coalition won enough seats to avoid a crisis. He’ll be able to win over just 2/3rds of Republicans (or 44 seats) for a majority on anything of economic and political importance to conservatives (and to pan-Euroepans).

However, one must realise that Macron will also win over many in the Socialist Party and the Green Party, as well! They are plenty of them who are totally on board with neoliberalism and the pan-European project. The NUPES left-green alliance is already fracturing.

Allow me a short victory lap: in already-published chapters of my new book (France’s Yellow Vests: Western Repression of the West’s Best Values – out July 1) I predicted the formation of AND the failure of the NUPES “popular front”. I understand Western fake-leftism – what can I say? This electoral alliance was always just that – to win votes – and it’s already breaking apart. Many in NUPES only put away their Europhilia to keep their seat, after all.

This certainly cannot be argued with, as well: There simply has not been a huge influx of parliamentarians who are anti-EU, anti-Liberalist, anti-austerity and anti-bourgeois bloc, and certainly not any majority. It will be business as usual in Western Liberal Democracy.

However, all of these facts are entirely moot!

You haven’t wasted your time, however, but you do need to please read Part 2 of this column, out soon.


Ramin Mazaheri is the chief correspondent in Paris for Press TV and has lived in France since 2009. His new book is ‘France’s Yellow Vests: Western Repression of the West’s Best Values’. He is also the author of ‘Socialism’s Ignored Success: Iranian Islamic Socialism’ as well as ‘I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’, which is also available in simplified and traditional Chinese.

The Fed’s Austerity Program to Reduce Wages

June 21, 2022

By Michael Hudson and posted with the author’s permission

Preface:

The Federal Reserve Board’s ostensible policy aim is to manage the money supply and bank credit in a way that maintains price stability. That usually means fighting inflation, which is blamed entirely on “too much employment,” euphemized as “too much money.”[1] In Congress’s more progressive days, the Fed was charged with a second objective: to promote full employment. The problem is that full employment is supposed to be inflationary – and the way to fight inflation is to reduce employment, which is viewed simplistically as being determined by the supply of credit.

So in practice, one of the Fed’s two directives has to give. And hardly by surprise, the “full employment” aim is thrown overboard – if indeed it ever was taken seriously by the Fed’s managers. In the Carter Administration (1777-80) leading up to the great price inflation of 1980, Fed Chairman Paul Volcker expressed his economic philosophy in a note card that he kept in his pocket, to whip out and demonstrate where his priority lay. The card charted the weekly wage of the average U.S. construction worker.

Chairman Volcker wanted wages to go down, blaming the inflation on too much employment – meaning too full. He pushed the U.S. bank rate to an unprecedented 20 percent – the highest normal rate since Babylonian times back in the first millennium BC. This did indeed crash the economy, and with it employment and prosperity. Volcker called this “harsh monetary medicine,” as if the crash of financial markets and economic growth showed that his “cure” for inflation was working.

Apart from employment and wage levels, another victim of Volcker’s interest-rate hike was the Democratic Party’s fortunes in the 1980 presidential election. They lost the White House for twelve years. The party thus is taking great courage – or simply being ignorant – by entering on this autumn’s midterm election by emulating Mr. Volcker’s attempt to drive down wage levels by financial tightening, which already has crashed the stock market by 20 percent.

President Biden has thoroughly backed up Republican-appointed Federal Reserve Chairman Jerome Powell in endorsing a financial crash in hope that it will roll back U.S. wage levels. That is the policy of the Democratic Party’s donor class and hence political constituency.

……………

To Wall Street and its neoliberal policy backers … the solution to any price inflation is to reduce wages and public social spending. The orthodox way to do this is to push the economy into recession in order to reduce hiring. Rising unemployment will oblige labor to compete for jobs that pay less and less as the economy slows.

This class-war doctrine is the prime directive of neoliberal economics. It is a feature of the tunnel vision of corporate managers and the One Percent. The Federal Reserve and IMF are are the operating arms for impoverishing the masses. Along with Janet Yellen at the Treasury, public discussion of today’s U.S. inflation is framed in a way that avoids blaming the 8.2 percent rise in consumer prices on the Biden Administration’s New Cold War sanctions on Russian oil, gas and agriculture, or on oil companies and other sectors using these sanctions as an excuse to charge monopoly prices as if America has not continued to buy Russian diesel oil, as if fracking has not picked up and as if corn is not being turned into biofuel. There has been no disruption in supply. We are simply dealing with monopoly rent by the oil companies using the anti-Russian sanctions as an excuse that an oil shortage will soon develop for the United States and indeed for the entire world economy.

Covid’s shutdown of the U.S. and foreign economies and foreign trade also is not acknowledged as disrupting supply lines and raising shipping costs and hence import prices. The entire blame for inflation is placed on wage earners, and the response is to make them the victims of the coming austerity, as if their wages are responsible for bidding up oil prices, food prices and other prices resulting from the crisis. The reality is that they are too debt-strapped to be spendthrifts.

The Fed’s Junk Economics of What Bank Credit Is Spent On

The pretense behind the Fed’s recent increase in its discount rate by 0.75 percent on June 15 (to a paltry range of 1.50% to 1.75%) is that raising interest rates will cure inflation by deterring borrowing to spend on the basic needs that make up the Consumer Price Index and its related GDP deflator. But banks do not finance much consumption, except for credit card debt, which in the United States is now less than student loans and automobile loans.

Banks lend almost entirely to buy real estate, stocks and bonds, not goods and services. Some 80 percent of bank loans are real estate mortgages, and most of the remainder are loans collateralized by stocks and bonds. So raising interest rates will not lead wage-earners to borrow less to buy consumer goods. The main price effect of less bank credit and higher interest rates is on asset prices – deterring borrowing to buy homes, and arbitragers and corporate raiders from buying stocks and bonds. So the main price effect of less bank credit and higher interest rates is to reduce stock and bond prices and demand for home mortgages.

Rolling Back Middle-Class Home Ownership

The most immediate effect of the Federal Reserve’s credit tightening will be to reduce America’s home-ownership rate. This rate has been falling since 2008, from nearly 68 percent to just 61 percent today. The decline got underway with President Obama’s eviction of nearly ten million victims of junk mortgages, mainly black and Hispanic debtors. That was the Democratic Party’s alternative to writing down fraudulent mortgage loans to realistic market prices, and reducing their carrying charges to bring them in line with market rental values. The indebted victims of this massive bank fraud were made to suffer, so that Obama’s Wall Street sponsors could keep their predatory gains and indeed, receive massive bailouts. The costs of their fraud fell on bank customers, not on the banks and their stockholders and bondholders.

The effect of discouraging new home buyers by raising interest rates is to lower home ownership – the badge of being middle-class. The Fed’s policy of raising interest rates will greatly increase the interest charges that prospective new home buyers will have to pay, pricing the carrying charge out of reach for many families. The United States is turning into a landlord economy.

As the United States has become more debt-ridden, more than 50 percent of the value of U.S. real estate already is held by mortgage bankers. That means that homeowners are left with only a minority share in the value of their homes; most is owed to their banks. The remaining homeowners’ equity – what they own net of their mortgage debt – has fallen even faster than home ownership rates have declined.

Real estate is being transferred from “poor” hands to those of wealthy landlord corporations. Private capital companies – the funds of the One Percent – are going to pick up the pieces from the coming wave of foreclosures to turn homes into rental properties. Higher interest rates will not affect their cost of buying this housing, because they buy for all cash to make profits (actually, real estate rents) as landlords. Within another decade the nation’s home ownership rate may fall toward 50 percent (and homeowners’ equity even lower), turning the United States into a landlord economy instead of the promised middle-class home ownership economy.

The Coming Economic Austerity (Indeed, Debt-Burdened Depression) 

While home ownership rates have plunged for the population at large, the Fed’s “Quantitative Easing” has increased its subsidy of Wall Street’s financial securities from $800 billion to $9 trillion – of which the largest gain has been in packaged home mortgages. This has kept housing prices from falling and becoming more affordable for home buyers. But the Fed’s support of asset prices has saved many insolvent banks – the very largest ones – from going under. Sheila Bair of the FDIC singled out Citigroup, along with Countrywide, Bank of America and the other usual suspects. The working population is not considered to be too big to fail. Its political weight is small by comparison to that of Wall Street banks and other FIRE-sector beneficiaries.

Lowering the discount rate to only about 0.1 percent enabled the banking system to make a bonanza of gains by making mortgage loans at around 3.50 percent. The banks kept credit-card rates high – and made even more money on penalty fees for late payment than they “earned” on interest charges (in the range of 18 percent). And despite the stock market’s plunge of over 20 percent from nearly 36,000 to under 30,000 on June 17, America’s wealthiest One Percent, and indeed the top 10 Percent, have vastly increased their wealth in stocks, while the bond market has had the largest boom in history. But most Americans have not benefitted from this runup in asset prices, because most stocks and bonds are owned by only the wealthiest layer of the population. The Fed is all in favor of asset-price inflation. But For most American families, corporations and government at all levels, the financial boom since 2008 has entailed a growing debt burden. Many families face insolvency as Federal Reserve policy aims to create unemployment. Now that the Covid moratorium on the evictions of renters behind in their payments is expiring, the ranks of the homeless are rising.

The Biden Administration is trying to blame today’s inflation and related distortions on Putin, even using the term “Putin inflation.” The mainstream media follow suit in not explaining to their audience that Western sanctions blocking Russian energy and food exports will cause a food and energy crisis for many countries this summer and autumn. And indeed, beyond: Biden’s military and State Department officers warn that the fight against Russia is just the first step in their war against China’s non-neoliberal economy, and may last twenty years.

That portends a long depression. But as Madeline Albright would say, they think that the price is “worth it.” As seen by the Biden regime, the New Cold War is a fight between the “democratic” United States, with its privatized economic planning in the hands of the financial class, and “autocratic” China and Russia, where banking and money creation are treated as a public utility to finance tangible economic growth instead of serving the financialization of the economy.

There is no evidence that America’s neoliberal-neoconservative New Cold War can restore the nation’s former industrial and related economic power. The economy cannot recover as long as today’s debt overhead is left in place. Debt service, housing costs, privatized medical care, student debt and a decaying infrastructure have made the U.S. economy uncompetitive. There is no way to restore its economic viability without fundamental changes in economic policy. But there is little “reality economics” at hand to provide an alternative to the class war inherent in neoliberalism’s belief that the economy and living standards can prosper by purely financial means, by debt leveraging and corporate monopoly rent extraction while the United States has made its domestic manufacturing uncompetitive – seemingly irreversibly. To reduce their labor costs, U.S. corporations moved manufacturing offshore, thereby depriving the American work force of high value-added, high productivity jobs.

The Rentier Class Has Sought to Make America’s Neoliberal Privatization and Financialization Irreversible

It has succeeded to such a degree that there is no party or economic constituency promoting the policies needed for an industrial recovery. Yet the Democratic Party leadership, subjecting the economy to an IMF-style austerity plan, will make this November’s midterm elections unique. For the past half century, the Fed’s role has been to provide easy money for the economy, to give the ruling party at least the illusion of trickle-down prosperity to deter voters from electing the opposition party. But this time the Biden Administration is running on a program of financial austerity.

The Party’s identity politics address almost every identity except that of wage-earners and debtors. Advocating lower wages, more expensive financial charges for home mortgages and credit-card loans, and broken promises for student-debt writedowns does not look like a platform that can attract many voters, especially as the administration pours money into Ukraine. Republicans such as Tucker Carlson are appealing to the “deplorables” majority that the Democrats have left behind.

Addendum: Yves Smith of Naked Capitalism reminds me that: “Paul Volcker made it explicit that the Fed is in the business of crushing labor. As reported by William Greider in Secrets of the Temple, when Volcker was driving interest rates to the moon, he kept a note card in his pocket. It was a record of weekly average construction wages. Volcker wanted them to go down as proof his harsh medicine was working.”

M.K. Bhadrakumar, “West at inflection point in Ukraine war,” Indian Punchline, June 19, 2022

“Fundamentally, the Western economies are facing a systemic crisis. The complacency that the reserve-currency-based US economy is impervious to ballooning debt; that the petrodollar system compels the entire world to purchase dollars to finance their needs; that the flood of cheap Chinese consumer goods and cheap energy from Russia and Gulf States would keep inflation at bay; that interest rate hikes will cure structural inflation; and, above all, that the consequences of taking a trade-war hammer to a complex network system in the world economy can be managed — these notions stand exposed.”

Maduro: We Are All Part of Axis of Resistance

June 21, 2022

By Staff, Khamenei.ir

Venezuelan President Nicolas Maduro said the ‘Axis of Resistance’ is not just confined to certain countries across the world, but it refers to all those fighting colonialism and hegemonic powers.

“The Axis of Resistance exists throughout the world; it exists in Africa, in Asia, in the Middle East, in Latin America and in the Caribbean. The Resistance also belongs to the people who are fighting against neoliberalism, racism and various forms of colonization, political, economic, cultural colonization and cyber colonization,” Maduro said in an exclusive interview with the official website of Leader of the Islamic Revolution His Eminence Imam Sayyed Ali Khamenei that was published on Monday.

“All of us who fight against colonialism, all of us who fight to decolonize our minds and our people, are part of the Axis of Resistance that stands against the methods of the imperialists for imposing hegemony on the world,” he added.

Maduro: We Are All Part of Axis of Resistance

Lauding the deeds of the Axis of Resistance throughout the years, Maduro said, “The 21st century is our century. It is the century of the unity of the people. It is the century in which people will be liberated. It is the century of justice and truth. Empires are in decline, and people’s projects for well-being, development and greatness have just begun. This century is our century.”

Pointing to a recent meeting with Imam Khamenei and the His Eminence’s statement about the very close relationship between Iran and Venezuela, Maduro said, “Since Commander Hugo Chavez’s first visit in 2001, Iran and Venezuela have established exemplary political, diplomatic, moral, and spiritual ties.”

“During this current trip, I’ve witnessed how there is an exemplary relationship between us in terms of our increasing cooperation. We’ve had many successes. So Imam Khamenei is right when he states that the relationship between the two countries is quite unique and extraordinary,” he noted.

Asked about his latest assertion regarding the Zionist occupation regime’s conspiracies against Venezuela through Mossad, Maduro said, “Imperialism and Zionism are conspiring against the progressive, revolutionary processes taking place in Latin America and the Caribbean, especially the Bolivarian Revolution.”

The Venezuelan president stressed, “This is because we are a true alternative, an alternative of truth and justice, an alternative of freedom, an alternative of democracy, and an alternative for realizing projects that are fully humane in the Latin American region and the Caribbean Sea. In addition to this, Mossad’s conspiracies are due to our strong position of solidarity with the Palestinian people and our support of them for their regaining their historical rights and for the Palestinian Resistance. Our support of them is strong and unique, and we will continue supporting them in this manner.”

Asked about the role of Iran’s anti-terror commander General Qassem Soleimani and the Quds Force over the last 20 years in strengthening the relationship between Tehran and Caracas, Maduro said he met General Soleimani in March and April of 2019 when he came to Venezuela during the time of US’ cyberattacks against the country’s power plants.

“I really didn’t know. I didn’t know him. I didn’t know how amazing he was, but the discussion I had with him was very pleasant. We reviewed everything during our meeting and he immediately suggested we get help from Iranian experts. Two or three days later, Iranian experts came to repair electrical services in Venezuela,” he added.

In response to a question regarding a saying by Imam Khamenei that, “If Prophet Issa [Peace upon Him] were among us today, he wouldn’t miss a moment to fight the leaders of global oppression and arrogance,” Maduro said, “We’re believing Christians. We’re the type of Christians who take action while praying and thinking. And Christ came into this world to fight the Empires. He came to confront the Roman Empires. He risked his life. He sacrificed his life to fight the Roman Empire.”

The Venezuelan leader said, “If there’s one good thing I can say about Christianity, it is its anti-imperialist nature and its seeking of truth and justice against the oppressors. I have no doubt that if Christ were among us today, he would have been at the forefront of the battle against imperialism, colonialism and all forms of oppression.”

During the interview, Maduro pointed to several meetings he had had with Imam Khamenei over the years as well as the meeting between Chavez and the Leader of the Islamic Revolution.

“I’ve always admired Imam Khamenei’s excellent memory. That he recalls the memories of those days is important. In the talks that I have had with him, he has recalled some of the conversations he had with Commander Chavez where Commander Chavez shared some of his memories about Cuba and Commander Fidel Castro. There was a time when a hurricane was heading straight toward Cuba. It was a Category 5 hurricane. A conversation took place between Fidel and Chavez. Fidel said, “Chavez! What you need to do right now is to pray. Pray for us!” Chavez started praying. That day passed and the hurricane changed its course. It didn’t cross over Cuba. Chavez called Fidel and said, “It’s a miracle!” Fidel replied, “Yes, it’s because God helps Chavez and Chavez’s friends.” In the last talk that I had with Imam Khamenei, he told me this story in a friendly, kind way in memory of Commander Chavez and Commander Fidel Castro,” he said.

“Holding a conversation with Imam Khamenei truly fills one with spirituality and wisdom. He likes the Venezuelan people. He likes the people’s ideals, and he always offers us great ideas and recommendations,” Maduro underlined.

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.

Growing up Yellow Vest: Seeing French elites, not French people, conquered by neoliberalism

May 08, 2022

Source

By Ramin Mazaheri

World War II saw massive political gains by the lower classes and average person, but only via their own mass-murder. Many socio-economic demands which go back to 1789 and which animated the Revolutions of 1848 were put in place, finally.

(This is the ninth chapter in a new book, France’s Yellow Vests: Western Repression of the West’s Best Values. Please click here for the article which announces this book and explains its goals.)

The three biggest changes were that socialism was now firmly implanted on the global scene, women got the right to vote in France in 1944 and that the Western Liberal Democratic elite were discredited worse than ever.

That forced Western elite, who were now allying with fascists to forestall further socialist and anti-imperialist victories, to make political and economic concessions which they had resisted for a century. These subsequent 30 years – from 1945 to 1975 – are known as the “30 Glorious Years” in French history. During this period a broad economic stability was founded upon the stability, productivity, joy and long-sightedness which can only be provided by worker rights and influence, and by socialist-inspired levers and organisations.

The brief era of “Social Democracy” was officially terminated by the introduction of the euro (1999) and then the European Union (2009). EU citizenship was introduced in 1992 but its official installation was not until 2009, with the elite-only ratification of the Lisbon Treaty, which amended the constitutional basis of the EU, the Maastricht Treaty (1992) and the Treaty of Rome (1957). The Yellow Vests would be the flaming leftist economic and political reaction to this political-economic regression away from Social Democracy. The introduction of this version the pan-European project was a major regression in the threat of modern political history: to reduce the autocratic rights of elite and to increase the empowerment of the average person.

Sadly, it was only 30 years – one generation – before the autocratic and oligarchical elite began to retake power. When they do this effort is called “neoliberalism”, even though the first “neoliberalism” was with the start of 3rd Republic (1871-1940), which restored the immediately discredited and popularly rejected Liberalism of the 2nd Republic (1848-52). The goal of today’s “3rd-liberalism” is to end the Social Democracy era and to redistribute its gains back to the Liberalist 1%.

This book ignores the upheaval of 1968 in France – when a General Strike attracted 8 million workers in a country of 50 million people – for this reason: This is a book is about political changes, and the rebellion of 1968 only produced cultural changes. It was indeed a cultural revolution, but because it was not state-sponsored, as in China, where cultural changes were embraced by leaders like Mao Zedong, the Western Liberal Democratic elite successfully broke any chance of fully democratising from Social Democracy to Socialist Democracy. There’s no denying that this era’s cultural revolution (note the lower case) won advances in everyday culture but that is not the same as formal political-economic changes.

The political failures/cultural gains of this era would eventually reveal the continued rightward shift within the elite of the French left, and this can be illustrated by the path of Daniel Cohn-Bendit, the most prominent of the student leaders in 1968. In his memoirs he wrote that he was not seeking Marxist-inspired equality but simply more control over his personal life. These freedom of expression types of changes can perhaps be encapsulated in the freedom of students to now question their teachers in class. Cohn-Bendit would quit the Trotskyists, switched to the Green Party, became a devoted Europhile, reject the Yellow Vests and is now a close advisor to Emmanuel Macron – it’s an incredibly representative political trajectory of this era. Ecology is a subject completely neutered of class politics (even though the idea of a capitalist/competitive solution to ecological issues, and not socialist/cooperative solution, is an obvious absurdity) and thus is the political outlet most encouraged by contemporary Western Liberal Democratic elite.

However, we should note that for many decades already French socialism was primarily intellectual, and dominated by right-wing socialists: “Before the war of 1914-1918 only 20% of socialist deputies were workers while they had been 80% of the German socialist party (SPD), and they represented the totality of the English Labor party. The socialism of Jaures and Blum is, when it comes to leaders, a socialism of intellectuals and liberal professions,” wrote Romaric Godin in La guerre sociale en France (The Social War in France – 2019). Jean Jaures and Leon Blum were the right-leaning socialist leaders of their respective generations. Jaures is notable in that both Francois Hollande and Nicolas Sarkozy both claimed to be continuing his legacy. Also notable is that whether worker or intellectual – 20th century West European socialists failed.

Between the USSR’s fall (1991) and China’s rise (starting in 2008) the French left’s economic ideology was in disunity and disarray at best and total betrayal at worst. Many also went whole-hog over to neo-imperialist culture, espousing right-wing “universal values” and embracing neo-colonial wars in the former Yugoslavia and the Muslim world.

The change began in 1974 with the death in office of President George Pompidou, Charles de Gaulle’s successor in the 5th Republic (1958-today), just a month before the presidential vote.

Neoliberalism starts to win over elites from Paris to Moscow, but the French keep protesting

Pompidou’s death effectively ended Gaullism, which had helped win World War II, presided over the “30 Glorious Years” and insisted on French sovereignty. The closet election in French history saw the victory of the aristocrat Valerie Giscard d’Estaing, a politician who was thus extremely familiar but also a new breed: Giscard d’Estaing was liberal on social issues, rejected Gaullist Euroscepticism and was extremely close with high finance – he served as Minister of Finance twice. We see how the “Bankocracy” has gone from not existing in 1789 France to running the executive branch. He marks the start of the third restoration of extremist Liberalist thought.

Liberals had been waiting decades to restore firm control, and they salivated at the prospect of dividing up the spoils created by the 30 Glorious Years. Using the excuse of inflation cased by a rise in oil prices in 1973, free competition was reimposed after decades of abandonment, austerity was imposed for the first time, salaries were frozen, compulsory salary taxes soared ten points to nearly 30% and the despised CDD work contract was created. (The despised contrat à durée déterminée is a temporary employment contract which renders life in France extremely difficult and unstable. It’s usual length is one month and then it is renewed endlessly, without ever becoming a long-term contract. As the French do not have hourly wages, the CDD can perhaps be thought of as “part-time work”.) Seigniorial dues and tithes were not restored.

It would not be until 2016 that a team of economists at the International Monetary Fund would release a paper which admits that austerity doesn’t work. The economic massacring of the lower and middle class which is austerity would be the reason for the upcoming years recession, although the mainstream history is that it was entirely due to the rise in oil prices.

France was not alone in its first steps towards the restoration of Liberalism. The United States responded to energy inflation with the “Volcker Shock” in March 1980: a huge rise in interest rates which gutted the average person’s primary asset class – the housing market. The UK and Germany turned to wage suppression. It’s vital to note that the same elite capture was also occurring in the USSR. By Christmas 1991 it would be imploded from the top: their elite infamously ignored a high-turnout referendum in March in which 80% of the nation voted to preserve the USSR.

Unsurprisingly, the French voter rebelled: Giscard d’Estaing was voted out in 1981. A socialist-communist backing of Francois Mitterrand’s economic platform – the most socialist economic plan ever promoted in the non-Eastern Bloc Europe – was a repeat of 1936. However, by 1983 he infamously made his U-turn back to austerity (more on this shortly) – French elites had fully accepted the terms of Liberalism.

Yellow Vest: “I worked from the age of 14 until the age of 60, and in my entire life I accepted only 1 month of unemployment insurance. And yet, in the last 4 years I have seen my pension lowered from 1,150 euros to 1,050 euros. My rent is 800 euros a month, so I cannot afford to live, and I will never accept this injustice.”

(Note: this book intersperses over 100 quotations taken from actual, marching Yellow Vests which were originally published in news reports on PressTV.)

By 1986 French neoliberalism was in full swing: the abolishment of price controls, the end of controls on exchange rates and the deregulation of financial markets in order to do what modern Western financial markets do – divert the wealth produced by people who actually work into the bank accounts of the 1%. Mass de-nationalisations began: General Electric Company, Suez, Paribas and Société Générale (banks), Saint-Gobain and Matra (industrial giants).

The average Frenchman would not accept the death of Social Democracy as complacently as in the rest of the West, and that fact is certainly in keeping with the line of West European history since 1789 – the Yellow Vests only confirm this line further. The French responded to the restoration of Liberalism over socialist-inspired ideas with massive, broadly-encompassing and successful social movements: protests against proposed university reforms in 1986 and rail reforms in 1987. The “Touche pas à mon pote” (Don’t touch my buddy) movement marked the introduction of French Muslims into French political movements.

Godin, who is also the economics reporter for France’s top media, Mediapart, wrote: “The error of (then prime minister) Jacques Chirac in 1986 was to think that he could force through a new culture which could sweep away the past, as Margaret Thatcher did across the Channel. However, the French showed their capacity to resist the complete destruction of their social model.”

In France from 1986 until 1995 efforts at restoring liberalism were stopped by massive social movements: against worse work contracts in 1994, retirement and social security cutbacks in 1995. The 1995 General Strike was the largest since 1968, and the political introduction for a new generation. Starting in 1992, the excuse of the need to “qualify” for the euro currency – and thus right-wing rollbacks were needed – was unconvincing to the average Frenchman as well.

From 1995-2007 the attempts at major neoliberal reforms were less ambitious and, crucially, began to offer some monetary redistribution efforts as compensation for right-wing deforms. This is partially explained by the inflation which immediately followed the introduction of the euro in 1999. The reforms of 1994 would fail again in 2006 when they were attempted to be rammed through, due to more protests.

But by 2002 the leftist voter had partially revolted against the traitorous French left – the National Front made it to the 2nd round at the expense of the ever-more un-socialist Socialist Party. The far-right party – totally neoliberal in economics – was led by Jean-Marie Le Pen, a former intelligence officer in Algeria. Like with Cavaignac in 1848, once again Algerian colonisation has provided the entry point for the most extreme-right and anti-socialist elements in French domestic politics.

The National Front’s advancement to the runoff was precisely due to the left’s now two decade-long embrace of neoliberalism despite the rejection of neoliberalism by its constituents. The French mainstream media like to blame Mitterrand’s party-gerrymandering, but that’s a distant secondary reality from the fact that voters opposed this third return of liberalism. However, unlike in 1852 there was no Bonapartism to send Liberalists packing, and unlike in 1945 liberalists had not yet had a long-running economic crisis deep enough and/or war to fully discredit them.

The 2005 French European Constitution referendum was essentially a referendum on neoliberalism, and it lost by a 55-45% margin. The majority of the French Socialist Party would vote yes, and that effort would be led by future president Francois Hollande. Three days later the Netherlands would also vote no, by a 62-38% margin. Aghast, Western Liberal Democrats decided that this would essentially be the end of putting the concept of the European Union to popular votes.

Yellow Vest: “The government doesn’t listen to us at all. The economic situation keeps getting worse, the prices are rising, and the government’s response is to attack the Yellow Vests to keep us from telling the truth.”

In May of 2007 neoliberalism made a huge inroad in France with the election of Nicolas “l’Américain” Sarkozy, the son of a Hungarian nobleman. Sarkozy was the first French politician since World War II to break totally with even lip service to being an anti-monarchist in style and ideology. Giscard d’Estaing at least made regular and often poorly-received efforts to shed his aristocratic pretensions and appear close with the average person. The pernicious influence of monarchy was still grasped in France then, but the new millennium has seen Western culture re-cultivate the idea that greed is good and that the aristocracy are our betters.

Sarkozy would make France the first major European power to approve the new Lisbon Treaty, which put the installation of the European Union into the hands of the elite: the Maastricht Treaty was reformed to allow the installation of the EU via the approval of national parliaments and not popular referendums. French Socialist MPs overwhelmingly voted in favor of this coup in plain sight.

The method (oligarchical approval) and context (an economic collapse unseen since 1929) of the ratification of the Lisbon Treaty cannot be stressed enough, as it unmistakably reveals that in the history of Western Liberal Democracy the installation of EU was the latest in a never-ending line of autocratic decisions by their oligarchical elites. Again, by understanding modern political history (which began in 1789) as a move away from autocracy and towards democracy we see how the EU is a regression and not a progression.

Only Ireland was able to achieve a popular referendum on the Lisbon Treaty: when the first vote produced a rejection a re-vote was forced the following year, when it passed. Every other member approved the installation by a vote in their national parliaments, as well as six royal assents.

This is a precise repeat of when the parliamentarians of the French 2nd Republic, the continent’s first Western Liberal Democracy, committed coups against the people via voting to submit the 1848 Constitution to the majority approval of parliament, and then to gut the primary advance of the 1848 Revolution, universal male suffrage. The populist reaction then was the democratic approval of the re-installation of Bonapartism in 1852, with Louis-Napoleon Bonaparte, who restored universal suffrage and ended the disastrous first foray of Western Liberal Democracy.

The vast majority of nations would ratify the Lisbon Treaty between February and July of 2008, a disastrous year. The collapse of Lehman Brothers investment firm that September is the official start of the Great Recession, but the US Federal Reserve held its first emergency weekend meeting in 30 years back in March, to negotiate the shocking collapse of the Bear Stearns investment group. Thus, it’s not as if European elite weren’t aware of major issues brewing. Four countries, including Germany, would not fully ratify the treaty until after the fall of Lehman Brothers. We can certainly call it an amazing coincidence: how the elite Liberalist politicians successfully forced through the European Union mere weeks before economic collapse struck?

The Treaty would be fully ratified in November 2009 amid mass bankruptcy, home foreclosures, unemployment and that slogan which is the essence of British conservatism: “Keep calm and carry on”. The pan-European project was now complete and – as we’ll see – largely unchangeable. The European Union thus joined only Saudi Arabia, Israel, San Marino and the UK Commonwealth as having citizenry but no constitution.

The European Union thus was born amid the Great Recession – it has never been willing or able to end it.

The next chapter will deal with three related events – the Great Recession, the European Sovereign Debt Crisis and the Age of Austerity – which left the French populace too skeptical, resentful and experienced to allow the extremist Liberalist policies and autocratic personality of Emmanuel Macron to go uncommented upon, as he apparently had assumed.

This chapter has thus far shown how the French people, but not the elites, successfully fought the 3rd restoration of liberalism which so many other countries embraced even before the implosion of the Soviet Union. We should now turn to these new Liberalist structures.

I should note that in this era of Socialist Democratic collapse the last great progressive revolution of our contemporary times – the Iranian Islamic Revolution – victoriously emerged from the ashes of the Western-imposed Iran-Iraq War in 1988. They found very few sympathisers to the socialist-inspired country it had just forged, and then 9/11 would create not just skepticism but violent animosity towards seemingly all things Islamic.

The European Union – capitalist cartel or France’s idea of a progressive & united continent?

Yes, it’s pathetically easy to dismiss any discussion of the European Union as being merely an extension of aristocratic autocracy: since 1992 there have been eight national referendums which rejected key aspects of the European Union only to be either ignored or subverted by oligarchical elites. Nonetheless, if we insist (rightly) that another version of the pan-European project is possible then we need to see how France has repeatedly proposed an alternative vision of a united Europe, and one which wouldn’t have been embraced by the liberalists of 1848 or 1871.

Just as Lenin saw that the principal feature of modern capitalism is monopoly, so the EU began in 1951 as an undemocratic cartel to fix prices for coal and steel. The European Coal and Steel Community also included a multinational bureaucracy which was empowered to ignore national parliaments and laws.

Was the EU always intended to be just a capitalist cartel? It’s possible, but we cannot completely ignore France’s historical trend since 1789, which is to be more often than not at the progressive forefront of the West.

In the WWII postwar reckoning France was excluded: de Gaulle was famously not invited to the Yalta Conference in February 1945. Thus, France immediately saw that the US and UK liberalists were only dealing with the head of Western leftism since 1917, the USSR. After the Labor Party defeated Winston Churchill in July 1945, just two months after the defeat of the Germans, the rabidly anti-socialist US called off the in-progress plan to de-industrialise Germany and instead tapped West Germany for their imperial collaborators in Europe. That is why Germany is the industrial powerhouse of Europe today even though they provoked and lost WWII: Western Liberal Democracy’s alliance with postwar fascists couldn’t be more clear. This was a crucial historical decision which laid the foundation for German domination of the Eurozone and EU today. Many would add that it is a US domination of the Eurozone and EU, and via their longtime dependant in Germany.

By the 1960s French elites were well aware that they could not compete industrially with America’s creation of a German Frankenstein, so in their conception of a pan-European project they wanted to join with – not conquer – Germany. In some ways this is a continuation of the Franco-German elite alliance in 1871, but there is a very different factor this time: the imperialist United States.

Historically, no country’s elite has pushed harder for European unification than France, and that’s because the European Union was seen by many French elite as something which could serve as a Franco-German bulwark against imperial domination – that of the United States. The idea of total French enmity with Germany since 1871 is a short-term view – the two neighbors share a tremendous number of cultural similarities, values, multiple regions and several millions of Franco-German citizens in Alsace, Lorraine and in Alpine regions. France uniquely combines both the cultures of Latin/Mediterranean Europe and Northern Europe, after all. Some further add that France is a Latin country but run by a Northern elite. European unification was seen by many in Paris as an effort to preserve the sovereignty of both nations and to create a counterbalance to the obviously domineering US. In this way we can say that the European Union was the latest in two centuries of effort by France to unite Europe in a more progressive way – the problem is the awful, undemocratic structures which this version of a pan-European project would ultimately adopt.

The foundational Élysée Treaty of friendship between France and Germany, signed in 1963, was a clear attempt to separate West Germany from the Anglosphere. The US was livid at France’s attempt at undermining the US-imposed postwar order: “I can hardly overestimate the shock produced in Washington by this action or the speculation that followed, particularly in the intelligence community,” said top US diplomat and banker George Ball.

The French understood that the 1944 Bretton Woods monetary system (when accounts began being regularly settled not in gold but in dollars) was not meant as a balanced system of international trade and financial flows but as an instrument of US domination via the dollar. Europe’s participation meant it supported American living standards and subsidised American companies. That the US could print unlimited dollars for unlimited imports was famously deemed an “exorbitant privilege” by France, but postwar France could do nothing about it until 1965.

The US deficit exploded in the mid-1960s, mostly due to their imperialist wars in East Asia. France and de Gaulle openly demanded a reform of the Bretton Woods system, a return to the gold standard and began repatriating French gold from New York City banks. “Perhaps never before had a chief of state launched such an open assault on the monetary power of a friendly nation,” wrote Time magazine in February 1965. In 1967 France was the first to withdraw from the West’s London Gold Pool, hastily constructed in 1961 to defend Bretton Woods. Unlike the UK and Germany, France was not always so subservient to the United States.

The truth which financial media never wants to tell is that France had a genuine commitment to a pan-Europeanism guided by a mixed socialist/pro-growth/not-rabidly-capitalist economic plan. This mirrors France’s own postwar “Mixed Economy” model, in which the state gives short- and long-term targets for industry to meet, and aids them to achieve it. There’s planning and state ownership – not at the level of a communist state but enough to enrage liberalists. There is also a commitment to a social safety net because endless austerity is simply not sustainable if French elite wish to avoid further revolutions. France’s Mixed Economy is also not at the level of Japan, where the state’s role was much larger (until the Plaza Accord of 1985, signed by Japan, the US, France, West Germany and the UK), and where economic success was spectacularly greater.

France’s contemporary effort to fight far-right economics and austerity did not begin with Francois Hollande’s 2012 election campaign campaign but began three decades earlier. So why did Mitterrand’s anti-3rd liberalist “Common Project” culminate in a U-turn in in 1983? Of course, just like in 1936, 1871 or 1848 the primary reason is that Western Liberal Democracy is an oligarchy which refuses to listen to the majority will of the people (as in a normal democracy). But in 1983 the power of a completely united globalist rich class – one undivided by royalist squabbles or support for the national sovereignty proposed in fascism – could be wielded as one. This same tool – the “Bankocracy” of international high finance – would also be used to provoke the 2012 European Sovereign Debt Crisis.

Despite a huge democratic mandate to end Giscard d’Estaing’s austerity and restore growth polices, France was immediately foiled by high finance and currency speculators. Capital flight from France to Germany immediately took place and long-term borrowing rates (10-year bond) went from 9.6% in March 1979 all the way to 17.3% in May 1981, when Mitterrand was elected. Government bonds, as Marx foresaw, are the indispensable lifeblood of the biggest economic actor in any capitalist country: the government. After devaluing the franc three times Mitterrand was forced into submission. He made his U-turn and by March 1986 10-year bonds were at 9.3%.

Yellow Vest: “The British have shown us that it is possible to obtain a referendum on leaving the European Union. However, the French media refuses to ever discuss the issue at all, but many in France will not stop demanding a Frexit.”

What happened was that Germany and the Bundesbank, knowing that Western high-finance was philosophically in their corner and willing to destroy France’s democratic will with every dollar they could borrow, joined with global high finance and professional currency speculators to strangle France into backtracking on socialist-inspired policies. If high finance cared at all for democracy they would have supported France’s anti-austerity plan. However such an idea is as absurd today as it was to socialists, fascists and even the apolitical in the 1930s, and also to those opposing the nouveau riche backers of the House of Orleans in 1830’s July Revolution.

France could not boldly defy high finance and keep devaluing their currency until growth took hold for another crucial reason: they would have had to abandon the 1979-inaugurated European Monetary System (EMS), the financial predecessor of the euro. This was an adjustable exchange rate agreement which linked 10 Western European currencies to prevent large fluctuations. It was France’s brainchild for their long-term goal: wooing Germany away from the US and towards a genuinely European integration. Preferring to stay in the EMS meant violating the people’s democratic will demanding an anti-austerity agenda – this process would obviously be repeated ad nauseam.

By 1993 the European Union would begin, which replaced the European Economic Community, which in 1957 had replaced the original European Coal and Steel Community. The euro currency would arrive six years later – the new structures would fully end the Social Democracy era.

In 2012 Hollande was the hope of an entire “Latin Bloc” against Germanic austerity, once again, but he would do the exact same U-turn. However, he showed far less resolve than Mitterrand and faced far less pressure: 10-year bonds stood at 2.75% when Hollande was elected and and they fell immediately – high finance seemed to know the longtime Europhile Hollande’s anti-austerity promises were election nonsense. French 10-year bonds stood at 0.81% when he left office, in total disgrace and with the Socialist Party perhaps permanently smashed.

More important than the EU – the Eurogroup

Part of the problem of talking about the “pan-European project” is that you have multiple bodies which overlap. You also have some nations which are part of one, but not another. Or which pay into one body, but abstain from another.

The Eurozone is more important than the European Union because it controls the money in the world’s second largest macro-economic bloc behind the US (in 2008). By comparison, the EU is mainly a regulatory body, and their modest annual budget – about the size of Denmark’s – reflects that.

All serious studies of the eurozone – from Nobel Prize-winning economists, such as Joseph Stiglitz, to those with insider knowledge of how it operates, such as former Greek Finance Minster Yanis Varoufakis – stress that there is nothing in its structure which allows for the possibility for change. That’s a pretty vital and damning conclusion to be consistently reached, especially when post-1991 Europe loves to stand on its hind legs and lecture the rest of the world about democracy. Objective studies reach another regular conclusion, and it’s one which is shared by the lower- and middle-class: the euro has totally failed in its promise to bring about prosperity and economic security.

The Eurozone was a clear replication of the German Zollverein, led by Prussia during the 19th century, which was the world’s first example of independent states creating a full economic union without also creating a political union. Germanifying an area of German-speaking peoples and cultures is one thing, but trying to replicate that for all of Europe has only led to dramatic inequalities.

The Eurozone thus embodies the victory of Germanic economic ideology in tandem with the victory of English oligarchic parliamentarianism in political ideology – this is perhaps the simplest essence of Western Liberal Democracy: England’s Glorious Revolution of 1688 combined with the Germanic commitment to the economic autocracy of the elite. The French are often called the intellectuals of Europe, but it’s far more accurate to call them the ignored intellectuals of Europe: the history of Europe since 1789 is the defeat of French intellectual egalitarianism and the victory of the aristocratic thought of Anglo-Germanic intellectuals.

To examine the Eurozone you have to bring up something which mainstream media is instructed to ignore – the Eurogroup.

The Eurogroup rules the Eurozone and its 19 member states, and it also governs the “bailouts” to member nations like Greece. The Eurogroup is, at face value, an informal monthly meeting of the finance ministers of the euro member countries.

However, it is no exaggeration to say that the Eurogroup is the banker cabal hidden in plain sight. It is truly the expression of the autocratic and oligarchical forces which go back to 1788. Gone are the Bourbons and Orleanists, though of course they remain on the boards of banks and hedge funds.

In his 2017 book And The Weak Suffer What They Must? Varoufakis provided a wealth of insider knowledge on how the Eurogroup operates.

“Moreover, the Eurogroup, where all the important economic decisions are taken, is a body that does not even exist in European law, that operates on the basis that the ‘strong do as they please while the weak suffer what they must’, that keeps no minutes of its proceedings, and whose only rule is that its deliberations are confidential – that is, not to be shared with Europe’s citizenry. It is a set-up designed to preclude any sovereignty traceable back to the people of Europe.”

What can we say of Western Liberal Democracy when their most advanced economic achievement is governed by an entity with no rules, no records, no democratic process and no democratic accountability? It is truly a return to 1788 – the time when the average person had no say in politics or economics. Every French person should be able to recognise in 21st century Western Liberal Democracy the autocratic domination which even the many European kings of today recognise is no longer unacceptable.

Thanks to the whistle-blowing of Varoufakis we also know that there is also essentially no discussion at Eurogroup meetings: The Troika (the International Monetary Fund, European Central Bank and European Commission) initiates, dominates and outlines the terms and then the finance minister-members vote. The overwhelming majority of participants in this group which governs eurozone economic policy (and thus social policy) are bankers, former bankers or intimately tied to high finance.

When bankers run economic policy, one shouldn’t be surprised if the resulting social policy is for the benefit of bankers and their biggest aristocratic clients. Yes, the EU is obviously a Bankocracy, but Bankocracy is simply the modern form of rule by an oligarchy of the rich and powerful. It is as if the new banker class in 1830’s France didn’t just put the House of Orleans on the throne and boot out the House of Bourbon, but as if the new banker class assassinated all Houses, restored serfdom and declared that they had a divine right to rule. Their obvious goal is the rollback of mere Social Democracy, and to reattempt a destruction of any Socialist Democracies.

The Eurogroup is not an EU institution and cannot declare any legally-binding decisions. It can never be blamed for a bad decision, nor held accountable, because it is not answerable to any parliament or body politic whatsoever. Many are increasingly asking in France and Europe: What’s the point of voting for any national or EU politician if they have little to no chance of influencing policy? Many don’t even realise that the highest level of policymaking is actually the Eurogroup.

Yellow Vest: “In France’s 5th Republic when someone is elected president they can do whatever they want for five years because we truly have no way to influence them. This is why the Yellow Vests are insisting that Macron accept regular citizen referendums on his policies, because he is destroying French society.”

(Of course, what will occur when citizen referendums oppose the decisions of the Eurogroup? The European Union will step in and either totally ignore the referendum, call it illegal or regulate them away.)

It is self-evident that that when politics does not rule – where there is no law or regulation – the rich are the rulers. It is also self-evident that in a climate of total deregulation the richest nations and persons will benefit the most, thus inequality will increase. It is also self-evident that when billionaires and hedge funds own the bulk of a deregulated and denationalised media there will be very little discussion of the Eurogroup in the mainstream media. This is what has happened throughout the history of the Eurogroup, which operated without formal recognition until the Lisbon Treaty.

Unsurprisingly, the US pioneered the concept of mass deregulation in the early 1980s, which they foisted on Europe as much as possible when their academics, think tanks and intellectuals helped oversee the writing of the new structures of the pan-European projects. It is thus no exaggeration to say that – coming after the so-called “end of history” and Liberalism’s alleged total victory following the fall of the USSR – the Eurogroup has achieved the American dream of total deregulation even more than in America.

For the Eurogroup to become remotely democratic and not autocratic/oligarchic a Eurozone constitution would have to be created, an executive would seem useful, a legislative branch would be indispensable and approval power over national budgets would seem necessary. Only the last is already in existence, but why would they add any Liberal or Socialist Democracy to this Bankocracy? Answer: they never will create this in any sort of equitable format.

Such facts make it clear why the Eurogroup cannot be considered compatible with democracy, and thus cannot be supported. One might support creating a new Eurozone or changes to the Eurozone structure, but supporting the current Eurozone is simply indefensible. The European corollary to the post-1991 dictum of TINA (There Is No Alternative (to imperialism and liberalism)) is that there is no alternative permitted to this version of a pan-European project.

Because change is impossible the elites’ goal is thus forced ignorance and silence, and when that fails, deflection: “To believe that Europe’s problem was debt. Not the architectural design of the Eurozone. Not its unenforceable rules. But debt. Debt was never Europe’s problem. It was a symptom of an awful institutional design,” wrote Varoufakis.

From 1999 until 2007 it’s said that the Eurozone had a short period of success in redistributing wealth. This is based on the fact that rich Eurozone countries decided to loan to their Eurozone brethren in poorer countries. As is always the case in capitalist countries, and as was seen in previous recessions, and as is evidenced in the history of countless Western Third World client states – once economic troubles hit these loans were called in and could no longer be repaid, creating even more crisis.

Liberalism fully restored for the third time – exact same result: immediate failure

The 2009 European Sovereign Debt Crisis will go down in history as the time when the EU both started working and then immediately started dying. The response to the crisis by Brussels and the newly rammed-through governmental structures made clear that the economic solidarity which would be required of richer nations to make “more Europe” work simply does not exist.

The parallel of its literally-immediate democratic discrediting with France’s 2nd Republic should be striking to all readers of this book, and should remind that Western Liberal Democracy has only produced failure. This is especially true when the outlet of imperialist war is not an option for this structure – France’s 3rd Republic (when Liberalism was re-imposed) took advantage of this option to the maximum, as the 3rd Republic’s imperial empire was one of history’s most expansive.

As the European Sovereign Debt Crisis turned into the Age of Austerity Europe’s richer nations got what they wanted from weaker Eurozone countries – ports, airports, water departments, laws favouring their own industries against local industries, etc. They did this all while claiming that Western Liberal Democracy was so much more just than any ideological competitors!

Pro-capitalist American media may be persuaded by the German accusation of profligate smaller countries, but most of Europe saw the democratic will of nation after nation get strangled until their national politicians surrendered. Around the continent (and the UK) many realised that the EU and Eurozone was sucking the lifeblood of White locals the way White colonialists used to suck the lifeblood of Brown locals. Some understood that the forcing of the governments of Greece, Ireland, Portugal and other weak countries to assume the private debts of French and German banks was simply a repeat of what happened all over the 3rd World since the late 19th century – neo-imperialism was not just for Brown puppets anymore, but White puppets too.

2009 thus became the historical bookend to 1871’s siege of Paris, when the elite of France and Germany colluded to destroy the first flowering of Social Democracy and Socialist Democracy in the Paris Commune. French and German banks were the most leveraged in Greece; are the two biggest funders of the European Central Bank; were the most insistent that promises of borrowers to their bankers are sacrosanct while the promises of national politicians to their voters are not. The victory of the neoliberal and neo-imperial EU empire was thus fully imposed, and – amid the heat – Bismarck and Thiers looked up and smiled.

None of this was missed by the as yet unformed Yellow Vests.

<—>

Upcoming chapter list of the brand-new content in France’s Yellow Vests: Western Repression of the West’s Best Values. The book will also include previous writings from 2018 through the 2022 election in order to provide the most complete historical record of the Yellow Vests anywhere. What value!

Publication date: July 1, 2022.

Pre-orders of the paperback version will be available immediately.

Pre-orders of the Kindle version may be made here.

Pre-orders of the French paperback version will be available immediately.

Pre-orders of the French Kindle version may be made here.

Chapter List of the new content

Ramin Mazaheri is the chief correspondent in Paris for PressTV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. He is the author of ‘Socialism’s Ignored Success: Iranian Islamic Socialism’ as well as ‘I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’, which is also available in simplified and traditional Chinese.

The Dollar Devours the Euro

April 08, 2022

By Michael Hudson and posted with the author’s permission

It is now clear that today’s escalation of the New Cold War was planned over a year ago, with serious strategy associated with America’s plan to block Nord Stream 2 as part of its aim of blocking Western Europe (“NATO”) from seeking prosperity by mutual trade and investment with China and Russia.

As President Biden and U.S. national-security reports announced, China was seen as the major enemy. Despite China’s helpful role in enabling corporate America to drive down labor’s wage rates by de-industrializing the U.S. economy in favor of Chinese industrialization, China’s growth was recognized as posing the Ultimate Terror: prosperity through socialism. Socialist industrialization always has been perceived to be the great enemy of the rentier economy that has taken over most nations in the century since World War I ended, and especially since the 1980s. The result today is a clash of economic systems – socialist industrialization vs. neoliberal finance capitalism.

That makes the New Cold War against China an implicit opening act of what threatens to be a long-drawn-out World War III. The U.S. strategy is to pry away China’s most likely economic allies, especially Russia, Central Asia, South Asia and East Asia. The question was, where to start the carve-up and isolation.

Russia was seen as presenting the greatest opportunity to begin isolating, both from China and from the NATO Eurozone. A sequence of increasingly severe – and hopefully fatal – sanctions against Russia was drawn up to block NATO from trading with it. All that was needed to ignite the geopolitical earthquake was a casus belli.

That was arranged easily enough. The escalating New Cold War could have been launched in the Near East – over resistance to America’s grabbing of Iraqi oil fields, or against Iran and countries helping it survive economically, or in East Africa. Plans for coups, color revolutions and regime change have been drawn up for all these areas, and America’s African army has been built up especially fast over the past year or two. But Ukraine has been subjected to a U.S.-backed civil war for eight years, since the 2014 Maidan coup, and offered the chance for the greatest first victory in this confrontation against China, Russia and their allies.

So the Russian-speaking Donetsk and Luhansk regions were shelled with increasing intensity, and when Russia still refrained from responding, plans reportedly were drawn up for a great showdown to commence in late February – beginning with a blitzkrieg Western Ukrainian attack organized by U.S. advisors and armed by NATO.

Russia’s preemptive defense of the two Eastern Ukrainian provinces and its subsequent military destruction of the Ukrainian army, navy and air force over the past two months has been used as the excuse to start imposing the U.S.-designed sanctions program that we are seeing unfolding today. Western Europe has dutifully gone along whole-hog. Instead of buying Russian gas, oil and food grains, it will buy these from the United States, along with sharply increased arms imports.

The prospective fall in the Euro/Dollar exchange rate

It therefore is appropriate to look at how this is likely to affect Western Europe’s balance of payments and hence the euro’s exchange rate against the dollar.

European trade and investment prior to the War to Impose Sanctions had promised a rising mutual prosperity between Germany, France and other NATO countries vis-à-vis Russia and China. Russia was providing abundant energy at a competitive price, and this energy was to make a quantum leap with Nord Stream 2. Europe was to earn the foreign exchange to pay for this rising import trade by a combination of exporting more industrial manufactures to Russia and capital investment in developing the Russian economy, e.g. by German auto companies and financial investment. This bilateral trade and investment is now stopped – and will remain stopped for many, many years, given NATO’s confiscation of Russia’s foreign reserves kept in euros and British sterling, and the European Russophobia being fanned by U.S. propaganda media.

In its place, NATO countries will purchase U.S. LNG – but they will need to spend billions of dollars building sufficient port capacity, which may take until perhaps 2024. (Good luck until then.) The energy shortage will sharply raise the world price of gas and oil. NATO countries also will step up their purchases of arms from the U.S. military-industrial complex. The near-panic buying will also raise the price for arms. And food prices also will rise as a result of the desperate grain shortfalls resulting from a cessation of imports from Russia and Ukraine on the one hand, and the shortage of ammonia fertilizer made from gas.

All three of these trade dynamics will strengthen the dollar vis-à-vis the euro. The question is, how will Europe balance its international payments with the United States? What does it have to export that the U.S. economy will accept as its own protectionist interests gain influence, now that global free trade is dying quickly?

The answer is, not much. So what will Europe do?

I could make a modest proposal. Now that Europe has pretty much ceased to be a politically independent state, it is beginning to look more like Panama and Liberia – “flag of convenience” offshore banking centers that are not real “states” because they don’t issue their own currency, but use the U.S. dollar. Since the eurozone has been created with monetary handcuffs limiting its ability to create money to spend into the economy beyond the limit of 3 percent of GDP, why not simply throw in the financial towel and adopt the U.S. dollar, like Ecuador, Somalia and the Turks and Caicos Islands? That would give foreign investors security against currency depreciation in their rising trade with Europe and its export financing.

For Europe, the alternative is that the dollar-cost of its foreign debt taken on to finance its widening trade deficit with the United States for oil, arms and food will explode. The cost in euros will be even greater as the currency falls against the dollar. Interest rates will rise, slowing investment and making Europe even more dependent on imports. The eurozone will turn into an economic dead zone.

For the United States, this is Dollar Hegemony on steroids – at least vis-à-vis Europe. The continent would become a somewhat larger version of Puerto Rico.

The dollar vis-à-vis Global South currencies

The full-blown version of the New Cold War triggered by the “Ukraine War” risks turning into the opening salvo of World War III, and is likely to last at least a decade, perhaps two, as the U.S. extends the fight between neoliberalism and socialism to encompass a worldwide conflict. Apart from the U.S. economic conquest of Europe, its strategists are seeking to lock in African, South American and Asian countries along similar lines to what has been planned for Europe.

The sharp rise in energy and food prices will hit food-deficit and oil-deficit economies hard – at the same time that their foreign dollar-denominated debts to bondholders and banks are falling due and the dollar’s exchange rate is rising against their own currency. Many African and Latin American countries – especially North Africa – face a choice between going hungry, cutting back their gasoline and electricity use, or borrowing the dollars to cover their dependency on U.S.-shaped trade.

There has been talk of IMF issues of new SDRs to finance the rising trade and payments deficits. But such credit always comes with strings attached. The IMF has its own policy of sanctioning countries that do not obey U.S. policy. The first U.S. demand will be that these countries boycott Russia, China and their emerging trade and currency self-help alliance. “Why should we give you SDRs or extend new dollar loans to you, if you are simply going to spend these in Russia, China and other countries that we have declared to be enemies,” the U.S. officials will ask.

At least, this is the plan. I would not be surprised to see some African country become the “next Ukraine,” with U.S. proxy troops (there are still plenty of Wahabi advocates and mercenaries) fighting against the armies and populations of countries seeking to feed themselves with grain from Russian farms, and power their economies with oil or gas from Russian wells – not to speak of participating in China’s Belt and Road Initiative that was, after all, the trigger to America’s launching of its new war for global neoliberal hegemony.

The world economy is being enflamed, and the United States has prepared for a military response and weaponization of its own oil and agricultural export trade, arms trade and demands for countries to choose which side of the New Iron Curtain they wish to join.

But what is in this for Europe? Greek labor unions already are demonstrating against the sanctions being imposed. And in Hungary, Prime Minister Viktor Orban has just won an election on what is basically an anti-EU and anti-U.S. worldview, starting with paying for Russian gas in roubles. How many other countries will break ranks – and how long will it take?

What is in this for the Global South countries being squeezed – not merely as “collateral damage” to the deep shortages and soaring prices for energy and food, but as the very objective of U.S. strategy as it inaugurates the great splitting of the world economy in two? India has already told U.S. diplomats that its economy is naturally connected with those of Russia and China. Pakistan finds the same calculus at work.

From the U.S. vantage point, all that needs to be answered is, “What’s in it for the local politicians and client oligarchies that we reward for delivering their countries?”

From its planning stages, U.S. diplomatic strategists viewed the looming World War III as a war of economic systems. What side will countries choose: their own economic interest and social cohesion, or submission to local political leaders installed by U.S. meddling like the $5 billion that Assistant Secretary of State Victoria Nuland bragged of having invested in Ukraine’s neo-Nazi parties eight years ago to initiate the fighting that has erupted into today’s war?

In the face of all this political meddling and media propaganda, how long will it take the rest of the world to realize that there’s a global war underway, with World War III on the horizon? The real problem is that by the time the world understands what is going on, the global fracture will already have enabled Russia, China and Eurasia to create a real non-neoliberal New World Order that does not need NATO countries and which has lost trust and hope for mutual economic gains with them. The military battlefield will be littered with economic corpses.

New book – ‘France’s Yellow Vests: Western Repression of the West’s best values’

March 15, 2022

Source

Ramin Mazaheri

As the journalist – in English or French – who has covered more Yellow Vest demonstrations than any other, I thought it was my responsibility to give them something I can’t find anywhere: an objective, accurate and complete history. I am publishing here, in a chapter-by-chapter serialised format, my new book – France’s Yellow Vests: Western Repression of the West’s Best Values.

Soon after starting this project I quickly realised: France doesn’t need an accurate rendering of the massive repression of progressive politics which began on November 17, 2018 – they need an accurate rendering of the massive repression of progressive politics which began in 1789. If they lied and misrepresented the Yellow Vests in 2018, wouldn’t they have also done the same in 1936, 1871, 1848, 1789 and in between?

Russia’s Vladimir Putin has just called the West an “empire of lies” – this book is an effort to dismantle those lies as regards to France from 1789 through the Yellow Vests. My previous books have dispelled the lies about modern China and modern Iran – after 13 years in France, I think I can do the same for the good people of France. Check out the chapter list below – this is new and interesting stuff that will reshape your perceptions of the entire West. Send Putin a copy.

Look below to pre-order a copy in e-book and paperback form. The book will be available in French as well. The publication date is June 1.

I’m publishing here for free because – of course – relating the true ideas and experiences of the Yellow Vests is what is most important. But leftist journalism doesn’t pay at all, and we have bills, too. If you like it, please support it with a purchase if you have the ability. It’s cheaper during this pre-order period. Something to keep in mind: Most public libraries want donations but their absolute priority is new books – wouldn’t this book be a great donation or gift? You know it’s an empire of lies regarding French history since 1789, but do others?

This is going to be the most comprehensive book on the Yellow Vests you can find, and from the journalist who knows them best; who got gassed and harassed right alongside them; who wore out shoes on their weekly, 15km+ races across Paris chased by riot police. This will also be the book with the most space devoted to the actual words of the Yellow Vests, as I’ll soon explain.

France has a historic vote coming up next month, and I thought this book would talk much about that vote but then I realised: How much more vital and interesting is a Yellow Vest-fuelled rethinking of two centuries of French and global politics than one election featuring not one but four far-right candidates? Even the French have been tuning out this election in record numbers. I will have to write some columns on the election, but the 2022 vote deserves only the final coda in this book. Please enjoy this series as you also follow France’s upcoming election, and I promise you will have a totally different view of France when it is all finished.

Right in 1789, right in 2019 – why don’t Western historians admit France keeps being right?

When it comes to reading Western commentary on French political history from 1789 into the 21st century what always baffles me is: they are so terribly critical of France and its revolutionaries, even though by the 1970s much of what they fought for would be absolutely insisted upon by the average European. I think the Yellow Vests will continue this trend of being ahead of the curve.

The book is divided into two broad sections: the first is French history from 1789-2018, and the second is an analysis of who, how, why and what the Yellow Vests are for.

What’s certain is that it’s a necessary book: The English-language books on the Yellow Vests (less than a handful) are analyses from overseas and not worth mentioning. The leading French-language books on the Yellow Vests were seemingly all published by spring 2019: they give the whys but not the actual history of the Yellow Vest movement, which this book will; they were published too soon to grasp the depth of their victories, as this book does; they include a fraction of actual Yellow Vest words, crucially.

This book is not detached analysis: I have interviewed hundreds of Yellow Vests in my work for Iran’s PressTV and their quotations will be interspersed throughout every chapter – you’ll see how long-running the fight for progressive politics truly is.

I can promise you that the first part of this book is not some boring leftist genuflecting at the 1794 glories of Robespierre, Danton and Marat – they are not analysed at all. Simply scroll down to the bottom and look at the chapter list – I think you’ll see chapters with analyses that have hardly ever, or never, been broached. “The Paris Commune as the birth of the ‘neoliberal empire’ of the European Union, really? Napoleon was actually a true leftist, is that right? Reclaiming Trotsky’s analysis of turbulent 1930s France from the Trotskyists – well, they are usually wrong these days. I guess the English really do declare war on everyone else’s revolution….” Etc.

As an immigrant journalist to France I have been forced to try and make sense of French history from 1789 until today. In the same way that historians like to sum up centuries of history from the Achaemenid or Safavid eras in Iran – it can be done, after all – I’m looking for patterns and threads, and I think the Yellow Vest phenomenon has either capped or sparked an absolutely major part of French history.

I have covered France for 13 years, but it’s a special 13 years: This is the era when the recently born “neoliberal empire” – the European Union – made its Age of Austerity power plays to become entrenched and obeyed. These are not spur of the moment creations – the European Union, and also the eurozone, are institutions which are centuries in the making. They might last centuries, but only upon the broken bones of the truly once-in-a-century, undemocratic repression of the Yellow Vests.

The Yellow Vests provide us with a new mountain ledge in history – thanks to them the patterns and threads from 1936, 1871, 1848 and 1789 become much clearer. Thanks to the Yellow Vests we can better grasp what today’s establishment institutions truly want; we have been reminded of the episodes of bloody repression from times incorrectly thought to be bygone. Thus, by incorporating the Yellow Vest experience we can give a more “scientific” historical analysis of French history and – because of France’s unusually prominent role in modern political thought – even global political history.

The second most important thread which emerges from 1789 to the Yellow Vests is this: The failure of Western Liberal Democracy as a system which can produce broad security for the average person and not just the elite. The Yellow Vests remind that, still, Western Liberal Democracy can only be imposed by force and without democracy – it is not chosen by popular mandate in a democratic “marketplace of ideas”.

In the 21st century I think it may take someone who is personally familiar with the evils of monarchy and shah-dom to realise that the French had it right long ago: Monarchy, and its ideological partners and inbred ideas, are not from some bygone era but are still in force today. Macron means autocracy. That is a fair and common judgment of his five-year tenure. Autocracy is still a problem, the Yellow Vests gorily remind us.

The Iranian Revolution, which in 2022 is still the great revolution of the contemporary era and which was waged against the “king of kings”, also reminds us that the shortest summation of the progressive goal of human political efforts is this: To move away from autocracy.

Autocracy – opposition to popular democracy of any sort – is the spring from which all political evil flows, and we saw it in the Yellow Vests, and in the method of governance from Brussels and Paris which provoked the Yellow Vests.

For the Englishmen who insist wizened Queen Elizabeth II could never hurt a fly, unfairly collude with a bank/landlord or covertly join in suppressing opposition to her royal brethren in Morocco, Saudi Arabia and elsewhere – they must also necessarily fail to see that the oligarchy produced by Western Liberal Democracy represents only the barest broadening of the spoils of autocracy. The Yellow Vest grasp this: the “rubber bullet liberalism” of Macron needs no prefix – liberalism has always been violence in support of government policies by and for a tiny elite instead of by and for the people.

This book combines understanding of politics today with an understanding of the autocrats who insist on the politics of yesterday

You know about the Yellow Vests, and thus you know what repression Western Liberal Democracy will wage to preserve itself, and you likely know what a “neoliberal empire” is. But, and forgive me if I am presumptuous, do you know how Western Liberal Democracy truly got here?

It’s not easy, because they don’t give an accurate accounting of their own history any more than they do for the Yellow Vests.

I am always amazed at how much the history of the 19th century in the US, France and UK is so very ignored by those countries when this era saw the very formation of the Western Liberal Democracies which their leaders champion so violently today? The reason for this is because this era is full of elitist nonsense, unpatriotic treasons, violence and ever-repeated repressions of the average person. Continuing ignorance about this has only produced an “empire of lies”. Abroad, these countries literally created the disparities which we now refer to as the “Third World”, but domestically they were just as awful to their very own people. This is, “… because class warfare” but also, and Karl Marx himself doesn’t stress this enough, “… because monarchy”, which is autocracy by and for elites; which is perfectly acceptable to Western Liberal “Democracy”.

Many peers of mine (and analysts who are far more learned and vital than myself) often talk about a “neo-feudal” model because, I believe, of the widespread misunderstanding of the actual history of Western Liberal Democracy, which began in 1789 and this fight against monarchy. But the failure to see Western Liberal Democracy also as international 1%er collusion against the masses implies the failure to see Western Liberal Democracy as autocratic, too.

Make that mistake and you misunderstand the political foundations of the modern world since 1789, and thus the class struggle, modern imperialism and today’s Bankocracy – which is to say the entire factual foundation for the sensible and successful choice of Socialist Democracy.

Make that mistake and you’ll ask: Why are the French told to have a conflicted and even negative view of Napoleon Bonaparte, even though he was the most influential figure of the 19th century? How can Adolphe Thiers treasonously and openly collude with Bismarck and still be a president and a Western Liberal Democratic hero? Why do 21st century Westerners call people “neo-nazis” even when such people have zero socialism in their platforms and seemingly no familiarity with the Marxist view of 19th century history? Why are they the “Revolutions of 1848” when they only succeeded in one place (France)? If the French Revolution is done and dusted then why is modern Western conservatism based around the ideas of Irish-Anglo Edmund Burke and his knee-jerk Reflections on Revolution in France from 1790? The first part of this book about the Yellow Vests answers these vitally important questions.

Burke, Karl Marx – the leading historian of the 19th century -, and Leon Trotsky – the leading historian of first decades of the 20th century: this book relies on them heavily to help us understand the 2020s. Why am I employing philosophical leaders from the far-right to the far-left? Because this is an interesting book you should buy and read, of course! Because the Yellow Vests are historic! Because, mostly, all three were aware that Western Liberal Democracy was a sham democracy and doomed to failure for everyone but a most unmeritorious elite. They thought these things for different reasons but, just like the Yellow Vests, they are all the most trenchant critics of Western Liberal Democracy.If the repression of the Yellow Vests doesn’t merit a new and serious criticism of Western Liberal Democratic history… then I guess one is avoiding such objective and honest talk until the aftermath of World War III?

So while I may be painted as a naive leftist, an Islamic Socialist, a communist, an apologist, a reactionary, a fake-journalist – I have heard all these things, LOL – we still need a cogent critique of modern French history which seeks to explain the lies on which an “empire of lies” shakily rests.

This book rests upon the voices of the Yellow Vests: I am simply the facilitator – the one who was on the daily hard-news job when it became clear what “neoliberalism” and “neo-imperialism” means for 21st century France, Europe and beyond.

I hope you enjoy the book and that you comment freely. It sure would be nice if you could buy a copy, but – please – only if your finances allow it.

<—>

Upcoming chapter list of the brand-new content in France’s Yellow Vests: Western Repression of the West’s Best Values. The book will also include previous writings from 2018 through the 2022 election in order to provide the most complete historical record of the Yellow Vests anywhere. What value! Publication date: June 1, 2022.

Pre-orders of the paperback version will be available immediately.

Pre-orders of the Kindle version may be made here.

Pre-orders of the French paperback version will be available immediately.

Pre-orders of the French Kindle version may be made here.

Chapter List of the new content

  • Introduction: A Yellow Vests’ history must rewrite both recent & past French history
  • Burke’s endless reaction: 1789 & feudalism’s end creates modern conservatism
  • Glorious Revolution of 1688: England declares ‘death to all other revolutions’
  • Modern political history makes no sense if Napoleon is not a leftist revolutionary
  • The Revolutions of 1848: Because Liberalism can’t say the ‘Counter-Revolutions of 1848’
  • Louis-Napoleon: The revolutionary differences between Bonapartism & Western Liberal Democracy
  • The Paris Commune: The true birth of neoliberalism and EU neo-imperialism
  • Where the West is stuck: The fascism of the 1930s and the ‘fascism’ of the 2020s
  • On ‘Leon Trotsky on France’ in order to reclaim Trotsky from Trotskyists
  • The Yellow Vests’ childhood: Seeing French elites, only, swayed by neoliberalism
  • No one here is actually in charge: How the EU empire forced the Yellow Vests
  • The radicalisation by Europe’s ongoing Lost Decade: the Great Recession changes France
  • To Yellow Vests he’s the radical: Macron and ‘Neither Right nor Left but the Bourgeois Bloc’
  • Yellow Vests: At worst, the most important French movement for a century
  • Who are they, really? Ask a reporter whose seen a million Yellow Vest faces
  • Yellow Vest Win: Ending the West’s slandering of all popular movements as far-right xenophobes
  • Yellow Vest Win: The end of Western anarcho-syndicalism & unions as leftism’s hereditary kings
  • Yellow Vest Win: The end of Western parliamentarianism as the most progressive government
  • Yellow Vest Win: Reminding us of the link between fascist violence & Western democracy
  • What the Yellow Vests can be: a group which can protect liberalism’s rights, at least
  • The 2022 vote: The approach needed for ‘Before’- what came ‘After’ polls closed

Ramin Mazaheri is the chief correspondent in Paris for PressTV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. He is the author of ‘Socialism’s Ignored Success: Iranian Islamic Socialism’ as well as ‘I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’, which is also available in simplified and traditional Chinese.

‘Remaining in the EU means peace’ – Ukraine explodes that Bourgeois Bloc idea

March 11, 2022

Source

By Ramin Mazaheri

For many years Europeans have said the European Union was the only way to have peace on the continent. I always had a tough time seeing the direct correlation.

I often wondered if the thinking was: Europeans are so bloodthirsty and savage that they have to join themselves together just to keep from killing each other. It reminded me of English critic A.A. Gill’s explanation of why the English line up in a queue so well – because, “if they didn’t, they’d kill each other.”

So how on earth did they make it India – where there is a line to the front, but it’s a horizontal one – without killing them en masse? Oh wait….

I’m not one to be down on human nature – something very English – but sending arms to Ukraine, the first time the EU has sent lethal weapons, seems to explode the idea that the EU is a peaceful venture.

How many Nobel Peace Prize winners have sent guns to one side of an armed conflict? Besides Barack Obama.

But ultimately, the EU is institutionally programmed to favour peace and not the use of military force,” recently wrote the UK’s The New Statesmen.

This completely ignores the EU’s role in sanctioning – and profiting from -the breakup of Yugoslavia but the main problem is that such a statement – inexplicably – comes before this one: “Though it can and does leave the challenges of confronting violence directly to other organisations (NATO particularly), the EU signals a pacific intent.”

If the EU is inherently attached to NATO – responsible for three of deadliest wars in the 21st century (Iraq, Afghanistan, Libya) – then where has been this alleged favouring of peace?

The claim that the EU is a force for peace only works if one looks at it this way: There has not been a war between the current members of the EU since 1945, therefore, all one needs to do in order to enjoy peace is to join the EU – those who won’t join will either get invaded, destabilised or forced to join. Basically, join the “universal value” of the EU or face a “humanitarian intervention” of some sort – people behave as if these ideas are passé just because the politicians who originally uttered them have aged out of office, but they are truly part and parcel of EU ideology.

The claim that the EU is somehow pacifist and benevolent was always nonsense but it was an idea pushed endlessly by the UK’s Remainers and Europhiles. They will have much more difficulty now. Even if a definite European army isn’t going to come out of the current two-day meeting at Versailles of EU leaders, there’s going to be a giant step towards that.

The average European knows – via the Age of Austerity – that the EU is not at all benevolent, and many of them want out, still. A February poll conducted by France’s top polling agency found that a whopping 63% of France are favourable to a referendum on Frexit.

What’s interesting is that only 11% of respondents were totally opposed to a referendum – it’s truly just a small minority which is strongly attached to the EU. That minority is the hardcore half of the “Bourgeois Bloc” in France, which is led by Emmanuel Macron.

Macron and the Bourgeois Bloc are thrilled over current developments: France is set to profit immensely, as it’s the EU’s largest arms producer by far. From the very start of his term Macron has pushed for an EU army, and the massive rush to arm Ukraine shows that the EU’s 1% and their Bourgeois Bloc lackeys have been ready and waiting for an arms race opportunity.

It’s extremely fitting that the meeting is in Versailles – the very symbol of autocracy and anti-democracy – but not for the most commonly reported reason: that it’s where the peace treaty for World War I was signed. Versailles is also the little-understood birthplace of the neoliberal empire which is the European Union. It’s perfect the EU army takes it’s big step there.

Versailles is synonymous with absolute monarchy and anti-democracy, but in 1871 it was the place where France’s 1% ended their collusion with Bismarck in waging a 4-month siege of Paris, in an event known as the Paris Commune. Adolphe Thiers led the French traitors who colluded with occupying Germans to attack the capital of their own country – is that not treason? Theirs was rewarded with the presidency of the new Third Republic.

The 1% of European countries colluding to attack Europeans – this is exactly what has happened to the peoples of Greece, France and everywhere in Europe during the Age of Austerity – thus, 1871 truly marks the birth of the neoliberal empire which is the EU. The Franco-Prussian army which worked together to defeat the sovereigntists and progressives in the Commune – those are the first troops of an “EU army”.

But wait, there’s more – it also marks the true birth of neoliberalism.

European liberalism was fully installed for the first time ever in 1848 with France’s 2nd Republic – it was the only victory in the Revolutions of 1848. By 1851 European liberalism, or what I term “Western Liberal Democracy” had already been totally discredited: President Louis-Napoleon Bonaparte initiated a self-coup (setting up the Second Empire) against WLD’s always-awful and always-elitist parliamentarians, a self-coup which was later overwhelmingly approved by what was then the largest popular vote ever. 1871’s at-gunpoint restoration of Western Liberal Democracy, via the Third Republic, is thus the true (finally, the true!) origin of “neoliberalism”, a term which is bandied about constantly but which is neutered of this true birth and thus its long true history of failure. Neoliberalism did not begin with Thatcher and Reagan – it began in Versailles in 1871 with the treaty to end the Franco-Prussian War.

1871 as the birthplace of the neo-imperial empire which is the EU and the birthplace of neoliberalism– these are two major concepts which I defend in detail in my upcoming book, France’s Yellow Vests: Western Repression of the West’s Best Values. (Dig the cover below – out in mere days.)

Western Liberal Democracy should have been gone for good after it was voted out after just three years; European elite violently colonising the European masses must be included in the definition of neo-imperialism – what’s going on in Versailles right now is a continuation of these concepts, as would be the creation of an EU army.

It’s all in the book – Western Liberal Democracy is not peaceful, nor is the European Union. Ask a Yellow Vest.

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Ramin Mazaheri is the chief correspondent in Paris for PressTV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. He is the author of Socialisms Ignored Success: Iranian Islamic Socialism’ as well as ‘I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’, which is also available in simplified and traditional Chinese.

The EU, Globalization and the Road to Serfdom

December 28, 2021

By Francis Lee for the Saker Blog

PART 1

It might be a good idea to start with some theoretical clarifications. Firstly, nationalism should not be confused with national sovereignty. Nations which are effectively ruled by outside agents – from Greece to Honduras – are not sovereign; they are colonies or vassals of some larger agency. And since they are not sovereign, the cannot be democratic, since decision making, and policies have been abrogated to an external ruling power. Secondly, nationalism: the term which in general is generally regarded as the all-weather bête noire by the orthodox left, can be and often is aggressive, racist, imperialistic, and so forth. But this is only half the story and there are ample reasons to believe that this view is both simplistic and narrowly focussed; ‘nationalism’ can be either a reactionary or a radical/progressive force, depending on the local and political circumstances. This is simply an historical fact. The latter phenomenon is particularly true of those nations which struggled under the yoke of imperialism – from Vietnam to Algeria both ex-French colonies – and who actively engaged in national repeat, national, liberation struggles involving a broad coalition of political forces

However, according to the conventional wisdom of the hyper-globalists both nation states and the whole concept of national sovereignty are now defunct. Their reasoning is based upon the following premises. 1.Most products have developed a very complex geography – with parts made in different countries and then assembled somewhere else – in which case labels of origin begin to lose their meaning. 2. Markets when left unfettered will arrive at optimal price, allocative, and productive efficiency. 3.This means that capital, commodities and labour should be free to move around the globe without let or hindrance to achieve these goals. 4. Any barriers to this process – capital controls, trade unions, exchange rate controls, welfare expenditures, minimum wage legislation, wages and even public goods – will result in price and allocative distortions. Q.E.D.

Such globalization has come to be seen and defined by its proponents as the ‘natural order’, almost a force of nature; an inevitable and inexorable process of increasing geographical spread and increasing functional integration between economic activities. This current orthodoxy goes by various other names, Washington consensus, market liberalisation, neo-liberalism and so on and so forth. In fact, there is nothing ‘natural’ about this stage of historical development, since the whole phenomenon has been politically driven from the outset. (Of which more later).

It is important to note, however, the difference between contemporary imperialism in its present stage – i.e., globalization – and the classical imperialism of pre-1914 vintage that Hobson, Lenin, Bukharin and Rosa Luxemburg were writing about. Classical imperialism was characterised by a shallow integration manifested in arms-length trade in goods and services through independent firms and international movement of portfolio capital and relatively simple direct investment. Note also that the British state granted Charters to investment entities such as the East India Company and the British South Africa Chartered Company to ‘develop’ (exploit) these colonial possessions. Thus, even at this early stage the British state actively intervened to facilitate and open up markets for British capital in India and Africa. This was the liberal epoch trade of the 19th century. Full-on globalization did not develop, however, due to inter-imperialist rivalries and mercantilist policies being carried out by the competing imperial powers (which eventuated in WW1). The opening up and liberalization of markets – which did not at that time occur – was and still is the conditio sine qua non for the development of full-blown globalization, which even today is nowhere near total.

This generalised retreat from a classical liberal colonialism began with the First World War and lasted until the early 1970s. This statist phase of the global economy was universalized in the west after the aftermath of WW2 in the form of social-democracy and the welfare state. Suffice it to say that this period is long gone having been systematically deconstructed by the present neo-liberal counter-revolution which began circa 1979. The neoliberal phase really got going in the 1980s. This was the time of the Washington Consensus a set of ideological prescriptions based upon archaic Ricardian trade theory (comparative advantage) to be followed to the letter and by all and sundry. It was argued that this would result in an economic nirvana attendant on the removal of distortions to the market mechanism brought about by welfare capitalism. To repeat: the tripod on which neoliberalism is based consists of 1. The free-movement of labour and ‘flexible’ labour markets, 2. the free movement of capital and commodities which in essence means the loss of control of monetary policy, exchange rate policy and capital controls. The neo-liberal regimen also involves 3. downward harmonisation of wages and working conditions, involving fixed term contracts, zero-hour contracts, the weakening or in the case of the United States, the virtual elimination of trade unions, stagnant wages, structural unemployment, which in turn leads to increased indebtedness which benefits the rentier class, and ongoing and deepening structural inequality. This is sometimes called austerity, but this is putting the horse before the cart. Austerity is the effect not the cause of liberalised financial, labour and commodity markets.

The present stage of neo-liberal imperialism differs from the classical stage insofar as we currently live in a world of deep integration organized primarily within and between geographical and complex global production networks as well as other mechanisms. Moreover, a new factor became apparent in this Brave New World – financialization. There has been a massive increase in both the size and scope of financial markets, with money moving electronically around the world at unprecedented speeds, generating enormous repercussions and instability. The system of unlimited fiat currencies mainly used for purely speculative purposes is resulting in ongoing asset price bubbles particularly in stocks, bonds and property, as well as other financial instruments, e.g. derivatives.

To wit:

  1. The surge of bank loans to Mexico in the 1970s – Th tequila crisis.
  2. The bubble in stocks and Real Estate in Japan – 1985-89
  3. The 1985-89 bubble in stocks and property in Norway, Finland and Sweden
  4. The bubble in real estate, stocks and currencies in East Asia in 1992-97
  5. The bubble in over the counter (OTC) stocks in the US, including hi-tech start-ups
  6. The 2002-2008. The property bubble in the US, UK, Spain, Ireland, Iceland and Greek sovereign debt. (Manias, Panics and Crashes – Kindleberger and Aliber – 2011)

Additionally, the global institutions, which emerged from the Bretton Woods Conference of 1944, the IMF, GATT/WTO, World Bank, and increasingly central banks around the world, play a crucial role of the construction of trade policies, co-ordination, guidance, as well as providing and enforcing legal statutes designed to keep the globalist ship afloat. But it should be understood that these institutions are highly politicised and ideologically driven and not disinterested arbiters of the common weal. This is amply illustrated by the recurring breakdowns in the various rounds of trade liberalization talks conducted by the WTO when what are perceived by the developing world (with some justification) as being unfair trade agreements foisted on the them by the more affluent and controlling developed states nations who control voting procedures. In passing, it should also be noted that the EU represents a regionalised version of these global institutional structures, the ECB, EC, Council of Ministers, Eurozone Finance Ministers, European Round Table of Industrialists and so forth. Moreover, there exists a revolving door – in career terms – between state institutions and private corporations. N.B. the ease of which big-time globalist financial honchos such as Henry (Hank) Paulson, Steve Mnuchin and Mario Draghi glide effortlessly between the leading US investment bank, Goldman Sachs, and the US Treasury Department and ECB.

Power to shape/control this system is concentrated in the hands of states and/or the newly emergent Transnational Corporations (TNCs). Of course, there is not going to be a simple answer to this as the relationship between these two pillars of modern imperialism is both fractious and permanently mutating. The received wisdom, as put forward by the various spokespersons for globalization, ranging from the Bank of International Settlements (BIS) OECD, and IMF, to the globalist house journals – Financial Times, The Economist and Wall Street Journal – of the global Transnational Uberklasse is predictable enough. Namely that the state is always in a subservient position vis-à-vis the dominant TNCs.

This perhaps would qualify as a procrustean effort to make the facts fit the theory. Contrary to the image of the all-powerful TNC demanding fealty and obedience from prostrate states, the relationship is somewhat more symmetrical; corporations and states are always to a certain degree joined at the hip.

‘’ … they are both competitive and competing, both supportive and conflictual. They operate in a fully dialectical relationship, locked into unified but contradictory roles and positions, neither one nor the other partner completely able to dominate.’’ (Picciotto, S. 1991 The Internationalisation of the State – Capital and Class 43.43-63)

The widespread notion that a TNC can simply up sticks and move lock, stock and barrel to a more compatible venue if its home base no longer suits it purposes is fanciful in the extreme. All TNCs have home bases, national HQs. Here is where global strategy is determined; here is where top-end R&D is carried out; here is where design and marketing strategies take place; here is where the domestic market is situated and where long-term domestic suppliers are located; here is where overseas operations are conceived planned and carried through; here is where AGMs of the Corporations takes place with published accounts circulated to all shareholders; here is where the local workforce, at all levels, is recruited; here is where the political bureaucracy and the above mentioned institutions are situated and amenable to lobbying. Picking an obvious example, the US defence industries, Raytheon, Lockheed-Martin, Northrop-Grumman are all based domestically and are not going to move out anytime soon.

It is unquestionably true that TNCs and states often have divergent goals: TNCs’ primary function is to maximise profits and enhance shareholder value, whereas the economic role of the state should be to maximise the economic welfare of its society. But although this conflictual relationship exists, states and TNCs need and lean on each other in a variety of ways. States might wish that TNCs are bound by allegiance to national borders – and in many ways they are (see above) – but total allegiance is not an option in a liberal capitalist economy. Indeed, it would be true to say that some states regard TNC (activities) as being complementary to their foreign policy. Here economic issues merge with geopolitical imperatives. For example:

‘’American political leaders have believed that the national interest has also been served by the foreign expansion of US corporations in manufacturing and services. FDI has been considered a major instrument through which the US could maintain its relative position in world markets, and the overseas expansion of TNCs has been regarded as a means to maintain America’s dominant world position.’’ (Gilpin, R. 1987 – The Political Economy of International Relations.)

On the other hand. Businesses, Corporations, TNCs, have always needed the state to provide the necessary infrastructure without which their operations would not be possible. This infrastructure includes what are sometimes called ‘public goods’ the built environment of roads, railways, airports, ports, canals, health services, education at all levels, a legal system, a centralised government with the power to tax and spend, as well as control monetary policy by a central bank, various procurement policies – in the US particularly involving the Military Industrial Complex – publicly funded research, which played an absolutely vital role in the development of the internet and Silicon Valley. In addition, there have been a range of cultural and political goods – the media for example – some of which were provided by the state, the BBC and public service broadcasting, and some by the market, newspapers and commercial television, albeit privately subsidised.

In short, the relationship between TNCs and states is complex and symmetrical and does not conform to the simplistic ‘Me Tarzan, you Jane’ globalist trope. In fact, the relationship has betimes been the other way around. During the post-war period both Japan and South Korea were at pains to block Foreign Direct Investment (FDI) from overseas TNCs entering their economies, principally by operationalising import controls. This notwithstanding the fact that both countries were export orientated. The reasoning behind this policy was that the type nation-building mercantilism being which has been and is still the only way out of under-development could not work in an open liberalised economy. Similarly, Chinese development included inward FDI by overseas Corporations, BUT this time around the state-TNC roles were reversed. Automobile firms wished to invest in China for the simple reason of access to the world’s largest growing market which served as a powerful incentive for these firms to enter. But the Chinese government, consistent with its state-capitalist, mercantilist policies had complete control over such entry and adopted a policy of limited access to foreign firms. It is customary to imagine that TNCs always have the upper hand in the bargaining process, but this time it was different. Auto TNCs whose experience had conditioned them to play off states against each other, were subjected to the humbling experience of China who – given its control of FDI entry – was able to play off one TNC against another.

In fact, the East Asian development model – which for want of a better label I will call, state-capitalist mercantilism – has been successful in enabling states such as China, South Korea, Taiwan, Singapore, and possibly Thailand, and Malaysia to claw their way out of the trap of underdevelopment. This nation-building developmental strategy was first outlined by the German economist Freidrich List. The policy advocated imposing tariffs on imported goods while supporting free trade of domestic goods and stated the cost of a tariff should be seen as an investment in a nation’s future productivity – worked and was operationalised in the 19th century by both Germany and the United States, with a view to breaking British industrial and trade hegemony, which it did. As for free-trade, that was a policy strictly for the losers who to this day stay under-developed. It is also worth adding that the East Asian development bloc did not seek permission from the imperialist behemoth to carve out their own place in the sun.

We can say, therefore, that ultimately the negotiating relationship and outcomes between states and TNCs will depend on the relative bargaining strength in any specific instance. It is argued that if nation states are capable of so much why does the record show that they have achieved so little.

Well, South Korea was about equal to Tanzania in terms of all the economic, social and cultural indictors in the 1950s when it was just recovering from the Korean war.

South Korea is now one of the developing world’s long-term success stories. The country is now classified by the World Bank as a high-income economy, with PPP income exceeding $29,000.00 in 2010. Korean consumer electronics and other goods – auto-vehicles, Kia and Hyundai – have become synonymous with high quality and low price. Even more impressive is Korea’s achievements in social development, in education, and health. Life expectancy is now over 75 and the country’s HDI was placed 26th in 2004. As was the case in Japan inward investment was discouraged in favour of an infant protection industry and export led growth. Exports in such sectors as consumer electronics and auto-vehicles, and more recently in high technology have grown at an extraordinary rate. One very important reason for this has been a national strategy that has favoured the promotion of increasingly sophisticated exports and technology. Strong financial incentives for industrial firms to move up the value chain of skills and technology were built into most of the government’s policies. These policies included:

1. Currency Undervaluation: The effective exchange rate favoured cheaper exports and more expensive imports – an overt mercantilist approach

2. Preferential access to imported intermediate inputs needed to produce export goods

3. Targeted infant industry protection as a first stage before launching an export drive.

4. Tariff exemption on imports of capital goods needed in exporting activities

5. Tax breaks for domestic suppliers of inputs to exporting firms, which constitutes a domestic content incentive

6. Domestic indirect tax exemptions for successful exporters.

7. Lower direct taxation on incomes gained from exports.

8. The creation of public enterprises to lead the way in establishing a new industry.

9. The setting of export targets for firms.

(Todaro and Smith – Economic Development – 2009)

These policies were, of course, and still are, the exact opposite of the Ricardian free-trade comparative advantage model and are an anathema to any orthodox economists.

Herewith a development comparison Tanzania/South Korea.

Tanzania:

GDP, US$47,652 – GDP per capitaUS$857 – Education Expenditure US$1678.9, Govt Health Expenditure per capita US$24

South Korea:

GDP = US$1,411,042 – GDP per capitaUS$27,535 – Education Expenditure US$ 289,283.4 -Govt. Health Expenditure per capita US$159. (countryeconomy.com)

I think this is enough and don’t wish to labour the point, the gap is self-evidently enormous. But now the subsidiary question arises: what explains the divergent paths of development for two countries starting at the same point?

Well, according to the conventional wisdom ‘‘the incidence of wealth is only weakly related to the way in which the sovereign power of the state is exercised and is much more closely aligned to the ways in which states are aligned with the circuits of global capitalism.’’ Wrong! Political agency has everything to do with economic and social development, ‘‘and the way in which the sovereign power of the state is exercised.’’ If this were not the case East Asian development strategies would never have worked. Modernisation and development requires/required the indispensable political prerequisite of a modernising, nation-building ruling stratum which mobilises the whole nation in this revolution from above. This pattern has always been almost without exception the historical experience of capitalist development.

Such political and state institutions together with modernising class forces have/been and are, notably weak or even absent in what we generally refer to as the under-developed or developing world. ‘States’ (and I use this term advisably) such as Tanzania and the Democratic Republic of the Congo lack the political and social modern(ising), structures and institutions as we understand them which might bring about economic and social development. Crucially, the class structure of these societies is dominated by a comprador bourgeoisie, a self-aggrandising, self-serving elite whose interests are intertwined with the imperial overlord in the ongoing exploitation and looting of their own country. We also know that such nations are stuck in the production of raw materials and agricultural products – low value-added, low research-intensive, low-productivity, primary commodities – all of which are both price and income inelastic and have had a tendency toward price stagnation and decline in the long run – a structural deterioration in their terms of trade. (Oil may be an exception to this, but oil prices are notoriously volatile.) Thus, the unequal and increasing gap between the higher income and lower income countries. But is this the end of the matter? Well from a rigidly structuralist point of view it would seem to be. History, however, is an open ended and semi-voluntaristic process – as the famous quote goes, ‘Men make history, but do not do it as they please’ – and a number of possibilities for fundamental structural changes exist. But for real change to take place both economic and political/ideological conditions must be present.

‘’History has shown that the vicious circles of poverty and underdevelopment can be effectively attacked only by qualitatively changing the production structures of poor and failing states. A successful strategy implies an increasing diversification away from sectors with diminishing returns (traditional raw materials and agriculture) to sectors with constant and increasing returns (technology, intensive manufacturing and services) creating a new and more complex division of labour and new social-economic structures in the process. In addition to breaking away from subsistence agriculture, this will create an urban market for goods, which will further induce specialization and innovation, bring in new technologies, create both alternative employment and the economic synergies that unite a nation state. The key to economic development is the interplay between the sectors with increasing and diminishing returns in the same labour market.’’ (How Rich Countries got Rich, Why Poor Countries Stay Poor – Erik Reinert).

Thus, if you wish to bake a cake these are the ingredients. But comprador bourgeoisies and their imperial sponsors have other priorities and preoccupations, nation-building and economic development are not among them.

PART 2

Turning to the EU the regional prototype for the globalization project, it was Patrick Buchanan, an American conservative who once correctly stated in ‘The American Conservative’ that the US Congress ‘is an Israeli occupied zone’’ by which he meant of course that Israel and the Israeli Lobby, both external and internal, has had a huge input into the framing and operation of US foreign policy. In a similar vein the EU is also occupied territory under the tutelage of US imperialism. (This process of blatant meddling in European affairs by the US-CIA started with ‘Operation Gladio’ in the late 1940s) but the perceived enemy was not merely Soviet communism, but also sotto voce European social and political theory and practise, notably, Gaullism and social-democracy, both of which have long since been politically cleansed with the EU being reconfigured as neo-liberal, and (since the alignment of the EU security structures have been aligned with NATO) neo-conservative vassal states overseen and represented by odious little Petainist/Quisling occupation regimes. This is only too apparent when the fawning behaviours of May, Macron and Merkel vis-à-vis the US are observed. Whenever the US master says jump, the Europeans will reply ‘how high’ And this is even more pronounced by the newly arrived Eastern European states. A group which Dick Cheney once described as the ‘new Europe.’ By which meant the political force which was operationalised to fundamentally change the political direction of the EU in the late 20th century. Euro-widening was meant to prevent euro-deepening, and it worked a treat.

The ongoing Americanisation of Europe carries with it the toxic values of liberal individualism, market liberalisation, structural inequality, a philosophy of winner takes all, and a rapacious/murderous imperialism. A nightmare Hobbesian world of a ‘war of everyman against everyman’; John Stuart Mill also weighed in with considerable disdain writing ‘I confess I am not charmed with the ideal of life held out by those who think that the normal state of human beings is that of struggling to get on; that of trampling, crushing, elbowing, and treading on each other’s heels, which forms the existing type of social life are the most desirable lot of humankind … (J.S.Mill – Principles of Political Economy).

The Americanisation process has been going on for the last half century. It degrades Europe, causes it to regress, forces it to abandon everything in its progressive past contribution to the capitalist stage of production the antidotes which it allowed it to resist the liberal poison and promote democracy and equality despite it.

‘’Old Europe’’ has nothing to learn from ‘’Young America.’’ There will be no progress possible on any European project as long as the US grand strategy is not foiled.’’ (The Liberal Virus – Samir Amin)

One particular crisis in the EU – the unfolding to the denouement of the Greek debacle – has presented an archetypal learning curve for an understanding of the structural problems involved in the EU and occasioned a virtual industry of copious tracts which purport to explain the crisis, and I have no wish to repeat the whole sorry tale here. I would say, however, that if Syriza was in earnest in taking on the Troika it would have required not just an imaginary backing of a long-defunct and toothless euro social-democracy, but also a withdrawal from the euro – certainly a leap into the unknown. Assuredly this would have been a high-risk policy – and no-one should be under the illusion that there is any easy way out. The trouble is that social-democracy has vanished into history; the soft-options specialists. The SPD (Germany) PS (France) PASOK (Greece) PSOE (Spain) are political organizations which might (occasionally) refer to themselves as social-democrats, or even on occasion ‘socialists’ but of course they are nothing of the sort. ‘By their works shall thee know them.’

And,

‘’ … Syriza’s strategy was not only long-run but also attempted to incorporate the social virtues of Europe’s once dominant social-democratic heritage. What Syriza did not adequately understand, however, was that heritage was now history, buried deep under the refuse pile of new neo-liberal values.’’ (Looting Greece – Jack Rasmus)

Now we have Varoufakis going on to declare that the ‘nation is dead’. Well, that is certainly true of Greece, which is now to all intents and purposes a colony with the grotesque spectacle of Syriza now playing a governing role in a regime that at one time it stridently opposed. The assertion that nations as such are no longer sovereign – a statement which is wrong both theoretically and empirically – but has a limited application. Truth be told some states are more sovereign than others, and the sovereign nations call the shots vis-à-vis the vassal/colonies which are not sovereign. (One wonders if the United States, or Israel or indeed Syria which has been engaged in physically defending its sovereignty for some time, are not sovereign. I think they are, but Mr Varoufakis may wish to differ) Greek sovereignty and democracy disappeared when the Troika and EU finance ministers and French and German banks forced the surrender and took over the running(-down) of the Greek economy. But this was inevitable in a liberal internationalist globalist economy; open borders will simply mean that TNCs will be free to exploit the productive resources of any country in the world – particularly labour – in order to maximise their economic power at the expense of society’s. In other words, societies with open markets, will be unable to impose any effective controls to protect themselves from the rapacious incursions of TNCs as Polanyi pointed out long ago.

So, what does the ‘supra-national’ solution offer other than comforting words.

Try the following.

‘’DiEM2025 stands today as an attempt to learn the lessons of defeat, and to prepare for future struggles for building a stronger network, not of globalists, but left-wing internationalists whose strategies for advance include the dislocation of imperialist economic chains, as well as real progress in building the capacities of national societies to strengthen democracy and provide for the well-being of their nations.’’

All of which strikes this writer as a series of clichés and meaningless abstractions. Please note, the dog-eared phraseology, ‘learn the lessons of defeat’ ‘prepare for future struggles’ ‘strengthen democracy’ and ‘provide for the well-being of their populations.’ You might as well throw in motherhood and apple pie whilst you’re at it.

Then comes the dawn of realization that ‘a future Labour government which -assuming of course that the next government will be Labour – attempting to carry out its declared programme of bringing some elements of the economy under national control ‘’will come under the assault not only from the EU, but also Washington.’’ Really! Never occurred to me that! What does a Labour government do in this hypothetical situation? Surrender, Syriza style. No, we apparently need a Europe-wide supra-national strategy based upon what policies exactly? We must assume, according to the orthodoxy, that the nation state is either dead or dying, an article of faith of the globalist left and the Washington Consensus. Ergo, the policy the ‘left internationalists’ is one of inter alia ‘strengthening democracy’ – all very noble. But provided that the neo-liberal tripod of the three freedoms of movement – capital, labour, commodities – remains in place, political change will not take place. And provided the institutional infrastructure of globalized capitalism – the IMF, WTO, World Bank, the EU are overseeing and enabling the neoliberal project economic and political change will not take place. It is not the shackles of nationalism that give rise to the bureaucratic monstrosity which is the EU but precisely the opposite. The neo-liberal imperatives of open borders, liberalized markets, flexible labour markets and freedom of movement of labour, capital and commodities, might have had something to do with it. Unless these political/ideological roadblocks are addressed the status quo will continue and continue to deteriorate.

In terms of alliance building, political convergence between states cannot be constructed at regional (for example the EU) or even less so at global levels even if it is not achieved firstly at the level of nations. Because whether we like it or not, nations define and manage concrete realities and challenges, and it is only at these levels that changes in the social and political balance of forces to the advantage of the popular classes will or will not occur. Changes at the regional and global level may reflect national advances and certainly facilitate them – but nothing more.

In order to stop the onward march of globalist neoliberalism governments and state must regain control of their economies. There is no single way to achieve this critical goal, but without it hemispheric co-operation will remain little more than an empty rhetorical flourish. Moreover, everywhere electorates are looking to governments to be a counterweight to footloose corporations. It is this intuitive perception to rein-in markets that will increasingly occupy centre-stage between pro and anti the coming decade. For social-political movements the nation-state continues to be the chosen instrument for the organization of society. However much social institutions will have to adapt to new global pressures, what is not in doubt is that the nation-state remains the crucible for equality seeking movements the world over. Efficiency, profitability and competitiveness have not won the hearts and minds of the peoples worldwide.’’ (States Against Markets – Boyer and Drache)

Reform of the EU, which I understand to be the goal of the campaign of pro-EU aligned leftist factions, fails to take into consideration the fact that the EU cannot be reformed since its whole ideological structure and constitution is built upon neo-liberal technocratic assumptions which can clearly be identified in the interior belief-systems of the bureaucracy and consequently the daily practise and deliberations of its internal institutions. Being explicitly designed on a neoliberal model which was cemented by legal statutes have made such changes impossible.

‘’Any belief that the EU can be ‘democratised’ and reformed in a progressive direction is a pious illusion. Not only would this require an impossible alignment of left movements/governments to emerge simultaneously at the international level. On a more fundamental level, a system that was created with the specific aim of constraining democracy cannot be democratised. It can only be rejected.’’ (Thomas Fawzi – Lexit Digest)

Reinforcing the conservative structure of the EU’s political institutions, and here I have in mind the European Parliament, are dominated by two powerful blocs.

1. An alliance of political parties, centre-left and centre-right which form the usual centrist mish-mash, the extreme centre, as it has been called. This centrist bloc is composed predominantly of euro-enthusiasts and who command a working majority in the European parliament and other EU institutions. 2. The geo-political alliance – i.e., the infusion of members of the ‘New Europe’ into the EU, who were generally very pro-American and fanatically Russophobic, this along with the parallel expansion and incorporation of these new states into NATO has served to undermine some of the earlier Gaullist and social democratic traditions in Europe.

It seems clear, therefore, that the pro-EU bloc which dominates the political, economic and strategic agenda of the EU, in addition to the permanent institutional structures which are mandated to carry out existing policies, will continue to do so for any foreseeable future despite the pipe-dreams of the ‘left-wing internationalists’. Even Varoufakis has admitted that this approach is frankly ‘utopian’ – and if this is the case, the Remainer left can only play games and give a leftish veneer in an attempt to reform what they apparently believe is an unstoppable historical development (globalization). (Lexit Digest)

Having said all this the final outcome of this imbroglio may include elements of piecemeal reform and/and or outright rejection, which is what usually happens. We shall see. But it would be useful perhaps to have an open dialogue between all parties involved rather than highly partisan and misleading attempts to smear and shout down opponents – and we are all guilty to a degree in this respect – who may have something positive to offer.

Facts and expectations of the triumph of the elected president of Chile, Gabriel Boric

23 Dec 2021

Source: Al Mayadeen Net

Mikhael Marzuqa

What is the political meaning of the recent victory at the polls of the Chilean left-wing?

The victory of Gabriel Boric in the recent presidential elections in Chile represents the triumph of the aspirations for more social rights of the postponed classes; it is the recovery of the course towards a social state of rights that sometime, 50 years ago, we called “the Chilean way to socialism”, with president Salvador Allende, murdered during the military coup in 1973. Paradoxically, the result of the current election was similar to the plebiscite of 1988 to decide Yes or No for the recovery of democracy in Chile.
 
Gabriel Boric’s success is the remedy for the failure of the neoliberal experiment in Chile that has lasted for decades. Although we had progressive governments in the previous 30 years to the government of the right man president Sebastián Piñera, who ends his mandate next march, those governments, supposedly center-left tendency, did make social reforms, but maintained the structural capitalism basis.

The victory of Boric also represents the generational change of politicians and diplomats anchored in ambiguous visions of what development with equity is. Therefore, it is a sample of the political maturity of the Chilean youth and the students that have promoted social and political reforms since 2004 and then in 2011 and more recently in 2019. Boric´s government program represents the concern for the conservation of the planet against the denial of its contender José Antonio Kast about the existence of climate change. 
 
The triumph of Boric means to recognize the equal rights of men and women, in front of Kast’s intentions to close the Ministry of Women; also means the hope of the originating peoples to recover their rights, the rights of the minorities and, what is very important, powerful support to the constituent process initiated this year to write a new constitution and to establish a social state of rights. 
 
The new constitution will be submitted to the scrutiny of the Chilean people through a plebiscite in the mid of this year. 

The youngest president in the history of Chile

A young candidate was successful because the drivers of social and political change in Chile have been the young generations for decades but with much more strength since the early 2000s.

Boric was one of the main leaders of those movements, he had their support and he came to congress and proved to be a politician of great national agreements. I presume that he is an intelligent leader who knew how to understand that the power of the business and political elites is so powerful, that to achieve significant changes, national majority agreements to face them are needed. It has also been known to recognize that financial power is global and that the interests of the Chilean elites are connected and coordinated with the global elites.

In Latin America and in much of the world, inequalities have widened and in countries like Chile and others in Latin America and the Caribbean, social classes have seen their contradictions increase. The most dispossessed have been aware of the concentration of wealth and that they must fight for their rights, even though their aspirations are not properly of a social class, but they have been subdivided into different groups of social, economic, environmental, gender, ethnic interests, and so on.

Meanwhile, with their ambition, the rich classes are blinded and cannot see that they must give up privileges to avoid a social crisis.

Those last two statements will constitute a challenge for the young deputy and recently elected president Gabriel Boric.

Some reasons for the defeat of the economic and political right and far-right

The defeat of candidate Kast, an ally of Washington, is the defeat of the main test laboratory of the neoliberal system in Latin America. But I clarify that it is not precisely a defeat of Washington only, but that it is a failure of the world’s predominant economic elite, with their project of a planetary mega-state where to establish their supremacy not only economic but also ethnic and sometimes religious, as is the case of “Israel” Zionism which imposes Jewish fanatic supremacism against pluralism and the rights of the Palestinian people.
 
We must be clearly aware that the monster, the neoliberal system, is big and has hundreds of tentacles, and every time it loses benefits, it returns to the charge to regain or increase its privileges. Progressive movements should seek to build governments of majorities that force the powerful to yield. Otherwise, they will not be able to sustain strong democracies with social rights guaranteed for those who have less. If not so, there would be no other alternative than the armed struggle with its highest costs that has been proven to bring ephemeral fruits because imperialism takes care of blocking its objectives as much as possible.
 
One of the main reasons for the defeat of the ultra-right and the right in these elections in Chile was that Kast wanted to present this opportunity as a choice between communism and democracy, between chaos and progress, between freedom and authoritarianism. That was exactly the same speech of the military dictatorship but the representative of the far-right, José Antonio Kast, apparently did not duly consider that such speech didn’t work so well 50 years ago and less would it at this time.
 

What is expected of the Boric government and progressivism in Latin America?

Boric´s government will be a government for the majority but he is not a populist leader like there are others in Latin America. Coordination among progressive governments is necessary for this region. I hope there can be a political alignment with Argentina, a greater rapprochement with Bolivia to end the maritime dispute and move forward to a regional collaboration, as well as with Peru and hopefully Ecuador and Colombia in the short term, depending on the presidential elections in that countries. We have high expectations that Lula da Silva be elected president in Brazil.

We must keep in mind that although Chile is a political reference, because of its magnitude and presence in international instances, Brazil sets the tone for relationships in Latin America with the rest of the world, even though many times it manages its own agenda.

I also hope that the election of Xiomara Castro will mean an alignment of South America’s progressivism with Central America. This will facilitate the rebuilding of the “American Nation” (Patria Grande) and of stable democracies in Latin America and the Caribbean.

The advancement of progressive and democratic governments in Latin America will depend on the strengthening of their republican institutions because we must learn to live in a world where diversity is the main characteristic. In that sense, an important thing will be to take care that there is no place for some to impose their ambitions on others by the force of arms or economic power.

Regional cooperation and the exchange of democratic experiences are important and necessary in Latin America and the Caribbean. This will most importantly depend on building solid constitutional and political foundations in our nations so that progressivism can continue to govern and prevent setbacks in social and political achievements, as was the risk if candidate Kast had been elected.

The imperious need to break the ties of neoliberalism, untie the authoritarian knots and open the way to new models of development are the main reason to prevent the extension or return of the conservative and neoliberal governments in Latin America. That is why the great challenge of progressive is to know how to conceive and develop an alternative model, based on a well-being state with political balances and a constitution that prevents the supremacy of a few over the great majority. Otherwise, we will be exposed to the risk of losing social and political conquests and being subject to the great financial power and its political expression, neoliberalism, with its consequences of poverty and planetary desolation.

The opinions mentioned in this article do not necessarily reflect the opinion of Al mayadeen, but rather express the opinion of its writer exclusively.

The West, Eurasia, and the Global South: The Development of Underdevelopment

The West, Eurasia, and the Global South: The Development of Underdevelopment

August 01, 2021

By Francis Lee for the Saker Blog

‘The dependency thesis, like all good (and great) theories can be summed up in a single phrase: Modern ‘’underdevelopment’’ is not ‘’historical backwardness’’ the result of late and insufficient development; it is the product of capitalist development, which is polarizing by nature’. (Andre Gunder Frank -1996.)

The leader of the UK Conservative Party, Mrs Thatcher, first came to power in the UK in 1979 with a brief to end the post-war consensus which had prevailed from the Labour party victory in 1945. Although Labour lost the ensuing elections from 1951-1963, the Conservative Party nonetheless adopted many of Labour’s social-democratic policies, particularly the economic policies, which characterised the post-war years. The same process was to take place when Ronald Reagan established a similar ascendency in the United States. The Thatcher-Reagan duo was born and was to terminate the post-war settlement in both the UK and the US.

Theories were put forward by economic luminaries on both sides of the Atlantic, but particularly by Milton Friedman at the University of Chicago. The notion that there existed a magic panacea that would banish all the problems associated with the failing British and American economic policies of 1945-1979, formed the basis of the Thatcher-Reagan economic radicalism, which was to be followed by the Blair-Clinton consolidation of the 1990s. The so-called ‘supply-side’ revolution consisted of removing all the controls which undergirded capitalism, and which had been painstakingly put in place during the course of the 20th century, and simply letting the system find its own level. Privatisation, deregulation, and liberalisation were the components in this policy paradigm.

Of course none of this is news; it had been the staple of the West’s chattering classes in the late 20th century. But its effects were more than restricted to the North Atlantic bloc and was to have a global impact changing the political and economic policies and structures of the whole world.

NEO-LIBERALISM & GLOBALIZATION

­In international terms ‘free’-trade as it was known was at the heart of the system – a system, which was later to become known as globalization, packaged and sold as an irresistible force of nature. Globalization was considered to be neo-liberalism writ large. But on the contrary, a more nuanced interpretation was to be put forward by one of the more astute commentators on the issue.

‘’The standard and most popular narrative is of globalization as the twin of neo-liberalism, expressing the market-fundamentalist view that state-intervention is bad for the economy. It is argued that the state interferes too much with the self-regulating power of the markets, thereby undermining prosperity. This perspective would explain why Alan Greenspan regarded it as fortunate that globalization was rendering the government as being redundant. We call this the anti-state narrative. An alternative narrative is actually considerably more germane: an anti-politics, specifically an anti-mass politics narrative. Greenspan’s statement incorporated the conventional presumption that the West has reached the frontiers of traditional politics: politics has lost its efficacy in the face of global forces. As a result, especially economic policy, is now pretty irrelevant if not actually detrimental, because everything is driven by – determined by – the impersonal force of globalisation. (1) So it is argued.

It was of course taken as axiomatic that free-trade – a vital component in the new economic paradigm – was always and everywhere the best policy. This conventional wisdom was to become known as the ‘Washington Consensus’ and was given a legitimating cachet by political, business, and academic elites around the world. However many of the elements – if not all – of the Washington Consensus where hardly new, many date back to the 18th and 19th centuries and perhaps beyond. It could be said that the newly emergent mainstream orthodoxy represented a caricature of an outdated and somewhat dubious political economy.

The free-trade canon is, of course, spoken of in almost reverential terms. It is as jealously guarded by the economics priesthood in Wall Street and the City of London and of course academia. In short, the theory is based upon a type of formal logic expounded by the early pioneers of political economy, viz., Adam Smith and David Ricardo; and in particular in Ricardo’s magnum opus, The Principles of Political Economy and Taxation first published in 1817. Briefly he argued that nations should specialise in what they do best and in that way world output would be maximised. The hypothetical example he used was England and Portugal and the production of wine and cloth, where he calculated that England should produce cloth and Portugal should produce wine. It was asserted, although no evidence was ever presented, that all would gain from this international division of labour.

However, even a cursory glance at economic history, and particularly the transition from agrarian to industrial societies, demonstrates the weaknesses, and indeed serves to falsify the whole Ricardian model – taken as a model of development. The brute historical fact is that every nation which has successfully embarked upon this transition, including most importantly the US and Germany, has done so adopting catch-up policies which were the exact opposite of those advocated by the free-trade school. (2)

In the world of actually existing capitalism free-trade is the exception rather than the rule. Contemporary free-trade is mainly a matter of intra-firm trading, that is to say, global companies trading with their own subsidiaries and affiliates mainly for tax avoidance purposes, transfer pricing for example. Next come the regional trading blocs – the EU, NAFTA, (which was superseded by the United States–Mexico–Canada Agreement USMCA) and Mercosur (in Latin America). With regard to Mercosur there is no common currency as is the case in most of the EU. Thirdly there is barter trade where goods and services are exchanged for other goods and services rather than money. Finally only about 20% of world trade can at most be considered free trade, and even here there are exceptions involving bilateral specifications and agreements.

INTERVENTIONISM

Modernisation and industrialisation, wherever it took place, involved tariffs, non-tariff barriers (3) infant industry protection, export subsidies, import quotas, grants for Research and Development (R&D), patents, currency manipulation, mass education and so forth – a smorgasboard of interventionist policies whereby the economy was directed from above by the state. For example, during its period of industrialisation, the United States erected tariff walls to keep out foreign (mainly British) goods with the intention of nurturing nascent US industries. US tariffs (in percentages of value) ranged from 35% to almost 50% during the period 1820-1931, and the US itself only became in any sense a free trading nation after WW2, that is once its financial and industrial hegemony had been established.

In Europe laissez-faire policies were also eschewed. In Germany in particular tariffs were lower than those in the US, but the involvement of the German state in the development of the economy was decidedly hands on. Again there was the by now standard policy of infant industry protection, and this was supplemented by an array of grants from the central government including scholarships to promising innovators, subsidies to competent entrepreneurs, and the organisation of exhibitions of new machinery and industrial processes. In addition ‘’during this period Germany pioneered modern policy, which was important in maintaining social peace – and thus promoting and encouraging social investment – in a newly unified country.’’ (4)

This path from under-development to modern industrial development, a feature of historical and dynamic economic growth and expansion which has taken place in the US, Europe, and East Asia is not a ‘natural’ progression, it was a matter of state policy. It has been the same everywhere that it has been applied. That being said the Ricardian legacy still prevails. But this legacy takes on the form of a free-floating ideology with little connexion to either practical policy prescriptions or the real world.

Turning to the real world it can be seen, by all of those who have eyes to see, that, ‘’ … history shows that symmetric free-trade between nations of approximately the same level of development, benefits both parties.’’ However, ‘’ … asymmetric trade will lead to the poor nation specialising in being poor, whilst the rich nation will specialise in being rich. To benefit from free-trade, the poor nation must rid itself of its international specialisation of being poor. For 500 years this has not happened anywhere without any market intervention.’’ (5)

GLOBAL ECONOMIC ASYMMETRY

This asymmetry in the global system is both cause and consequence of globalization. It should be borne in mind that the Least Developed Countries (LDCs) are the providers of cheap raw material inputs to the industrial countries of North America, Western Europe and East Asia. In technological terms the LDC’s find themselves locked into low value-added, dead-end production where no discernible technology transfer takes place. Thus under-development is a structural characteristic of globalization, not some unfortunate accident. Put another way,

‘’ … If rich nations (the North) as the result of historical tendencies (i.e., colonialism – FL) are relatively well-endowed with vital resources of capital, entrepreneurial ability, and skilled labour, their continued specialisation in products and processes that use these resources intensively can create the necessary conditions for their further growth. By contrast LDCs (the global South) endowed with abundant supplies of cheap unskilled labour, by intentionally specialising in products which use cheap, unskilled labour … often find themselves locked into a stagnant situation which perpetuates their comparative advantage in unskilled unproductive activities. This in turn inhibits the domestic growth of needed capital, and technical skills. Static efficiency becomes dynamic inefficiency, and a cumulative process is set in motion in which trade exacerbates already unequal trading relationships, distributes benefits largely to the people who are already well off, and perpetuates the physical and human resource under-development that characterises most poor nations. (6)

Examples of these unequal economic relationships are not difficult to find. US global trade policy was openly based upon a ‘Me Tarzan, you Jane’ set up. America’s trade ‘partners’ were somewhat less endowed with both political and economic capital compared with their senior trading associate – this fact provides a number of typical case studies in this connexion.

Agriculture was always a particular example of the double standard inherent in the trade liberalization agenda. The United States always insisted that other countries reduce their barriers to American products and eliminate subsidies for those products which competed against theirs. However, the US kept up barriers for the goods produced by the developing countries whilst it continued to underwrite massive subsidies for their own producers.

Agricultural subsidies encouraged American farmers to produce more output, forcing down global prices for the crops that poor developing countries produce and depend upon. For example, subsidies for one crop alone, cotton, went to 25,000 mostly very well-off US farmers, exceeded in value the cotton that was produced, lowering the global price of cotton enormously. American farmers, who account for a third of global output, despite the fact that US production costs twice the international price of 42 cents per pound, gained at the expense of the 10 million African farmers in Mali, West Africa, who depended on cotton for their meagre living. Several African countries lost between 1 and 2 percent of their entire income, an amount greater than what these particular countries received in foreign aid from the US. The state of Mali received US$37 million in aid but lost US$43 million from depressed cotton prices.

In other grubby little deals the US tried to keep out Mexican tomatoes, and Mexican trucks, Chinese honey, and Ukrainian women’s coats. Whenever an American industry is threatened, the US authorities swing into action, using so-called fair-trade laws, which had been largely blessed by the Uruguay Round.

Such Treaties were little more than a con game between two grossly unequal partners where one of the partners holds all the cards. Nor does it end there. Transnational Companies can and do avoid much local taxation by shifting profits to subsidiaries in low-tax venues by artificially inflating the price which they pay for their intermediate products purchased from these same subsidiaries so as to lower their stated profits. This phenomenon is usually called ‘transfer pricing’ and is a common practice of Transnational Companies (TNCs), one over which host governments can exert little control as long as corporate tax rates differ from one country to the next.

It should also be borne in mind that although the IMF and World Bank enjoin LDCs to adopt market liberalisation policies they apparently see – or conveniently ignore – the past and current mercantilist practices of developed nations. Agriculture, as has been noted, is massively subsidised in both NAFTA and the EU. But it really is a question of don’t do what I do – do as I say.

The hypocrisy at the heart of the problem represents the elephant in the room. We know that countries which attempt to open their markets when they are not ready to do so usually pay a heavy price (Russia during the Yeltsin period and the shock therapy for example). The countries which protect their growing industries until they are ready to trade on world markets – e.g. South Korea –have been the successes, even in capitalist terms. The wave of development during the 19th century and the development of East Asia in the 20th bears witness to this.

NOT IN THE DEVELOPMENT BUSINESS

But the object of the free-trade rhetoric and finger-wagging posture of the developed world is precisely to maintain the status quo. We should be aware that … ‘’Transnational Corporations are not in the development business; their objective is to maximise their return on capital. TNCs seek out the best profit opportunities and are largely unconcerned with issues such as poverty, inequality, employment conditions, and environmental problems.’’ (7)

Given the regulatory capture of the political structures in the developed world by powerful business interests, it seems that this situation is likely to endure for the foreseeable future. Development will only come about when the LDCs take their fate into their own hands and emulate the national building strategies of East Asia.

‘’…markets have a strong tendency to reinforce the status quo. The free market dictates that countries should stick to what they are good at. Stated bluntly, this means that poor countries are supposed to continue with the current practices in low-productivity, low-value added, and low research-intensive activities. But engagement in these activities is exactly what makes them poor in the first place. If they want to leave poverty behind, they have to defy the market and do the more difficult things that bring them higher income and development – there are no two ways about it.’’ (8)

APPENDIX

THE RUSSIAN ROAD.

The legacy of the Yeltsin years had left Russia badly exposed to a triumphalist Western US/EU/NATO bloc. The NATO expansion up to Russia’s western frontiers posed a serious threat to Russia’s security. Internationally Russia was relatively isolated. The socialist political and economic alliances (Warsaw Pact and Comecon) were disbanded, and their previous commercial and economic networks were dismantled. The Russian Federation was excluded from membership of the European Union and was not (yet) a member of the World Trade Organization (WTO). This was the background for the widespread popular support for the assertive policy of President Putin.

But the geopolitical situation was to say the least – challenging. For his part Putin objected to NATO’s deployment of missiles in Poland and Romania pointed directly at Russia. In 1999 the Visegrad countries, Czech Republic, Poland and Hungary, joined NATO and in 2004 they were joined by Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia and Slovenia. All these states joined in 2009. Albania and Croatia joined in the same year. Economically, politically and militarily, the ‘’West’’ had arrived at Russia’s borders.

In addition to its external enemies Russia had an abundance of internal foes. This latter group was a product of the Yeltsin model and prior to this a tottering bureaucratic system which barely worked and ultimately collapsed. It was possible to distinguish two main groups which, for better or worse, undermined the Soviet system, which were identified as 1. The Administrative Class, and 2. The Acquiring Class, to which should be added the black-market entrepreneurs who were keen to emulate their western business icons in addition to the American mafia. Powerful reactionary and criminal elements in Russia were keen to bring about deep-rooted changes at the expense of the Russian people.

‘’Ostensibly the reforms in Russia were overseen by a group of senior state officials headed by one Yegor Gaidar and advised, supported and encouraged by senior figures from the US administration, as well as by various American ‘experts.’ But according to an American scholar, Janine Wedel, the Russian reforms were worked out in painstaking detail by a handful of specialists from Harvard University, with close ties to the American government, and were implemented in Russia through the politically dominant ‘Chubais Clan’. (Wedel – 2001). Chubais was officially reported as having engaged foreign consultants including officers of the CIA, to fill leading roles in the State Property Committee. Jonathan Hay, citizen of the USA and Officer in the CIA, was appointed director of the Foreign Technical Aid and Expertise Section and Deputy to the chairperson of the committee (Anatoliy Chubais) within the Expert Commission. The Expert Commission was empowered to review draft decrees of the president of Russia to review for the decisions by the government and instructions by the Chairman and Deputy Chairman of the State Property Committee of the Russian Federation of the details of privatisation in various sectors of the economy … The memoirs of Strove Talbott, Assistant to the US President William Jefferson Clinton on Russian affairs, left no doubt that the US administration viewed (the then) Russian President, Boris Yeltsin, as a reliable conduit for its interests in Russia.

The US neo-liberal economists Jeffrey Sachs and Andrei Shleifer, and Jonathan Hay, had an unprecedented degree of influence over Russia’s economic policy which was unparalleled for a sovereign state. Together with Gaidar and Chabais they formulated decisions that were inserted directly into Presidential decrees … Analysis shows that the implementation of Russian reforms organically combined an aspiration by Soviet bureaucrats to transform themselves from State functionaries into private property owners, and a desire on the part of the ruling elites in the West to impose their own system of values on their historical rival. It was thus inappropriate to speak of Russia and its neighbours in the CIS as having been independent in their conduct of radical economic reforms, and this very lack of independence was crucial for determining the strategy applied in these transformations.’’ (9)

Be that as it may, the damage to Russia carried out and orchestrated by both internal and external enemies was to push back Russian development at least two decades, if not more. Russia has been described by various informed opinion as being a ‘semi-peripheral economy’ and there is some truth in this, its main exports being raw materials and military and defence hardware. But this was a choice forced upon Russia by the US-western alliance. At the turn of the 19/20 century Russia needed to defend itself from western aggression. There were two absolute priorities. Agricultural security and military security. This was the sine qua non for Russia’s continued survival and development. The mixed economy – a characteristic of the western economic models, was for the moment, out of reach. But then the west started to run into its own problems, so things began to balance, particularly with the emergence of the Russian-Chinese alliance. However, the Yeltsin period which had produced a crop of cronies, co-conspirators, criminal and mafia elements, are still hidden in the shadows, often in very high places. The struggle goes on. La Lotta Continua.

NOTES

(1) Phillip Mullan – Beyond Confrontation – p.36

(2) These economic policies as advocated by Alexander Hamilton in the US. In the month of January of 1791, the Secretary of Treasury to the then President George Washington’s administration, Mr. Alexander Hamilton, proposed a seemingly innocuous excise tax on spirits distilled within the United States of America. The move was part of Hamilton’s initiative to encourage industrialization and higher degree of national sufficiency. In his December 1791 report to manufacturers, Hamilton called for protective tariffs to spur domestic production. Also, Hamilton called for the reduction of duties on goods that were carried by American ships.

This was also the case of Freidrich List in Germany in his short work – The National System of Political Economy.

(3) A non-tariff barrier (NTB) is a policy implemented by a government that acts as a cost or impediment to trade. It is not tariffs on products but rather different rules and regulations that are often the biggest practical barrier to trade between countries. Examples of non-tariff barriers include rules on labelling and safety standards on products. Other types of non-tariff barriers to trade can also be the result of policies that differentiate between national and international companies and firms. For example, domestic subsidies by governments to a carmaker may help keep that manufacturer in their country. However, that acts as essentially an indirect non-tariff barrier to other car companies looking to compete. Governments are also often likely to give preferential treatment to companies in their own country when it comes to government procurement contracts. Governments also buy products from their own industries in preference to foreign companies, these are called procurement policies another NTB. This can be seen as an impediment to free and fair international trade.

(4) Ha-Joon Chang – Kicking Away the Ladder – p.32/33.

(5) How Rich Countries Got Rich and Why Poor Countries Stay Poor. – Erik Reinert. It could be argued that political intervention would be the prerequisite for an industrial policy.

(6) Development Economics – Todaro and Smith – 2009

(7) Todaro and Smith – Development Economics – Ibid.

(8) Ha-Joon Chang – Bad Samaritans – p.210

(9) Ruslan Dzarasov – Russia, Ukraine and Contemporary Imperialism – Semi-Peripheral Russia and the Ukraine Crisis – pp.82-97

The Great Interregnum

The Great Interregnum

February 01, 2021

by Francis Lee for The Saker Blog

The road to the future, to a new expansion as is always close to the heart of capital, led outwards, to the still pleasantly unregulated world of a borderless global economy in which markets would no longer be locked into nation-states, but nation-states locked into markets. (1)

The golden age of post-war capitalism which lasted from the Bretton Woods arrangements of 1944 ended definitively with the great 1971 counter-revolution; a process which began with the removal of the US$ from the gold standard. Since the rest of the world’s currencies were fixed to the dollar these currencies were automatically detached from gold. What emerged, whether by accident or, more likely by design, has defined the contours of the 21st century and this has borne witness to the emergence of a New World Order (NWO) of a neo-liberal, globalization settlement and conjointly the collapse of actually existing socialism. This realignment was by no means accidental and represented fundamental policy changes rather than unconnected random events.

THE RISE OF NEOLIBERALISM AND THE NWO

This NWO has been established on the basis of deep structural changes in the nature of actually existing capitalism and qualitatively different to the welfare, inclusive capitalism of the immediate post-war period. However the counter-revolution caught the left unprepared and who have seemingly been unable to grasp this fact. Moreover the collapse of actually existing socialism ended the historical period of political ascendency of the left – a process which dated back to the Russian revolution of 1917 – and transmuted into the great neo-liberal counter-revolution which began in 1971.

This eclipse of socialism – or anything resembling socialism – has been the feature of the late 20th and early 21st centuries. Both social-democratic and even communist parties have been politically marginalised by their theoretical inability to discern the deficiencies in their political agendas. The counter-revolutionary wave of the late 20th century began in stages to sweep all before it. The decline of a moribund social-democracy and even eurocommunism with their entrenched and seemingly immovable policies of an earlier period – Progress through Parliamentary Reform – were found to be wanting, out of date and out of time, running out of steam with their economies plagued by stagflation and declining growth. By the late 60s early 70s Le Trente Glorieuses were no more and this gave rise to the surge of counter-revolution initially led by the Reagan-Thatcher axis. This move into the future was – if anybody noticed – a backward movement. Winners included the then Head of Siemens, Heinrich Von Pierer, to triumphantly proclaim: ‘’The wind of competition has become a storm, and the real hurricanes still lies ahead of us.’’(2)

THE EFFECTIVE DEMISE OF THE LEFT

To think that the Left which had once occupied and dominated Western Europe and consisted of mass parties of social-democrats and communists, and moreover, even in 1945 there were armed communist partisans operating in Albania, Greece, Yugoslavia, Italy, and France, including a large Parliamentary representation.

But the Left capitulated and adapted to the new order and for better or worse – actually worse – and was to imbibe the fashionable doctrines of neo-liberalism.

I vividly remember being a student delegate at Labour Party Annual Conference in the seaside town of Blackpool in 1976. Conference was always a rather tedious and dispiriting affair but this time it was historic. James Callaghan the then Prime Minister gave the following address. The key passage was as follows:

‘’We used to think that you could spend your way out of a recession and increase employ­ment by cutting taxes and boosting Government spending. I tell you in all candour that that option no longer exists, and that in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of infla­tion into the economy, followed by a higher level of unemployment as the next step. Higher inflation followed by higher unemployment. We have just escaped from the highest rate of inflation this country has known; we have not yet escaped from the consequences: high unemployment.’’ Apparently, Keynes was now passe and Von Hayek was flavour of the month.

What Callaghan was in fact articulating was the demise of social-democracy in the UK, and for that matter everywhere else; it was over, finished, and now a complete political racket infested with careerists and parvenus on the make. So Orwell was right even before then to describe the Labour Party as being ‘pale pink humbug’(The Road to Wigan Pier 1937). The neo-liberals had won, and it was an Atlantic-wide victory. Be advised that a party which calls itself a party of the Left, but which adheres to the neo-liberal orthodoxy is simply a fraud. Ex-centre-left parties have simply moved over to the centre-right en bloc. This project was definitively operationalised with considerable success by Blair (New Labour) and Clinton (political centrism) in the 90s.

TAKE A KNEE TO THEM NOW

This political about-face where the ashes of the left and the emergence of the neoliberal right was presided over by a new goddess known as TINA—There Is No Alternative. The long list of her high priests and priestesses extends from Margaret Thatcher via Tony Blair down to Angela Merkel and Bill Clinton. Anyone who wished to serve TINA, to the accompaniment of the solemn chorus of the united economists of the world, had to recognize the escape of capital from its national cages as both inevitable and beneficial, and would have to commit themselves to help clear all obstacles from its path. Heathen practices such as controls on the movement of capital, state aid and others were to be tracked down and eradicated; no one must be allowed to escape from ‘global competition’ and sink back into the cushioned comfort of national protections of whatever kind. Free-trade agreements were to open up markets and protect them from state interference, global governance was to replace national governments, protection from commodification was to be replaced by enabling commodification, and the welfare state was to give way to the competition state of a new era of capitalist rationalization. By the end of the 1980s at the latest, neoliberalism had become the de rigeuer for both the centre left and the centre right—with haemorrhaging membership and a declining electoral participation, disproportionately so at the lower end of the social scale. Additionally, a beginning in the 1980s this was accompanied by a meltdown of trade-union organization, together with a dramatic decline in strike activity worldwide—altogether, in other words, a demobilization along the broadest possible front of the entire post-war machinery of democratic participation and redistribution The old political controversies were now regarded as being obsolete by the PTB.(3)

THE ROAD TO NEMESIS

But history is full of surprises. In their hubris the new ruling elites were to become victims of their own propaganda, a customary and predictable human failing. Cracks were beginning to show in the neo-liberal paradigm during the holding period of 2008-2020 and the model was, whether they liked it or not, beginning to show deep structural fault-lines. The new economic system was becoming increasingly obsolete and unstable, the elephant in the room is now beginning to make its presence felt. This has been the result in the build-up of problems which were occasioned by the 2008 blow-out.

At the present time, however, the cracks which had papered over the post 2008 bodge and the distribution of national income was increasingly tilted away from the 99% to the 1%. Such a polarization of wealth and income cannot possibly endure without economic and political chaos. The process is in its early stages and represents the most severe trial of the new order since the 1971 establishment. In effect democracy is being sacrificed by the requirements of capitalism. This Great Reset is the Hayekian wonderland of a 21st century slave state.

‘’If capitalism of the consolidation state can no longer produce even the illusion of equitable growth, the time will come when the paths of capitalism and democracy must part. The likeliest outcome would be the completion of a Hayekian social dictatorship in which the capitalist market economy was protected from democratic correction. Its legitimacy would depend upon whether those who once were its citizens would have learned to equate market justice with social justice and to think of themselves as members of a unified marktvolk. Its stability would further require instruments for the ideological marginalization, political disorganization, and physical restraint of anyone unwilling to accept this lesson. Those who refused to bow to market justice, in a situation where political institutions economically, would then be left with what used to be described in the 1970s as extra-parliamentary protest: emotional, irrational, fragmented, and irresponsible. And this is what we would precisely expect if the democratic channels for the articulation of interests and the formation of preferences are blocked, only because the same outcomes can never emerge or because what emerges no longer makes any difference to the markets … The alternative to capitalism without democracy is democracy without capitalism. (4)

So now we are living in a period of what Antonio Gramsci described as the interregnum. “The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.”(5) Its outcome can only be guessed at.

La Lotte Continua.

NOTES

(1) Wolfgang Streeck – New Left Review – 104

(2) Der Spiegel 1996

(3)Wolfgang Streeck – New Left Review 104

(4) Grace Blakeley – Stolen: How to Save the World from Financialization -pp.172/73.

(5) Prison Notebooks – Antonio Gramsci.

President Assad Slaughtered Neoliberalism’s Four Sacred Cows

By Andrew Korybko

Source

President Assad Slaughtered Neoliberalism

Syrian President Assad just slaughtered neoliberalism’s four sacred cows of gay marriage, radical secularism, marijuana legalization, and gender theory in a short video of his latest speech that recently went viral on social media where he condemned these examples of “total moral degeneracy” that he very passionately believes “target our humanity”.

The “Great Social/Civilizational Reset”

The increasingly sharp contrast between the West’s extreme neoliberal social values and most of the rest of the world’s embrace of conservative traditionalism was brought to the fore of global attention after October’s terrorist beheading of a French schoolteacher for sharing satirical cartoons of the Prophet Muhammad. The author published an analysis at the time asking “Is A ‘Great Social/Civilizational Reset Upon Us?”, which predicted that each value system’s proponents will become more vocal in the future but that this doesn’t necessarily imply that the fearmongered “Clash of Civilizations” scenario is inevitable. Rather, what’s likely to unfold is that each side more proudly reasserts their identity as time goes on, defending that which they hold dearest against what they regard as the threat represented by the other system. This is precisely what recently happened after a short video of Syrian President Assad’s latest speech went viral on social media where he slaughtered the four sacred cows of neoliberalism.

Syrian Girl Made The Syrian Leader Go Viral

Mimi Al Laham, also known as Syrian Girl on Twitter, translated the most important part into English. Her work was then shared by Infowars as part of their article titled “Bashar Al-Assad: Neoliberalism is Based on ‘Total Moral Degeneracy’”, which in turn brought it to the attention of countless people across the world. President Assad is known for his solid support of secularism in the face of fundamentalist religious threats to his country’s society, yet casual observers would have been mistaken if they assumed that this means that he’s sympathetic to neoliberalism. The reality couldn’t be more different since the Syrian leader showed that it’s possible to be a secular anti-liberal unlike what many people might have naively thought. Some of his own supporters abroad might even be a bit surprised by what he said since they probably didn’t expect him to group gay marriage, radical secularism, marijuana legalization, and gender theory together as examples of “total moral degeneracy” which he very passionately believes “target our humanity.”

Slaughtering The Four Sacred Cows

For the reader’s convenience, the author is sharing Syrian Girl’s translation of President Assad’s speech below:

Neoliberalism is based on promoting a total moral degeneracy and separating individuals from any principles or values and affiliations and beliefs in order to reach this moral degeneracy. Neoliberalism promoted gay marriage. They started in the 1970s and now gay marriage is legal. And now they have children but it’s different from adopting because how can they have children?

Neoliberalism promoted that a child does not choose his own religion and this is against the child’s freedom of expression. A child is born without any religion and later choose his own religion when he’s grown up. This is against human nature. Ever since human made their own idols and Gods, a child would instinctively belong to his family’s religion. They contradict humanity itself.

It has recently promoted that marijuana is not harmful and now it’s sold in shops legally. They started claiming that drugs are not harmful, and later they will find something more harmful. Now in some places you can buy marijuana-flavored bread. This is neoliberalism. It (neoliberalism) now claims that a child is born and does not have a gender, that the child chooses later to be a male or a female. Very strange indeed!

So what do we understand from this? Neoliberalism targets our humanity, and by doing so, it collides with religions because religions serve humanity while neoliberalism separates individuals from their values.”

From the above, there’s no doubt that President Assad slaughtered all four of neoliberalism’s sacred cows.

Reviewing President Assad’s Principled Views

Gay marriage, as he noted, has been pushed by neoliberals onto society for nearly the past half-century, after which it finally succeeded to such a wild extent that sex change surgeries can now even lead to so-called “male pregnancies”. According to President Assad, the radical neoliberal ideology of forcibly secularizing children “contradicts humanity itself”. Legalizing drugs, and especially Western society’s normalization of marijuana, is harmful in his eyes, and he also regards gender theory as “very strange indeed”. Taken together, it can unambiguously be said that President Assad sees little difference between “impregnating” sex-changed males, forcing children to accept secularism despite their parents’ wishes, eating a marijuana “brownie”, and convincing children that gender is a choice. These are all similar expressions of neoliberalism’s “moral degeneracy” and “targeting of humanity”, hence why they’re equally condemned. All four of these are like a cancer eating Western society from within, something that he wants to avoid having happen in Syria.

The Syrian Model Stands To Inspire The World

President Assad’s very principled defense of traditional values despite his vehement support for secularism challenges the assumption that the only ones who support the former are religious fundamentalists. As proven by none other than himself and his millions of supporters across the world, it’s entirely possible to simultaneously support secularism and traditional values while being strongly against both neoliberalism and religious fundamentalism. It’s not an either-or choice like those who want to provoke a so-called “Clash of Civilizations” dishonestly try to make everyone think. The world is so complex that not every society neatly falls into one or the other category as Syria shows. For this reason, the Syrian model might eventually be replicated by other countries that are striving to strike a balance between those two social extremes. In hindsight, the nearly decade-long Hybrid War of Terror that was launched against his country in 2011 might have even been partially predicated on erasing Syria’s unique social system from the face of the earth in order to prevent that.

A Hard Look at Rent and Rent Seeking with Michael Hudson & Pepe Escobar

Source

A Hard Look at Rent and Rent Seeking with Michael Hudson & Pepe Escobar

December 23, 2020

Michael Hudson and Pepe Escobar discuss rent and rent-seeking, i.e., unproductive economic activity, in the US and China mainly but including the Russian, Iranian and Brazilian economies.

In the first 15 minutes, an overview from Michael Hudson explains what happened in the US economy once jobs and manufacturing were offshored to mainly China.  He proposes that even if China did not exist, the US economy has been changed to the extent that it is almost impossible to change back to a productive economy without material changes in the economic model.

Pepe keeps the conversation flowing quickly with incisive questions.  The two esteemed gentlemen take a look at the Chinese view on a possible Biden administration and how the military hawks in Washington could be countered.   Outlining the ‘conflict of systems’ between the US and China, Michael Hudson explains the thinking of the Pentagon and paying ‘protection money’ historically to fund oligarchies.  It is a ‘war between systems’, Hudson explains with the thinking being:  “If only China did not export to us, we could reindustrialize.”

“It’s over”: says Hudson, because “we’ve painted ourselves into such a debt corner.  So much money flows to the top 5% that there is no money for investment, no money for growth.”

Hudson explains the concept of capitalism, how it was conceived to work against neo-liberalism, and how it has changed to systemic support for rentier economics.

A wealth of detail follows, around fictitious debt and wealth creation.   Michael discusses the ‘brainwashing’ of Russia vis a vis economic policy and central bank to end up in a position where Russia was paying 100% interest for years under American advisors and privatized rentiers, “a bunch of gangsters.”   Very interesting is the discussion on how the perpetrators, the leading university of the US in the destruction and looting of Russia, could not be brought to a court.

“You don’t need an army to destroy a country any longer.  All you need to do is to teach it American economics.”  Michael Hudson

A question from Pepe regarding the economies of North East Asia, South East Asia, the Asia Crisis and currently further integration with Russia, resulted in this very cogent quote from Michael Hudson.

“The current mode of warfare is to conquer the brains of a country, to shape how people think.  If you can twist their view into unreality economics, to make them think you are there to help them and not to take money out of them, then you’ve got them hooked.  You need to lend them money, and then crash it.”  Michael Hudson.

The conversation ends with an extensive question from Pepe regarding the biggest myth regarding Belt and Road, the supposed ‘debt trap’.  The difference in systems, non-rentier, and rentier, debt, and neo-liberalism again is illustrated in a crystal clear fashion.

Corporations, States, and the neo-liberal symbiosis

Corporations, States, and the neo-liberal symbiosis

December 16, 2020

By Francis Lee for the Saker Blog

The men and women who run global corporations are the first in history with the organization, technology, money, and ideology who are attempting to structure the world as an integrated economic unit. (1)

THE RISE OF CORPORATE POWER.

Scroll down another six decades (or thereabouts) and this statement has hardened into an objective fact – and moreover has turned out worse than the above authors had ever imagined. In effect what has taken place, and is still taking place, is the massive shift of power, out of the hands of nation states and democratic governments and into the hands of Transnational Corporations (TNCs) banks, Investment banks, Commercial banks, and Central banks. It is now the coalition that effectively governs the lives of the vast majority of the people on earth; yet these new world realities are seldom reflected in the strategies of citizen movements for democratic change. All too often, strategies are aimed primarily at changing government policies, whilst the real power being exercised by TNCs behind the scenes is rarely challenged, let alone dismantled. When the operations of TNCs do become a prime target for citizen action campaigns, there is a tendency to employ a rather piecemeal and foot-dragging approach to such popular struggles to what is a deeply systemic problem – a problem for the lower orders that is.

Regardless of their nominal home bases these globe-trotting corporate Leviathans have become essentially ‘stateless’ (I use this term advisedly) juggling multiple national identities and loyalties in order to achieve their global competitive interests. Regardless of where they operate in the world these conglomerates can use their overseas subsidiaries, joint ventures, licensing agreements, and assume foreign identities and tax evasion on a huge scale – as for example in the practise of ‘transfer pricing’ – whenever it suits their purposes. In so doing, they develop chameleon-like abilities to change their identities to resemble insiders wherever they are operating. As one nameless CEO put it, When we go to Brussels, we are member states of the EU, when we go to Washington, we become an American Company. Whenever the need arises these gentlemen will wrap themselves up in the national flag of choice (or flags of convenience as in the shipping industry) to get support for tax breaks, research subsidies, or governmental representation in negotiations affecting corporate profit and marketing plans. Through this process stateless corporations are effectively transforming what were independent nation states to suit their interests.

CORPORATIONS AND STATES – PARTNERS IN CRIME

Having said this, however, I would add a qualifying disclaimer:

Namely, that nation states do not necessarily choose to prostrate themselves before their lords and masters of Finance and Industry, this was never – mirabile dictu – meant to be a one-way arrangement or an alternative to the liberal market economy. I have argued elsewhere that states and corporations are both conjoint and symmetrical. Both need each other. The state unquestionably remains the most significant force in shaping the national and world economies, despite the rhetoric of the state-denialist lobby. The state has played a fundamental role in the economic development of all countries, from the 19th century onwards, and my hunch is that it will continue to do so for the foreseeable future.

However, given the universality of the state-economy dualism it should be understood that a system of variegated capitalism is a feature of the contemporary state-economy partnership. In general terms this fragmentation breaks down into basic models of actually existing capitalism.

1. The liberal-market capitalism (LMC). This is generally understood to be associated with the Anglo-American economies. Rampant individualism has become the dominant characteristic, short-termist and based upon a weak industrial and a strong financial sector. Shareholder value has assumed a quasi-religious status. The banking system is oligopolistic and averse to industrial investment and fixated on the property sector. Financialization is the dominant economic form.

2. Social-market capitalism. (SMC) A premium is placed on collaboration between different actors in the economy with a broader definition of ‘stakeholders’ beyond that of solely the owners of capital. The concept of ‘social partnership’ is more prominent than the Anglo-American model, but somewhat weaker more recently. Capital markets – unlike the LMC – tend to be bank-centred and the banking industry tends to be more diffuse as instanced in the existence of the German Sparkassen. This model is characteristic of the German, Scandinavian, western European bloc.

3. Developmental Capitalism. This is a highly activist state-driven system (although not necessarily through public ownership of productive assets). The state sets substantial policies contained within an explicit industrial strategy. Capital markets tend also to be bank-centred and there is a strong emphasis on tight business networks – e.g., the Chaebol and Keiretsu. The model is exemplified by Japan, (south) Korea, Taiwan, Singapore, and more recently by China.

4. Russian Capitalism. This is difficult to categorize since it is given an unbelievably bad press – for geopolitical reasons – in the western media and academia.

It is also under the cosh of western sanctions which makes development even more difficult. Moreover much of what is going on is conducted in the Russian language which makes reporting and analysis even more difficult. Both political and economic structures were liberalized after 1991 but the Russian state still exerts strong control over the economy. The jury is still out on Russia’s system and development.

Given a choice of which system works best it would seem to be the highly state-activist developmental model.

‘’We can safely predict that the Anglo-American model will become less influential … whilst … virtually all of the Asian models of capitalism involve a more active role for government. And the rise of these models is taking place as the US approach is discredited by abuse, shrivelling opportunities and a shrinking middle-class. Among listed alternatives, the US model is now the outlier.’’ (2)

Alexander Hamilton 1755-1804

These views on industrialisation and state-building could legitimately be described as a protectionist and strategic policy, this to the extent that his theories made a positive impression, and these were not lost on US President and ex-commander-in-chief of the Army of the Potomac, Ulysses S Grant. (1822-1885).

According to Grant:

‘’For centuries England has relied on protection, has carried it to extremes and has obtained satisfactory results from it. There is no doubt that it is to this system that it owes its present strength. After two centuries, England has found it convenient to adopt free trade because it thinks that protection can no longer offer it anything. Very well then, gentlemen, my knowledge of our country leads me to believe that within 200 years, when America has gotten out of protection all that it can offer, it too will adopt free trade.’’

Interestingly enough the United States did not become a great trading power and not recognisably be a free-trade nation until after WW2.

Similarly In Germany, Friedrich List (1789-1846) who also had scant regard for any ‘free-market’ nonsense along with the Ricardian corollary of comparative advantage, was instrumental in promoting a guided political economy; a system of political supervision from above as a policy for economic development. He argued that,

‘’…the first stage (of such a long-term policy) is one of adopting free-trade with more advanced nations as a means of raising themselves from a state of barbarism, and of making advances in agriculture; in the second stage, promoting the growth of manufactures, fisheries, navigation and foreign trade by means of commercial restrictions; and in the last stage, on after reaching the highest degree of wealth and power by gradually reverting to the principle of free-trade and of unrestricted competition in home and foreign markets.’’ (3)

As with Hamilton’s economic theories and their influence on Grant, so with List’s theories, on the leading figure in Germany at the time, the ‘Iron Chancellor’ and leading statesman of the day – Otto Von Bismarck (1771-1845).

These strategic, nation-building, and planned approaches were to give rise to the considerable success of the ‘mixed economies’ during the Bretton Woods era – 1944-1971 – and particularly so in the west. But this historical phase ended abruptly with the rise of the Thatcher-Reagan axis circa 1980, to the tune of TINA – there is no alternative, although such policies continued to be the chosen road to development in East Asia. If the TNC-State paradigm operates globally they do so only because the state allows and facilitates this. But the relationship between the two varies from one state’s political economy to another.

The present actually existing state-market archetype – which in its essence is neo-liberal – is such that business enterprises now seem fit to expect/demand more from their governments in order to secure markets for their products (these enterprises certainly have some chutzpah in this respect!)Trade follows the flag. This special pleading notwithstanding, the fashionable nostrums extolling the economic virtues of neo-liberalism – nostrums of an entirely theoretical nature, based upon a type of reasoning associated with the medieval schoolmen, or rolled out as if it were Immanuel Kant’s Categorical Imperative. In this respect also such economic theory, as postulated by the marginalist school (see below) takes place before any engagement with the material world, the theory precedes practice when it should be the other way around. I believe that it was Goethe who once said “All theory is grey, my friend. But forever green is the tree of life.”

ECONOMIC DEVELOPMENTAL DESIDERATA

However, in spite of the neo-classical economics theological school founded in 1870 (4) the fact of the matter is that the private sector requires at least 4 principles of support and services from governments.

1. Infrastructure support. That is to say state funding of high-risk and basic research. This involves funding of universities and of vocational training systems. Subsidizing of mechanisms for the dissemination of scientific and technological transfers.

2. Providing tax breaks. Incentives, necessary for investment in industrial R&D

3. Guarantees. That national enterprises from the given country have a sufficiently stable Home Base and privileged access to the home market via public contracts (defence, telecommunications, health, transport, education, social services). Industrial policy, particularly for those in the high technology strategic sector (defence, telecommunications, and data processing), also guarantee of a certain basic scientific and technical competence, as well as protecting designated sectors of the internal market on which local enterprises may depend.

4. Provision: that is the necessary support and assistance (regulatory and/or commercial, diplomatic, and political) to local enterprises in their activities and in their fight to better survive in international markets.

The above prescriptions would constitute the absolute sine qua non for economic growth and development. But it is no longer necessarily the case that these expectations will be met. Instead of the assessment (and presence) of past economic developmental strategies with measurable outcomes we have a religious, inflexible dogma of ‘market forces’ which is not to be gainsaid, gibberish in theory, but not even workable in practice. Herewith the record.

1. Capital/Labour relations.

Promise: Deregulation will allow for full employment.

Outcome: No clear impact.

2. Forms of Competition.

Promise: Deregulation will erode oligopolistic market power and will restore free competition

Outcome: Re-regulation, less producers, increased market concentration, from one oligopolistic form of competition to another.

3. Monetary Regime

Promise: Control of Monetary Base is possible.

Outcome: Monetary Innovation prevents this control and the rise of the shadow banking system.

4. State.

Promise: Minimal state will enhance growth and productivity

Outcome: Poor levels of productivity due to lack of educational infrastructures. Finance is put before industry.

5. International Regime

Promise: Smooth currency adjustments.

Outcome: Large movements up and down of exchange rates

And so on and so forth. The state – if it so chooses – remains the most formidable institution to channel and tame the power of the markets. In the absence of powerful countervailing regulation any economic analysis shows that persisting unemployment, recurring financial crises, rising inequality, underinvestment in productive activities such as education and research, a cumulative asymmetry of information and power and overinvestment in financial activities are the outcomes of a complete reliance on market forces. This we already know, but the suffocating global impact of Anglo-American liberal globalism – in both theory and practice, and in its sphere of influence – has served to erect a seemingly insurmountable barrier, both political and ideological, to any exit from the dead-end of TINA.

DECLINE AND FALL

Sad to say, however, that the public authorities on both sides of the Atlantic have defaulted on their obligations to their electorates and to a large extent have merged with the corporate and banking sector. The US and EU remain in thrall to neo-liberal doctrine, the only ‘growth’ policy considered worthy of the name consists of eliminating organizations or institutions of any kind that are regarded as obstructing markets and competition, be they cartels, chambers of commerce and industry, trades unions or tax guilds, or minimum wages or employment protection. This is all that is meant when todays creditors expect debtor states to implement the dreaded ‘structural reforms’. The collapse of the Keynesian economics establishment and its political manifestation in both social-democratic theory and practice was unable (and even unwilling) to prevent the counter-revolutionary onrush of the neoliberal forces who now command the political and economic agenda.

‘’The historical significance of the transition from a Keynesian to a Hayekian political economy, which has been taking place since the 1970s, becomes clearer if we recall the situation at the beginning of the neoliberal turn. Whereas today with open borders, formerly sovereign states with independent central banks must pursue a rule-bound economic policy in accordance with a prescriptions of efficiency theory, the Keynesian mixed economy of the post-war decades had at its disposal a wide range of instruments for discretionary government intervention, especially in the distribution of the national product and the life-chances of national citizens … The neoliberal counter-revolution has left nothing of this. It’s objective was to trim the states of post-war capitalism as much as possible reducing them to providing for the functioning and expansion of markets and making them institutionally incapable of corrective intervention in the self-regulating enforcement of market justice.’’(5)

Returning to the global perspective of the opening passage the problems of under-development in the periphery is now being felt in the imperial centre as the centre becomes more and more like the periphery. A state cannot be emerging or developed if it is not inward rather than outward looking to the goal of creating a domestic market and thus reasserting a national economic sovereignty. This complex objective requires over all aspects of economic life. In particular, it demands policies that protects food security and sovereignty, and equally sovereignty over ones natural resources and access to others outside one’s territory. These multiple and complementary objectives are contrasted with those objectives of the internal comprador class, who are content to adapt to growth models that meet the requirements of the dominant global system (liberal globalization) and the possibilities that these latter alternatives offer. (6)

At the present time, the historical requirement for the establishment of an entirely new social and economic order based upon sound principles and respecting the environment with a goal of the fulfilment of human rights has become imperative. It hardly needs stating that this is a monumental task and the possibilities between success and failure are evenly balanced. Nonetheless it remains the greatest challenge in today’s world – moreover it is a challenge which spans both the developed and developing world and for tackling the issue of the survival of the human species and the Earth itself. Whether mankind is up for this challenge remains to be seen, but the world is running out of time and positive action needs to start very soon indeed. We shall wait and we shall see.

La Lotta Continua.

NOTES

(1) Richard Barnet & Robert Mueller -Global Reach – 1974

(2) Rothkopf – Financial Times – 01/02/2012)

(3) Freidrich List. – National System of Political Economy. P.15

(4)The Marginalist ‘Revolution’ of 1870. The term ‘marginalist revolution’ is commonly utilised to indicate the abandonment of the classical liberalism – of Adam Smith, and John Stuart Mill – and posited a theoretical shift to a subjective theory of value and the analytical notion of marginal utility. The years between 1871 and 1874 saw publication of the major writings of the leaders of the Austrian marginalist school, Carl Menger (1840-1921); of the British school, William Stanley Jevons (1835-1882); and of the French (Lausanne) school, Leon Walras (1834-1910). For better or worse – pretty much the worse FL – this is the basis of the contemporary economics taught in schools and universities today. It is a toxic legacy.

(5) Wolfgang Streeck – Buying Time – pp.111/112

(6)Samir Amin – The Implosion of Capitalism – p.44

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