Ideologies are no longer the way we know them and this means that the world is being reconfigured

July 17, 2022

Source

By Guilherme Wilbert

I try to bring a reflection in most of my texts about what competes for the international diplomatic and monetary future after Operation Z in Ukraine, but also, I always try to bring the ideological part into the discussion because this still makes many people’s heads spin. Or are Ukrainian flag-wavers not ideologized?

Capitalism and communism have always been enemies at their core, especially in their own archetypes, since communism is internationalist, while pure capitalism is just the simplest way of doing business: you give me money for what it is worth, and I give you the product.

It turns out that along with the collapse of communism after the Soviet collapse in 1991, capitalism has also spiraled, and its most vile forms are found in meta-capitalists and monopolizing companies, which distort the real meaning of free markets, open competition and more.

What happens is that some businessmen behave like communists with money because they use their companies to carry out monopolies and cartels around the world, with the simplest case being that of Brazil, which has a nation of 200 million people to more and only has 5 banks in Brazilian territory operating, these being: Banco do Brasil (created by D. João VI of Portugal during the Brazilian Empire), Caixa Econômica Federal (which is a kind of banking autarchy of the Brazilian Federal Government), Itaú, Santander and Bradesco.  Even HSBC was strong in the country, but could not stand it and closed its operation last decade.

The case of Brazil is a clear example of a country that fell victim to the metacapitalists, even though it had a leftist government like the Workers Party led by Luiz Inácio Lula da Silva, former president of the country.

And this proves how even orthodox socialism, which is the case of the ideology-north of the Workers Party of Brazil, can be eroded by metacapitalism and its bad ways of doing business.

The point is that cartels, monopolies, oligopolies are distorted forms of capitalism, which look very much like a communist quasi-statist economy because the monopolizer behaves like a communist strong state. And this destroys the sense that is used to identify a communist or capitalist militancy in some countries because the real goals of the ideologies cited here are not made explicit up front. This makes for a dumb and innocuous militancy that sometimes is fighting for the same things without realizing it.

While the communist militant likes a strong State that monopolizes natural resources or not, the meta-capitalist also likes the State because it helps him to make and maintain his monopoly. That is why it is not rare to see people like George Soros, prominent bankers, supporting wealth taxes, for example, because it would be a way for them to continue using the state territory to carry out their monopolies and cartels.

Another practical example coming from Brazil are telephone lines: the country has only 4 cell phone companies, with one (Oi Telecomunicações) in receivership because it is in bad shape.

During Lula’s communist government in the country, the banks had the highest profits, several newspapers reported at the time.  This is a clear proof of the distortion of the communist discourse that usually carries the popular feeling but sometimes only makes its leaders richer and more powerful and more brutal.

Fidel Castro, who died richer than Queen Elizabeth II, it is said.

And a global international reconfiguration is happening right now, with the various economic blocs of countries in the Global South becoming closer together.

This is also because of the ideological capitalist exhaustion due to monopolizing meta-capitalism, or communism, when the exacerbated statization and planned economy is proving wrong again in the countries, making the real economy of production take over the discourse and making smarter heads.

Wars still happen because of ideologies, but they can be stopped by them too

When the clash of civilizations happened in 2019, with the world distrusting China for being bad at preserving Covid-19 cases, as well as trying lockdowns recently that destroyed the global supply chain of production, a lot of bad thought was given to a strong and sovereign state like China’s, especially the more ideologized ones, who blamed the country’s trademark hammer and sickle as the cause of the problems plaguing the world at the time. Except that today, 3 years later, China, which is clearly totally ideologized, may be guiding some parts of the Global South towards an inter-country integration that involves the monetary, diplomatic and trade issues. In other words, the China that would have caused the Covid-19 problem for some ideologues, may be the same country that can save the global economy when the dollar collapses. And it will collapse. It is just a matter of time.

While NATO, which carries an air of the cold war because it still exists even after the end of the Warsaw Pact, is trying to emulate a kind of international police force, going against the very name of the military organization, which in theory would only be in the North Atlantic Sea, today it is already in Asia and Oceania. In what is seen as the opposite thinking of the leaders of Eurasia and the Global South.

Some diplomats from within NATO have even talked about “Global NATO”. What is this if not a trace of colonialism ingrained in the Atlanticist organization to stand up to the enthusiasts of multipolarity, who have sometimes ended up being characterized by the flags with sickle and hammer?

The clearest point I try to make is that ideologies have been eroded by the mistakes or successes of their own leaders, distorting the orthodox common sense of centuries-old doctrines like communism for example. This was seen when the US opened the international market to China, which made them the second global economy today.

But there was also no good interpretation from the West towards Russia for example, which today is a totally different country from the Soviet Union, and could have become an ally. Which would totally change the scenario we are living today.

So ideologies can stop or make wars, either by capitalism or by communists.

Capitalism at war means monopolies arising, while communists at war means massive genocides arising.

Corroded ideology is not necessarily a bad thing, but it shows a breakdown in thinking in society

Ideologies arise as a way of trying to organize models of government, and several of them have even been criminalized around the world due to the massacres they have carried out. But at the same time, this does not mean that they will cease to exist.

When a society thinks 50% one thing and another half thinks 50% another thing, this means that there is a polarity of thoughts that can only lead to chaos and barbarism, because the people, hungry or in difficulty, are not able to come to a consensus, and then authoritarianism and popular uprisings arise.

The corrosion of ideologies, be they capitalist or communist, was something that would happen naturally because time goes on proving some points that have always been pushed by the enthusiasts of such as absolute truths, which are lies.

Several are the cases of communist countries that collapsed and several are the countries that collapse because of meta-capitalism. This is why we must abandon ideologies and simple ways of thinking when it comes to a nation, a homeland.

A homeland is much bigger than a 19th-century German writing. A nation is much bigger and means much more than a Politburo.

Capitalism and communism behave today as different sides of the same coin, with their owners and enthusiasts having the same origins.  Instead of studying the end result, look for the cause. Many coincidences can arise.


Guilherme Wilbert is a Brazilian law graduate interested in geopolitics and international law.

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.

Will the Global South break free from dollarized debt?

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

June 09, 2022

By Pepe Escobar

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

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

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

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

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

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

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

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

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

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

Lost in a Roman wilderness of debt

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

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

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

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

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

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

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

Socialism or barbarism

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

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

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

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

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

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

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

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

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

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

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

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

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

June 03, 2022

Source

By Michael Hudson

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This financial diplomacy promises to introduce “interesting times.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

May 12, 2022

Source

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

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

Transcript

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

MICHAEL HUDSON: Yes, yes.

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

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

BENJAMIN NORTON: It’s called Citgo.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

So that’s basically what’s happening.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Thanks, Professor Hudson.

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

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.

France’s conservatives cry out for National Socialism – Zemmour’s response?

February 10, 2022

by Ramin Mazaheri

The two big differences between 2017 and 2022 are that back then France had a presidential candidate who should have been called a National Socialist, and that in 2022 the country has somehow moved even further to the right.

History will show that back in 2017 the Great Financial Crisis – just the latest failure of Western liberalism – had inflamed the masses too much for every single politician to ignore: Marine Le Pen thus dropped the Reaganism of her father and made it to the second round.

She defended economic ideas similar to the Germanic National Socialists of the 1930s, who pillaged the Marxists of their “anti-international finance” analysis only to dangle economic equality for those of a certain religion and ethnicity. The latter is why they weren’t socialists, of course, but merely people who somewhat understood the economics buttressing Western Liberal Democracy.

Five years after 2017, Eric Zemmour draws widespread praise from people who believe they are entirely well-meaning by saying that he is, “here to save the French people and France…not here to save the world.” It’s a telling, semi-messianic remark because it is truly straight out of Adolf Hitler’s platform in the 1930s.

Ah, old Adolf – we can’t bring him up in the West, can we?

Many have heard of Godwin’s Law, or the rule of Nazi analogies: an Internet adage asserting that as an online discussion grows longer (regardless of topic or scope), the probability of a comparison involving Nazis or Adolf Hitler approaches. However, an important corollary is that whenever someone compares someone or something to Nazism – that person has lost the argument and/or the argument is summarily over.

Essentially, the world is to accept that all discussions of Western politics cannot discuss the anti-Western Liberalism ideology which was German Nazism.

How difficult it will be, then, to describe a French election where the four top candidates are all on the far-right – either economically, politically, culturally or all three!

I will come out and say it: Today’s left does not want to talk about the socialism in Germanic National Socialism, even though there was some.

Namely: Unlike seemingly all Western politicians today, Hitler actually read Marx and incorporated something of class analysis into Germanic Nazism. He clearly was familiar with the perfectly accurate Marxist analysis of European historico-economics up until the late 19th century: landed wealth was joined by commercial/trading wealth was joined by industrial/financial/stock-jobbing wealth, and then they all stopped squabbling and peacefully joined hands to oppress the 99%. Western Liberal Democracy remains – eternally – at this point.

German National Socialism opposed – in their campaign promises, at least – the domination of international high finance and the liberalism (whether “neo-”, “ultra-” or sans-préfixe it’s all the same: free markets, unregulated capitalism, rights for those who can afford it) which forever is ultimately cover for a bankocracy. In political power structures and culturally Germanic National Socialism totally rejected the grassroots empowerment and multiculturalism of Socialist Democracy.

But the right does also not come out and say it, either: Today’s right doesn’t want to talk about the economic socialism in German Nazism – because they oppose talking about socialism with anything but death threats – whereas they are entirely thrilled to use their same racist scapegoating and autocracy.

Hitler would have called Zemmour far-right, and that’s saying something

Returning to Zemmour’s jingoist messianic message: He promises to save only those within his own borders and only those of a certain color/religion/DNA, and thus he totally rejects the internationalism embodied by socialism, just as Hitler did. Nobody was less internationalist than old Adolf – his nation was to be a purely Teutonic one. This message still resounds across Europe 90 years later – Zemmour is hardly unique – in what can easily be termed “National Neoliberalism”.

Zemmour doesn’t just go against the tide of history, he is anti-history – in the sense that his own particular interpretation of French history hopes to be predominant, and not interpretations which rely on accuracy, rationality, scientific historical analysis, etc. Thus, Zemmour also incarnates the autocratic vision of a dictator like Hitler on how a political power structure should operate – per his whims. France is whatever Zemmour says it is. If he says France means no kebab shops or people named “Ramin”, then so be it.

Frankly, I think Zemmour is a total waste of my time, and it’s easy to explain why:

Zemmour is so pathetically predictable precisely because – as this analysis of Zemmour notes, by the must-read political polymath (and longtime inhabitant of France) Pepe Escobar – he’s such a sycophant; so obviously fuelled by winning the approval of the elite. He is not like Donald Trump, who was born with the brazen independence of the super rich – Trump never needed a patron – and who was much more a genuine political outsider. LOL, you work at Le Figaro for 25 years and you’re not tenderly ensconced in the political mainstream? Tu parles…. With Trump a voter had at least some grounds to hope that: Here is someone asking for my vote who might actually have the courage to be a renegade against the 1% – a hope that was dashed on the unimpressionable rock which is apparently Trump’s brain. Not only will Zemmour never be 1/10th the loose cannon Trump was, Zemmour does’t even have the potential to do so. Few outside France realise that Zemmour is not even intellectually courageous enough to actually be original – he’s the racist, social-climbing, poor man’s Alain Soral, who had a Yellow Vest on seemingly immediately.

Zemmour’s long-delayed economic program is totally Reaganite/neoliberal – this was totally predictable precisely because he’s such a toady to the elite. Hitler truly would have called Zemmour right-wing, economically.

Therefore, I assume Zemmour’s totally pro-insider ideology makes him so unelectable that I won’t have to say much more on him, unless I have to in-between the first and second round, and thus Macron’s re-election. I should note that I treated Emmanuel Macron with very similar disdain in my journalism in 2017 – both are total suck-ups to the elite, of course.

Zemmour offers the same old reactionary faux-promise: reversion to a bygone (autocratic, insular) era. He has kept all the rabid anti-internationalism and racism which helped sweep Hitler to power, and which seems totally embedded in Western society after nearly a century, and none of the economic promises of Germanic National Socialism, unlike Le Pen in 2017.

Marine Le Pen, whom I would totally disavow in a one-round vote, exactly as I explained in 2017, is far worse than she was in 2017, as my previous column just showed. 2017 had much more on the table – namely her anti-liberalism economic policies of leaving the euro, a vote on Frexit six months after her election and repudiating banker-induced debt.

Xenophobia in the headlines means liberalism’s economic failures aren’t

What liberalism learned from Germanic National Socialism is that xenophobia and security (greatly augmented by the total insecurity provoked by corona’s alleged once-in-a-millennium threat) are spectacles just big enough to dominate the headlines, and thus to ignore neoliberalism’s failures, and thus to get elected more liberalist, 1%-er proxies.

(To put it in Zemmour’s terms: France’s economic problem is Muslim welfare, not banker welfare. A pathetic intellectual analysis.)

Thus I can report that there is no economic program being bandied about during the French election campaign, despite the screams of the inflation-gutted French masses. Have you even noticed that we’re just two months from the vote? They’re calling it a”Teflon campaign”, where faux-issues and faux-candidates like Zemmour aren’t sticking, thus producing a 10% drop in domestic interest in the upcoming vote. Like I wrote – it’s nothing as compelling as 2017, to say nothing of 2012’s hope that Hollande would end austerity (Germanic National Neoliberalism, of course).

It is precisely by ignoring history – by refusing to acknowledge Napoleon Bonaparte’s revolutionary contributions, or by calling them the “Revolutions of 1848” when they produced nothing but political counter-revolutions everywhere but France, or by ignoring French liberalism’s collusion with Bismarck to lay siege to Paris in 1871, or by claiming that World War I started merely by some sort of unforeseen accident, or by refusing to allow any political discussion of Germanic National Socialism, etc. – that Western Liberal Democracy is able to persist despite the regular depressions, inequalities and the suicidal disgust with politics it provokes.

And yet despite Zemmour’s ascent to 4th place the Yellow Vests proved that there are indeed pre-revolutionary conditions in France – my book on them will soon start to be published, chapter by chapter, because that is so obviously true.

But with the viability of the candidacy of Zemmour – who truly must be considered to be to the right of Germanic National Socialists and Adolf Hitler – it does’t take a historian like Trotsky to note that revolutionary changes never came via a Western Liberal Democratic ballot.

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List of articles covering the 2022 French elections

Catastrophe since 2017: How to cover France’s presidential election? – November 22, 2021

Le Monde’s circus invite: ‘France is a leftist country which votes right’ – January 27, 2022

Le Pen now wants in the euro & no Frexit – should the Left want her in? – February 2, 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 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.

Le Monde’s circus invite: ‘France is a leftist country which votes right’

January 27, 2022

By Ramin Mazaheri

In less than three months France will have a presidential vote, and I haven’t written much about it because I’ve been too occupied with what I humbly hope will be the authoritative book on the Yellow Vest movement. The working title is France’s Yellow Vests: Western Repression of the West’s Best Values.

It will be published for free in serialised form, like my books on Chinese socialism and Iranian Islamic socialism (but buy a copy anyway!), and it should start getting published soon. As I’ve worked on it I’ve realised how interesting it is to determine the Yellow Vests place in French and global political history, and especially when the alternative is to analyse April’s elections.

In fact, the election is interesting, but not at all in the ways described by the Mainstream Media. After all, Emmanuel Macron is 100% a revolutionist – the 2016 book which laid out his campaign platform was titled (quite unironically) Revolution – but he’s the type of revolutionist only a royalist could love.

And France has many royalists, still. And with guns, money, lawyers and spin doctors the French government certainly supports many hardly-working royals worldwide. But this is mixing too many complicated matters for the Mainstream Media, so rather than using just a bit of logic – such as making actual political structures, slogans and policies the basis for which one can define a country to be “leftist” – let’s play along with their tortured illogic by looking at a new column from France’s paper of record titled, “France is a leftist country which votes right”.

It’s a self-flattering idea which explains less than it confuses, and is only useful for how we can examine it to show that “Western leftism” truly is rather rightist. Let’s look at how Le Monde defines what a “leftist country” is:

“… : a right-wing France, tempted by its extremes, which doubts democracy. We need to take a closer look. And do not confuse the sociological reality of the French with its polling, media and political representations. There is no shortage of visible signs of the progress of democratic values: LGBT tolerance, homosexual marriages, record of inter-ethnic marriages and assimilation of foreigners, feminist movements, increased sensitivity to inequalities and injustices, attachment to the republican motto, etc.”

Le ugh….

After covering the US 2020 election I can say this: For two countries which loudly insist on their exceptionalism the political lives of both nations are so very, very boringly similar. I wouldn’t doubt that the mainstream media of both nations are owned by the very same people (or investment management firms), such is the similarity between their mainstream political discussions.

I am analysing this Le Monde article because I assume you don’t speak French, but Anglophones will easily recognise that the French are describing (or their media owners compel them to describe) the exact same problems:

democratic fatigue”, “crisis of representation”, “society of individuals”, “refusal to vote or a vote of refusal” (well-put!), “society of communication”, “the verticality of institutions” (“verticality” may be too complicated a concept for the US media), “an openly xenophobic media group”, “menace to democracy”, “climate (change)”, “how to reconcile civil society with (Western-style) representative politics”, and with the same exact Salafist answer, merely “return to our forgotten origins”, in the French case Rousseau instead of America’s Founding Prophets-Fathers.

I respond with the ultimate dagger one can thrust in French society: It’s not interesting.

Yet France’s election matters, even if it will be a lesser Cirque du Soleil to America’s 2020 election circus extravaganza, which was truly The Greatest Show on Earth.

Le Monde and the other French MSM are basically pushing quiet-yet-prideful acceptance of the fact that the four leading presidential candidates are all on not just the right but essentially the far-right on either political, economic or cultural issues (or on all three).

This is even though the country saw massive support for a Yellow Vest movement whose essential list of demands was quickly recognised to be traditional West European leftist, and remarkably similar to the platform of the leftist party La France Insoumise, led by Jean-Luc Melenchon. Now that is something which we would like to see the French MSM explain rather than confuse, for a change!

Allow me to skip to the end as quickly and painlessly as possible:

Just like with America, we’d be wrong to accuse the average Frenchman of being an intractable reactionary… even though polls show that leftist voters are outnumbered here 2 to 1 by rightists and equalled in number by independents (who to actual leftists would be called right-wing). Leftism rests upon a fundamentally positive and loving view of humanity: The People have long been denied honest education and instead have been spoon-fed elitist-supporting nonsense, and this historical fact is what leftism must methodically work to overcome.

“We too often forget that democracy is born from the recognition of the individual released from the community shackles.”

“No longer the equality of individuals through similarity and having, but a more-demanding equality through the singularity of being particular. Beyond any condition, belonging or identity, everyone feels more and more the equal of the other by their own ‘originality’.”

What we see here is the replacement of both class politics (“having”) and even mere fake-leftist identity politics (“similarity”) with the Western Liberal Democratic emphasis on hyper-individuality, adored by their self-adoring elite.

However, historically and politically the aim of both democracy and leftism was to reduce the power of the monarch, i.e. to place some shackles on the over-empowered individual, both monarch and noble. This is what produced the calls for constitutions and votes and ends seigneurial (feudal) rights, after all.

But in Western Liberal Democracy – or democracy with Western characteristics – “democracy” means protecting what we can call the “over-rights” of the elite – whether you want to call that elite the 1%, the neo-aristocracy, the bourgeois or maybe les seigneurs. Whatever you call it the point is that in a fundamentally disunited “society of individuals” the modern-day lords will always win the maintenance of the current status quo due to their superior resources. The entire point of Western Liberal Democracy’s war on Socialist Democracy has been (and will be) to keep it this way.

There isn’t much more to say than that. I need not quote you the second half of the column, which is a litany of Western grievances with “this way”, i.e. their own system, i.e. that list of societal logjams I bomb-dropped 12 paragraphs above.

They all amount to an admission that Western Liberal Democracy fundamentally rejects class-equitable representation in the halls of political power, and that this power imbalance is brutally enforced by “liberal strongmen” like Macron in “rubber bullet democracies”. Western civil society and the middle and lower classes are thus rendered apathetic, wary of cooperating and de-politicised, and even in a formerly-revolutionary culture like France.

Socialist democracy – i.e., the evolutions in politics represented by the advances from 1917 onwards – are certainly not permitted as an option for discussion in Le Monde, thus the author can only suggest France re-study Jean-Jacques Rousseau. That’s a fine idea, but not if we don’t also study the histories, lessons and ideas around Marx and Mao, Castro and Khomeini, Sankara and Sandinista.

A far more interesting article, by a journalist and not a sociologist, can be found in the current issue of the long-form monthly Le Monde Diplomatique, which has total editorial autonomy from Le Monde (and it shows): “If the working classes were listened to”. A quick recap of the surprising things their interviews with the working class found:

  • They don’t care about rising salaries because the cost of goods will just rise commensurately. Who says you need to be an economist to understand how capitalist economics works, LOL? What they want is price controls on essential goods, which France ended in 1987.
  • Public debate on education is centred around austerity cuts to government budgets, but what’s driving the average person crazy is the multiplying costs centered around school or outside of school: nurseries, camps, after-school programs, cafeteria food, school supplies, etc.
  • The price of entertainment, or should everyone just study/work all the time? Leisure expenses are so high there’s only room in the budget to watch Netflix again. So all three are purchasing power, which has been the number one complaint of French voters since I’ve been here, but – hey – prior to corona the Eurozone’s problem was not enough inflation, right? Sure.
  • The alignment of salaries between manual labor and intellectual labor, of which there is zero public discussion in this “leftist” country. It’s another case of unions and other working-class representatives pushing so-called solutions which are fundamentally right-wing. For tough jobs, one worker noted, what’s the point of union discussions of lowering the retirement to 60 – one’s body is already wrecked at 50. Try explaining that to your average French sociologist.
  • Getting social welfare deposited directly into the bank accounts of those deemed to deserve it. Tortuous paperwork leads to unclaimed sums for 1 in 3 French families totalling €10 billion, or the total monetary concessions of 2018’s failed effort to buy off the Yellow Vests.

Now that’s a good article, and unlike the Le Monde column it doesn’t totally ignore the biggest development in French politics in decades – the Yellow Vests.

But to a committed Western conservative human politics are based on natural, unregulatable laws, and not on a science of history or reason. Thus your average French voter – which insisted to me prior to 2017’s round 2 that Macron was a “centrist” – gave up on me long ago! “Our top four candidates essentially on the far-right? Ramin, you misunderstand modern Western conservatism!”

Save that for the book – I promise such political explorations will be far more fruitful than this Le Monde column.

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List of articles covering the 2022 French elections

Catastrophe since 2017: How to cover France’s presidential election? – November 22, 2021

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.

CPC Centenary – China on the Cusp of a Socialist Society

June 25, 2021

CPC Centenary – China on the Cusp of a Socialist Society

by Straight-Bat for the Saker Blog

1. Prelude

The other day, I was trying to visualize the conversation that would take place on a rainy humid day in July 2021, in a cafeteria in the Eurasian region of heaven where Karl Marx, Robert Owen, Comrade Lenin, Chairman Mao, and Generalissimo Chiang would meet. Purpose – to exchange critical views around the Communist Party of China (CPC) centenary and China.

Generalissimo Chiang would start the conversation, “Mr. Mao, congratulations on the hundredth anniversary. Tell me what did you really achieve by pushing me and Kuomintang out of mainland China?”

Chairman Mao would reply, “It was obvious! We wanted to build a socialist China based on Marxist-Leninist principles, for which you were the biggest opposing force. The CPC was always looking out for enlarging the anti-imperialist democratic front – even a section of Kuomintang joined us! But you steadfastly denied, on the contrary you acted viciously to wipe out the proletarian struggle in China.”

Chiang chuckled, “Well, that happened in past. Now, mainland China progressed a lot to become the largest economic power ahead of my friend (USA) and second largest military power next to your friend (Soviet Union or Russia), but it still has too much of inequality among three types of citizens – filthy rich businessmen and capitalists, struggling workers in farms and factories, and self-employed city dwellers burning midnight oil in their small ventures. If only economic growth and military power were the objectives, even Kuomintang (after emancipation from the cliques with vested interests) would have achieved similar targets!”

At this point, Comrade Lenin, the eternal revolutionary, came to the rescue of his cherished student Mao, even though they never met. Lenin replied, “Mr. Chiang, it’s a long haul, it would be a very complicated journey. My follower relentlessly struggled to establish the CPC as the vanguard of socialist revolution. His team had to develop the productive forces, build the initial social capital for further economic development – that called for a capitalist economy. Unfortunately, the European geopolitics didn’t allow my New Economic Policy to succeed in developing the productive forces in Soviet Union”.

The old ‘patriarch’ Karl Marx couldn’t remain silent anymore. He appeared to be in a reflective mood and shied, “I was sure about the appraisal of ‘capital’, but wasn’t sure how to turn the ‘surplus value’ into irrelevance after gaining the political power. Also, neither I nor Engels got came out with a definite blue-print on how ‘state’ would wither away! As long as a few fellows could own land, and resources as their property, get hold of technology, and could exert influence on the state apparatus, neither ‘capital’ nor extreme inequality would go away. Mao’s team still has a long way to go. However, this is a great occasion to cheer up the Communist Party that was founded in China hundred years back.” Marx would turn to Lenin with silent reprimand, as if Lenin stood guilty of his team’s failure to reach a century even after scoring a swashbuckling half-century under the leadership of Stalin against the Zionist-capitalist clique who staged two world wars by then for wanton destruction of Eurasian heartland!

Marx would continue, “so many groups of revolutionaries in dozens of European and non-European countries came forward since 1848 to build a socialist society through a socialist revolution, but most of them messed up their movements mid-way. The CPC withstood the test of time, which is now leading the most populous country (with 18% of the total global population) and churning out approximately 19% of the total global GDP on purchasing power parity basis. Even if the CPC hasn’t yet closed the first step of a socialist society, this is an occasion to celebrate their incredible perseverance!”

Chiang obviously didn’t want to join issues, for he never had time for such ideological discussions; Mr. Chiang’s faction only understood power and wealth based on rudimentary nationalism.

The discussion so far was not to the liking of Mr. Owen. He deemed it fit to jump in, with apparently robust argument, “Mr. Marx, aren’t you ashamed of so much of bloodshed by your followers, the so-called revolutionaries, and yet not even the first step of Marxist Socialism is complete in case of China?”

The quintessential activist in Marx flared up suddenly, “Mr. Owen, enough of such allegations! Let me ask you two simple questions – firstly, even if other groups of socialists also fought against injustice and inequality globally, why there was not a single case where they could come to political power?” Owen was speechless, Marx continued, “Let me respond! Whether in the past or in present, no socialist group other than the Marxists will be able to come to power AND build truly socialist society, because their ideology was based on only compassion and courage, it lacked the foundation of scientific analysis.”

Marx leaned towards Owen, and murmured in a soft tone, “Did you notice the difference of the present status of the standard of life between China and India, both of which started their journey as a modern independent country with humongous load of population as the decade of 1940s was drawing to a close? The proletariat and petit bourgeoisie in China are leading a quality life which is way ahead of what their brethren enjoy in India – on all parameters like education, health, employment, income, household expenditure, leisure, life expectancy etc.! There were dangerous obstacles in the struggle of the poor Chinese for emancipation and dignity under the banner of communist party, hence there was bloodshed. If such impediments do not arise, then a socialist revolution would become peaceful without bloodshed! Now the Chinese people are leading a life which is worth living! Compared to that, what did the social democrat faction (of the most prominent political party) achieve in India, even if they ruled India for more than four decades immediately after independence? Now, after three decades of exploitation under neoliberal capitalism, on one side, two-thirds of population, the plebs, earn on average even less than a dollar per person per day, and on the other side, the Indian bourgeoisie continue accumulating more wealth than others in Asia!”

The moment was ripe for Lenin to take a centre-stage. He became brutally frank while addressing Owen, “Mr. Owen, the Utopian socialists, the Anarcho-socialists, and the social democrats are blinded by jealousy of our limited success – otherwise how could they blame the Marxist socialists for every problem that overwhelm the humanity! Isn’t that utterly funny? Not only us, but all other socialist groups were equally sickened with the exploitation and injustice meted out by the capitalist bourgeoisie! The capitalists have not changed, so is it that the Utopian socialists, Anarcho-socialists, and social democrats changed their track to become lackeys of the capitalists?”

Lenin continued, “if they have truly anti-capitalist anti-imperialist anti-Zionist ideology then, there is every possibility that the Utopian socialists, the Anarcho-socialists, and the social democrats would become successful in the long run – maintain your separate identity as a party, if you wish so, but adopt our goal which wisely mix empathy with wisdom, which identify actions along with the dream. Join our front in every nook and corner of the globe!”

And, that ended my day-dream. Is the dream, a blasphemy in the ‘post-modern’ era when half of the 1% Zionist-capitalist oligarchy fund a section of academia and media to beat the hollow drum of democratic nationalism, while the other half of the same 1% oligarchy fund another section of academia and media to sound the trumpet of capitalist globalism, thereby creating a false dichotomy that would perpetually keep 90% of the population of the globe engaged in stupid arguments over the future of humankind? Is the dream, a wickedness in the current ‘post-modern’ era when the 1% Zionist-capitalist oligarchy successfully obscured the real issue of accumulation of wealth and power by them, and obfuscated the very definition of ‘democracy’, ‘autocracy’, ‘capitalism’, ‘socialism’, and ‘communism’ to turn their meaning upside down? Be that as it may, now, as the CPC celebrates a splendid 100 years journey, I would like to look into the details of how socialism, the only antidote to Zionist-capitalism, has been welcomed in China!

2. Socialist Revolution & China

In the medieval world the traders and businessmen were inseparable from their wealth/money/capital. The evolution of ‘capital’ as a separate entity from the businessmen, traders and entrepreneurs took quite a long time. During 15th, 16th, and 17th century when aristocrats and financers of west European kingdoms and empires were fully absorbed into ‘mercantile capitalism’ and ‘agrarian capitalism’, the underlying dynamics were fully related to ‘primitive accumulation’ (even though no body spelt it out that way). The primitive accumulation of wealth (as capital) taking place within the entrepreneurs- traders-bankers of different countries of west Europe through their far-flung imperial ‘colonies’ in the continents of North America, South America, and Africa soon became the harbinger of ‘industrial capitalism’ at the dawn of 18th century west Europe. Even before that, the capitalist system of finance matured in the beginning of 17th century Netherlands – world’s first stock exchange as well as world’s first bank using the fractional reserve system were established in Amsterdam. Capital became a global force to reckon with, by the end of 19th century, when the entire world came under the sway of west European Zionist-capitalist oligarchy whose primary objective was to relentlessly pursue accumulation of capital – essentially, the journey of ‘capital’ to reproduce itself infinitely, passed through extermination of hundreds of communities across the globe and ceaseless exploitation of natural resources of mother earth. Karl Marx bared it all in the ‘Capital: A Critique of Political Economy, Volume I’ as “The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signalized the rosy dawn of the era of capitalist production. These idyllic proceedings are the chief momenta of primitive accumulation ……The different momenta of primitive accumulation distribute themselves now, more or less in chronological order, particularly over Spain, Portugal, Holland, France, and England. In England at the end of the 17th century, they arrive at a systematical combination, embracing the colonies, the national debt, the modern mode of taxation, and the protectionist system. These methods depend in part on brute force, e.g., the colonial system. But, they all employ the power of the State, the concentrated and organized force of society.”

Between 18th to 20th century in Europe, many intellectuals, economists, politicians, philosophers, and social activists raised their voice against the Zionist-capitalist savagery in which their state became willing accomplice. They did extensive analysis of how the different stages of capitalism exploited the society and transformed majority of the people into poor plebs ruled by a group of wealthy aristocrats who would bend any established rule to ensure accumulation of profit and wealth from any kind of business – from slave trade to opium trade. Different European thinkers (in Britain, Germany, France, Sweden, Russia) became political activists trying to organize (a) political party that would fight for rights of the working class, (b) awareness among public about inhuman treatment meted out to the people in the colony owned by the state. Different political groups were formed by the advent of industrial capitalism during this period, each of which professed to a particular ‘ideology’ of political economy built over time by few intellectual-cum-activists – prominent among them were Utopian socialists, Anarcho-socialists, social democrats, and Marxist socialists. All of these ‘socialist thoughts’ had one common theme – working class people are exploited by the business owning class, and the workers must get their due share of revenue from industrial operation.

Throughout the second half of 19th century, Karl Marx and Fredrick Engels enriched the philosophical basis of socialist thoughts and carried out extensive economic analysis of mode of exploitation – thus ‘Marxist socialism’ evolved, and the political activists who would follow the socialist thoughts of Marx and Engels came to be known as Marxists or Marxist socialists or Communists. Till date, hundreds of intellectuals, politicians, economists, activists, and philosophers across the globe contributed to the development of Marxist socialism, and enriched the Marxist literatures. Most prominent among them was Vladimir Ilyich Ulyanov, the Russian revolutionary better known as ‘Lenin’, who during his short lifespan of 53+ years (a) formulated the procedures of practical implementation of Marxist socialism in a country, (b) analyzed the economic relation between imperialism and capitalism, (c) coordinated the Russian Revolution that formed the first socialist government in Russia, (d) guided the newly created Russian government towards economic and geopolitical. Since mid-20th century, most of the political parties across the globe who followed Marxism, identified themselves as ‘Marxist-Leninist’ – that made perfect sense, for it was Comrade Lenin who first brought the theory down to practice.

2.1 Basics of Socialist Dream

Any country and its people can be depicted as interplay among five socio-political entities, where community as the central entity deals with four other entities which are modern historical constructs (with roots in ancient and medieval history). Four relationships between community (identified as ‘1’) at one side and state apparatus (identified as ‘2’), political party (identified as ‘4’), ally states (identified as ‘3’), adversary states (identified as ‘5’) on the other side are crucial for a community to survive and flourish. This has been the case ever since human civilization started experimentations with political entity. In reality, the state and the party both are extended part of a community itself (hence, intraneous entity), while outside states can be termed as extraneous entity. The following block diagram figure 2.1 depicts it:

Every society/community is the expression of a continuous interaction between the ecosystem and a group of people. A community lives and thrives within the boundaries of the ecosystem – if the ecosystem is frayed, the community can’t thrive. The main socio-economic actors in the modern history, after industrial capitalism transformed the lifestyle of human beings, are portrayed in the schematic diagram figure 2.2 given below.

Significant observations that can be noted from a glance at the above diagram are:

1. There is a clear pattern emerging out of the interaction between ecosystem and community – the economic activities of the community draws EVERY MATERIAL (except finance, technical, managerial knowledge, and labour efforts) from the ecosystem that is processed into goods and services. The 1% people (termed as bourgeois capitalist) who have inclination towards wealth accumulation, contributed towards the creation of the social superstructure containing state apparatus, law, monetary and banking system etc. in such a way that, the output of economic base would continue to enrich them generation after generation through a benefit accrual cycle:

Ecosystem → Economic Base → Capitalists → Ecosystem

2. Since the economic base is using every material input from the ecosystem (other than labour and other efforts of the society) for production and distribution of goods and services, and NO INPUT CAN BE FUNDAMENTALLY CREATED BY THE BOURGEOIS OR ANYBODY ELSE, how could a class of people (termed as proletariat) of the community be deprived of the fruits of the economic activities? Every person has a ‘natural right’ to the benefits as per the concept of ‘natural justice’. Laws are made by humankind, but NATURAL JUSTICE AND NATURAL RIGHTS ARE IMMUTABLE CONCEPTS of the creation that can’t be challenged by humankind. Hence Marx-Engels-Lenin-Mao (the doyens of Marxist socialist theory) unambiguously wanted to create a benefit accrual cycle that would scotch the earlier fallacy and create an appropriate cycle:

Ecosystem→ Economic Base→ Community→ Ecosystem

2.1.1 The Essence of Marxism

A socialist society would convert all classes of people into stakeholders of economic performance of the country instead of leaving it on to invisible ‘market forces’ (which is a façade under which the Zionist-capitalist operated economy accumulates wealth and power on behalf of the 1% oligarchy). The objective of socialism is to bring widest possible freedom and maximum possible development for every citizen in a classless stateless society. Every human being (irrespective of background identity like age, sex, ethnicity, language, religion, and region) should become free from hunger-disease-insecurity-injustice, each citizen should spend time in socially useful productive work, people can carry out research in academic areas, they can seek entertainment-pleasure at leisure time, without any of these being morally or physically harmful to any other people or section of the society.

As per Marx, the history of humankind is a struggle between antagonist ‘classes’ over the fruits of economic activities. Whether the slave mode of production in ancient era, or feudal mode of production in medieval era, or capitalist mode of production in modern era, the working class was always exploited by the dominant class of the era who constructed the system of state, law, bureaucracy etc. as institutions to perpetuate their rule – hence, the majority plebs remained paupers throughout the history while the aristocrats remained wealthy.

In the capitalist mode of production, some of the elements of ‘factors of production’ (viz. the ‘means of production’, and financial capital) are treated as ‘capital’ and two other elements of factors of production (viz. labor, and entrepreneurship) utilize the capital to produce goods and services. The produced goods (and services) have different ‘use-value’, and in a barter society real and specific useful labor that went into making of the goods would be considered as ‘exchange-value’ which is tied closely to the ‘use-value’. In modern capitalist society, that real labor is removed from the goods, and abstract value of labor is attached to the produced goods which results in the labor efforts getting objectified. Similarly value of the produced goods get transformed from use-value – in the capitalist market, artificially calculated exchange-value dominates. In order to generate surplus (monetary capital as profit), price of the produced goods in money-form becomes cost of input materials plus labor plus ‘surplus/‘profit’ (ignoring things like interest and depreciation). Thus, the capitalist who owns the finance capital and means of production, earns profit (in monetary form), accumulates profit endlessly, while the laborer don’t get the price of labor.

Every means of production whether the ‘subjects of labor’ (raw materials, natural resources including source land, energy, water) or the ‘instruments of labor’ (tools, machinery, factory including land, other infrastructure) which go into production of any material (from a grain of wheat to a car) and service (from electricity supply to 5G communication) is drawn from natural resources, while the processing is done by a team of people (Labour) supervised by technical specialists. Hence, any entity like a family, or a business that use such ‘produced goods and services’ only utilize natural resources and human labour. Thus the capitalists’ accumulation of profit is more immoral because he/she is not the creator of natural resources.

As per the Marxist theory, there should be two-stage transformation in a socialist society which looks like:

The stage 1 transformation >> Capitalist society (bourgeoisie democracy) to

Socialist society (dictatorship of proletariat)

The stage 2 transformation >> Socialist society (dictatorship of proletariat) to

Classless socialist society (also termed as Communist society)

The most significant modification of Marxism happened with Lenin’s theory that proposed: a Marxist political party would act as a vanguard party of the proletariat which would seize the state power, and steer the economy and society until the political environment across the world is conducive for classless stateless society (where party would lose its significance).

If Marx was 100% right, ‘capitalism’ as an economic system has to go. David Harvey (2015) criticizes capitalism as ‘a system which lives beyond its means through a banking and finance system that takes on too much debt’, ‘a system which pays its workers too little to consume all of the goods it produces’, ‘one which is ruining the environment’. There is little doubt that Zionist-capitalist oligarchy created a globalized society of monumental inequality – Oxfam said in January’2020 that, 2,153 dollar billionaires across the world have more wealth than the 4.6 billion people (i.e. 60% of the planet’s population), and top 162 billionaires have the same wealth as the poorest 50% of global population (link: https://www.huffingtonpost.in/entry/billionaires-inequality-oxfam-report-davos_n_5e20db1bc5b674e44b94eca5?ri18n=true). There can be even less doubt that, nature abhors the state of disequilibrium.

2.2 Socialist Dream – China, the Last Man Standing

As on date, there are 155 countries in the world with population more than 1 million. At least two-thirds of the countries have one or two political outfits which identify Marxist socialism as their guiding principle – these parties/outfits have been around for a long time, may be on average 75 years. However, the current environment is a downward slide after the world-wide socialist movement witnessed phenomenal success in three regions apart from east and south-east Asia:

1. East Europe – Soviet Union helped many communist parties of east European countries to come to state power after WW II. Later on these countries formed ‘Warsaw pact’ that included Soviet Union, Poland, Czechoslovakia, Hungary, Romania, Bulgaria, and East Germany. Not only Soviet Union led the economic rejuvenation of the Warsaw pact countries after complete devastation of WW II, Soviet Union contributed immensely towards national liberation of African countries.

2. Africa – many countries that fought liberation war against the west European colonial masters saw the triumphant parties professed Marxist socialism as their guiding principle. Countries like Algeria, Ethiopia, Tanzania, Mozambique, Namibia, Angola, and Zimbabwe had governments and ruling party leadership who wanted to progress the newly independent countries through the past of socialism.

3. Latin America – in most of the countries in South American continent and Central American region, Marxist parties were organized against the well-entrenched lobby of local oligarchy and American oligarchy who would invariably manipulate every government towards oligarch-friendly policies that would exploit the natural resource and 90% plebs. In countries like Chile, Peru, Argentina, Bolivia, Ecuador, Venezuela, Colombia, Nicaragua, Honduras, El Salvador Marxist parties struggled, but success eluded most of them.

Apart from the above mentioned countries where Marxist socialist political parties and discourse were popular in the past (and in some countries, still popular), there were many more South American, North American, African, and Asian countries where multiple groups of revolutionaries stood against exploitation and dehumanization by the local and comprador oligarchy, and struggled to seize political power through a socialist revolution. But, most of them messed up their movements mid-way – some of them couldn’t withstand the onslaughts by Zionist-capitalist oligarchs masquerading as democratic populist party leaders, some other simply betrayed the ideal in order to stash illegitimate wealth offered by the Zionist-capitalist clique, and finally there were a few leaders who were wrong from the very beginning about what is socialism! There was another unfortunate factor which played to the detriment of the worldwide socialist movements – unity among various ideological factions within a Marxist party was mostly absent, hence the policy and planning for struggle towards achieving political power differed. In many countries, the struggle within various factions of a Marxist party resulted in multiple splits and continuous depletion of resources, time and efforts of leadership of all factions.

With the implosion of the Soviet Union as a state and CPSU as a party between 1989 CE and 1991 CE, Marxist socialist political parties around the world lost much of the moral and material support to continue their journey towards socialism, and as matter of fact, most of those political parties changed their ideology to identify democratic capitalism as their goal. Only 5 countries viz. China, Vietnam, Laos, North Korea, and Cuba still got a Marxist socialist party controlling the state power. The socio-economic realities in all countries, however, point out towards high degree of exploitation, dispossession, lack of income, and overall poverty among the plebs, 90% of the population – the significance of Marxist socialism refuses to go away!

The CPC has always been one of the most vibrant communist parties in the world, which witnessed many violent field battles against adversaries as well as ideological battles between various factions within the party built around policy and implementation programmes since its birth in July’1921. Between July’1921 and October’1949 the CPC built the mass base in rural and urban regions as well as created an army (Peoples Liberation Army) that fought against the Kuomintang after it became clear that Chiang Kaishek faction of Kuomintang party would not share power at the central government with the CPC. In October’1949 People’s Republic of China (PRC) was proclaimed by Mao as the PLA won the war against the Kuomintang army – the leadership of Kuomintang settled in Taiwan group of islands declaring Republic of China (ROC) as an independent country. Technically PRC and ROC both claim to be the legal representative of China.

While none of the CPC leaders seriously debated about what would be the final shape of China after achievement of 2nd and final stage of socialism (class-less state-less communist society was never really a subject of detail discussion among Marxist socialists because Marx was vehemently opposed to any such blue-print of a distant future), senior leaders like Mao, Zhou, Liu, Deng, and their factions debated exhaustively on what would the 1st stage of socialism look like and how to achieve that. Marx-Engels-Lenin mostly engaged in deliberating the advent of capitalism in European society, hence theoretical discussions and writings on socialism in ‘Asiatic’ society remained a far cry from what was expected by the 20th century socialist revolutionaries in China, India, and Indonesia. Rightly judging that, the social capital and productive forces built in China between 1950 CE and 1980 CE as grossly inadequate for a stage 1 socialist society for sustaining in the highly competitive global economy and complex geopolitical reality (ideological divide between the CPC and Communist Party of Soviet Union in mid-1950s turned into unfortunate hostility by end of 1960s), Deng and his successors went on to develop theoretical framework of ‘Socialism with Chinese Characteristics’. When judged unbiased, ‘socialism with Chinese characteristics’ appears to be built on three pillars – (a) Leninist principle of communist party acting as the ‘vanguard of socialist revolution’ was followed with complete dedication and the CPC remained all-powerful authority, (b) the terminology of ‘market socialism’ propounded by Oskar Lange was borrowed and used with ingenuity by the CPC, but the concept of Lange was never really implemented anywhere in Europe or in China, (c) the productive forces including the ‘animal spirit’ of capitalists were unleashed under strict control of the Chinese state.

During the next 40-year period from 1980 CE to 2020 CE, the CPC spearheaded the rejuvenation of the Chinese society and state through astounding growth of China’s economy, complete eradication of absolute poverty, and imbibing all sorts of technology. The drive towards industrial capitalism in China using the global finance owned by the Zionist-Capitalist bankers and industrialists (initiated by Deng) was followed up by the succeeding CPC leadership in such sincerity that, the Zionist-capitalist Deep State representatives like Kissinger concluded that transformation of the Chinese society and economy into a Zionist-capitalist system was forthcoming. With China’s entry into the world order triad (USA-West Europe-Japan), the new configuration would have become USA-West Europe-East Asia. Meanwhile, Soviet Union and Warsaw pact got dissolved. Zionist-capitalist clique was sure about China ditching Marxist socialism to join USA camp by the turn of the past century. Chinese government went all-out to create free trade zones for global Zionist-Capitalist interests which wanted more and more profits towards endless accumulation of capital, and hence were busy shifting their manufacturing base to China to harness low-cost labour and slack regulations. By 2008, China became the third largest economy in terms of GDP nominal (as per IMF estimates USD 4604 billion) and largest export base in the world (In 2007-2008, its Export-to-GDP ratio reached 32%, and its Exim-to-GDP ratio was 59%). But during this process, China also became a society where inequality was one of the highest in the world – Gini coefficient increased from around 0.3 in early 1980s to 0.49 in 2008. The media, and academia funded by the Deep State went all-out to woo the CPC leadership towards ushering a new era of ‘political reforms’ after such a brilliant success of ‘economic reforms’ – by ‘political reforms’ they meant introduction of democratic election based multi-party system with liberal capitalism. However, after 2 decades of continuous and intensive persuasion, by 2008 CE, the Zionist-capitalist Deep State cabal concluded that, the CPC would never change their ideological color – the CPC leadership just utilized the capitalist system, capital, and technology from USA, Japan and west Europe to perform a ‘great leap’ forward towards the industrialisation of China! Since then, the world order controlled by the Zionist-capitalist Deep State has been putting up innumerable obstacles on the path for further economic and social transformation of China.

As it stands today, only a few Marxist communist/socialist/ workers parties, who continue to be led by bold, capable, and visionary leaders through generations, are able to sustain their journey. Among the 5 countries which still got a Marxist socialist party running their government, China has the largest Marxist socialist party. If China shied away from the ideology of Marxist socialism, the philosophy of socialism will get a quiet burial across the globe. Remaining 4 countries (Vietnam, Laos, North Korea, and Cuba) possess too insignificant landmass and population to gather sufficient moral and material strength to continue their journey on the road to socialism against the brutal economic sanctions by Zionist-capitalist world order. China led by the CPC, is the proverbial ‘last man standing’!

3. Socialist Revolution – All’s Well That Ends Well

3.1 Stage 1 Socialist Dream in China

While every socialist-minded people all over the world applaud the stupendous achievements of mainland China led by the CPC, as it celebrates the centenary, they also point out that, there is still a long way to go before the CPC can claim a successful socialist society in China.

A news article with a headline “600 million with $140 monthly income worries top” appeared on the Global Times website on 29th May 2020 (refer link: https://www.globaltimes.cn/content/1189968.shtml) and another with a headline “China’s 400 Richest 2020: Total Wealth Surges Amid Pandemic” appeared on the Forbes website on 4th Nov 2020 (refer link: https://www.forbes.com/sites/russellflannery/2020/11/04/chinas-400-richest-2020–total-wealth-surges-amid-pandemic/?sh=5b1c42d13d7a). In a Marxist socialist country, such income inequality is a natural outcome of the phenomenon, what I paraphrase as: the significant aspects of stage 1 socialism are yet to be achieved in China. Chinese government took remedial action as noted in the article “China to issue 20 billion yuan in subsidies to farmers” (refer link: https://www.globaltimes.cn/page/202106/1226522.shtml) that appeared on the Global Times website recently. However, such corrective action is not really a substitute for permanent resolution – remedial measures need to be taken up at the level of policy formulation and implementation.

During past 4 decades, China implemented a mix mode of economy, which was essentially a combination of ‘state capitalism’ and ‘private capitalism’ supported by the Zionist-capitalist global oligarchy with finance and technology until about 2008 CE. The Zionist-capitalist motive force generated very high degree of momentum within the Chinese mainland unmatched in any of its past ‘enterprises’ whenever the force went to ‘invade’ new territory around the globe. The main challenge for the present Chinese leadership is to dissipate the energy of that storm so that, the energy can be harnessed for social benefits as much as possible, while damage from the storm is kept at a minimum as the society turns deep into socialism. With Zionist-capitalism so well-entrenched within the bourgeois class and the economy, the CPC wouldn’t be able to a take an ingenious decision of a single-stage transformation to a classless and stateless society. On the eve of centenary celebrations, the CPC should finalize on a prudent realistic approach of two-stage transformation. The following tasks should be taken up to implement the final aspects of the stage 1 socialism in China:

(a) Action point 1 – Implementing the concept of ‘restricted-profit enterprise’ to bring all economic activities (as mentioned in the sub-section 3.1.1) under its sway EXCEPT a few vital sectors, and simultaneously making all classes of society stakeholders for enterprise performance (as owners of the enterprises), instead of only the capitalist class and the state owning industrial enterprises;

(b) Action point 2 – Implementing a robust banking and monetary policy by following a judicious mix of the ‘fractional reserve theory of banking’ (broad banking for creating credit money) through 50% of the banking/financial institutions and ‘financial intermediation theory of banking’ (narrow banking that is transactional in nature) through remaining half of the institutions, instead of individual bank/ financial institution practicing the ‘credit creation theory of banking’ to create debt money out of thin air in connivance with the ever-greedy capitalist class;

(c) Action point 3 – Restructuring the agriculture and related sectors towards liberating tens of millions of surplus workforce (currently underemployed and unemployed), and simultaneously making new initiatives for agro-based industry in rural regions, instead of the rural economy remaining burdened with an overcrowded agriculture sector;

(d) Action point 4 – Planning and control of national economy with an eye to increasing the spending capacity of all sections of the society, so that the household consumption expenditure becomes the mainstay of the economic growth by contributing at least 50% of the GDP, instead of investment and export playing the lead role to support economic growth;

While action point 1 and 2 are truly (socialist) revolutionary concepts directly favouring the proletariat (and the petit bourgeois) against the bourgeois capitalists, action point 3 and 4 are concepts related to sound economics that fight against inefficiency and unsustainability. Four action points collectively target to erase exploitation and inequality which are still part of the quasi-capitalist economy of China and to implement robust monetary and economic measures that will be instrumental in achieving the stage 1 socialism.

At least the following subjective impact analysis should be done meticulously during detail planning:

1. Impact on GDP and GNI

2. Impact on prices and inflation

3. Impact on employment and income

4. Impact on consumer households (i.e. people from different classes of the Chinese society who consume goods and services)

5. Impact on producers (i.e. different enterprises, and individuals of the Chinese society who manufactures/produces goods and services)

6. Impact on Chinese importers (the enterprises in China who import goods and services from foreign countries)

7. Impact on Chinese exporters (the enterprises in China who export goods and services to foreign countries)

8. Impact on MNC with business operation in China (imports and sells in China, manufactures and sells in China)

9. Impact on MNC with business operation in China (manufactures and exports to foreign countries)

10. Impact on local governments

11. Impact on central governments

12. Impact on Peoples Bank of China (PBoC)

13. Impact on global banks with business operation in China

14. Impact on foreign governments

15. Impact on Multilateral trade organizations

16. Impact on projects funded by Chinese government

17. Impact on projects funded by foreign governments

Socio-economic scenario simulation should also be done during detail planning:

1. Computerized simulation of pessimistic scenario that assumes actual duration of implementation to be double than planned duration calling for almost double resource and efforts

2. Computerized simulation of optimistic scenario that assumes actual duration of implementation to be 80% of the planned duration thereby saving resource and efforts

3. Computerized simulation of probable scenario that assumes actual duration of implementation to be 20% more than the planned duration thereby causing little additional resource and efforts

Both the individual impact analysis and socio-economic scenario simulation need to take into account the past 3 decades of socio-economic landscape of China and make projections for 2 decades into the future. We need to remember, if central planning system of Soviet Union failed to take into account the population, geography, and goods/services requirements satisfactorily, lack of enough computational power and adequate information were to be blamed – the theory and proposition was not responsible for its debacle. The following subjects should be considered as part of the socio-economic landscape:

i. Parameters on national GDP accounting

ii. Parameters on production

iii. Parameters on sales

iv. Parameters on prices and inflation

v. Parameters on labour force

vi. Parameters on international finance and trade

vii. Parameters on balance of payments

viii. Parameters on income and expenditure

ix. Parameters on Human Development Index (HDI)

x. Parameters on environmental sustainability

3.1.1 Action Point 1:

Ever since the intellectuals and economists in early modern Europe raised their voice against the exploitation by the privately owned industries, the question of ‘ownership of means of production’ took central position (along with the question of ‘money as finance capital’) in every debate concerning struggle against capitalist mode of economy. Mainly three different ideas got substantial support among different shades of socialists – (a) ownership by public/community, (b) ownership by ‘State’, and (c) ownership by ‘workers’ cooperative’. Mode (b) had been the most preferred option for the socialist parties that came to power in Soviet Union, East European countries, China, Vietnam, and Cuba, because it was assumed that a ‘state’ represented a ‘community’. However, in my opinion, mode (a) is the most genuine because only that can deliver all the benefits of ownership to the individual level of the community – not only the appearance of ‘state’ as expropriator gets averted, but people’s self-esteem and involvement with the economy increases. Let’s revisit what happened in Soviet Union and East European countries in the beginning of 1990s – when the Zionist-capitalists were dissolving the socialist state, constitution and system, they picked up all productive assets – factories, mines, facilities – at almost no cost by manipulating the then state administration of Soviet Union. The ‘state’ was the owner of all productive assets, hence the people were just bystanders, they didn’t resist since they didn’t own. In future, if and when the Zionist-capitalists in China organize themselves to stake its claim on state power, community ownership of means of production and other productive forces will be the ONLY repelling force that would save the day for the CPC.

The action point 1 should be implemented at every sector/sub-sector of the Chinese economy (that are concerned with natural resources and economic base of the society as shown in figure 2.2) and its interaction with every class in the society in such a way that address specific issues and concerns of the society as well as the economy. Because of the unparalleled significance of ‘Manufacturing (defense & space)’, ‘Banking, Finance, Insurance’, ‘Education’, and ‘Healthcare’ sectors, ownership of those four sectors should be only vested in the state, to begin with. The ownership of remaining all categories of means of production needs to be legally transferred to the community (and the state) in an orderly manner – EVERY CITIZEN AS HE/SHE TURNS 25 YEARS, SHOULD BECOME ELIGIBLE FOR ALLOTMENT OF EQUITY OF ENTERPRISE(S) TO BECOME AN ‘OWNER’ under this scheme, what easily can become the largest transfer of wealth in the history of humankind. The ownership would remain non-transferrable which means that the share is not trade-able at the share market, and at death the ownership gets terminated. An indicative scheme of ownership for the 12 sectors/sub-sectors is given below in table 3.1.1. It is to be noted that, the percentage of ownership indicated in the table is for EVERY ENTERPRISE/FACILITY and NOT for a sectors/sub-sectors in totality – e.g. in the ‘Real Estate & Construction’ sector, equity of each of the organizations/facilities should be distributed among citizens belonging to 5 classes/sub-classes of the community as noted in the same table so that, each class gets 20% equity, it does NOT mean that 20% of the enterprises/facilities in the ‘Real Estate & Construction’ sector should be owned by each of the 5 classes. Approximately 73% of the population of China would be beneficiary. Since the entire conceptual philosophy behind this proposition is to put an end to basic causes of exploitation and inequality among various sections of society, the implementation of this vast programme has to be done in such a way that at least 1 member of every family residing in 22 provinces, 5 autonomous regions, and 4 municipalities of PRC becomes beneficiary of this scheme.

The table 3.1.1 given below has been constructed with a certain degree of thought process that took into consideration things like (a) criticality of a sector to the sustenance of the state and the party (a ‘vital’ sector shouldn’t be opened for community ownership at this point of time), (b) future urban-rural population (urban population would become two-thirds of the total population, hence more sectors should be serving that compared to rural people), (c) the state (and the party) should play a role as ‘stabilizer’ among different classes of owners in every enterprise, hence a token presence is required on the ownership table. However, before implementation, the concerned team of CPC should suitably modify to reflect the ground realities more appropriately (except increasing the share for bourgeois).

Table 3.1.1

Economy sectors & sub-sectorsCommunityState
Proletariat –Rural labourer, unemployedProletariat –Urban labourer, employed, unemployedPetit bourgeois – Rural peasant, craftsmenPetit bourgeois – Urban technologist, manager,self-employedBourgeois – owning or controlling capital
i) Agriculture & related areas20% Ownership70% Ownership10% Ownership
ii) Mining & related areas20% Ownership70% Ownership10% Ownership
iii) Utility40% Ownership40% Ownership10% Ownership10% Ownership
iv) Manufacturing(traditional)40% Ownership40% Ownership10% Ownership10% Ownership
v) Manufacturing(hi-tech)40% Ownership40% Ownership10% Ownership10% Ownership
vi) Manufacturing(defence & space)100% Ownership
vii) Banking, Finance, Insurance100% Ownership
viii) Real estate & construction15% Ownership20% Ownership15% Ownership20% Ownership20% Ownership10% Ownership
ix) Technology-based services15% Ownership20% Ownership15% Ownership20% Ownership20% Ownership10% Ownership
x) Education100% Ownership
xi) Healthcare100% Ownership
xii) Other Services20% Ownership20% Ownership20% Ownership20% Ownership10% Ownership10% Ownership

There would be a couple of significant counter-arguments to suggest the proposed implementation of action point 1 as an ‘impossible task’ or a ‘utopia’:

1. Primarily there are four types of domestic enterprises operating in China mostly in industry and services – state-owned big/medium sized corporates, private-owned big/medium sized corporates, state and private joint ownership companies, small companies owned by individual professionals. How could the ownership pattern be changed without disturbing the management as well as without impacting the performance of the enterprise? Answer to that can follow similar logic of how a company maintains its structure and functioning after it is taken over by another corporate entity through acquisition of majority equity share with an understanding that existing setup won’t be disturbed by the new owner;

2. Assuming on average 4-member family, there would be about 350 million families in China spread over about 9.6 million sq.km. How could even 1 member from each family get ownership share in even 1 enterprise that brings material benefit to him/her? There is no standard answer. There has to be rigorous analysis covering all types of enterprises (According to a report by China’s Administration for Industry and Commerce released on 14 January 2016, more than 77 million companies were active in mainland China) in all sectors/sub-sectors to explore physical and financial capital base built over past 7 decades, and thereafter optimum restructuring of equity capital has to be done for each of those enterprises in all sectors/sub-sectors (except 2). Then only a clear picture would evolve about how so vast number of citizens can be accommodated;

3. Another significant question is whether the existing private owners would at all accept proposed dilution of their equity stake, and if they agree then what would be the terms-conditions, and if everything is settled, then whether they would continue to manage the enterprise as they did in past. This is the most significant question from legal perspective. The bourgeois class executives would not mind diluting their equity stake in existing enterprises because (a) China’s private entrepreneurs are politically co-opted by the CPC, (b) by working through the party-state networks all over the country, private businessmen understand that they are a very important part of the current national economy, (c) bourgeois class is a numerically very small part, may be 1% of the Chinese community, still sizeable equity stake for them has been proposed in 6 sector/sub-sectors (as given in table 3.1.1) which is disproportionately high when compared to numerically much larger part of the society;

4. Last but not least is the question – how could a business enterprise function under ‘restricted-profit’ environment. Generally, an enterprise functions with ‘profit’ (e.g. business operation) or ‘non-profit’ (e.g. social work) orientation. But, as per the guiding principles of socialism, endless accumulation of profit can’t be an objective for a socialist society. Hence, during implementation of action point 1, procedures for enterprise functioning with restricted profit has to be laid out that neither violates the socialist principles nor kills the spirit of business operation. Steps may be – (a) exhaustive analysis of all factors of production that go into production and distribution process for all types of business operation under each of the listed 12 sectors/sub-sectors (e.g. ‘Manufacturing – traditional’ has, say, 15 sub-sectors like food & beverages, textile & garments, metal processing, light engineering goods, consumer durables, heavy machineries, automobiles, chemicals & fertilizers, hydrocarbon processing, pharmaceuticals, rolling stock, shipbuilding etc.); (b) setting up of optimum range of operational expenditures – input material cost, input labour hour, input energy cost, factory and machinery depreciation, cost of financial capital, cost of technology, cost of managerial coordination etc. – across the entire value chain of each of the sub-sectors (e.g. 15 sub-sectors of ‘Manufacturing – traditional’); (c) setting up of optimum range with upper and lower limit of operating margin, product/service price, profit, share of profit to be reserved and share of profit to be distributed among shareholders. We, the protagonists, need to always remember ‘when there is a will, there is a way’

3.1.2 Action Point 2:

In commodity exchange, one exchanges a commodity for money, and that money is exchanged again for some other commodity. One sells in order to buy something else for consumption – Marx identified this cycle as Commodity-Money-Commodity (C-M-C). In modern economy, with ‘money’ as the exchange medium as well as store of value, one can buy in order to sell at a higher price – Marx defined this as Money-Commodity-Money (M-C-M), the formula for capital. Free from the use-value of an item, this ‘money’ can move on continuously as profit-making finance capital. For the business of usury, the cycle becomes even sharper – Money-Money (M-M). Till 1970 CE, the traditional capitalist concept of accumulation of monetary capital as ‘profit from business operation’ continued as usual. Money supply through banking system (exogenous money created either by manufacturing paper/metal currency or by fractional reserve system, also called money multiplier model) of a country not only positively impact the business cycle, but it has an impact on inflation, and the price level also. Empirical evidence suggests a direct relation between growth in the money supply and long-term price inflation. In the post-Keynesian Europe and America, Zionist-capitalist oligarchy found that, in order to tackle inflation and price more effectively, the central banking institutions of countries across the globe (including the countries in European and American continents) were restricting the money supply for their economy (by NOT creating new money), which in turn restricted the flow of credit money to grow businesses owned by the capitalists. On the other hand, in the 1970s and 1980s most of the businesses were operating in severe competitive environment across the globe, input costs were not favourable always, fuel costs were up, product prices were too competitive with Japanese companies becoming more cost-effective – all these factors impacted the traditional process of seeking exorbitant profit from businesses in the era of ‘industrial capitalism’. Thus, as a result of two simultaneous pressures, the endless accumulation of (money) capital became much more difficult than the Zionist-capitalist oligarchy expected.

Hence, the academia and media funded by the Zionist-capitalist oligarchy dusted off an old theory of endogenous money and gave it a new life – credit creation theory of banking. This concept of credit money heralded a new era of Zionist-capitalist exploitation of the earth and humanity through ‘financial capitalism’. Starting in 1980s beginning, financial capitalism saw its ‘golden era’ during the 1990s and 2000s until the financial crisis overwhelmed American and European economy in 2007. But soon after the financial shock, financial capitalism found its way in the same fashion like before. Central banks in advanced countries maintain their official stand as exogenous money creation through fractional reserve system, but in practice, many banks in developed countries create endogenous credit money while paying lip service to principles of prudence and conservatism (refer “Post Keynesian Endogeneity of Money Supply: Panel Evidence” from https://www.researchgate.net/publication/257594497_Post_Keynesian_Endogeneity_of_Money_Supply_Panel_Evidence). Under the endogenous money theory (and, practice), ‘the supply of money is a function of profit expectation’. As per the Jewish tradition of banking and usury, the central theme of this theory is endless accumulation of money. The bourgeois capitalist businessmen would start calculation from ‘profit expectation’ which would derive the ‘income of firm’, this in turn would derive the ‘demand for credit’ as per which the ‘credit money creation’ would become the responsibility of the banker (the leader of the team of capitalists). Hence, the traditional flow of causality through fractional reserve system (Reserve → Deposits→Loan) gets reversed as Loan → Deposits → Reserve under this endogenous credit creation system. For endogenous money, the interest rate is not determined by the market mechanism (like the supply of and the demand for savings, the supply of and the demand for money). Nominal interest rate set by the central bank is applicable.

During past 4 decades of the era of financial capitalism, as and when the Zionist-capitalist oligarchy in a country decide to accumulate more money without going into the ‘painful’ mode of industrial capitalism, they create a flow of credit money through connivance with the management of commercial banks (staff at the higher positions in industry and banking are ALWAYS selectively appointed by the oligarchy) each of which has country-wide network of regional offices and branch offices, ostensibly for growing business operations. Question can be raised, “so what, the credit money drives creation of new business that helps growth of the overall economy”. The answer is, “no, it is not so”. Apart from a glitzy ‘project report’, none of the business objectives are ever honestly mentioned. Industrial and Service sectors are the prime target areas where hundreds of millions of investments are demanded as ‘project loan’ from commercial banks, and after receiving the amount, half of the amount gets transferred the foreign/domestic accounts of the ‘businessman’ and their accomplices, remaining half may be actually invested in the project. In many cases, after couple of years the businessman declares the project as dead and business operation as bankrupt. In many other cases, where the targeted project came to fruition, it can be easily proved through post-completion report that, the loan taken from bank was about 150 – 200% more than the actual project expenditure. This is how, in all countries throughout the world the wealthy oligarchs have been accumulating money, only a small part of which comes through profit from business operation. And, this ‘mechanism’ of ‘getting rich fast’ has been popular among senior-level technocrats of state-owned enterprises in all developing countries (including China) – Zionist-capitalist oligarchy happily accommodates such turncoats as part of the oligarchy. On the other hand, this swindle of a very large section of Zionist-capitalist business-owners results in bad debt problems for the country.

Government of China has to grapple with the bad debt problem continuously for past two decades (refer link:

 https://www.business-standard.com/article/international/china-s-bad-loan-season-descends-again-and-this-time-it-may-be-really-bad-121021700184_1.html). Writing off trillions of bad debt as non-performing asset from the books year-after-year is not really a solution. Unless and until the procedures and systems of banking-financing and money circulation are made full-proof along with complete prohibition of the endogenous credit money, PBoC won’t be able to see a clean slate ever in the banking sector.

As proposed in action point 2, the worst performers among banks and financial institutions should be converted into ‘narrow banks’ where deposits would be used to buy government bonds, but no investments in shares. Lending would be done using the deposits only (following ‘financial intermediation theory of banking’). Narrow banks are safe banks; there would be very limited credit risk. The danger of non-performing loans and subsequent injections of capital (using taxpayers’ money) would be grossly mitigated through narrow banks. Remaining banking institutions should religiously follow ONLY the money multiplier model of the fractional reserve system for creating credit money required for economic growth. PBoC should keep reserve requirement ratio at 25 – 30% which may be considered as a prudent base for credit money creation through fractional reserve system. Thus supply of money would be maintained, but unscrupulous capitalists won’t find a route to carry out bank robbery any time they wish.

3.1.3 Action Point 3:

Agriculture and related sectors in China has innate unbalances – the country has only 9 – 10% of the total arable land in the world, and 7 – 8% of its fresh water, but the sector’s output has to feed about 18 – 20% of the world’s population. Agriculture in China had been the core economic activity since ancient era. In the post-WW II when PLA won the civil war against Kuomintang, rural peasants were the most significant base of the communist party. The people’s commune system was established in Mao era, which was changed into the household responsibility system in Deng era. With progress of time, the improvement in productivity and income per capita as a result of such structural changes always taper down. Agricultural output has increased leaps and bounds over past 7 decades (with temporary dips). However, current problems of the agriculture and related sectors can’t be wished away:

(a) Diminishing plot size of the arable land (average size – less than 1 hectare) due to division among family members with each generation,

(b) Availability of water for irrigation remains a challenge especially in the northern half of the country

(c) Income of farmers lag behind the urban population by a very large gap

(d) Increasing demands for agricultural and dairy products, meat, and fish due to two simultaneous factors – population growth as well as change in dietary patterns especially in the urban regions

(e) Environmental degradation due to the ever increasing use of chemical fertilizers and pesticides

(f) Decreasing area under cultivation due to rapid township development projects

There are unresolved dichotomies in the agriculture sector in China:

1. If farmers’ income rise becomes more important, then high-value crops need to be cultivated; but that would require releasing arable land currently under food-grain cultivation, which in turn would affect the goal of self-sufficiency in growing food-grain

2. If afforestation is increased as a measure to address environmental pollution, semi-arable land should be released for that purpose; however, that would result in further reduction in the agricultural land, which in turn would impact production of both food-grains and high value crops

Under the restructuring of agriculture and related sectors action point, government should consider a mid-way between village-level people’s commune and household responsibility – contiguous plot-owners should form cooperative enterprises so that plot size remain above 10 hectares. Such plot sizes would enable the cooperative to deploy most modern farm equipment. Government should ensure that farmers’ produces are picked up at farm-gate at a price that covers the cost of inputs, labour, and a net income that is significantly higher than current income per capita in rural regions – essentially it would require subsidy payments in a systematic way. Finally, such cooperatives would indirectly result in release of the surplus labour into industrial and service sectors – migration to urban areas is highly probable, unless government launch new initiatives for agro-based industry and electricity generation system through renewable sources like solar and wind energy.

3.1.4 Action Point 4:

In a brief, accurate write-up, The Guardian website provided the economic data related to Chinese economy from 1980 to 2016 (Link: https://www.theguardian.com/news/datablog/2012/mar/23/china-gdp-since-1980). The export-oriented economy that Deng set in motion (following other East Asian success stories in 1970s and 1980s) during 1980s has been performing with extreme efficiency and effectiveness till now. The statistical indicators point out to that fact. However, household consumption expenditures remaining slightly below 40% of the GDP still remains a matter of concern for the policy making body of the CPC (GDP of China in 2019 CE was Yuan 99492.74 billion by expenditure approach, out of which Household Consumption Expenditure was Yuan 38589.56 billion i.e. 38.78% of GDP). There are two sides of the issue – (a) household consumption expenditure has been increasing steadily for past few decades, but the growth in GDP due to exports (and investments in infrastructure asset creation) readily outsmarted the household consumption growth, and (b) the potential for household consumption contributing a minimum of 50% of the GDP has not been unleashed yet.

In my opinion, both the perspectives of household consumption ‘dilemma’ need to be seriously addressed. After 2008 CE, the steadily growing trade and commerce between China and USA as well as China and West Europe has been a boon for the Chinese economy and bane for the Zionist-capitalist oligarchy. On top of it, the BRI programme, that aims to revolutionize the infrastructure and trade in Asia, Africa and South America, has sounded the alarm for the existing Zionist-capitalist world order. The existing world order would explore all type of ‘programme’ that attempts to hinder the existing trade and commerce between China and USA-West Europe-Japan triad (link: https://asiatimes.com/2021/06/american-decoupling-from-china-deconstructed/ ) as well as implementation of BRI programme. The CPC leadership should take note of it, and make preparations for absorbing a possible dent in exports (and imports). And, the question of substantial increase in household consumption appears on the horizon right away.

Under the scheme for boosting household consumption, the purchasing power of the rural population needs to be enhanced substantially. For the urban citizens of China, consumption is a way of life – generally, they enjoy life with increased income. However, for the entire country, apart from enacting laws that would ensure increase in salaries-wages-bonus in every types of enterprises, the government has to explore a creative way that would indirectly increase the propensity for consumption expenditure. Chinese government should seriously consider making education and healthcare a subject of governance. Thus, all arrangements, from creation of infrastructure to providing services, related to education and healthcare should be made by the government for every citizen of China. Citizens, as per their income category, would make payments for such services – this would require subsidies, since the poor section of the society won’t be in a position to cover the expenditures fully. However, once the population is free from the biggest concerns of daily life, the consumption expenditure would increase in true sense. (It won’t be inappropriate to mention here that, in the USA, education and healthcare services form a substantial part of the consumer expenditures, because the general population is turned into debt-serfs through credit money created out of thin air by the Zionist-capitalist banking cabal – but following USA as the role model for society and economy is hardly an intelligent decision for a Marxist socialist government).

3.2 Debate on Four Action points

There would be couple of valid questions from China watchers:

1) Question from intellectuals who identify themselves as ‘ideologically pure Marxist socialist/ Communist’ would be invariably on whether the continued presence of ‘market’ and ‘money’ in China (as I envisage in this article) would allow transformation of the society into a stage 1 socialist society. True, most of the early socialists detested market and money by assuming these as the root cause of all evils, and there were serious research in inter-war Europe and Soviet Union to propose how socialist society can function without market and money. The famous socialist calculation debate during the inter-war period between Austrian School (Ludwig von Mises and Friedrich Hayek) and neo-classical and Marxists (Oskar Lange, Abba Lerner, Fred Taylor, Maurice Dobb, and others) was a discourse on the subject of how a socialist economy would perform economic calculation in the absence of the price, money, capital market, and private ownership of the means of production. Without getting into the logic and analysis of such research provided by either side, I would like to maintain that socialism as an economic system is far more efficient than capitalism from social and environmental perspective, and that socialism is highly feasible. In my opinion, Socialism won’t be mortally wounded, if centralized economic planning work as complementary to market mechanism, enterprise functions with restricted profit accumulation, and money is used as a medium of exchange and an unit of calculation (instead of labour-time or physical unit of measure). In defense of my stand, I would quote David McMullen from his working paper titled “Re-Opening the Debates on Economic Calculation and Motivation under Socialism”, “there is nothing preventing an economy where the means of production are socially owned from having an effective price system as long as it can replace the profit motive with a desire by people to undertake work for its own sake and to serve the common good.”;

2) The intellectuals who wouldn’t give a damn to ideology, would like to ask, now that China has almost become a superpower in the realms of industry, technology, defense and space, why to bother about little ideological things like ‘yes to community ownership’ and ‘no to endogenous credit money’, that would be akin to rocking the boat. My response would be, without appropriate ideology, CPC members would become a class unto itself and would not be able to keep its mass base intact over the next 50 years. As a result, corruption, manipulation, nepotism and irresponsible behaviour would increase dramatically leading to loss of public support. Thereafter, it would be just a matter of time that, CPC would be challenged by a political entity (created-aided-abated by the Zionist-capitalist world order). Whether China sets up a base in Mars, in my opinion, is less important than whether China implement the crucial aspects of the stage 1 socialism.

3) Inquisitive readers may come forward with a very practical question – what would happen to people and society in Hong Kong, Macau, and Taiwan. Well, I would like to keep them separate as part of the “one country two systems” policy. It would be better for everybody if the regions of Hong Kong, Macau, and Taiwan are kept outside of this proposed program of final aspects of the stage 1 socialism in China. Let free entrepreneurship operate in these places, including operation of a business enterprise with even 100% private ownership (if the existing laws of those quasi-states permit). After all, those regions didn’t go through the transformation brought out by the Chinese Revolution.

4) Yet another group of informed readers might like to ask if the CPC has the organizational strength, leadership with ideological bent of mind, and all sorts of resources required to implement such an ambitious program. The question of whether the CPC can lead, whether the CPC can prepare a blueprint, and whether the CPC leadership can mobilize resources required for such a mammoth transformation is, actually, the most important issue for eventual success or failure. If a serious reader scans through the 100-year history of the CPC, he/she can come to a conclusion that the party was not built in a day – over the 100 year period, the Chinese leaders kept no stone unturned to keep the socialist dream alive. Extreme hard work by the leaders and members of all factions strengthened the CPC. Hence, in my opinion, the CPC would be able to register a complete success.

There are couple of key suggestions for strengthening the organization to prepare itself better for any eventuality, like: (a) expand membership strength to 140 million (equivalent to 10% of population), new recruits should cover all regions and at least 80% should come from proletariat and petit bourgeois family background; (b) vigorous training sessions for all party members through class-room and practical training, training should be imparted at least once in every 5 years; (c) while 80 years age should be maximum allowable age for a member in the party, average age should be lowered, so that members are physically fit to perform in difficult circumstances.

4. Conclusion

Coming back to the elders’ discussion in Heaven. China has achieved wonderful all-round progress towards building of social capital in the country. Now, to complete the first stage of socialism, China needs to shift the gear to adopt the cycle: Ecosystem → Economic Base → Community → Ecosystem.

It is time for the CPC to undertake the next journey on the socialist road with careful planning and implementation of the milestones. Couple of afterthoughts:

1. Two most crucial objectives for the CPC – socialist transformation and Taiwan reunification – should be undertaken simultaneously, for any attempt to plan those two objectives at staggered timeline may result in disappointment and stagnation. China (and Taiwan) can continue their journey towards more economic prosperity (with considerable inequality) even without achieving socialist transformation objectives, but the main issue refuses to go away – what happens when the Zionist-capitalists in China organize themselves to seize the political power (as they did in Soviet Union)? So, it is not a question of making a decision so that the elders like Marx, Engels, Lenin, and Mao would be delighted in heaven, it’s a question of life and death for socialism, which the CPC would have to confront, most probably before the centenary of PRC appears on the horizon.

2. The CPC Politbureau should own the entire initiative and meticulously prepare two options (plan A and plan B) on detail roadmap containing high-level tasks, sub-tasks, task-owners, task-locations, resource requirement, and timelines to achieve the objectives between 2026 CE and 2030 CE. It is imperative that pre-requisites for and implications of each task pertaining to each of the two plans are deliberated upon in detail before a plan is approved for implementation. Politbureau may involve all members of the Central Committee in thorough discussions on the final aspects of the stage 1 socialism in China and 2 optional plans, and if required, modify the plans with inputs from these two very important groups.

3. For a trouble-free implementation, the CPC should maintain the same senior level team, hence the CPC and the National People’s Congress should re-elect Xi Jinping as President and Li Keqiang as Premier in March 2023 for next 10 years circumventing the existing party constitution, as a special gesture. President, Premier, and all other Politbureau members should visit the building at Shanghai’s French Concession and Jiaxing site that hosted the party’s founding congress in 1921, and reiterate the commitment to maintain the original aspiration of the founding members and continue the journey towards socialism.

4. In this article, I haven’t touched upon the geopolitical and geo-economic themes that permeate the overall architecture within which the Zionist-capitalist world order has been operating since the dawn of 20th century. Since that invariably includes the Chinese state and its people, the existing fabric of geopolitics and geo-economics would certainly get squeezed to some extent with the proposed implementation of the final aspects of stage 1 socialism in China. The surest way for China to confidently face any unforeseen turmoil outside its border is to maintain an unwavering deep strategic partnership with Russia through thick and thin, as we notice currently.

5. Would an auspicious moment arrive in 2031 when people across the world come to know that the stage 1 socialism fully arrived in China? I am one of them who are convinced that, the CPC has the resources, analytical ability, and organizational wherewithal to do it. If it really happens, there would be a tremendous wave of optimism about the possibility of a society based on truth-justice-equality-morality across the poor sections of the society around the world; the Marxist socialist dream that went sour with the dissolution of the USSR, would get a fresh lease of life!


Short profile:

Straight-Bat is an Engineer by profession, currently pursuing higher study in Economics. A keen observer of global affairs, Straight-Bat enjoys being an analyst of history, politics, economy, and geopolitics.

One of the few decade-old members of The Saker blog-site, Straight-Bat finds this website as a capstone entity that is dedicated to focus on truth and justice in public life across the world.

Bernays and Propaganda – The Transition to Education and Commerce – Part 4

March 02, 2021

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By Larry Romanoff for the Saker Blog

The success of Lippman and Bernays did not go unnoticed in many segments of American society. Universities in particular realised the potential of these new propaganda techniques to form, manipulate and control social perceptions and behavior. Schools and Universities in the US had never been viewed as an educational system but more as tools of a public disciplinary system, a method both of social control and a means to inculcate attitudes and beliefs most useful to the industrialists and bankers. This began before the time of Lippman and Bernays, with the great “Robber Barons”, the criminally rich families like Rockefeller, Carnegie, Mellon, Astor, DuPont, Guggenheim, Morgan, Vanderbilt. Andrew Carnegie first promoted the notion that the nation’s very rich should found universities in order to remake education to serve their needs. Many American industrialists joined this crusade, resulting in Stanford, Cornell, Carnegie-Mellon, the University of Chicago and many more. Their efforts were widely publicised as a kind of benevolent charity to the nation, but their purpose was not to educate but to indoctrinate, using the educational system to create citizens obedient to their capitalist ideology and maintain their financial power.

They meant these institutions to preach the standard religious mythologies of patriotism and democracy, but also the values of child labor, slave wages, anathema toward labor unions and opposition to minimum wages, as a scheme to maintain their income disparity, basically to inculcate public attitudes that would serve to prevent any transference of wealth to the masses. These industrial and financial elites played a heavy role in the transformation of America’s educational system, first from their financial control and second from their power to design and control the ideologies that would emerge in the curricula, setting the stage for the methods of American education today, in particular the US business schools. Perhaps the most important consideration about American education that is so poorly-appreciated is that the American elite did not want (and still do not want) to improve the nation’s education level because both the multi-party political system and the US brand of capitalism require ignorance for survival, both relying heavily for their success on a thoughtless, uninformed, and uneducated population. (1)

Of course in all nations, the educational system is one of the primary institutions of social control, but with the aid of Lippman and Bernays the US went far beyond civilised norms. For both primary and secondary school, the intent was to establish social control by first producing a strong sense of national identity and cohesion, which led to, among other things, the mass hysteria of US patriotism so much in evidence today. It isn’t widely recognised that the ever-present and pervasive pathological American brand of patriotism is an extremely powerful mechanism of social control, to the extent that few Americans would be prepared to have themselves classified as ‘unpatriotic’. But to be patriotic in the American mold means one must firmly align one’s interests with the ruling elite. In America, you cannot be patriotic while condemning free-market capitalism or the frequent wars for its benefit, and it is distinctly unpatriotic to express a wish for a government-paid healthcare system or to protest against the banks that caused much of the population to lose their homes in 2008. As reporter George Seldes pointed out, (2) (3) this patriotism, the American way of taking pride in one’s country, forces the masses to ally themselves with the ruling powers, and this produces a kind of perpetual control. He said this deceptive propaganda has existed for so long that few are aware of how it came about or even that it exists. He ended his comment with the observation that if the media informed the people of this insidious control, it would lose its power. But the media, themselves aligned with the ruling powers, refuse to address it.

The purpose of the universities, in the view of these industrialists and bankers, was to develop by indoctrination a kind of management elite capable of controlling society in a way most useful to the top 1%. By the end of the First World War, the world was in the throes of a massive industrialisation as well as urbanisation, creating social stresses from problems of inequality and civil rights, with social unrest already a growing problem. To deal with this, American universities developed (under the tutelage of Lippman and Bernays) what they called the “social sciences” like sociology and psychology with the objective of producing a cadre of “social engineers and technicians” to address these issues and control American society. The ‘secret government’ believed that psychology, with the techniques so skillfully applied by Bernays, could “be instrumental for attaining democratic social order and control”. The theory was that individuals in society were not “well adjusted” and that propaganda could be used to appropriately “adjust” them. From this point, with the educational system as a major instrument, the US transitioned into a society of social engineering and control, using Bernays’ methods directly upon primary, high school and university students to form and manipulate public perceptions and beliefs in a manner most useful to the secret government and the multi-nationals they controlled. Neither the good of the nation nor the welfare of its citizens were listed as priorities. Of course, education itself became diseased and corrupted by these measures.

Socialism was perhaps the greatest enemy to the entrenched ability of the bankers and industrialists to loot the nation, with items like minimum wages, free education or medical care severely restraining the greed of the elites, and thus socialism quickly became public enemy no. 1 in the American educational system. For generations, Bernays and his heirs filled the minds and hearts of American children with a fear of socialism, equating it to godless nations ruled by brutal dictators where citizens had no freedom. The propaganda was extremely powerful and the brainwashing began very early in life – as it still does today. Consider this example from a current American elementary school book: The question posed is “Which of the following goes with socialism?”, with the student offered three possible answer choices:

  • A Political system in which a dictator rules, and there are no freedoms.
  • An Economic system in which the government owns the big businesses.
  • An Economic system in which businesses are privately owned.

Of course, the correct answer is “none of the above”, but in American schools the first two evil choices are the only correct answers, small children learning very early on that private-enterprise capitalism is the only way to fly, socialism not only to be avoided but to even explore that system is equated to seeking information on Satan worship. The doors to these little American minds are firmly slammed shut very early in life, never to be opened again, an integral part of their political-religious indoctrination. The false tenets of American capitalism are given vast prime-time exposure, again closing the little minds forever to any understanding of what they are for or why they are for it. (4)

Yale University, working with huge grants from the Rockefeller Foundation, created a propaganda institute to perform practical research on issues “directly concerned with the problems of man’s individual and group conduct” and “to correlate knowledge and coordinate technique in related fields”. The stated purpose was to better “understand human life”, but the intent was to utilise that understanding for the control of the population. There was a Princeton University Radio Project to discover the most effective way to use broadcasting for population indoctrination and control, the techniques being adopted by the VOA, Radio Free Europe, and Radio Free Asia. The internet and Princeton archives appear to have been scrubbed clean of information on this.

And indeed Princeton was so heavily involved in propaganda, subterfuge and spy-craft, that it provided the bulk of the staff for the OSS and CIA during their formative years. (5) As with most everything else regarding the US, the American universities were even much worse than imagined, being deeply into the CIA’s murderous MK-ULTRA program of mind control that stretched for decades (6), as part of the Bernays-inspired search for population control mechanisms. In testimony to the US Senate, Senator Ted Kennedy stated that more than thirty US universities and institutions were involved in what he termed an “extensive testing and experimentation” program which included covert drug tests on citizens at all social levels, all without their knowledge or consent. (7)

The elite 1% founded not only universities but the Foundations that exist to this day, and for the same purposes of social control. Institutions like the Rockefeller, Ford and Carnegie Foundations, the Council on Foreign Relations, the Trilateral Commission, were primarily created “to perpetuate predatory wealth through the control of information and the sources of information”, and quickly assumed missions of direct influence and control of the mindsets of many of the world’s leaders, or at least influential individuals. The Rockefeller Foundation has been pre-eminent in an astonishing array of social control initiatives that included population control in the real sense through sterilisation and war. And both the Rockefeller and Carnegie institutes funded and promoted the practice of eugenics, Carnegie recommending a national chain of gas chambers to eliminate the socially (and ideologically) unfit. (8) All of this twisted ideology stemmed from the same source.

The Rockefeller Foundation in one advertised instance held a major conference with “representatives of some of the largest financial interests” in the US, i.e. the Jewish European bankers who controlled the US FED, to promote a propaganda program to “educate the citizenry in pro-capitalistic ideology and thus relieve unrest”. In other words, employ the Freud/Bernays propaganda methods to teach the working class to stay poor for the benefit of the corporate elites and the bankers. This group believed it needed a “publicity bureau” that could “correct popular misinformation” by providing “a constant stream of correct information” delivered to the lower and middle classes on their proper place in society. They then set about creating a powerful research organisation to study “social problems” and “the causes of social and economic evils”, portraying themselves as disinterested scientists searching for the public good while actually focused on propaganda, public indoctrination and secret social control.

All the so-called Foundations and Think Tanks established during the past century shared the purpose of steering society and social thought into desirable channels, and executing massive schemes of social engineering, eventually corrupting the educational system and co-opting all emerging social movements for the benefit of Bernays’ ‘secret government. American society, primarily through the educational system and the use of the new social sciences was being almost totally re-created to serve its ultimate masters.

A memo from the Rockefeller historical archives revealed a concern that their purposes might become public knowledge and be “misinterpreted” since public opinion would naturally be violently opposed to such secret programming. Senators and Congressmen rightly feared these Foundations were dangerous to their society and form of government, and recommended their abolition, but the elected portions of the government have never had the power to control the secret government. The US Congress stated that these foundations, with their wealth and influence, were “a grave menace to the welfare of society” and would be used not only to affect and control the government but to change its form. And try to change its form they would.

This is one reason most university business schools are funded by (and named after) their monied benefactors: money guides and even determines the curriculum. Many American universities today are merely servants of major industrial firms, virtually their entire research capabilities harnessed in pursuit of either commercial patents or discoveries of military value, the education of students becoming increasingly remote and inferior. In the end, the practices of Bernays’ propaganda and the private funding of education to serve private hidden interests became one and the same, the propaganda machine absorbing education itself, for the purpose of ‘adjusting’ the population to eliminate ‘misinformation’ and replace it with the ‘constant stream of correct information’ while firmly repressing all contradictory thought.

Interestingly, debt bondage is one of the main forms of social control and for this reason has always been heavily promoted in the US, its financial benefit to the private bankers being an added plus. New university graduates who are $200,000 in debt, homeowners with a huge mortgage, wage slaves with high credit card balances, are unlikely to risk their careers and livelihood by openly challenging the system. When an entire nation is heavily in debt, the people cannot afford to revolt. Meekness and silence are prerequisites for survival, especially in the almost total absence of labor unions. Thus, the American propaganda machine discouraged savings and encouraged consumption on credit. This was so true that as early as the 1920s as much as 90% of all major items like homes, cars, furniture and appliances purchased in the US, were bought on credit. (9)

  • Turning to Commerce

Lippman and Bernays also turned their attention to the manipulation and control of public attitudes toward advertising and commerce, which is why and how the vast propaganda machine transformed American culture into a materialistic consumer society. The consumption orientation was created solely to transfer wealth to the top 1% who owned most of the means of production and who would primarily benefit, mostly the same people constituting Bernays’ “invisible government”. The ease and potential of public manipulation fired the imagination of those who controlled the banks and multinational corporations, their minds opened to the vast potential to increase sales by turning Americans into appropriately conditioned consumers. They realised that if they could condition emotional responses into the subconscious of the American population without the awareness of the people, they could firmly control the purchasing attitudes and habits of an entire nation. And of course this was precisely the result, with the US economy today dependent for 75% of its life on consumer spending, Americans proclaiming this bizarre condition as a universal value and the will of God.

Following his political successes, Bernays set up shop on Madison Avenue and by the early 1920s was already doing for American products and branding what he had done for war marketing, that is to say, using propaganda to manipulate and control public perception and behavior, in this case to create not only mindless consumers but to fabricate and permanently instill in the American mind the myth of brands. Bernays quickly attracted more corporate clients than he could handle, with most large firms tripping over themselves to take advantage of the power of propaganda and mind control to loot the nation’s bank accounts.

Advertising and Agencies

In 1957 Vance Packard published a best-selling book titled “The Hidden Persuaders”, that revealed in detail how advertisers were using psychologists and psychiatrists following Bernays’ manipulative methods to tap into our unconscious desires in order to “persuade” us to buy the products they were selling. (10) (11) The entire advertising industry succumbed to this siren call and today is a rat’s nest of (often) reprehensible manipulation of the public. Ad agencies would hold “focus groups” where they would surreptitiously record housewives and others discussing their inmost feelings, thoughts, desires on many matters, then use that information to subvert those and manipulate people into buying whatever they wanted to sell.

One instance that crossed my path was exposure to the story boards of a foreign advertising agency in Shanghai tasked with helping an American bank market credit cards to young Chinese. I was appalled at what I saw. The manipulation was to me not only disgusting but obscene. Someone had spent real money to ferret out the hidden desires, fears and aspirations of young Chinese, and turned that knowledge to looting their bank accounts. The conclusions were that these young people, university graduates, were now in an era of rising affluence and desired to be recognised as more than citizens of a third-world country, in a sense to be seen as worthy equals to young people of other nations. They had purchasing power, generally good taste, and wanted to be appreciated as valuable consumers. The recommendations were startling. “Tell him he’s a king. Use the tag line “The world is waiting for you”, and “With our credit card, you can have it all now”. Make him feel he is important and recognised, that he is valued because he is Chinese.” And, since this young person likely came from a one-child family where his wishes were important, “Do everything possible to push the “me, me, me, more, more, more” attitude.”

I encountered this by accident, and had an email exchange with a young Chinese on this topic. I cannot locate my original email but, from memory, this is what I wrote to him:

“A credit card is not magic, and it is not free. It is borrowed money that you will have to repay at a high rate of interest. No matter what they tell you, you cannot have it all, not now, and not without working and saving for it. Moreover, you are not a king. You are a nobody. You are just another dumb kid with a credit card, one of 300 million others like you. I am sorry to tell you the world is not waiting for you. The world doesn’t even know you exist and, if it did know, it wouldn’t care. That is the truth. I suggest you accept it and act accordingly.”

The American Auto Industry

The conduct of these propagandists, beginning with Lippmann and Bernays marketing war for Rothschild and their other masters in London, was clearly criminally insane. There is no way to place a positive spin on people who provoke a world war for their private benefit, but it is more difficult to grasp that their conduct in the commercial realm was (and still is) no less criminally insane. One example is the American auto industry and the American love affair with the automobile.

This is a long and interesting story which I have covered in detail here (12). Briefly, in the 1920s the world was turning to electric automobiles en masse and the advent of inexpensive electric public transport was sounding the death knell for gasoline-powered cars. General Motors and the major oil companies were facing a multiple crisis, and embarked on one of the greatest criminal frauds in history, killing off the electric car and mass transit in the US. But they didn’t stop there. Life in many of the world’s major cities is convenient and enjoyable without a car, partially due to excellent mass transit and partially to urban areas designed for human living rather than automobiles. But not in the US. GM and its friends infiltrated the civic planning faculties of major US universities and propagandised the construction of suburbs – which exist only in North America, physically segregating living, working and shopping spaces to make auto ownership mandatory. They also bribed and extorted the US government to abandon rail transport and invest solely in highways, again to make private auto ownership mandatory. The long term negative effects of this ruthless corporate conspiracy are literally beyond calculation. Then the public propaganda kicked in:

“America’s Love Affair with the Automobile” is presented as an expression of independent and freedom-loving America, where inexpensive mass transportation failed to evolve due to Americans’ individuality and desire for freedom, but that is a propaganda myth, a lie of enormous proportion. Today’s US car culture was the result of a massive conspiracy, like the consumer society, imposed on an unsuspecting nation through deceit and propaganda. After execution of the massive fraud, the American people were for generations complimented on their individualism, adventuresome spirit and their love of freedom and independence, and for the choices they believed they made but that had been made for them by others. Here as in no other market is it so true that Bernays’ capitalists were selling “not so much products as emotion itself, psychologically linking the act of purchasing an automobile to falsely-manufactured feelings of confidence, freedom, happiness, empowerment and independence, tying the very self-identity of Americans to the purchase of an automobile.” (13)

CONSUMER GOODS

Nestlé and the Baby Milk Companies

Mothers’ breast milk is universally acknowledged as far superior to artificial powdered milk for babies, being naturally sterile and containing all the necessary nutrition while, and very importantly, supplying the baby with multiple antibodies that provide immunity against many childhood illnesses and diseases. Almost all mothers are able to breastfeed their babies, who then become ill much less often than babies fed with artificial milk powder. Bottle-feeding with artificial milk has been long proven to present increasing dangers where mothers have poor or no access to necessary sterile facilities.

UNICEF and many other health groups have stated that about 1.5 million babies die each year from simple ailments like diarrhea, common in babies drinking artificial powdered milk, but that almost never occur with breast-fed babies. The WHO and a number of other international organisations claim that “Over 4,000 babies die every day in poor countries because they’re not breastfed. That’s not conjecture, it’s fact.” Since the end of World War II, approximately 50 million infants have died from this one cause, but Nestlé, Danone, Wyeth, Mead Johnson and Abbott are hugely profitable.

In one of the most criminal and anti-human campaigns ever produced by Bernays and his heirs, a few industrialists conspired to create a reprehensible propaganda offensive to convince the world’s mothers, most especially those in undeveloped countries, to avoid breast-feeding their babies. It was a direct and deliberate attack on one of the most basic of human functions while ignoring the enormous human cost in infant fatalities and illnesses for which they are in most cases directly (or at least indirectly) responsible.

They utilised the services of thousands of physicians, psychologists and psychiatrists, and marketing personnel, to learn how to penetrate the psyche of a new mother to discourage her from breastfeeding her own child. I can recall seeing in several poor countries billboards for baby milk that contained photos of ‘yellow-haired goddesses’, the essential sentiment being communicated was: “Beautiful white women don’t breastfeed their babies. It’s only you backward, uneducated and ignorant brown peasants who do that.” And this from a radio advertisement by US-based Borden milk in the 1950s that played this little song: “The child is going to die because the mother’s breast has given out. Mama o Mama the child cries. If you want your child to get well, give it KLIM milk.” (14) The executives and staff of baby milk companies like Nestlé are even more morally deformed than are those of Big Pharma (who are often owned and controlled by the same people), and have proven they will do whatever is necessary, use any tactics that produce sales, totally heedless to law, ethics or morality.

Bernays’ first corporate client was Proctor and Gamble (P&G), a client that wholeheartedly subscribed to his methods, their relationship lasting more than 30 years, with P&G adopting a marketing model driven by propaganda built on psychological manipulation. (15) Chinese mothers preferred washable cloth diapers, strongly resisting P&G’s marketing efforts for plastic Pampers, so P&G spent millions on psychologists and psychiatrists in attempts to identify the hidden fears and weaknesses in Chinese mothers so as to prey on those. And they found what they needed: the mothers’ concern for their baby’s health and his longer-term development and success in life. P&G then created a scenario based on claims that increased sleep would not only improve a baby’s health but would result in “improved cognitive development and academic achievement”, thereby presumably guaranteeing wealth and a successful career. They produced “studies” with “scientific results” that appeared palpably fraudulent, claiming that Chinese babies wearing Pampers fell asleep 30% faster than babies wearing cloth diapers, and further that their sleep while wearing Pampers would experience “50% Less Disruption”. (16) In an internal P&G staff promotional video, one Pampers brand manager boasted about his psychological fraud, saying, “We really had to change the mindset and educate [Chinese mothers] that using a diaper is not about convenience for you – it’s about your baby’s development. I’m talking about taking a product and literally changing consumer behavior to create a market for it.” Through this reprehensibly false propaganda, P&G were “educating” mothers to believe that wearing disposable diapers would dramatically enhance their child’s mental development. And boasting about their cleverness in doing so. (17)

The Barbie doll is a similar story, a product never intended for children. Barbie was a sex toy named Lili, created in Switzerland in the 1950s and popular primarily with perverted single men in Europe. A Jewish-American woman named Ruth Handler who, with her husband, owned the then-small company named Mattel toys, was on holiday in Germany and apparently fell in love with this doll, brought it to the US and began marketing it as a “more mature” companion for little girls “exploring womanhood”. Mothers were either disturbed or horrified, especially since Barbie’s “mature” body was “borderline pornographic” and seen as a serious danger “potentially damaging to young girls’ psyches”. That view is still held very strongly by millions of mothers all over the world who have banned this doll from their homes. But Handler, adopting Bernays’ propaganda methods, employed psychiatrists to learn how to change the values of American mothers in order to market this doll. The advice was to instruct mothers to consider Barbie as “a tool for teaching their daughters about the importance of appearance and femininity.” Just what every 3 year-old girl needed to help her grow up into a wholesome young woman – a plastic doll with big breasts and a sports car. I have always hated that doll.

It shouldn’t be necessary to point out that Starbucks offers some of the worst coffee on the planet, which is natural since it was designed to suit American tastes. But you may be surprised to learn that Starbucks is no longer selling coffee; they are now selling “experiences”. The marketers and advertisers, aided and abetted by the propagandists and their Freudian background, have concluded that there is an even better way to loot bank accounts than offering fake goods on credit. In their view, shops once sold commodities (coffee beans), then became ‘service firms’ (coffee shops) where the commodity was standardised and the distinguishing consumer attraction was the quality of service. Inherent in that shift was the degrading of the commodity – which was expensive – and replacing it with ‘service’ which cost nothing but an artificial smile. They have now moved to a new level where we sacrifice both the commodity and the service, and replace both with “an experience”.

Now, the offspring of Lippman and Bernays are spending huge money on psychologists and psychiatrists to fathom precisely what it is about going to a Starbucks or a Wal-Mart that can create a “positive emotional response”. Yes, I know. I almost choked writing that sentence, but these people are serious. They want to identify the underlying stimuli and then fabricate the circumstances in an attempt to provoke that response. If successful, the fake commodity and fake service can disappear to be replaced by a fake emotional experience that you will treasure and one day excitedly relate to your grandchildren. It is all a false reality created with contrived experiences that are not real, but Americans are already on international speaking tours proselytising the new marketing approach. And it’s all fake, in the same way that most of America is fake. Americans promoting this new view seem unable to recognise that any part of their new bible contrasts with reality, and react with offense when Europeans tell them “You Americans are all about image instead of reality. Everything about you is fake and superficial. You people are living in a cliché.”

It is true that sitting in a coffee shop in Vienna or at a sidewalk cafe in Rome can be a treasured experience, generated by dozens or perhaps even hundreds of charming small details that combine to create a genuine appreciation of one of life’s little pleasures. But these wonderful small experiences cannot be fabricated and still generate a pleasure of life, except perhaps for Americans who appear to have lost entirely the ability to distinguish the sizzle from the steak and to whom the only genuine reality is superficial. There is nothing inherently wrong with wanting one’s customers to have a good experience, but the American attitude toward creating these is not genuine or sincere; it is cheap, fake, and artificial, a psycho-induced emotional response to a fake reality. Instead of trying to understand how to give customers a real, genuine, pleasant experience as they would receive in Vienna or Rome, the Americans are spending millions trying to understand how to fabricate in their customers the artificial “feelings” of an experience without actually giving them anything. One needs to wonder what the hell Americans think about, what goes on in those minds. And, if anybody needs an “experience” so badly they have to go to a Starbucks or a Wal-Mart to find it, what they really need is a life.

I could go on, but these cases illustrate the point I want to make. There was a time when manufacturers focused on making products that people wanted to buy but, with the success of Bernays’ twisted and manipulative “propaganda”, they now employ psychologists and psychiatrists to probe the human psyche and find a way to permanently alter (and corrupt) the human mind to buy whatever these people want to sell. There is much more to this, including the concept of branding, that I will cover in a later essay.

Let’s review. By the early 1900s, Lippman and Bernays had learned from experience the methods of creating an extensive, false, and emotionally-provocative imagery and to use this fabricated mythology to control the perceptions and manipulate the opinions and behavior of the population of an entire nation. It had first been done for political purposes during wartime, to create immense racial hatred and push a nation into war, but was clearly just as applicable to political and commercial ambitions. At the same time, the wealthy elite of the nation created the higher echelons of an American educational system that would use essentially the same principles to entrench themselves in perpetuity by maintaining the bewildered herd as a kind of feudal colony of impoverished consumers. Those controlling the banks and large corporations were not content to stop with the educational system when they realised the broader possibilities of influencing the population through a nationwide scale of propaganda disguised as advertising, which led in turn to the creation and rapid development of the American advertising industry based almost entirely on the principles Lippman and Bernays identified. We then had the media, beginning with print and radio but rapidly including the movies and then television, being the vehicles through which this grand plan of population control would be executed.

In summation, we have a grand conspiracy by a relative handful of people to manipulate and control the perceptions and beliefs of an entire nation of people, entirely for perverted purposes. Perhaps the word ‘conspiracy’ is inaccurate, since these categories of players were in some sense acting independently or at least in different spheres such as advertising and media control or education and politics, but the net result is not different from what would have occurred had there been a tightly-organised conspiracy. Certainly, each knew what the other was doing, and would have been fully aware of the effects of their combined efforts. If we connect these dots, we have the European Jewish bankers and their many huge corporations, and the wealthy US elites exercising enormous control over the US government and effectively taking full charge of American education, of banking and the economy, of industrial production and, most important of all, of the mental and emotional content of the American people.

In every case, there was no concern for the good of the people or of a nation, no value placed on human lives, the human experience, or the human environment. It was only about the money to be derived from social control. Lippman and Bernays are gone, but their mainstay of immoral, manipulative and deceptive practices is as virulent as ever. As Shakespeare told us in Julius Caesar, “The evil that men do lives after them; the good is oft interred with their bones”.

Introduction – If America Dissolves – https://thesaker.is/if-america-dissolves/
Bernays and Propaganda – Part 1 of 5 — https://thesaker.is/bernays-and-propaganda/
Bernays and Propaganda – Part 2 of 5 — The Marketing of War — https://thesaker.is/bernays-and-propaganda-the-marketing-of-war/
Bernays and Propaganda – Part 3 of 5 – Democracy Control – http://thesaker.is/bernays-and-propaganda-democracy-control/
Bernays and Propaganda – Part 4 of 5 –The Transition to Education and Commerce

*

Mr. Romanoff’s writing has been translated into 30 languages and his articles posted on more than 150 foreign-language news and politics websites in more than 30 countries, as well as more than 100 English language platforms. Larry Romanoff is a retired management consultant and businessman. He has held senior executive positions in international consulting firms, and owned an international import-export business. He has been a visiting professor at Shanghai’s Fudan University, presenting case studies in international affairs to senior EMBA classes. Mr. Romanoff lives in Shanghai and is currently writing a series of ten books generally related to China and the West. He is one of the contributing authors to Cynthia McKinney’s new anthology ‘When China Sneezes’.

His full archive can be seen at https://www.moonofshanghai.com/

and http://www.bluemoonofshanghai.com/

He can be contacted at: 2186604556@qq.com

Notes

(1) https://www.moonofshanghai.com/2020/04/substandard-education-in-america.html

(2) https://www.libertarianism.org/people/george-seldes

(3) https://www.amazon.com/You-Cant-That-Attempting-Patriotism/dp/1332838243

(4) https://www.moonofshanghai.com/2020/04/what-is-difference-between-capitalism.html

(5) https://paw.princeton.edu/article/p-source

(6) https://www.moonofshanghai.com/2020/07/cia-project-mk-ultra-july-2-2020.html

(7) https://ascensionglossary.com/index.php/Project_MKUltra

(8) https://www.moonofshanghai.com/2020/07/the-pleasures-of-depopulating-earth.html

(9) https://www.moonofshanghai.com/2020/04/lets-have-financial-crisis-first-we.html

(10) https://www.amazon.com/Hidden-Persuaders-Vance-Packard/dp/097884310X

(11) https://www.nurturedevelopment.org/blog/the-7-tactics-of-hidden-persuaders/

(12) https://www.moonofshanghai.com/2020/04/the-american-love-affair-with.html

(13) This quote is not original, but I have lost the source.

(14) https://www.moonofshanghai.com/2020/10/en-larry-romanoff-nestle-murdering-with.html

(15) http://www.bluemoonofshanghai.com/politics/en-larry-romanoff-criminal-corporations-proctor-gamble-clean-face-dirty-heart/

(16) http://www.cbsnews.com/news/how-pg-brought-the-diaper-revolution-to-china/

(17) http://www.forbes.com/sites/china/2010/04/27/how-procter-and-gamble-cultivates-customers-in-china/

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.

The Long Goodbye of Social-Democracy

The Long Goodbye of  Social-Democracy

November 17, 2020

by Francis Lee for the Saker Blog

The ongoing process of political degeneration which has been happening in the UK Labour Party is basically part of a deep-going movement which has been taking place in all left-of-centre parties in Europe. In political/ideological terms, they have been swept away by the rampaging neo-liberal globalist forces – circa 1980 onwards and have, like good little boys and girls, trimmed their sails to the globalist agenda. This, straight betrayal has been justified by the usual TINA cliche. The roll-call of the sell-outs has included the SPD (Germany) the PS (France) Pasok/Syriza (Greece) the old ex-communist party of Italy, (now rebranded as the Democratic Party) PSOE (Spain) not forgetting the Democratic Party in the US. This historical betrayal has given the militant right a chance to attack the very real sell-out of the centre-left parties and publications which includes the Guardian, New York Times, Economist, Washington Post, . L’Express, La Figaro, Der Spiegel – the list is extensive.

THE BRITISH LABOUR PARTY

The Guardian newspaper had long been a supporter of the Labour Party but more recently has been the trend-setter in this ‘liberal turn’ if we may call it such. There has taken place an unseemly metamorphosis from centre-left to the Blairite right. Going back to earlier days the Manchester Guardian, as it was then called, steered an honest social-democratic course under the leadership of C.P.Scott famous for his catchphrase, ‘’Comment is free but facts are sacred.’’ was the ultimate statement of values for a free press and continued to under-pin the traditions of good newspapers throughout the western world, (but sadly of course this is no longer the case, not by a long shot).  Looking back, Scott and the then Manchester Guardian resolutely opposed the British war against the Dutch settlers (Boers) in South Africa (1899-1902). For his pains Scott’s home was physically attacked by jingoistic mobs and he required police protection, as did the property of the Manchester Guardian which was also attacked.

That was then, this is now.

The rot in the current Guardian newspaper began with the conversion of what was once a campaigning left-of-centre political publication into a straightforward business journal with a centre-right political orientation; this happened earlier in this century when the Scott Trust was rebranded as the Scott Trust Limited, along with the Guardian Media Group – GMG – both of whom became registered as a commercial company by decamping to the tax haven of the Cayman Islands British Overseas Territory, for tax reasons – i.e. tax avoidance.

THE CORBYN AFFAIR

As for the whole ‘anti-semitic’ brouhaha surrounding ex-leader of the Party, Jeremy Corbyn, and the Labour Party itself, this was engineered from both internal and external sources. It should be understood that anyone who is anyone in the Parliamentary Labour Party (PLP) and who entertains political and occupational preferment in the PLP is a member of the ‘Labour Friends of Israel’ – this is mandatory. The same is true of the Conservative Party and the Liberal Democrats. So we have here a situation where an ostensibly sovereign state, the UK, has been penetrated by another sovereign state, Israel which in effect is selecting who and who shall not be members of the Labour Party’s policy and decision-making processes. This blatant process was caught by a mole planted by the Kuwaiti TV Station Al Jazeera and televised under the name of ‘The Lobby’ where the mole in question interviewed a member of the London Israeli embassy – Shai Masot – about the ‘taking down’ of pro-Palestinian politicians and spreading Zionist influence inside independent political groups active in the UK. This TV interview showed Mr Masot – who was blissfully unaware of being televised – discussing with his interlocutor how to cause embarrassment to pro-Palestinian politicians deemed to be detrimental to Israeli interests.

Students and campaigners told a reporter posing as a pro-Israel activist they had been given funding and support from Israel’s embassy in London to counter the Boycott, Divestment and Sanctions (BDS) movement. When asked whether he had ever “built a group”, Mr Masot replied: “Yeah, I did several things like that, yeah…in Israel and here. Nothing I can share but yeah.’’

“It’s good to leave those organisations independent, but we help them actually.”

The UK National Union of Students said it was investigating alleged attempts to influence last year’s leadership election, which saw its first black, Muslim, female president Malia Bouattia voted in.

Following claims that opposing NUS members held “secret meetings” with activists supported by the Israeli embassy, a spokesperson for the union said: “The NUS takes these allegations seriously. We are looking into them and, when we have all the information available, the behaviour of NUS officers will be reviewed, and appropriate action taken.” (1)

This seemed outrageous, but such is the influence of extra-national political configurations in British politics. This was instanced in the manner in which the now ex-leader of the Labour party – Jeremy Corbyn – was subject to a relentless but bogus assault internally from the Blairites, the media and also Britain’s Jewish opponents on the basis of his ongoing support for Palestinian rights. Of course anyone who in Zionist terms is a supporter of Palestinian rights is ipso facto an anti-Semite. On absolutely no evidence Corbyn was suspended from the leadership of the party which was now under the leadership of one (Sir) Keir Starmer QC, who doesn’t seem to have any political views at all, apart from his unconditional support of Israel, which of course befits yet another political carpet bagger on the make. ‘What are my politics?’ What would you like them to be?’

Of course the same scenario also applies to the United States – a fortiori. This latter case of organized Jewish influence both internal and from outside (Israel) is so open, widespread and obvious that it barely needs mentioning. (2) Moreover, socialism in the United States, or even social-democracy, has, never, since the days of Eugene Debs been anything other than a minor curiosity and led by a leadership so venal that it collapses at the first serious challenge. Such was the fate of Bernie Sanders, who managed to capitulate to the DNC powers-that-be not once but twice.

But to return to the Labour Party, this political hollowing-out of what was once a mass and proud reformist party has by now been pretty much neutered and in keeping with centre-left conditions just about everywhere. The list does not make pretty reading. Currently there is no centre-left party, in western Europe at least, worthy of the name, the capitulation seems complete. As follows:

GREECE. THE RISE AND FALL OF SYRIZA

On its accession to power Syriza laid great emphasis on trying to convince their opponents that their proposals were financially sound and of benefit to all in the long-run. This is one of the characteristics of social-democracy. It is an approach based upon ‘the truth’, as they understood it, and rationality of their approach and compared favourably to the mistaken beliefs of their political opponents. What Syriza did not understand, however, was that the social virtues and heritage of social democratic reform was now history, buried deep under the refuse pile of new neoliberal values.

The political imperatives of SYRIZA’s position consisted of an adamantly committed policy to stay in the eurozone and the euro regime; but this was a regime of structural flaws which only benefitted the elites rather than ordinary folk. Concurrent with this the Greek people were consistently indicating in various polls taken that they did not want to leave the eurozone either. Like Syriza they wanted to end austerity and stay in Europe and keep the euro. Neither thus understood that the root of austerity lay in the neoliberal euro regime that they wanted to keep. One would have thought that following the crowd in this instance was a dereliction of duty on the part of the Syriza leadership who should have known better, but it is so much easier to take the easy way out than actually lead.

Syriza wanted a European version of the US 1930’s New Deal, but there was no FDR on the horizon, and, moreover, this was 70 years later, and history was not about to repeat itself.

The upshot of this sad historical nemesis was when Syriza took the road of least resistance. The European base of neoliberalism required the arrangement of goods and services and free movement of labour and capital which had indebted Greece (and other peripheral economies) and ensured some form of perpetual austerity. But this was precisely how the system was designed to work.

‘’Over the course of the third debt restructuring negotiations in 2015, Syriza would at first deny and then resist this reality, then concede in steps as it retreated from its positions and its Thessaloniki programme. In August 2015, it capitulated. Like its political predecessors, New Democracy in 2012, and PASOK in 2010, Syriza would also eventually settle into the ‘caretaker’ role for the neoliberal Troika.’’ (3)

FRANCE – LE PARTI SOCIALISTE – ABJECT FAILURE.

In late 2016, French President Francois Hollande became the first leader of the 5th Republic to announce that he would not seek re-election leaving his Parti Socialiste to find another candidate for the April 2017 presidential election. The five years of Hollande’s presidency had not been kind to the ruling party. Terrorist attacks, a shift to the right on domestic matters, persistent unemployment, internal party divisions, and even an illicit love affair, eroded confidence in Hollande’s government and left the Socialists with little in their playbook that remained popular with voters.

Hollande’s choice for economy minister, Emmanuel Macron, created new problems for the president right from the start. Just 36 when he was appointed in 2014, Macron was a former investment banker at a firm owned by the Rothschild family – an unusual choice for a president who once declared that the world of finance was his “enemy”.

Macron soon angered the Socialist’s left wing with his criticism  of the 35-hour work-week and by calling for the deregulation of the French economy. Socialist deputy Yann Galut spoke for many in his party when he accused Macron of “disowning all the values of the left”. But then what else from an investment banker did the party expect?

The pro-business reforms, known as the “Macron laws”, included allowing stores to remain open  on Sundays and late in the evenings. A more wide-ranging labour code 5, made it easier for firms to hire or fire and to extend employee working hours, soon followed suit. The proposed reforms prompted months of sometimes violent protests  over the summer from students and unions who were angry over diminished labour protections. Yes it was all straight from the neoliberal policy manual. Hollande’s government controversially pushed the bill  through parliament in June 2016 without holding a vote, igniting a new burst of outrage.

Macron was not the only member of Hollande’s cabinet to anger the party’s leftist base. Manuel Valls, 54 – the French Tony Blair – who served as interior minister and then prime minister before resigning to announce his own presidential run, has proved that even a Socialist Party can have a right wing.

As protests against labour reforms spread across France last summer, Valls once again took a hard line, moving to ban further demonstrations in Paris after sporadic outbreaks of violence. It was the first time since the 1960s that union demonstrations had been banned in France and it sparked outrage across the political spectrum, including within the already divided Socialist Party. After a weeklong stand-off, the unions were eventually allowed to hold a protest march via a different route.

Valls has said he wanted to ‘modernise’ the Socialist Party, even suggesting that it rename itself because the term “Socialist” is too “old-fashioned”. He says that a revitalised party could unite all of the country’s “progressive forces” into one movement. Valls’ brand of ‘right-wing Socialism’ (i.e., a neoliberal party) highlighted the quandary the party faced. If Hollande is seen as representing the traditional yet ineffectual left, its more dynamic members now look like the centre-right.

As unemployment continued to hit record highs, Valls infuriated many by saying more needed to be done to encourage the unemployed to get back to work. Macron, for his part, had said that the costly system of unemployment benefits needed to be revised, blaming the unions for deadlocking negotiations.

Statements such as these, coming as record numbers of French citizens struggled with a lack of job opportunities, have heightened resentment among much of the public and divided those within the Socialist party. And they seem more like admonishments that would come from the right-wing Les Républicains party than from the fresh new faces of France’s left. But after the erratic Hollande years, the party now faced the task of reinventing itself as a movement that combines traditional leftist values with a fresh dynamism that is ready to meet the challenges of the future. In short, the PS had to change into a neoliberal outfit. After all – TINA!

Humiliated, unloved, and threatened to be plundered by Macron’s movement, the French socialists stood shivering at a crossroad. Hardly unexpected of course. France was, after all, being corralled into the neoliberal sheep-pen.

France has predictably followed the universal neoliberal economic prescriptions and rewarded with the wholly expected failed outcomes. After growing at an estimated rate of 1.7% in 2018, GDP grew by an abysmal estimated 1.3% in 2019. Minimal growth rates needed to overcome this economic standstill needed to be at least 2% to make any impact on what has become a secular stagnation. This has had political ramifications.

The European elections of May 2019 saw the victory of the National Rally of Marine Le Pen (far right), gathering 23% of the vote, compared to 22% for the Republic in March of Emmanuel Macron. On the international scene, the president intends to strengthen the integration of the euro zone by revitalizing the Franco-German partnership. But Macron’s delusions of grandeur are simply swimming against the stream here with unemployment at 10%, trade figures all negative, private debt to GDP at 227% and Sovereign debt at 98%. Unquestionably France is in a deep structural political/economic crisis.

From Gaullism in 1945 consisting of independence and distrust of the Anglo-Saxon bloc, to the current force feeding of neoliberalism and an unquestioning loyalty to NATO. Mission accomplished? Not quite. And then comes the emergence of the Gilet Jaunes. What next for France?

GERMANY: THE SPD

The oldest, Social Democratic Party in Europe, the Sozialdemokratische Partei Deutschlands, can be traced back to the 1860s, and for much of the 20th and 21st centuries it has represented the centre-left in German politics, although not the far left politics of the pre-war KPD (Communists) and SAP (Socialist Workers’ Party’ where Willie Brandt was once a member). Nevertheless from 1891 to 1959 the Party at least theoretically espoused Marxism. Of course this all changed in the main due to Cold War but more importantly for the need for political deals and coalition governments which were made the sine qua non for the formation of governments in Germany. At the present time, the SPD is in a fragile coalition government together with the conservative CDU/CSU and the SPD, the Grand Coalition as it is called.

THE EUROPEAN POWER-HOUSE:

In economic terms Germany had always been the economic powerhouse of Europe and possibly even the world. It’s dynamism came from a globally competitive industrial base, pivoting on automobiles, chemicals, and machine tools. Its exports enabled it to command vast surpluses on current account thus providing the wherewithal to lend globally.

Whether this Teutonic pre-eminence was a conscious policy choice on the part of Germany, or merely a policy-drift due to the internal structure of Germany’s post-war policy configuration seems debatable. Germany had certainly bucked the Anglo-American trend of de-industrialisation and financialization which had become de rigueur internationally as a result of the putative ‘efficiency’ of the Anglo-American model. Germany had not deindustrialised, had a smallish stock market compared with other developed states, eschewed as far as possible a system of equity funding and maintained a traditional reliance on bank funding for industry since long term relations were easier to develop among corporations and banks and the internal structure of corporations is not driven by the desire to placate stock markets. Moreover, the German banking system had a multitiered and competitively structured organization which included a raft of smaller and medium sized banks, the Sparkassen, which operated with a local focus. This stood in stark opposition to the oligopolistic banking monoliths of the Atlantic world.

Additionally, there were further reasons why Germany emerged as the EU hegemon. Primarily, Germany did not sacrifice its world class industrial-export sector on the altar of deindustrialisation. But instead adopted and adapted its own variant of financialization while at the same time protected its industrial sector by manipulating its exchange rate to protect exports. The German manufacturing sector is highly productive, export-oriented and has maintained relatively strong union representation in the wage formation process compared to the rest of the private (domestic) sector which has modest productivity and relatively weak unions in comparison with other EU countries.

In the domestic economy, however, Germany was able to restructure (i.e., lower) wage costs and working conditions with the imposition of the Hartz reforms – a set of policies arrayed against German labour which pushed down costs through the implementation of ‘flexible’ labour markets. This gave Germany a competitive first-mover, edge in intra-European trade resulting in an ongoing surplus on its current account. And when one state achieves a (recurring) surplus on current account other states must record a deficit on current account. In this instance this was the southern periphery. If this smacked of neoliberalism –that’s because it was.

In sharp contrast to the southern periphery the eastern periphery of central Europe was not part of the eurozone which means that they were not ensnared in the Iron Cage of EMU and enabled to keep their own currencies. But heavy German investment in this area produced a core-periphery relationship where low-wage, semi-skilled assembly work was farmed out to Slovakia, Slovenia, Czech Republic, Hungary, and Poland. That is the usual pattern of FDI supply chains. High-end production, including R&D was kept at Home Base.

Additionally, Central European peripheries have come to depend heavily on Germany for technology and markets. If Germany faced a severe recession so would probably be the whole of Central Europe.

Thus, Germany was to become the overseer of an increasingly neo-liberal order precisely at the time when the 2008 blow-out was to cross the Atlantic and usher in a quasi-permanent period of instability for the whole EU project. The main actors in the future development of the EU were the ECB the EC and the IMF, the infamous Troika. The ECB in particular was the paragon of Banking, monetary and fiscal rectitude. This was underlined insofar as it was domiciled in Frankfurt as was the Bundesbank and was heavily influenced in policy terms by this particular institution.

Then came the 2020 derailment. Prior to this, however, growth rates had been zero to miniscule at less than 1% per quarter since 2018. Then came the yo-yo bounce in 2020. Ten Year Bunds Yields were at -0.53 (that’s a minus sign BTW), unemployment was beginning to rise, inflation was at -0.2% which means that it was actually deflation, interest rates were at zero, consumer confidence was at -3.1, retail sales at -2.2%, Sovereign Debt-to-GDP 68%, Private Debt-to-GDP at 154% (but these latter private figures were based upon 2018 statistics).

THE SPD VANISHING TRICK:

And where was the SPD during all this time? It was following the trend of course. The then party leader and Chancellor, Gerhard Schröder, defended his counter-reformist ‘Agenda 2010’ and praised Tony Blair’s ‘New Labour’ as a successful example of ‘modern’ social democracy. At the same time, up and down the country, some 90,000 workers responded to a call by the Trade Union Federation, the DGB, and demonstrated against attempts to dismantle the welfare state. In East Germany, 84% of all steel workers organised in the IG Metall voted in favour of industrial action for the 35-hour week which had been introduced in the West back in the 1990s.

Horrified by high unemployment (4) and fear of recession and even depression, Schroder and his think tanks were doing what they had always accused the previous Helmut Kohl government of doing: they were attacking the unemployed and not unemployment. They claimed that dismantling the welfare state and massive tax reductions were to the benefit of the employers and the rich but in general would open the path towards economic growth and a new jobs miracle. In doing this, they could count on the applause of the bourgeois media and politicians who kept pushing them further and further down that road.

But later developments in 2019 have led to a new inward turn of the SPD which will give the already rapidly changing party system a further push. Both the CDU and SPD have lost dramatically during recent European and regional elections. The winners have been the ‘woke’ Green party and the far-right Alternative fur Deutschland (AfD). The Green party, also led by a new team since January 2018, has been a clear beneficiary of the rise of the urban middle-class and the weakness of the two governing parties. The Green party is now solidly number two in the party system and highly likely to join the next government, either with the CDU or the two parties on the ‘left’, the SPD left centrist and Der Linke the old East German Communist Party.

CONCLUSION

Throughout Europe the Social-Democratic tradition has been in crisis since the 1980s onwards and is heading rapidly toward marginalization and oblivion. Having prostrated itself before the deities of neo-liberalism and globalization, and swallowed the holy dogmas whole there seems no way back. And if anything the situation in the southern and eastern peripheries are even more dire than those in Western Europe. The political structures in Europe now range from outright fascist, right and centre right, and an allegedly centre-left that acts like a centre-right, a Guardian-style liberal woke party. That’s it folks. Europe seems to be heading to a turbulent and ugly future

NOTES

(1) The Lobby – Al Jazeera – The Independent newspaper – London 12-January-2017

(2) The Israel Lobby – John J Mearsheimer and Stephen Walt – passim.

(3) Looting Greece: A New Financial Imperialism Emerges – Jack Rasmus – passim.

(4) The story of the German jobs miracle is misleading. It is true that the number of people in employment increased by more than 10 percent between 2003 and the end of 2016 from 39 to 43 million. But this was achieved mainly by replacing full-time jobs by part-time and mini jobs. In fact, actual working time did not increase at all up to 2010; the work was just spread over more people.” And also since the economic climate improved in 2011, the volume of work has been growing much more slowly than employment and is still below the levels of the early 1990s. And that is why in 2016, 4.8 million people in Germany were living entirely from mini jobs. A further 1.5 million are working against their will in part-time jobs. And then there are around 1 million contract workers and more than 2 million self-employed without employees, and most of them do not have enough work.

The “industrial reserve army“ of the unemployed, as Karl Marx once called them, “was reduced in size at the price of a growth in the reserve army of the under-employed in part-time work and the over-employed who have to do several jobs to get by.”

Western Bankocracy: Banks loaned 0.2% of $600 billion in Main Street lending plan

Western Bankocracy: Banks loaned 0.2% of $600 billion in Main Street lending plan

September 18, 2020

By Ramin Mazaheri for the Saker Blog

Bloomberg reported that the Federal Reserve’s Main Street Lending Program (MSLP) has left 99.8% of its $600 billion loan pool untapped. So if you work for one of the just 118 medium-sized businesses who have acquired a loan – congrats, you might just make it through 2020.

Just as the Eurozone was emphatically reminded during its pre-Covid “Austerity Decade”, government-issued Quantitative Easing will never flow down (much less trickle) in the endemically low growth Western bankocracies unless strings are attached. However, the defining feature of the Western neoliberal bankocracy is that there are never any strings to free money for the 1%.

The failure of the MSLP proves yet again that QE is wasted on the rich and their fake FIRE economies.

Or, in this case, QE is not even used because in the Western system governments are only permitted to throw money at the banks and hope that banks use it – they are not permitted to give directly to the people nor to compel banks to loan, unlike in socialist-inspired economies like China, Iran, etc.

Why is MSLP not being used? Short answer: even though the government is backing 95% of the loans, multinational corporate banks refuse to participate with just a 5% risk.

Longer answers: They obviously cannot see the forest for the trees; their shareholders would sue them for acting patriotically; foreign banks are quite happy to foreclose on US assets; major domestic banks are quite happy to foreclose on US assets.

The only people in the Western financial world who even decry the bankocracy I so often describe don’t want to change it – these are the vultures who are quite upset that they can’t happily (but patriotically, they insist) foreclose on assets themselves. This “pure capitalism” they Salafistically aspire to would lead to a vast reduction in inequality to the point where we would talk about the “2%” instead of the current “1%”.

As I wrote from the start and ad infinitum (50 articles in 4 months/1 Groundhog Day), this was an easily-foreseeable disaster because their Great Lockdown attempted to (poorly and hysterically) emulate countries like China even though the West has none of the systemic socioeconomic safeguards socialist-inspired countries use in order to weather these types of disruptive events.

Personally, I’ve been so focused on covering the US election – and reporting on genuinely leftist parties like Party for Socialism and Liberation (Total 2016 presidential votes which were denied to the duopoly and made in favor of a rather spectacular campaign platform: 74,401 (0.05% of the total, and counting!)) – that I’ve neglected to keep documenting what a total catastrophe the Western coronavirus response still is.

The MSLP failure is rather a douse of cold water.

The program was designed to fail’ because Western bankocracy is designed to fail the average citizen

While the Paycheck Protection Program was aimed at small businesses (less than 500 employees) which were in total desperation due to the impeccable logic of quarantining healthy people continent-wide, MSLP was aimed at medium-sized businesses (less than 15,000 employees), which represent 1/3rd of private sector GDP and which employ 50 million Americans.

After being announced in April but not starting until mid-June, it’s now clear that small community banks, who actually may care about their Main Street not collapsing the entire community, are the only ones doing any lending.

Major banks like JPMorgan are sabotaging MSLP by refusing to participate by – per Bloomberg – doing things like asking applicants for terms which go beyond onerous, such as to “pledge real estate it doesn’t have”. JPMorgan reportedly had 2,000 applicants for MSLP – after finding out what JPMorgan demanded in return for a merely 5% risk only around 100 applicants still applied.

This is a doubly big problem, as MSLP was expressly intended for companies who cannot get loans during even normal times. Triply big problem: we should give JPMorgan some credit, I guess, because Wells Fargo, Citigroup and US Bank are refusing to take new customers.

This why applicants lamented MSLP is “designed to fail” – or in socialist terms, designed to increase market concentration and inequality. Governments can take risks, as they can print money, but in Western neoliberalism they cannot force private banks to take risks. The only choice, obviously, is for direct government control over at least some parts of banking but that is verboten in the US.

MSLP is such a catastrophe – and one surely colluded upon beforehand in a smoky backroom “filled” with the heads of the mere handful of top US banks – that one Florida lender accounts for half of all the loans.

The failure of MSLP shows that without lobbying and/or corporate power the “We the people” US government cannot help you. The “people” in a bankocracy is, of course, corporations and shareholders only – the US Supreme Court formally codified this in the 2010 Citizens United case.

For companies which cannot benefit from the Fed-backstopped corporate bond-buying craze ($1.2 trillion since March) and who needed more than just the Paycheck Protection Program, the failure to secure loans will mean more bankruptcies and social disaster.

Given that US culture is so very German-influenced – in the composition of its citizenry, in its evangelical and supremacist fascism, in its anti-socialism, in the original neoliberalism (ordoliberalism) – it’s ironic that the US cannot preserve these medium-sized Mittlestand businesses which are the backbone of German economic strength. Germany, of course, relies much more on local banks than international corporate ones. And, thanks to the money neoliberally/neo-imperialistically (the two are synonymous, of course) bloodsucked from their Eurozone “allies”, their $1.5 trillion coronavirus fiscal stimulus package – the biggest in the West compared to national GDP and a stunningly hypocritical 52% of all coronavirus aid approved by the European Commission – will allow them to only increase their European supremacy amid the Eurozone’s endless stagnation.

From the individual to the medium-big business, those without lobby influence and without credit at the start of the crisis aren’t getting influence or credit now (and this was widely predicted by capitalist-cynics like myself) even with MSLP. The US government has made a show of being independent from high finance, but MSLP is yet another proof that in the Western bankocracy it is banks who decide on socio-economic policy, even amid unprecedented crisis.

In a crisis you have to dance with the girl that brung ya: That is why I wrote so much about the certain suicide of a Great Lockdown in the capitalist-imperialist West. Contrarily, China, due to their very different economic inspirations, will be the only G20 country with positive economic growth – they’ve even doubled their annual projection from (back in only June) 1.8% for 2020 to 3.7%.

MSLP’s failure will only add to US economic woes, and even if they make changes it will be too late to save so very many jobs, assets, companies, households, etc.

I do not get much pleasure to write in September that my prediction that socialist-inspired countries would economically and socially weather the coronavirus better than Western capitalist-inspired ones has been proven correct. The only thing I can say is that Westerners often do not understand the underpinnings of their own system. That helps explain why they delusionally believed a “V-shaped” recovery was not only possible but certain, when an inequality-increasing “K-shaped” has been the clear result of their Great Lockdown. (Get the Nation of Islam’s take on that economy reality here. Interviewing Black Muslim leaders on national, not identity, issues – what a concept! Interviewing Black Muslims at all in the US – what a concept, LOL.)

The West thinks they are a walking, talking “universal value” but it is not like them everywhere. Just call up someone from Party for Socialism and Liberation to learn how There Is No An Alternative.

If the West still insists on not massively switching to the socialist alternative, then they should dance with the girl that brung them – i.e., start sending coronavirus-infected blankets to places rich in natural resources, and then claim it was more advanced intellectual ideas which increased the bottom line.

The problem with that is that the coronavirus has been somewhat serious but not anywhere equal to the hysteria evinced in Western nations, so it won’t really decimate populations like in the good old days.


Ramin Mazaheri is currently covering the US elections. He 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.

Covid Candide: Isn’t this the best of all possible worlds… and pandemic responses?

Covid Candide: Isn’t this the best of all possible worlds… and pandemic responses?

August 08, 2020

by Ramin Mazaheri for The Saker Blog

Eight months into the modern, digitised world’s first-ever global pandemic the results are in: Every government has failed miserably.

Despite the vast differences between socialist-inspired nations and capitalist nations every single government in 2020 has forfeited the chance at the possibility of maybe perhaps having something like a little bit of a rightly-guided mandate of heaven.

Our 2019 taxes must be refunded everywhere. What a waste voting has been, to say nothing of those few countries which have sustained modern revolutions.

Those in the know are hunkering down and bunkering up because the pandemic is proving that “government” (social organisation and collective unity) is an outdated concept in our modern, digitised, disease-ridden world.

Thus, the way you certainly are – wherever you are – being egged into hating your local, rather-poorly paid bureaucrat is something of a major propaganda coup for government-slashing neoliberalism, is it not?

Neoliberalism, per its tenets, cannot congratulate any government for anything other than self-immolation, so how can Western corporate media – owned by a handful of neoliberals – publicly congratulate any government for their handling of this unprecedented corona crisis? They cannot, so neoliberals are publicly shining in glorious vindication that all government is bad, unless and inept, period: the pandemic has decisively proven There Is No Alternative to neoliberalism.

Who knew a virus had enough innate intelligence to contain a political ideology, and despite not even being a life form with a cellular structure? This only proves that God – in His wisdom – is an American neoliberal.

Preposterous, faith-based radicalism, of course….

But firstly: Call me contrarian if you must, but don’t call this “Leibnizian optimism”: I think every nation has done spectacularly well in dealing with Covid, regardless of their guiding ideology.

The West got what they hysterically demanded, yet government is still a Satanic beast?

I think countries like China, Iran, Cuba and Vietnam had a fantastic response to Covid. People died, but not anywhere as many as we initially feared. Tons of radical measures were taken designed to protect the public good, armies of volunteers answered the call, hardships were attempted to be standardised, their peoples showed huge amounts of bravery, self-sacrifice and patience.

However, I see nearly all of these same virtues in the peoples of Western nations as well – don’t you?

Sweden succeeded without a Great Lockdown because their people – who also compose their government – acted so correctly and courageously. The idea that the exact same self-sacrificing virtues aren’t evident all over the place in the US as well is contradicted by countless individual testimonies. The first article I wrote on corona was a backhanded compliment to the West, after all: Capitalist-imperialist West stays home over corona – they grew a conscience? The West FINALLY issued some “People’s QE” – that was a huge improvement over the West’s previous decade of fiscal policies, certainly.

Indeed, the global pandemic response was the best of all possible worlds, worldwide: incredible concern for public health, a rollback to rabidly right-wing economic policies, and not anywhere close to the number of deaths we all had wild-eyed fears about.

Some systems had more limitations than others – be they cultural, political, financial or whatever – but every government tried to limit the pandemic amid these differing limitations. And they did it democratically, in the broadest sense of that term: Which government truly defied the will of their own majority? I can’t think of any.

The West got exactly what they wanted according to all the polls back then – a Great Lockdown – amid total hysteria, and in total disregard for the political and socio-economic laws which govern their societies and… they are still not happy with their government?!

Clearly, those in their media are shaping public perceptions in order to foment unrest and dissatisfaction instead of urging clarity and stoic realism – this article praising governments should not be such an outlier, but it certainly is.

To be clear, the problem was not necessarily the Great Lockdown but what will come after such a drastic move in certain countries. The West has capitalist-imperialist ideologies which ensure that a Great Lockdowning cannot be coped with – in the US the Republican Party, which is refusing to extend unemployment insurance, is currently insisting this be proven emphatically.

I insisted from the start that when a natural disaster hits – you have no choice but to dance with the girl that brung ya. Mid-crisis is not at all the time to reinvent the wheel, but the time to trust the defences you have been building (or in the case of neoliberalism: not building). The West, of course, has very poor political defences thanks to four decades of anti-government neoliberalism and an even longer history of deranged frontier libertarianism. All the West can do is throw their tons of money at the problem – too bad that can’t buy a modern political infrastructure, culture, perspective, etc.

Building that modern, post-1917 political infrastructure is what the West now has to do, or collapse. Thus, covid is going to drag the West kicking and screaming into political modernity.

Voltaire never lived in the digitised world, much less a truly democratic one

I wouldn’t take down his statue but I would reject the bitter and individualistic (and thus very French) outlook he presented in Candide, where optimism is only for fools. For Voltaire the mantra of the character Pangloss – that “this is the best of all possible worlds”, despite his encountering one misfortune after another – is something to be derided: Pangloss is an idiot for not giving in to black resentfulness.

Well, that’s one view – a mighty cynical one. For those of us lucky to still be alive and fully healthy in August 2020 – that seems like a rather ungrateful perspective, no?

Voltaire’s final moral of “tend your own garden” sounds like Taoist individualism from a guy who was supposed to admire Confucianism, which is active, social and judgemental. We are all stuck at home tending our garden and, guess what: a monkish existence is a lonely, self-centered, unsatisfying and even unproductive life – it is unsurprising that the extremely social and active religion of Islam forbids monasticism and demands charitable social works.

I don’t know what people expected from our modern digitised world in our first-ever response to a pandemic, but judging from the criticism of civil servants it’s clear that many people were expecting way too much. No state worker could make unfat all the Americans who have perished prematurely; no state worker had a fountain of youth for the over-80s who compose the bulk of Sweden’s dearly departed. The Western “Karen’s” babyish “war on dying” was always setting up governments to fail and for faith in political institutions – any institution – to be incorrectly lessened.

Those who read the paper regularly know that the world was not paradise back in December 2019. When we consider how badly things were supposed to get back in spring, pondering the possibility that this is the best of all possible worlds is truly worth more than a moment’s reflection.

And then you can explain to me how this pandemic could have possibly been better handled with less government? This is the impossible task of the deranged American libertarian, the European technocrat, and the neoliberal aristocrat/comprador around the world.

If there is one thing I know for certain it’s this: Covid has definitively proved that big government is our ONLY defense against an often-cruel natural world.

Duh…. Countries who have endured an actual war – not a pandemic war – already knew this.

The US and Eurozone governments have done well in spite of the limitations presented by their elitist and reckless neoliberalism, but the “anti-all government crowd” will eventually be forced to admit that – when compared with socialist-style governments, with their central planning and authority to lead in a crisis – their neoliberal ideals have failed everyone, will continue to fail everyone, and are expressly designed to fail everyone and leave people at the mercy of that often-cruel natural world.

Honest critics of neoliberal capitalism saw all that long ago.

Covid will ultimately be seen as the killer of neoliberalism, not its vindicator.

That’s why it’s not surprising to see so many anti-socialist commentators trying to declare the opposite: they are the ones saying 2+2=5, not any “Big Brother” central government. Again, this pro-government article shouldn’t be so rare – this went pretty well for the first modern, digitised global pandemic. But what do we do now?

Answer: no way we go back to anti-government neoliberalism. This exact light is being switched on in minds around the world.

So, for socialists: it came at a very heavy cost, but this is the best of all possible worlds!

*********************************

Corona contrarianism? How about some corona common sense? Here is my list of articles published regarding the corona crisis.

Capitalist-imperialist West stays home over corona – they grew a conscience? – March 22, 2020

Corona meds in every pot & a People’s QE: the Trumpian populism they hoped for? – March 23, 2020

A day’s diary from a US CEO during the Corona crisis (satire) March 23, 2020 – March 25, 2020

Tough times need vanguard parties – are ‘social media users’ the West’s? – March 26, 2020

If Germany rejects Corona bonds they must quit the Eurozone – March 30, 2020

Landlord class: Waive or donate rent-profits now or fear the Cultural Revolution – March 31, 2020

Corona repeating 9/11 & Y2K hysterias? Both saw huge economic overreactions – April 1, 2020

(A Soviet?) Superman: Red Son – the new socialist film to watch on lockdown – April 2, 2020

Corona rewrites capitalist bust-chronology & proves: It’s the nation-state, stupid – April 3, 2020

Condensing the data leaves no doubt: Fear corona-economy more than the virus – April 5, 2020

‘We’re Going Wrong’: The West’s middling, middle-class corona response – April 10, 2020

Why does the UK have an ‘army’ of volunteers but the US has a shortage? – April 12, 2020

No buybacks allowed or dared? Then wave goodbye to Western stock market gains – April 13, 2020

Pity post-corona Millennials… if they don’t openly push socialism – April 14, 2020

No, the dollar will only strengthen post-corona, as usual: it’s a crisis, after all – April 16, 2020

Same 2008 QE playbook, but the Eurozone will kick off Western chaos not the US – April 18, 2020

We’re giving up our civil liberties. Fine, but to which type of state? – April 20, 2020

Coronavirus – Macron’s savior. A ‘united Europe’ – France’s murderer – April 22, 2020

Iran’s ‘resistance economy’: the post-corona wish of the West’s silent majority (1/2) – April 23, 2020

The same 12-year itch: Will banks loan down QE money this time? – April 26, 2020

The end of globalisation won’t be televised, despite the hopes of the Western 99% (2/2) – April 27, 2020

What would it take for proponents to say: ‘The Great Lockdown was wrong’? – April 28, 2020

ZeroHedge, a response to Mr. Littlejohn & the future of dollar dominance – April 30, 2020

Given Western history, is it the ‘Great Segregation’ and not the ‘Great Lockdown’? – May 2, 2020

The Western 1% colluded to start WWI – is the Great Lockdown also a conspiracy? – May 4, 2020

May 17: The date the Great Lockdown must end or Everything Bubble 2 pops – May 6, 2020

Reading Piketty: Does corona delay the Greens’ fake-leftist, sure-to-fail victory? – May 8, 2020

Picturing the media campaign needed to get the US back to work – May 11, 2020

Scarce jobs + revenue desperation = sure Western stagflation post-corona – May 13, 2020

France’s nurses march – are they now deplorable Michiganders to fake-leftists? – May 15, 2020

Why haven’t we called it ‘QE 5’ yet? And why we must call it ‘QE 2.1’ instead – May 16, 2020

‘Take your stinking paws off me, you damned, dirty public servant!’ That’s Orwell? – May 17, 2021

The Great Lockdown: The political apex of US single Moms & Western matriarchy? May 21, 2021

I was wrong on corona – by not pushing for a US Cultural Revolution immediately – May 25, 2021

August 1: when the unemployment runs out and a new era of US labor battles begin – May 28, 2021

Corona proving the loser of the Cold War was both the USSR & the USA – May 30, 2021

Rebellions across the US: Why worry? Just ask Dr. Fauci to tell us what to do – June 2, 2021

Protesting, corona-conscience, a good dole: the US is doing things it can’t & it’s chaos – June 3, 2021

Why do Westerners assume all African-Americans are leftists? – June 5, 2020

The US as Sal’s Pizzeria: When to ‘Do The Right Thing’ is looting – June 6, 2020

The problem with the various ‘Fiat is all the problem!’ (FIATP) crowds – June 9, 2020

Politicisation of Great Lockdown result of ‘TINA’ economic ignorance & censorship – June 14, 2020

Trump’s only hope: buying re-election with populist jobless benefits – June, 16 2020

US national media is useless – so tell me the good local news sources? – July 4, 2020

Hamilton movie: central banker worship & proof the US has no left – July 8, 2020

News flash: Capitalism has no answer for 50 million jobless people – July 11, 2020

Naive Millennials: it’s the man (Trump) & not ‘The Man’ (the US system) – July 18, 2020

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 the books I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’ and the NEW Socialism’s Ignored Success: Iranian Islamic Socialism.

Hamilton movie: central banker worship & proof the US has no left

Source

July 08, 2020

Hamilton movie: central banker worship & proof the US has no left

by Ramin Mazaheri for the Saker Blog

I wonder if Hamilton creator Lin-Manuel Miranda will ever understand the real truth about why his play is so popular…?

Miranda probably believes that if he had written a play about Eugene V. Debs (America’s greatest socialist) his talents, approach and techniques would have produced a spectacle of similarly spectacular success, LOL….

The believers of Broadway are nothing if not wilfully naive (i.e. stupid), unsinkably optimistic and totally oblivious to the jingoistic propaganda which is self-centeredly, brayingly warbled at the top of everyone-on-the-stage’s lungs in the vast majority of Broadway musicals, Hamilton included. Non-Americans often roll their eyes at the inevitably absurd “Hollywood ending” of many US movies, but what can a viewer do when confronted by the endless fake cheer and perpetual smiling of Broadway besides beg for temporary blindness?

Indeed, one of the great results of the coronavirus is the shuttering of Broadway’s lights – may it always be dark inside that incredibly empty-headed art. I find very few things as physically disagreeable as all musical theatre (Bertolt Brecht and Monty Python are exceptions which proves the rule). Opera is just as atrocious, and may I give you a news flash: nobody cares about opera. It is a totally outdated art, and yet the vast majority of public arts funding in much of the West is directed towards opera. Why? The answer is also linked to the success of Hamilton – elitism and 1%-er domination of Western governance.

Musicals are not so very elitist as opera, but the average American man only sees a Broadway play after constant arm-twisting from the missus. And yet… we have had this broad success of Hamilton. How can we explain it? Why must we endure it? When will the American musical finally die, ending their assault on our ears and especially the ears of those poor, suffering parents of high school drama club members?

The answer is clear: the US is a bankocracy, and Hamilton is its unparalleled propaganda

I have not seen Hamilton and I never will – if I hate musicals already, why would I like one which is built around mythologising, propagandising and lying about the greatest central banker in American history?

The popularity of Hamilton is completely attributable to the total domination of corporate media in the 21st century. My last articleUS national media is useless – so tell me the good local news sources?, thus had to be published before this one: it discusses how ever since the Telecommunications Act of 1996, which allowed the rise of monopolistic media conglomerates, to watch one national US media is to watch them all – there is total uniformity. I also discussed how in music there used to be such a thing as a “local hit” within different US regions, but since 1996 a banal song can be a #1 for as long as 5 months because the conglomerates decide to support it and replay it, replay it, replay it, replay it.

The same goes for Hamilton: advertising works, and the conglomerate media saw a “pro-central banker” play, squealed with delight, and decided it should be bigger than The Bible.

So five years of corporate-ordered omnipresence of Hamilton coverage was not just in the pro-Broadway New York Times (Five Years and 100-Plus Stories: What It’s Like Covering ‘Hamilton’ – that’s 100-plus stories from just one Times journalist, mind you!), but across the nation: “It goes unspoken that ‘Hamilton’ is now available everywhere, for a $6.99 monthly Disney Plus subscription”. It “goes unspoken” precisely because in the US the corporate media has obviously ordered Hamilton to be atop the cultural agenda for years. It is now available as a movie for this Fourth of July weekend, thus the “news peg” for this article.

This omnipresence explains why I truly do not need to see Hamilton to write about it intelligently (though I did interview people who have seen it – hey, I’m not a bad journalist who doesn’t do homework) – the US has been OBSESSED with it for years.

But nobody seems to realise why because in all of the drooling, gushing reviews nobody gets at the economic aspects inherent in a play about a central banker. Nobody seems to make the link between the economic program of Western central banker collusion (Quantitative Easing), the reality of a US & Western “bankocracy” (a 10-part series I wrote on this issue can be found here) which has been crystal-clear since 2008 to anyone with half a brain, the elevation of central bank policy over democratic votes in the Eurozone, and then this absurd adoration of Hamilton?

How can it be a mere coincidence that at a time when central bankers have become more powerful than ever we also cannot – still – turn anywhere without being exhorted to love Hamilton? Just as rap music is the musical propaganda of modern Western capitalism, Hamilton is clearly its musical propaganda.

The pro-central bank propaganda is apparently overt during this 3+ hour show: a large part of the show is dedicated to showing how the US central bank was created, and of Alexander Hamilton persuading them of the worth and necessity of a central bank. Hamilton may not use the phrase “QE”, but how can anyone fail to see the link between inequality-creating, 1%er enriching, 99%er impoverishing QE and this stupid play? Like all great art Hamilton apparently does indeed capture the moment – too bad it is the “moment” of ravenous, society-destroying elite bankers.

Since 2015 I have said that the proof that there is no true left in the US is that I have not read of even one stink-bombing of a Hamilton performance. That the US left has not been able to mount any counter-attack on this neoliberal propaganda shows how appallingly clueless they are. Ishmael Reed Tries to Undo the Damage ‘Hamilton’ Has Wrought from The Nation was so notable because it stuck out so very much – it’s the exception which proves the rule.

The US left has been steamrolled by Hamilton and provided (as usual) so very, very little resistance, but Hamilton is a perfect example of just how easy it is to propagandise the US public – such is the extent of the dominance of their corporate media. Media concentration in the US is so absolute that if they decide something or someone or some concept should be promoted – one simply cannot escape it. And, I am sure, talking about Hamilton in this way at a US dinner party is to ensure that you are not invited back, LOL.

How was this central banker propaganda so effectively repackaged into suitable American jingoism?

In July 2020 even the World Socialist Web Site is decrying the attacks on statues of Lincoln and Jefferson; after decades of trying, corporate sponsors are going to force the rabidly anti-American Indian Washington D.C. to finally give up their “Redskins” football mascot/slur – so why on earth aren’t they coming for Hamilton?!

Alexander Hamilton bought and sold slaves, he married into a wealthy slave-owning family – it’s a no-brainer. If you support Hamilton and have some stupid liberal sign up in your front yard YOU are part of the problem (as much for liking awful Broadway as for being an obvious fake-leftist).

However, when we actually consider the economic ideology all over Hamilton we should easily grasp that the corporate-dominated US media is not about to permit sustained attacks on this spectacularly successful pro-central banker propaganda piece. What they are going to do is what places like The Washington Post just did, print lies about how Hamilton “despised slavery”.

Why would Miranda care – he did the same whitewashing. Of course he wasn’t going to talk about how the central banker Hamilton was all about debt slavery (no corporate media gushing in that case), but it’s pretty artistically opportunistic and cynical to make Hamilton some sort of abolitionist just to sell out his stupid musical. Tellingly, Miranda was forced to publicly admit he was wrong to be silent for so long regarding the George Floyd protests, but the guy adores Alexander Hamilton in the QE era – did you really think he was anti-establishment, LOL?

Reading drama reviews always produces plenty of eye-rolls – they are full of hyperbole and purple prose worthy of the biggest off-off-off-Broadway ham; everybody is just so very, very, VERY SPECTACULAR and AMAZING and TALENTED – but The New York Times lead movie critic writing that he “can’t escape tears” when watching Hamilton… how can we explain that?

Like I said, I’m not going to watch Hamilton to find out. I’m not even going to read its plot summary on Wikipedia. I have been unwillingly forced to acquire adequate Hamilton knowledge via cultural osmosis, but I also did ask around.

Part of its appeal, per reports, is undoubtedly based on jingoism and revisionist history – we’re all just so proud to be American (and to be led by heroic bankers in our wonderful bankocracy).

However, what is more shocking is how the play apparently significantly plays up the anti-monarchical, republican roots of the American Revolution for Independence by… upholding the pro-monarchy Alexander Hamilton? Jefferson said of Hamilton: “Hamilton was not only a monarchist, but for a monarchy bottomed on corruption.” I hear Miranda’s next play is about the great abolitionist Robert E. Lee.

So the apparently underlying theme of Hamilton is how revolutionary and cool the anti-monarchy stance was (way back in the late 18th century), and it is these ancestor worship-heartstrings which produce tears in fake-leftist pseudo-intelligensia like A.O. Scott. How could they possibly pick Alexander Hamilton as a leader of the fight against aristocratic privilege? Answer: in a bankocracy bankers are the vanguard party, so they simply must be whitewashed as spotless leaders.

Thus we can refer to Scott’s headline – ‘Hamilton’ Review: You Say You Want a Revolution – to get at the heart of what helped draw in so many American males to willingly watch Hamilton: make being conservative “revolutionary”. The play does what Westerners always do – try to end history long before 1917 by perpetuating the false belief that Western liberal democracy is somehow still “progressive” and not fundamentally aristocratic (bourgeois); the play obviously perpetuates the false Western belief that the summit of democracy’s reach is Western liberal democracy and not 20th century socialist democracy. However, with every passing corona hysteria day it’s more and more obvious that in the 21st century the latter is vastly outperforming the former, which did nothing but replace monarchy with bankocracy (thus it was merely a bourgeois/aristocratic revolution).

There are secondary propaganda bases for the success of Hamilton, mainly how it successfully espouses 21st century US liberal (fake-leftist) identity politics. But a huge part of this is merely technical and based entirely on what I can easily prove is the fundamentally reactionary nature of Broadway itself, because absolutely nothing is “Whiter” than Broadway in US culture.

Musicals like Our Town, Oklahoma, The Unsinkable Molly Brown, The Sound of Music, Music Man, Carousel – these are all whiter than Wonder Bread on a styrofoam plate in a snowstorm in themes, composition and musical styles. How can The Unsinkable Molly Brown be played by a Latina, after all? There are no Hindus in Our Town. Finding a young Black girl who can sing, act, AND has red hair is going to make staging a production of Annie difficult, but making Depression-era Daddy Warbucks Black is historically impossible. This is why playgoers have remarked how they have been thrilled by the mere presence of non-White actors in this type of a musical, but also in any musical. All of this supports my assertion of what a fundamentally reactionary institution Broadway is.

The use of rap was also another mere technical – and not intellectual or artistic – pseudo-achievement of Hamilton; that fundamentally reactionary Broadway required 40 years to finally use rap music and Hamilton was the first – big deal? The good news is: nobody over 50 can keep up with such rapid-fire spoken word poetry, and thus many of the elder showgoers surely missed out on the undoubtedly fascinating rap lyrics about the meetings to build the US Treasury.

(Of course, does every rapper think his or her every word is totally fascinating and worthy of your complete concentration and attention? Rappers dominate whatever music they sit in on – in jazz this is the sin of “overplaying” and overplayers are not invited to the next jam session. Sadly, US corporate media rams rap down our throats and refuses to broadcast jazz music literally anywhere, probably because jazz cannot proselytise for individualism and capitalism like rap does with seemingly every breath.)

Western democracy does indeed have two classes: Bankers and everyone else

Making central bankers “cool” – which seems impossible – is the greatest achievement of Hamilton in its effort to propagandise the American public into accepting QE, ZIRP and the post-2008 policies which have gutted the US and left it poised to plummet into prolonged socio-economic chaos following the hysterical corona overreaction.

By portraying Alexander Hamilton as an outsider who worked his way to the top the play undoubtedly allows viewers to maintain a certainly outdated belief in the fiction that the US is a “classless” society; this is just as the election of Barack Obama allowed the creation of the myth that the US had progressed to a “post-racial society”. If that was true – why the George Floyd protests? Miranda thinks Hamilton is a hero mainly because he knows nothing about QE, economics, the class struggle, and because he obviously admires the gangster/bankster values of rap.

If Miranda knew any of those crucial leftist analyses he would have known that in order to maintain this fiction of a “classless” American society absolutely everything must be burned before it: What is identity politics but an endless assertion that absolutely anything – from race to religion to gender to sexual to preference to party affiliation to ___ – is more important than class? Anything to not focus on class!

This explains the reactionary, divisive words of Hamilton as found in the play’s popular song, “Immigrants— we get the job done”. I’m not going to listen to it because when is Broadway very truly funky or cool? However, it surely seems to be an insult to the hard-working capabilities of White Americans – are how is that leftist or progressive? Due to Miranda’s political ignorance and obviously reactionary beliefs he was only too happy to write a song which seeks to divide the worker class based on their country of birth. What’s his next divisive attack, one wonders? May I suggest: “Left-handers do the job a bit differently but still get’er dun”. A pro-immigrant song can be a fine thing, but not coming in the context of banker worship, LOL – it’s an obvious contradiction, and obviously an attempt to distract from Hamilton’s overall capitalist-imperialist ideology with divisive identity politics.

So… not a single stink bomb at a Hamilton performance? Not a single call to take slave-dealer Hamilton off the $10 bill amid these rebellious times? Idiots will deface a statue of Cervantes (the Arab-loving “Multicultural Dreamer”), and steal a Frederick Douglass statue, but the Alexander Hamilton statues outside the US Treasury, in NYC, in Chicago and elsewhere remain standing because he’s apparently “that cool leftist guy from the cool leftist play”?

Alexander Hamilton – cool? Broadway – cool?!?! Hamilton – a leftist play?!

Clearly, the US left has no idea what they are doing, and that’s why we still don’t hear any leftist demands for media discussion about the links between QE, central banker dominance over Western liberal democracies, and the endless corporate promotion of Hamilton.

For all the wrong reasons Hamilton is popular – but they’re dead wrong, I know they are, as the song goes.

*********************************

Corona contrarianism? How about some corona common sense? Here is my list of articles published regarding the corona crisis.

Capitalist-imperialist West stays home over corona – they grew a conscience? – March 22, 2020

Corona meds in every pot & a People’s QE: the Trumpian populism they hoped for? – March 23, 2020

A day’s diary from a US CEO during the Corona crisis (satire) March 23, 2020

– March 25, 2020

Tough times need vanguard parties – are ‘social media users’ the West’s? –

March 26, 2020

If Germany rejects Corona bonds they must quit the Eurozone – March 30,

2020

Landlord class: Waive or donate rent-profits now or fear the Cultural Revolution – March 31, 2020

Corona repeating 9/11 & Y2K hysterias? Both saw huge economic overreactions – April 1, 2020

(A Soviet?) Superman: Red Son – the new socialist film to watch on lockdown – April 2, 2020

Corona rewrites capitalist bust-chronology & proves: It’s the nation-state, stupid – April 3, 2020

Condensing the data leaves no doubt: Fear corona-economy more than the virus – April 5, 2020

‘We’re Going Wrong’: The West’s middling, middle-class corona response – April 10, 2020

Why does the UK have an ‘army’ of volunteers but the US has a shortage? – April 12, 2020

No buybacks allowed or dared? Then wave goodbye to Western stock market gains – April 13, 2020

Pity post-corona Millennials… if they don’t openly push socialism – April 14, 2020

No, the dollar will only strengthen post-corona, as usual: it’s a crisis, after all – April 16, 2020

Same 2008 QE playbook, but the Eurozone will kick off Western chaos not the US – April 18, 2020

We’re giving up our civil liberties. Fine, but to which type of state? – April 20,

2020

Coronavirus – Macron’s savior. A ‘united Europe’ – France’s murderer – April 22, 2020

Iran’s ‘resistance economy’: the post-corona wish of the West’s silent majority (1/2) – April 23, 2020

The same 12-year itch: Will banks loan down QE money this time? – April 26,

2020

The end of globalisation won’t be televised, despite the hopes of the Western 99% (2/2) – April 27, 2020

What would it take for proponents to say: ‘The Great Lockdown was wrong’? – April 28, 2020

ZeroHedge, a response to Mr. Littlejohn & the future of dollar dominance – April 30, 2020

Given Western history, is it the ‘Great Segregation’ and not the ‘Great Lockdown’? – May 2, 2020

The Western 1% colluded to start WWI – is the Great Lockdown also a conspiracy? – May 4, 2020

May 17: The date the Great Lockdown must end or Everything Bubble 2 pops – May 6, 2020

Reading Piketty: Does corona delay the Greens’ fake-leftist, sure-to-fail victory? – May 8, 2020

Picturing the media campaign needed to get the US back to work – May 11, 2020

Scarce jobs + revenue desperation = sure Western stagflation post-corona – May 13, 2020

France’s nurses march – are they now deplorable Michiganders to fake-leftists? – May 15, 2020

Why haven’t we called it ‘QE 5’ yet? And why we must call it ‘QE 2.1’ instead – May 16, 2020

‘Take your stinking paws off me, you damned, dirty public servant!’ That’s Orwell? – May 17, 2021

The Great Lockdown: The political apex of US single Moms & Western matriarchy? May 21, 2021

I was wrong on corona – by not pushing for a US Cultural Revolution immediately – May 25, 2021

August 1: when the unemployment runs out and a new era of US labor battles begin – May 28, 2021

Corona proving the loser of the Cold War was both the USSR & the USA – May 30, 2021

Rebellions across the US: Why worry? Just ask Dr. Fauci to tell us what to do – June 2, 2021

Protesting, corona-conscience, a good dole: the US is doing things it can’t & it’s chaos – June 3, 2021

Why do Westerners assume all African-Americans are leftists? – June 5, 2020

The US as Sal’s Pizzeria: When to ‘Do The Right Thing’ is looting – June 6, 2020

The problem with the various ‘Fiat is all the problem!’ (FIATP) crowds – June 9, 2020

Politicisation of Great Lockdown result of ‘TINA’ economic ignorance & censorship – June 14, 2020

Trump’s only hope: buying re-election with populist jobless benefits – June

16, 2020

US national media is useless – so tell me the good local news sources? – July 4, 2020


Ramin Mazaheri is the chief correspondent in Paris for Press TV 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 the books Ill Ruin Everything You Are: Ending Western Propaganda on Red China’ and the NEW Socialisms Ignored Success: Iranian Islamic Socialism.

Paradigm Shifts

source

by Francis Lee for The Saker Blog

Paradigm Shifts

INTRODUCTION:

I first wrote this article in 2012 and have had to make a number of minor alterations. Of course a great deal has happened since that time, most of it bad. We now seem to stand on the threshold of an even bigger and deeper crisis than in 2008, plus additional worrying features, viz. the pandemic and possible future pandemics as well as increasing and widespread economic and geopolitical instability. The crisis portents were always there but both the PTB and the populations at large did not seem unduly concerned about these developments which were taking place and maturing through the post-2008 period.

Paradigm Shifts

Some years ago I reviewed a book – State Building – by one Francis Fukuyama. This was one of Mr Fukuyama’s lesser known works, he is more famous for being the theorist of the ‘end of history’ – a view promulgated during the halcyon days of the neo-liberal counter-revolution circa the 1980s. After the collapse of communism in Eastern Europe, and with social-democracy effectively throwing in the towel in Western Europe, Mr F postulated that liberal, deregulated, market capitalism was now the historical norm, and if countries had not arrived at this terminal point in their history, then in the fullness of time they surely would. In short this is when one paradigm or epoch ends and another one begins. Certainly, the world underwent a both quantitative and qualitative paradigm shift in 1980s an historical shift which has lasted for at least 4 decades.

This current view was to become the received wisdom in official circles, and I would argue that in a contingent sense still is, at least among the political, financial and media elites. But it could be plausibly argued that this current paradigm is in secular decline and a new paradigm seems to be emerging. That is why we study history. Epochs come and go. Whether this will be for good or ill is an open question. Paradoxically, the established paradigm – let’s call it the Thatcher/Reagan settlement – represented almost a theoretical mirror image of the cruder types of Marxist historical materialism. Of course, both were extremely contestable since the human agency was excised from the historical process; a process apparently beyond human volition and control; almost a force of nature. It followed from this, therefore, that politics was no longer about choice, according to the post-modernist fraternity, the grand political narratives were at an end; henceforth politics was to be simply about administration: the relevant question being who could run the system more efficiently. How simplistic and facile these notions now seem.

To be fair Fukuyama has now admitted that he was wrong, and the more humanistic interpretation of Marxism – as espoused by inter alia Georgy Lukacs and Antonio Gramsci – does allow for human intervention in the historical process, in fact it insists upon this. Marx also, at least in his early years, put forward the famous dialectic. ‘Men make history, but they do not do it as they please.’ This is to say that they were creatures of their time and made political choices, but these choices were historically conditioned and constrained.

However, it seems commonplace among the journalistic types and other jobbing mediocrities to think that history is something in the past and that the present is the point of arrival; a tendency to take the empirically given as somehow natural and inevitable; its permanence taken for granted. And of course those who have most to gain from the present dispensation will fight tooth and nail against any attempt to change this state of affairs. Reforms are possible – even though these will be generally opposed by these same entrenched interests – but the fundamental structures and institutions of the system will be left broadly unchanged. This is true at all times and in all places, including our own.

We can say, therefore, that the world crisis of 2008 and its various explanations were thus all based upon the notion that the neo-liberal capitalist order is inevitable and permanent. Even erstwhile radicals like Will Hutton of the Guardian and Paul Krugman of the New York Times believed this to be the case. These are essentially mainstream Keynesians, who argue for a more regulated capitalism which they regard as viable, whilst their opponents the free-market Hayekians – Peter Schiff and US libertarian Ron Paul – believe in less or even no regulation. But of course both schools are committed to the capitalist system so the argument has been something of an in-house debate between the two establishment viewpoints.

That the system is in a protracted and long-term crisis is self-evident. But the contending viewpoints above are posited in a rather narrow and orthodox spectrum of economic theories which I think fail to address the depth of the predicament.

The Hayekian/Von Mises Austrian school

For a long time after the Second World War these particular theorists were exiled to a virtual leper colony of macro-economic theory. This was a period of the Roosevelt/Attlee settlement, the spread of communism over Eastern Europe, China and Indo-China. The catastrophe of depression/fascism/war, all emanating from uncontrolled markets and market crashes, followed by trade wars of the 1930s and then the shooting wars, was rejected absolutely by the electorates of the western world as well as by their leaders. But Von Mises, Hayek, et al. bided their time until their moment came. This moment came in the 1970s when the post-war boom petered out. They found a populariser of their beliefs – albeit in crude form – in Milton Friedman of the Chicago School and what was called monetarism. These ideas then migrated from academe via the broadsheet press and finally to the right-wing political parties at the time headed by Thatcher and Reagan.

The Austrian school believe that attempts to control capitalism through state intervention will fail and will in fact be positively counter-productive. This is because such interventions distort the price mechanism leading to misallocation of resources, inflation, and asset price bubbles. A good example of this would be the credit/property boom (2008) which was enabled by the accommodative actions of the Central Banks and Treasuries around the world, but particularly by the Bank of England and the US Federal Reserve Board. Interest rates were kept low and both heads of the two respective central banks as well as Treasury officials, in the UK’s Labour government, Gordon Brown and Edward ‘light touch regulation’ Balls in the UK, and the Fed boss Alan Greenspan in the US. Thus the natural cyclical tendencies immanent in the capitalist system were given an additional push by government monetary policy. Why? The answer is disarmingly simple: booms and bubbles (at least during the up-phase) are popular with the masses and are therefore good politics. Who can ever forget ‘the-end-of-boom-and-bust’ triumphalism of the period? However, the Austrians continued to argue that booms and busts are intrinsic to the system. One cannot exist without the other. During the boom phase of the cycle investors and consumers tend to become overconfident and make foolish investment and purchasing decisions. Prices start to rise due to the continual demand for factor inputs, growth becomes more and more febrile, banks make foolish loans and acquisitions (Northern Rock and the Royal Bank of Scotland come to mind), and then, when rises in income can no longer support rises in asset prices, the whole thing collapses. This is what happened in 2008; the bust part of the cycle then begins. All the bad investments and overspending now come to light. Companies go bust, unemployment mounts, debts are written down simply because debtors cannot pay, and all the misallocations of resources can clearly be seen with half-finished empty houses standing as the self-evident physical symbols of the manic bubble period which preceded them. Here Andrew Gamble explains:

‘’For the Austrians, the business cycle had a necessary and important function within capitalism. The crisis phase of the cycle was crucial if capitalism were to renew itself and purge itself of the false values and the misallocation of productive resources which had grown up during the boom phase. The crisis was a moment of truth, when suddenly the plans, the claims and the expectations which had been formed during the upswing were put to the test. Many of them would be found wanting, and those responsible for them would have to face the consequences. The process was not just to keep capitalism efficient; it was also necessary to keep capitalism moral. Only if agents bore full responsibility for their actions would the values of prudence, reliability and sound judgement and trust, on which capitalism relied, be upheld. The crisis purged capitalism in a double sense: both practically and morally. To many of its defenders the two were equally important. It was what gave capitalism its moral legitimacy and its practical dynamism.’’ (1)

It was argued that full recovery would not be achieved by bail-outs, Keynesian deficit spending, or by rescuing companies which were simply inefficient or did not supply consumers or investors with their preferences as demonstrated by the market price mechanism. Such policies would simply create ‘moral hazard’ a tendency for investors and consumers to carry on as usual with their losses being underwritten by the state; in this situation there was no intention or incentive for improving their business efficiency. These bailed-out entities were the economy’s living dead, kept alive on state support – zombie banks as in Europe and Japan and zombie auto companies like Fiat, Kia, and GM, or insurance companies like AIG, all of which should have been allowed to fail. With their failure more competitive efficient companies would arise in their place.

Recovery could only get underway when, as during classical depressions, prices fell, which meant that if wages and interest rates fell more slowly – if at all – then disposable income would start to increase. This being the case consumers would start to spend again and businesses start to invest. Similarly bankrupted and distressed firms would be bought out at fire–damage prices by the more efficient and larger firms with more up to date equipment. Growth now resumes given the destruction of existing capital values. The process of accumulation can restart.

What is striking about this (Austrian) theory is its similarity to Marx’s view of trade cycles, and also to those views espoused by Schumpeter. But much of both theories were formulated in an earlier phase of capitalism. But for all that the Austrian theory’s analysis of the bust is quite plausible and sophisticated.

‘’The anti-deflation policies which have been adopted (i.e., Keynesian demand management) is largely a policy of price-fixing, a policy of preventing the market from exposing capital misallocations and then liquidating them. The root causes of the crisis remain in place and the underlying problems unaddressed … The economy cannot realistically be expected to rectify itself if the market is not allowed to liquidate capital misallocations. The state has erected a protective fence around the most dislocated sectors of the economy (house prices for example) trying to keep market forces outside. As long as it lasts no true recovery is possible.’’ (2)

Summing up the Austrian view, capitalism is intrinsically cyclical. The Growth periods tend to run out of control resulting in bad investments and resource misallocation. This process is fed by easy credit and excess liquidity. Asset price inflation rises to a level which can no longer be sustained by rises in income or further borrowing. The boom turns into a bubble and the bubble bursts. Then the whole process swings into reverse – the bust has arrived. However, the bust rectifies the situation by liquidating all the mal-investments and making way for a reconfiguration of the system on a more sustainable and efficient basis. Capitalism restructures itself through these types of crises.

Prescriptions

Although the Austrian (and indeed Marxist) analysis of the bust is, I would argue broadly speaking correct, but the future policy prescriptions of the Hayekians seem frankly alarming. The scope and interdependence of the system is such that the notion of simply letting the bust take its course would lead to quite massive economic, political, and social dislocations on a global scale – as would have been the case had world governments simply let the coronavirus pandemic rampage through societies and run its course in 2020 – such a policy would dwarf the depression of the 1930s and 2008. In a strictly logical sense the reasonings of the Austrian school are correct, but their policy prescriptions are simply too terrible to contemplate.

‘’The Libertarians are actively promoting policies sure to bring about immediate economic hell, in the faith that punishment and suffering are the prerequisites to an economic afterlife in a better world. While in the end their philosophy of economic karma may ultimately prove correct, before accepting the remedy through collapse, other approaches should be put to the test. Economic reincarnation could take a lot longer than the Libertarians anticipate. The Renaissance did follow the fall of Rome – but only after 10 centuries.’’ (3)

So what about the alternatives?

John Maynard Keynes and his followers

Well I think we need to clear up one or two things about Lord Keynes before we start. Keynes was emphatically not a socialist, if anything he was actively hostile to socialism. He opined that: ‘’The class struggle will find me on the side of the educated bourgeoisie.’’ (4) We might legitimately enquire who, apart from Keynes himself, might be the ‘educated bourgeoisie’ exactly! Further, The Labour party is a class party, and that class is not my class. Again, How can I adopt a creed – Socialism – which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeois and intelligentsia who, with whatever faults, are the quality in life and surely carry the seeds of all human advancement. It seems necessary to state this because of the widespread belief on the left that Lord Keynes was indeed some sort of (closet)-socialist. This could not be further from the truth: Keynes main aim in life was to save capitalism from itself.

His magnum opus, ‘’The General Theory of Employment Interest and Money’’ first published in 1936, represented the culmination of his earlier writings in which he elaborated what he believed to be the problem situation which had arisen in the world economy during the 1930s, and what he believed to be the solutions. But Keynesianism is not really a theory of the trade cycle, nor is it a general theory (more of which later) it is more a theory of boom/bust and possible ways out of economic depressions. The bust period in a capitalist economy generally follows a period of excess credit and hence debt-fuelled growth. This was the case during the roaring 20s with runaway credit (debt) fuelling growth until – pop went the weasel! Credit duly contracted as the defaults multiplied, and so the Roaring 20s transmuted into the depressed 30s.

‘’In 1930 the US money supply comprised currency held by the public (9%) and deposits held at commercial banks (91%). Banks used these deposits to fund their loans. When the credit that fuelled the Roaring 20s could not be repaid, the banks began to fail. When a borrower defaults it not only destroys credit, it also destroys the deposits which funded the credit. Between 1930 and 1933, 9,000 US banks failed. The corresponding destruction of deposits caused the country’s money supply to contract by a third from $46 billion in 1928 to $31 billion in 1933. As the money supply shrank the happy economic dynamic that expanding credit had made possible, went into reverse, and the global economy spiralled into catastrophe.’’ (5)

Post-crash, the problem was not excess demand but insufficient demand. This became known as debt-deflation. This is where Keynes and his co-thinkers entered the scene. With consumers and investors not spending, aggregate demand in deflationary conditions is flat, or even falling. Therefore the solution could only be increased spending by the government. This to be carried out by a mixture of monetary policy (lowering interest rates and Open Market Operations, and now Quantitative Easing – QE) and/or fiscal policy (taxation and public spending). This is of course something of an oversimplification of Keynes’ theories which were somewhat more radical than most of his enthusiasts found to their taste, but it broadly captures the gist of what he said. The increase in aggregate demand would feed through to the rest of the economy and so induce an increase in output which would be eventually self-sustaining. Governments would find it necessary therefore to run budget deficits during this period. Q.E.D.

This approach was taken up by the Roosevelt administration when it came to office in 1933. At that time unemployment in the US stood at the alarming figure of 25%. A raft of policy measures including the Works Programme Administration (WPA), National Recovery Act (NRA), Tennessee Valley Authority (TVA) Civilian Conservation Corps, were implemented. Unemployment fell to 14% by 1936, but then rose again during a new recession in 1937/38 to 20%. So the track record of Keynes policies seems patchy to say the least.

The Long Boom and its collapse 1980-2008

In our own time we have seen almost a repeat of the 1930s debacle. The long boom of 1980-2007 was floated on a sea of debt. But even this period was punctuated by blow-outs, first in the Savings and Loans episode of the 80s and 90s, then the Long-Term Capital Management collapse in the 90s, and finally the dot.com bubble in 2001. The 2008 crisis was, however, seemingly worse than these events and more global than that of the 1930s. In 2008 the whole credit/property induced boom came to a shuddering halt when the sub-prime borrowers in the US defaulted. House prices, which, had been rising by double digit percentages since the early 90s collapsed in 2006 and have been falling, apart from one or two transient minor upturns, ever since.

The same was to also happen in Iceland, Ireland the UK and Spain who had also built their policies around house-price inflation. Mortgage backed derivatives – i.e., those financial products which were based upon these repackaged dubious mortgages were parcelled up and sold as new financial products to brain-dead investors around the world after being given the triple AAA seal of approval by the ratings agencies. These derivatives were only producing a stream of income so long has the mortgagees continued to pay their instalments – when they defaulted the derivatives became worthless, the banks, who among others such as pension funds who had been purchasing these debt instruments, then found that their newly acquired ‘assets’ had turned into liabilities overnight. Many banks were effectively insolvent, and the great bank panic of 2008 spread around the world.

Governments found it necessary to bail-out these institutions in order to avoid a global meltdown. So the banks happily transferred their junk ‘assets’ onto the sovereign nations’ balance sheets courtesy of the Central Banks. Needless to say this was only the opening of the great recession of 2008/09 which in spite of its putative ‘recovery’ still drags on. The crisis was to cross the pond from the US – whose fundamental problems still seem unresolved – to Europe where the problem became more acute.

Stabilisation and low growth 2009-onwards

Since the nadir of 2008/09 there has been a stabilisation rather than what we might meaningfully call a recovery in the global economy. Growth is flat or falling in Europe, although there are very marked regional disparities, and very weak (and as I write, beginning to actually stall) in the USA, again with regional disparities. Interestingly, perhaps with all the clamour regarding austerity in the eurozone, no mention was made in the 40 or so US states – some effectively insolvent – which oversaw swingeing austerity programmes, California and Wisconsin come to mind, as does Detroit, famous for Tamla Motown and auto-vehicle production. A one time industrial city of 2 million people became a ghost town of 700,000.

Concomitant with this there were high levels of unemployment on both sides of the pond. Official figures for US unemployment, as found in the Bureau of Labor Statistics (BLS) are completely fraudulent and always have been since whole swathes of de facto unemployed have been disappeared off the register simply by definition. (The same disappearing trick was used with the core inflation figures.) The BLS gives three levels of unemployment according to how the word is defined. In fact there are six definitions ranging from U1-U6. The BLS uses U3 but the figure for U6 is double. And if the same definition were applied as used to be the case then unemployment would be almost 4 times the official account. The same jiggery-pokery is used when defining inflation. Each redefinition gives a lower figure.

Regarding this universal practise, it was the late Conservative Member of Parliament and at one time member of Mrs. Thatcher’s Cabinet, Lord Gilmour, who once said of his government’s unemployment reduction programme: ‘’Now we have reduced the unemployment figures, perhaps we can make a start on reducing unemployment.’’ I am afraid the pollution of statistics is the same for inflation, GDP growth and various other economic statistics. These statistics are not some measurements of objective facts, but simply political constructions. (6)

In passing we should become aware of a new economic development which came into being after 2008 and persists to this day. This was the genesis of the so-called ‘gig’ sometimes called ‘sharing’ economy. It should be made clear that this sector of the economy is generally very much ’off the books.’ The modern workforce has become increasingly stratified. There are well-paid jobs for a small portion with the requisite skills, but the vast majority of new employment is in the low-paid service sector, such as retail, leisure, hospitality, age-care and health-care. The sharing-economy is generally part of the informal sector but requires abundant cheap contract labourers to be available at the touch of a smartphone screen. Fulltime employees with normal benefits would make the model unworkable. This ‘gig’ or sharing economy exploits low-wage workers in a weak economic environment. This new ‘eke-onomy’ consists of individuals renting out their houses, cars, or labour make only a fraction of what they would receive in traditional full-time jobs, without any employment benefits. This is what Marx/Engels termed the industrial reserve army consisting of the unemployed and under-employed. Moreover, in the UK at least most of the workforce engaged in this low-paid, insecure drudgery are for the most part, immigrant labour, often illegal, from Romania, Spain, Portugal, Poland, the English-speaking part of Africa and even as far as China. Welcome to the ‘smart’ economy.

Keynesian policies … and debt levels

The general Keynesian response to the downturn has been a hue and cry for stimulus at all costs. Keynesian counter-cyclical policies traditionally consisted of 1. Monetary policy. This comes under the remit of the Central Bank and consists of control of interest rates and money supply. 2. Fiscal policy, which is the remit of the Treasury consisting of taxation and public expenditure. Sotto Voce It should be noted at this point that the Central Banks became the source of economic policy. This was a new departure since it meant that fiscal policy was relegated to a secondary role in economic planning. Monetary – i.e., central bank – policy now ruled the roost. The rigidly orthodox European Central Bank (ECB) – more catholic than the Pope – adopted hard-nosed monetary policies in the eurozone with alacrity, whilst the Anglo-American approach involving monetary and second-tier fiscal policies were partially adopted in the UK and more rigorously in the US.* The ECB put the weaker economies in the eurozone – Greece, Spain, Portugal, Ireland, Italy, Latvia – through the wringer of a grinding depression. No stimulus policies were undertaken, since it is argued this would pile more debt onto unprecedented levels already extant. Results have to say the least, not been exactly encouraging, particularly in the southern European periphery. This situation has received press coverage ad infinitum much of it justified, but much incredibly biased and ignorant, but hey, this is the white noise of democracy in action.

Given that the eurozone crisis has received saturation coverage we will move on to the UK. Here we have a bizarre mismatch of policies: a loose monetary policy with the Bank of England lowering the base rate to 0.5% and engaging in money printing – otherwise known as Quantitative Easing – and a tight fiscal policy with the Treasury cutting back on public spending. The result? The worst of both worlds, inflation, and – good old 1970s stagflation.

The poster child for the Keynesians was the United States which threw everything but the kitchen sink at the problem in both fiscal and monetary terms. This produced some low growth and a slight fall in unemployment, albeit from an extremely high level, and recently reversed, but each additional stimulus has had less of an impact than the one preceding it. A sort of diminishing returns was to set in, whereby more and more of the ‘fix’ is needed to get any sort of result.

‘’ … in the 1970s the increase in GDP was about 60 cents for every dollar of increased debt. By the early 2000s this had decreased to close to 20% of GDP growth for every new dollar of debt.’’ (7)

The Federal Reserve had already initiated 2 rounds of QE injecting literally trillions of $s into the economy. In addition it lowered interest rates to 0.25% – zero to all intents and purposes. The Fed’s purchase of paper assets was facilitated with the printing of paper monies. These paper assets consisted of US Treasury bonds and junk securities from government sponsored enterprises such as Freddie Mac and Fanny Mae, the two government agencies whose remit was to issue mortgages to prospective US homebuyers. This meant that the assets purchased by the Fed were nothing more than debt, unredeemable debt at that. This is a weird situation where the Fed was buying US bonds issued by the Treasury department so that the US Federal government could pay its current bills. And where did the Fed get its money from? Out of thin air apparently, it simply printed the stuff! When the stage is reached where governments have to pay their current expenditures by printing money then the alarm bells should start ringing. An idea of the monies involved was described as follows:

‘’Before the first round of QE began, the Fed held roughly $900 billion of assets. When it ended on March 31, 2010 the Fed’s balance sheet had more than doubled to $2.3 trillion. There is no precedent for fiat money creation on this scale in the US during peacetime.’’(8)

Suffice it to say that money printing has continued and massively expanded to the present day 2020. Increasing the supply of paper money in the economy in the absence of demand for it can only produce one result – inflation, albeit after a time lag. (But this works on the assumption that the velocity of circulation of such monies remains constant. If the circulation falls to zero, then there will be no inflation. Deflation is more likely if the money supply does not reach the real economy. If the rate of money circulation does not alter, we can expect inflation to appear.) It will be objected, however, that the US rate of inflation was at the time of the 2008 episode only 2.3%. True. But bear in mind that both food and fuel price increases are left out of the calculation in what is termed US ‘core inflation’; another egregious example of officialdom’s statistical sleight of hand. Were those price rises added in then at the very least the US inflation figures would almost certainly double. Moreover, the global effects of the Fed’s policies has been to export this inflation around the world as a mass of greenbacks flew out of the US looking for more favourable investment outlets. The global supply of these Eurodollars (i.e., US$s circulating outside of the US) had ballooned, and this led to an inflationary impact globally as food and commodity prices (notably oil) had spiked. This in turn led to food riots and political disturbances throughout the world, particularly in the Middle East. A sort of unforeseen justice was done, however, when higher oil prices hit the price of gasoline in the US – a boomerang effect. The inflationary effect of the Fed’s money printing also meant that local currencies were put under pressure. When the $ tsunami entered a country their own currency was subject to an upward revaluation, which meant a higher exchange rate. They were therefore faced with two choices: one, do nothing and let their export markets contract since their currency was now more expensive, or two, maintain the value of their currency against the US$ by purchases of more of these dollars with their own currency. This would mean that their own money supply would expand and become inflated. Thus US inflation had become global inflation. Yes, devaluation is a great way to start a currency war.

As far as fiscal policy goes the US has consistently run budget deficits since the 1990s when it actually recorded a small surplus. The cost of the government takeover of Fannie Mae and Freddie Mac, the cost of ongoing wars in the middle east, the cost of bailouts to various financial institutions, the cost of fiscal transfers to cash-strapped states and various stimulus programmes has raised the US budget deficit (2008 figures) to $15.5 trillion, which given that the Gross Domestic Product of the US as of May 2012 was $15.6 trillion, makes the ratio close to 100%. Even before the economic crisis, the U.S. debt grew 50% between 2000-2007, ballooning from $6-$9 trillion. Now the implications of this are indeed sobering.

According to the authors Reinhart and Rogoff when debt to GDP ratio reaches 90% this will constitute a drag on future growth. And bear in mind that this figure of debt-to-GDP has risen to 107% in 2020. Longer term implications of America’s chronic debt problem are manifest. Sure the Fed can print unlimited monies, but it can’t guarantee that these greenbacks will have any value.

Over the next 20 years, the Social Security Trust Fund won’t have enough funds to cover the retirement benefits promised to Baby Boomers. That means higher taxes since the high U.S. debt rules out further loans from other countries. Unfortunately, it’s most likely that these benefits will be curtailed, either to retirees younger than 70, or to those who are high income and therefore aren’t as dependent on Social Security payments to fund their retirement.

Second, many of the foreign holders of U.S. debt are investing more in their own economies. Over time, diminished demand for U.S. Treasuries could increase interest rates, thus slowing the economy. Furthermore, anticipation of this lower demand puts downward pressure on the dollar. That’s because dollars, and dollar-denominated Treasury Securities, may become less desirable, so their value declines. As the dollar declines, foreign holders get paid back in currency that is worth less, which further decreases demand.

The bottom line is that the large Federal debt is like driving with the emergency brake on, further slowing the U.S. economy.

Now if we add in private debt to the equation – i.e., the debts of household sector corporate sector, business sector, non-corporate businesses, State, and local government – then the debt soars to something like $50 trillion, or 363% of GDP. Then of course there is the chronic deficit on current account which adds a further dimension to the problem, and all of these seemingly intractable processes are still ongoing but hey, let’s not labour the point.

The seriousness of the situation is only matched by the complacency of the US authorities who seem to think they can go on raising the budget borrowing ceiling and that overseas investors will simply keep on buying their Treasury bonds forever. If ever there was a definition of unsustainable this is it.

In fact the structural problems in the US economy could well be fatal if these colossal debt levels are not reined in or simply stabilised. The US is being kept afloat by their ownership of the global reserve currency and the willingness (for now) of investors, mainly China, Japan and the oil-rich states in the middle-east to keep purchasing US Treasury paper – paper assets of dubious value and paltry yields. Overseas investors are aware of this situation and have begun to lower their exposure to the US$s and dollar denominated assets by diversifying into other assets and have also started to trade in their own currencies rather than the dollar. Straws in the wind perhaps, but indicative of future trends.

Taken by themselves Keynesian demand-side policies of stimulating the economy hardly begin to grapple with the problem. This is because deeper problems are on the supply-side not the demand-side of the economy. They can be classified as follows. Deindustrialisation as the manufacturing base is hollowed out or emigrates to cheaper venues; ageing populations; rising energy costs and scarcity; saturation of markets; lack of leadership at the political level; finance running amok; the ability to create paper money and assets without limit; an inadequately trained workforce; skills and investment deficit; and structural unemployment brought about by new technologies. And to crown it all there is the dreaded ‘Triffin Paradox’ to be factored into the equation, but this would take another article. Moreover, I could also have added in the issue of climate change but didn’t want to depress my readers unduly.

Keynesianism is fixated on the demand-side. But in a world beset by the sort of supply-side problems listed above traditional demand-management policies used since the war will not be effective. It is also worth adding that both Germany and Japan, where the wartime devastation was manifest both recovered strongly without Keynesian demand management. This actually serves to validate the Austrian and Marxist theory that upturns and booms in a capitalist economy are the result of the destruction of existing capital values. Japan and Germany roared ahead because their own industries and infrastructure was decimated, and they had to install the most modern up to date capital equipment and technologies and again start from scratch. Economies which start from a low base tend to have extremely high rates of growth.

I did mention earlier that Keynes’ General Theory is in fact not a general theory at all but a special theory. Such policies may have been appropriate for the post-war period with the usual cyclical movements of the trade cycle, but dare I say, this time it’s different. What we are now confronted with is a systemic global crisis of capitalism. In the present situation Keynesian policies – which are commonly understood and promulgated by his epigones – are unlikely to have the desired effect for the following reasons.

‘’Keynes’ theory that government spending could stimulate aggregate demand turns out to be one that works in limited conditions only, making it more of a special theory than a general theory which he had claimed. Stimulus programmes work better in the short run than in the long run. Stimulus works better in a liquidity crisis than in an insolvency crisis, and better in a mild recession than a severe oneStimulus also works better for economies that have entered recessions with relatively low levels of debt at the outset … None of these favourable conditions for Keynesian stimulus was present in the United States in 2009.’’ (9)

It has been calculated that growth would have to be at the rate of 6% per annum which when inflation is factored in reduces to actual growth of 2% to make any inroads into the huge debts. This seems very, very unlikely, although this is what the US authorities will attempt to do.

One final point with regard to Keynesian policies: They are often thought of as an alternative to austerity, when in fact they are simply austerity by other means. It is an open secret, though never admitted, that both the Fed and the Bank of England are attempting to monetize the debt levels in both countries. This entails keeping inflation one or more jumps ahead of wages, pensions, benefits, and interest rates. This inflation is engineered by the Central Bank which devalues the currency – supposedly to make exports more ‘competitive’ and printing money through QE. Devaluation leads to an increase in import prices which will tend to feed through the rest of the economy causing domestic inflation. The time-honoured claim made by the then British Prime Minister, Harold Wilson, in 1967 that the proposed 17% devaluation of the £ ‘would not affect the pound in your pocket’ was simply a barefaced lie. When a country devalues its currency it makes itself poorer (‘competitive’ is of course the preferred description). That is its whole raison d’être, and in this respect, it is no different from a policy of deflation.

Thus the disposable income of the mass of the population is effectively pushed down as prices rise, and the most acutely affected will be the poorer sections of the community or anyone who keeps their assets in cash. The more opulent, however, will be able to switch into stronger currencies, and physical assets such as precious metals, property, L’Objets d’Art which will appreciate in price. Inflation will help debtors since their debts will be effectively amortized, i.e. grow less as inflation lowers the magnitude of the debt. Of course the principal debtor is the government.

Forcing down interest rates to near zero in an inflationary environment gives savers two options. Do nothing and watch their savings melt away, or just go out and blow the lot. Similarly investors will be forced into more risky investments as they see the paltry return to safer bolt holes such as gilts being eaten away by inflation. It all rather sounds like a re-run of 2002-2007 credit-fuelled growth madness. And paradoxically, because disposable income is crimped by such a policy, aggregate demand falls, and this gives another push to deflation – the law of unintended consequences.

Keynesians see the problems of past and present capitalism as purely technical. They apparently believe that capitalism can be ‘fixed’ using appropriate tools and that it would therefore be possible to have permanent semi-boom conditions. This is clearly expounded by economists such as the American Keynesian, Paul Krugman in his book Peddling Prosperity, first published in 1994. Having spent most of his life during the post-war boom, he is apparently dumbfounded that it suddenly ended in the early 1970s. He intoned that … In 1973 the magic went away. Well ‘magic’ had nothing to do with it. Capitalism was beginning to enter into a periodic systemic convulsion which is now reaching its climax.

After Keynes – What to Do?

‘’Can Capitalism survive? No I do not think it can … Can Socialism work? Of course it can.’’ (10)

On the first point Schumpeter was at that time wrong, but it is now a question which needs to be raised again. On the second point, he has to be right. But this is a political rather than a purely technical question. The present crisis will be solved sooner or later (preferably sooner) but the question is how, by whom, and for whom?

The question for socialists, or for that matter any oppositionists to the present regime, is what should the strategy be for the coming struggles with this system – a system which cannot go on in its present form for the simple reason that it needs to grow at a compound rate of 3% forever – this is not possible for both political, economic and environmental reasons. (My emphasis) Socialism or a collapse into semi-barbarism seems to be on the agenda once again. But we shouldn’t be surprised by this; it is surely what we have been expecting since the trouble started brewing in the late 60s. After all capitalism moves in huge cyclical convulsions, and this is one of them.

This is a colossal question and I can only allude to possible areas of political action. The first thing to realise is that the historical window for a social-democratic Keynesian solution to the crisis is now closed. It was only made possible by a specific conjuncture of political and economic circumstances. The Thatcher-Reagan settlement and globalization marked the death-knell of the Keynes/Beveridge consensus. (11) Does this mean that socialists should not support a policy of reform within the system? Not at all. But this support must perforce have in view the objective of forcing a paradigm shift away from what has been a trade unionist approach of simply gaining and defending reforms – to a struggle for real political and economic power. (My emphasis).

The programme of the liberal-left – the type of journalism which we see in the Guardian and Independent and Labour party publications – actually advocates reform of a system which is beyond reformIt should also be clearly understood that such reforms as advocated by most of the liberal-left such as public spending on work creation programmes, investment in green technology, a national investment bank will only provide a temporary fix, and may well have negative downsides, such as inflation.

‘’A short-run revival of growth, as opposed to proliferating distress, can … buy time for longer term solutions to the transition to be worked out. But bought time is only useful if it is put to good use.’’ (My Emphasis – FL)(12)

Keynesian reform will not be a long-term solution, but it can alter the political balance of power and shift the argument in favour of the 99%. The politicisation of the mass of ordinary folk can begin with such an approach. Socialists, however, need to go much further than the type of Keynesian stimulus programme as advocated by Hutton, Krugman, Elliott, et al. Such a programme might consist of the following set of workable policies.

  1. Public works programmes to reduce unemployment. Or full maintenance for the unemployed.
  2. Nationalization of all deposit taking institutions and the setting up of a national bank.
  3. Strict rules on credit creation and the Shadow banking system.
  4. More transparency and an end to over-the-counter (OTC) trading.
  5. Closure of tax havens. Stop tax avoidance scams such as Transfer Pricing.
  6. Withdrawal from overseas conflicts and NATO.
  7. Harmonisation of corporate tax rates within the EU.
  8. End of the global reserve status of the US dollar.
  9. Indexation of wages, pensions, benefits, interest rates to inflation
  10. A move away from indirect to direct taxation, and higher tax rates for the upper quintile of the population.
  11. Tax harmonisation in Europe to prevent tax competition and the race to the bottom.

These represent the economic demands. But capitalism also works at a political micro-level. The power relations in the work-place are such that employees and consumers have no say in how the business is run, by whom and for whom. Shareholder value is all that matters. This should be replaced by a stakeholder approach were all the interest groups have a say in the running of the organization.

Of course there is no possibility that such demands as these will be met, there is a war going on after all, and at the moment the class enemy have the power and the veto, notwithstanding the democratic will of the people. Moreover, some of these questions can only be raised at regional and/or global levels. This opens up several additional cans of worms. There is the seemingly intractable issue of Europe and the euro? Reversion to national currencies (as advocated by the Guardian’s economics team) may only lead to devaluation and trade and currency wars. Then there are global currency and trade issues: What replaces the dollar as the basis for a global currency? The IMFs Special Drawing Rights? A new gold standard? Or Keynes’ idea of a global currency – Bancor – to replace national currencies, in international trade. Then there is the massive question of climate change and the massive ecological damage and negative externalities which is the corollary of consumer capitalism. The problem we face is that politics are national, but capitalism and economics are global. But reforms of this type can obviously only be carried out at international level (13) but the starting place must be national. Co-ordinated global action is not going to happen any time soon, but regional action, whether in Europe, North and Latin America as well as the ASEAN bloc is a possibility – in fact it is the only option for supra-national policy making at the present time.

The task seems truly Herculean, the point is, however, that these issues must sooner or later (preferably sooner) be raised. They cannot be evaded. We do not choose history, history chooses us. And this is the labour of Hercules which history has bequeathed.

‘’An alternative (to capitalism – FL) will have to be found. And it is here that the emergence of a global co-revolutionary movement becomes critical not only to stemming the tide of self-destructive capitalistic behaviour … but also to our re-organizing ourselves and beginning to build new collective organizational forms, knowledge banks and mental conceptions, new technologies and systems of production and consumption, all the while experimenting with new institutional arrangements, new forms of social and natural relations, and with the redesign of an increasingly urbanized daily life …

While capital has provided us with an abundant means with which to approach the task of anti-capitalist transition, the capitalists, and their hangers on will do all in their power to prevent such a transition no matter how imperative the circumstances may be. But the task of transition lies with us not the plutocrats. As Shakespeare once advised: ‘’The fault … is not in our stars, that in ourselves that we are underlings.’ Right now, as Warren Buffet (the famous American investor – FL) asserts his class is winning (the class war) our immediate task is to prove him wrong.’’ (14).

NOTES

(1) Andrew Gamble – The Spectre at the Feast.

(2) Detlev Schlichter – Paper Money Collapse.

(3) Richard Duncan – The New Depression p.105

( 4) JMK – Essays in Persuasion – 1925 – Am I a Liberal, A short view of Russia. Ibid

(5) Richard Duncan -The New Depression – p.121

(6) In this connection see ChrisMartenson.com Crash Course, Fuzzy Numbers and John Williams Shadow Government Statistics – passim.

(7) Foster and Magdoff – The Great Financial Crisis – p.49

(8) Richard Duncan Ibid.

(9) James Rickards – Currency Wars –pp.186/187 – My emphasis FL

(10) Joseph Alois Schumpeter – Capitalism, Socialism and Democracy – 1943

(11) William Henry Beveridge, 1st Baron Beveridge, KCB was a British economist and Liberal politician who was a progressive and social reformer. His 1942 report Social Insurance and Allied Services served as the basis for the

post-World War II welfare state put in place by the Labour government elected in 1945

(12) David Harvey -The Enigma of Capital– p.278

(13) I have since revised this view and would argue that that starting place for the sweeping reforms which are necessary at the global world system must include and start at the national level. This is not the EU we signed up to in 1976, and there comes a time in politics where it is judicious to give up flogging a dead horse. A progressive Labour government under Corbyn would not have been allowed by EU law to implement its economic reforms, cancel Trident, leave, or even modify its NATO membership. Democracy is impossible without some measure of sovereignty, and nations must get control of their own foreign and economic policies since if they don’t the globalisers and Bilderbergers will and have done

(14) David Harvey, op.cit

*The Federal Reserve Act of 1977 modified the original act establishing the Federal Reserve in 1913 and clarified the roles of the Board of Governors. The Federal Reserve has two mandates: maintaining maximum employment and maintaining stable prices and moderate long-term interest rates. Congress explicitly stated the Fed’s goals should be “maximum employment, stable prices, and moderate long-term interest rates. It is these goals that have come to be known as the Fed’s “dual mandate’’. All of which was enabled to act in both monetary and stimulus capacities.

Francis Lee

Updated from 2012 to 2020

August 1: when the unemployment runs out and a new era of US labor battles begin

August 1: when the unemployment runs out and a new era of US labor battles begin

May 28, 2020

by Ramin Mazaheri for the Saker Blog

TITANIC LARGEST SHIP IN THE WORLD SINKING

personally I am not sure that the twelvehour day is bad for employees especially when they insist on working that long in order to make more money

— John Dos Passos, The 42nd Parallel, part one of the U.S.A. trilogy

What if the bailouts actually work?

Naturally, socialists aren’t inclined to explore this question, but what’s so interesting is that the Western Mainstream Media doesn’t want to admit the truth: the US bailouts for the lower classes have been hugely effective.

Too effective, they fear, and their fears are entirely correct. Make sure to circle August 1 on your calendar because that will be something of a US class war D-Day.

The Mainstream Media does not want to touch this issue with a 10-foot pole, so we cannot find much coverage of the reality that the Great Lockdown payouts to the lower classes have been – by US standards – incredibly generous. (Note: this article was written last week. The latest Fed Beige Book came out yesterday and addressed this issue, so I bumped this column up in the queue.)

2020 saw the very first “People’s QE”, with $1,200 in direct payments and a $600 increase per week in unemployment insurance until July 31.

Even if the bureaucracy sometimes moved too slowly and there were inevitable issues with this enormous and unprecedented redistribution, the verdict was in immediately: this was a hugely popular success with the lower classes. And why wouldn’t it be? It’s the most generous unemployment payout since the 1930s. For the first time in recent memory governmental policy favoured the lower class worker instead of the upper-middle and upper classes.

The average worker went from $378 per week in state unemployment benefits to $978 per week – a jump of 160%. You ever get a 160% raise before? I haven’t. Indeed, a socialist had to have gotten a lump in their throats when this was announced. One study showed that a whopping 68 percent of unemployed workers who can receive benefits are eligible for payments that are greater than their lost earnings. That number seems a bit high, but the massive desire to support the stay-at-home orders was surely a reflection of a desire to support this radically different approach to poverty prevention.

For the incredibly stingy US system the payout was unexpectedly generous and even based on good sense: the payout was $978 per week because the national average salary for unemployment recipients is $970 per week. It passed the smell test, too: $4,000 per month is a pretty good salary in the US… if you have no kids. However, if you have a very good upper-middle class job then it’s a pay cut, but democratically orienting policy to the needs of the lower classes and not the upper and upper-middle classes in the US? Since when?!

This is when socialists had to think – maybe these bailouts will actually work?

But it’s not as if they pulled the plug on capitalist-imperialist culture, so I think the US 1% made a major mistake in suddenly growing a conscience – they have unwittingly done more to raise class consciousness than any union or socialist party has done for many decades.

Buy some popcorn and watch the show – August 1 is going to see public labor-related rage for the first time since the 1930s.

Big, big problems in almost too many ways to count starting August 1

Michiganders demanding their constitutional right to fish was interesting, courageous and an example of ancestor worship any East Asian would be proud of, but let’s talk turkey about why in May – when it became clear that comparisons of coronavirus with the Spanish Flu of 1918 were obviously tabloid journalism – polls showed so many people refused to go back to work:

The early reopening of the economy was shot in the foot by this “unemployment bailout” – why on earth would the lower classes want to return to their low-paid jobs, where they could contract huge corona-related health care costs, when they can be totally safe and paid better to boot?

Don’t get it twisted for even a moment: the problem was NOT an excessive government handout but the TERRIBLE wages lower class workers have to endure since 1980. What “shot the recovery in the foot”, therefore, was capitalist greed and decades of stagnant wages, not “overly-generous government programs”. If the US had paid proper wages, and had shown proper skepticism to the now-unproven claims of corona hysterics, then they wouldn’t have so many employees telling bosses to take their job and shove it.

And the anger will seethe long-term, because the long, long, LONG overdue payout only sowed the seeds of future class discontent: it took a deadly pandemic for America’s most abused workers to finally get a living wage of above $15/hour. How can the lower classes – who are totally denied class consciousness by the US education system and pop culture – now ever forget that money for them really is there, but it is unfairly redistributed?

The US already has 41 million unemployed officially – given that the median weekly income in the US is $865, we are conservatively talking about 20 million workers who will only go back to work grudgingly on August 1.

The long-term cultural ramifications of that should not be underestimated.

Equally necessary to not underestimate: after August 1 many millions of workers won’t have these proper unemployment benefits nor a job either – at least 25% to up to over 40% of jobs aren’t coming back. So, conservatively, 20-30 million workers are going to get a huge pay cut as they have to survive on the “normal” benefit of just $378 per week.

Again, the cultural ramifications add up to massive discontent.

I think there is no chance that the US 1% authorises an extension of the $600 per week extra past August 1 – it was totally out of keeping with US ideology to begin with, and yet another indicator of the hysteria which swept the US regarding coronavirus. If unemployment benefits remained that high the only choice would be for bosses to raise wages to attract workers, and 40 years of recent shows that simply won’t be allowed to happen in the US.

Congress will, however, likely extend the number of weeks workers can live on the inadequate $378 wage (usually around 6 months in the US) but that will hardly be viewed as sufficient. They are talking about giving a $450 back to work bonus to get workers to accept jobs, and this only shows what a huge mistake the US 1% made amid the corona hysteria (thankfully!) and how they are now scrambling to erase it by offering crumbs.

The Democratic leadership has proposed extending the $600/week until 2021, but that’s typically-empty Democratic electioneering: if they really wanted to protect the lower classes and not corporations then they would have included that proposal in the first bailout package. Democrats waited until they knew extending $600 plus had no chance of getting passed

The cultural discontent will also be amplified and extended by the upcoming US elections in November.

Should we expect on August 1st the media to “play ball” with the 1%, like they normally do, and shepherd the masses to go back to work? Not hardly. I think it’s staggeringly unpatriotic to have “played politics” during this pandemic but nobody would doubt that many journalists, politicians and governors have done and are doing exactly that – why would they stop just a few months prior to Trump’s re-election vote?

(Indeed, whereas pre-corona I viewed Trump as a near-lock to be re-elected the odds of him winning amid such economic depression now seems rather illogical. As he is an extreme narcissist Trump views absolutely everything as being all about him, but I can see why he said back in February that corona was being overhyped to damage him politically.)

Will the fake-leftist MSM agitate in favor of labor/the unemployed army, thus against the 1%? That would be rather amazing, and something not seen since the 1970s, but it actually seems likely because they want to better Democratic election chances. It is only a temporary change caused by the corona hysteria and won’t stick long-term, of course.

Countering the fake-leftist MSM will be the always unwanted presence of Austrians/Chicagoans/Republicans who sanctimoniously rail about the “moral hazard” of “incentivising sloth” – people who never knew working hard at a lousy job yet still being unable to pay the most basic bills – will be equating extending the $600/week with the arrival of Satan, whom they are sure is also a Stalinist socialist. These greedy toads had effectively kept a lid on class consciousness for four decades, but no longer.

By August 1 all will be reminded: the problem remains unequal distribution

The term “working class” is so distorted in US culture that the term has no meaning anymore – I prefer the Iranian term “the lower classes” because everybody instinctively knows if they are in the “upper class” or one of all those “lower classes”. And, far more importantly, is that everyone knows whom they politically support: Mao came from a wealthy family but lived his motto of “Serve the People”, whereas plenty of New York City rappers would set an urban housing project on fire just to get on MTV. Many in the US are aware of Eugene “Daddy Socialist” V. Debs’ saying “while there is a soul in prison, I am not free,” but they are not told what preceded it: “while there is a lower class, I am in it”.

So support/opposition to $600 extra per week is going to go a long way in showing who supports which class.

Ultimately, the bailouts will not work – in terms of aiding society – for the three other major components of the US economy: the small- and medium-sized business, corporations and high finance. Addressing “Will the bailouts work?” for those sectors requires another article, but this column democratically addressed the bailouts’ effect on the largest sector of society – the lower classes.

August 1 will mark a critical new era in which domestic disenchantment with the American system reaches an all-time peak, and then only increase from there. Mark your calendars.

It’s not as if American socialism doesn’t have a history to draw upon for strength and guidance, such as John Dos Passos. The U.S.A. trilogy was ranked 23rd on Modern Library’s 100 best English-language novels of the 20th century, but today Dos Passos has been banished from schools, academia and public consciousness – he chronicled the early years of American socialism.

*********************************

Corona contrarianism? How about some corona common sense? Here is my list of articles published regarding the corona crisis.

Capitalist-imperialist West stays home over corona – they grew a conscience? – March 22, 2020

Corona meds in every pot & a People’s QE: the Trumpian populism they hoped for? – March 23, 2020

A day’s diary from a US CEO during the Corona crisis (satire) March 23, 2020

MSNBC: Chicago price gouging up 9,000% & the sports-journalization of US media – March 25, 2020

Tough times need vanguard parties – are ‘social media users’ the West’s? – March 26, 2020

If Germany rejects Corona bonds they must quit the Eurozone – March 30, 2020

Landlord class: Waive or donate rent-profits now or fear the Cultural Revolution – March 31, 2020

Corona repeating 9/11 & Y2K hysterias? Both saw huge economic overreactions – April 1, 2020

(A Soviet?) Superman: Red Son – the new socialist film to watch on lockdown – April 2, 2020

Corona rewrites capitalist bust-chronology & proves: It’s the nation-state, stupid – April 3, 2020

Condensing the data leaves no doubt: Fear corona-economy more than the virus – April 5, 2020

‘We’re Going Wrong’: The West’s middling, middle-class corona response – April 10, 2020

Why does the UK have an ‘army’ of volunteers but the US has a shortage? – April 12, 2020

No buybacks allowed or dared? Then wave goodbye to Western stock market gains – April 13, 2020

Pity post-corona Millennials… if they don’t openly push socialism – April 14, 2020

No, the dollar will only strengthen post-corona, as usual: it’s a crisis, after all – April 16, 2020

Same 2008 QE playbook, but the Eurozone will kick off Western chaos not the US – April 18, 2020

We’re giving up our civil liberties. Fine, but to which type of state? – April 20, 2020

Coronavirus – Macron’s savior. A ‘united Europe’ – France’s murderer – April 22, 2020

Iran’s ‘resistance economy’: the post-corona wish of the West’s silent majority (1/2) – April 23, 2020

The same 12-year itch: Will banks loan down QE money this time? – April 26,

2020

The end of globalisation won’t be televised, despite the hopes of the Western 99% (2/2) – April 27, 2020

What would it take for proponents to say: ‘The Great Lockdown was wrong’? – April 28, 2020

ZeroHedge, a response to Mr. Littlejohn & the future of dollar dominance – April 30, 2020

Given Western history, is it the ‘Great Segregation’ and not the ‘Great Lockdown’? – May 2, 2020

The Western 1% colluded to start WWI – is the Great Lockdown also a conspiracy? – May 4, 2020

May 17: The date the Great Lockdown must end or Everything Bubble 2 pops – May 6, 2020

Reading Piketty: Does corona delay the Greens’ fake-leftist, sure-to-fail victory? – May 8, 2020

Picturing the media campaign needed to get the US back to work – May 11, 2020

Scarce jobs + revenue desperation = sure Western stagflation post-corona – May 13, 2020

France’s nurses march – are they now deplorable Michiganders to fake-leftists? – May 15, 2020

Why haven’t we called it ‘QE 5’ yet? And why we must call it ‘QE 2.1’ instead – May 16, 2020

‘Take your stinking paws off me, you damned, dirty public servant!’ That’s Orwell? – May 17, 2021

The Great Lockdown: The political apex of US single Moms & Western matriarchy? May 21, 2021

I was wrong on corona – by not pushing for a US Cultural Revolution immediately – May 25, 2021


Ramin Mazaheri is the chief correspondent in Paris for Press TV 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 the books Ill Ruin Everything You Are: Ending Western Propaganda on Red China’ and the NEW Socialisms Ignored Success: Iranian Islamic Socialism.

France’s nurses march – are they now deplorable Michiganders to fake-leftists?

France’s nurses march – are they now deplorable Michiganders to fake-leftists?

May 15, 2020

By Ramin Mazaheri for the Saker Blog

(Hey hey, my new book is out today! Socialism’s Ignored Success: Iranian Islamic Socialism. Buy a copy for yourself and 50 of your closest friends and Iranophobic/Islamophobic/socialism-phobic enemies.)

On May 14 France’s nurses held a protest march in Paris despite ongoing fears about coronavirus — so are they no longer rightly-guided heroes but far-right neo-fascists now?

For several months we’ve been banging pots in gratitude and watching corporations praise them in TV ads but – there they are: gathering in public, not really keeping 2 meters between each other, demanding economic policy changes, defying the advice of their well-paid bosses and generally being very, very bad children who should go straight to bed after dinner.

France’s medical staff won’t be infantilised and have no time for jokes – they are tired of enduring economic hardship and poor working conditions.

Those with overprotective parents claimed the Great Lockdown was to save just one life, but the most common justification among mature adults was to avoid overwhelming medical systems – in France they failed to heed years of public protests saying exactly that.

Excepting the Yellow Vests, nobody in France has protested more in the past couple years than medical staff – austerity has gutted a medical system which in 2000 was ranked number one in the world. I got tired of covering them. My Sputnik Français colleagues hid the tedium of our job as far as the second paragraph: “… protested in order to denounce a lack of resources. It’s a demand which is far from new.” But, you know, people gotta listen to the protesters, so work has us back on the streets again….

Had people listened earlier, France would have far fewer dead grandparents today.

In the US people were explicitly told by Western journalists to not listen to the first anti-Great Lockdown protests, in Michigan. I immediately supported the protesters (in We’re giving up our civil liberties. Fine, but to which type of state?) because, you know – we’re trying to have a democracy here. However, the fake-leftist media looked on them with loathing and terror – calling them irresponsible, science-stupid, selfish, death-crazed, martyrdom-seeking, dangerous curmudgeons and neighbors who would not loan you a cup of sugar.

So the same applies to these French nurses, right?

You would accuse them of being nonchalant about corona? (Or is their crime that they aren’t single-mindedly obsessed with corona enough?)

We can’t really say, because there is no mention of the protesting nurses in Western media, or even in French state foreign-language media. From a mixed economy model to these nurses – more of “the French bad example”.

The widespread insulting of Michiganders refused to take into account their economic situation and the fact that their type of state put them in such a vulnerable position. A stunning 25% of their workers had just become jobless, so why wouldn’t they be demonstrating to get the government’s attention? On top of that their governor imposed an extremely harsh stay-at-home order, as though this was something routine for Michiganders instead of being a (hysterical, economically-suicidal overreaction) shocking, unprecedented first which is undoubtedly more restrictive on movement than being sentenced to house arrest for having committed a serious crime.

Do I think France’s nurses are heroes? Not really – I never asked them to do my job and stand at the front lines during the Yellow Vest protests and do live interviews, giving a big target for the rubber bullets. But, then again, my local garbagemen never asked me to heroically hoist refuse cans for decades even though it’s hardly fun and statistically likely to lead to an early death. And no housewife ever asked me to take care of the kids for even one month, and that seems harder than being a garbageman. Am I a curmudgeon or conceited? No, when one accepts socialism one can’t help but view all workers are equal (capitalists never enjoy this feeling). We all deserve our 15 minutes of fame, I suppose, but caring about fame is decidedly not heroism.

But the kiddies do need heroes, so should the West start cheering: “Nurses are our heroes – except French nurses!”

There is a very worrying outcome of the recent hero worship of medical practitioners: more doctors are now entering politics. The problem with this is simple: you can’t tell a doctor anything – they are the world’s worst-know-it-alls/sufferers from God complexes. They march into a room, quite late, hand down a diagnosis with absolute certainty, which then turns out to be wrong and kills you later (CNBC: The third-leading cause of death in US most doctors don’t want you to know about), but not before you are debt-yoked to a hugely inflated bill, and then doctors imperiously march into the next room and do the same thing all over again. This is NOT a mentality conducive to the consensus-building demanded by democracy.

Well, that’s in socialist-inspired democracy. In liberal democracy technocrats rule with executive decrees, so look for more doctors in office – they can afford to campaign, after all. Thus, “the recent hero worship of medical practitioners” isn’t going to lead to sensible, humble, hard-working nurses to get into office in the West – liberal democracy systematically puts the rich into office.

‘Liberty or boogaloo’? God bless America!

The coronavirus has really laid bare how dictatorial and anti-democratic their executive-dominated system really is, no? What checks and balances, much less public opinion reflected in public policy?

Across the country governors (the presidents of states) have imposed lockdowns without a single legislative vote of approval (at least that I can find). Michigan’s governor, a front-runner to be Biden’s vice-president, seems disturbingly rankled by the existence of other elected officials: Gov. Whitmer blasts Michigan Legislature for meeting during stay-at-home order, says she will veto power-limiting bills. Historically, this trend towards executive decree “began” with Dubya Bush and the Patriot Act, but that’s an inaccurate and sentimental reading of Western liberal democratic history. However, it clearly has become de rigeur across the West, and especially in Hollande/Macron France.

Wisconsin has become the first state, finally, whose judicial branch finally got involved and struck down their governor’s unilateral decree. (What’s amazing is how the Mainstream Media coverage of this was nothing but political sniping – Republicans undermining Democrats – from the very lede sentence.)

If there really are checks and balances in Western liberal democracy they are non-existent or move too slow. The reality is that judges in general are overwhelmingly hyper-conservative and in a non-revolutionary nation do nothing but defend the status quo – why has no judge interceded to prevent the weekly mauling of the Yellow Vests, for example?

(The Vesters will be out there this Saturday, of course, but we already knew what naughty children they are. I wonder if the media will cover it? If they do I doubt they will cover them two weeks in a row.)

It was historically predictable that Michigan and Wisconsin are the first to demand their rights – the Midwest has historically been the hotbed of American “progressivism” (but they still can’t say socialist over there). The state of Missouri was the first to sue China which, LOL, is misguided but at least they are sticking up for residents of the “Show-Me State”. Texas is semi-Midwestern, and non-Americans would expect them to be the first to resist for their sovereign rights, but Texans mostly just talk a lot – like Dubya Bush: all (cowboy) hat and no cattle.

By far the most delightful, “only in America” news item actually comes from the incredibly unfunky state of New Hampshire – “armed demonstrators passed out ‘Liberty or Boogaloo’ fliers at a statehouse protest”. You must be a fake-leftist if you can’t support that, LOL!

I know that when my liberty feels too infringed I immediately break out my best boogaloo dance – it works surprisingly well. I have a “Where’s My Bailout?” t-shirt from 2008 – I need a “Liberty or Boogaloo” t-shirt to sartorially commemorate the Great Lockdown. I really have to question the alleged superiority of the American entrepreneur when I cannot yet find such a t-shirt for sale?

Western journalists have thrown away skepticism during corona, except towards protesters

French nurses go against the script and thus they get ignored, but most often anti-corona hysteria protesters just get discredited.

The reality back in April was that the Michigan gun-wavers were just a small fringe group – the overwhelming majority of protesters stayed in their car as it was primarily an “auto protest”. The Mainstream Media focused on a tiny portion of overall demonstrators in order to totally discredit the anti-establishment message.

In today’s New York Times lead economics columnist, Paul Krugman (who surely cannot boogaloo his way out of a wet paper bag) also discredits the protesters, opposes ending the Great Lockdown (“never mind what the experts say”, he condescendingly pouts) and even fails to bring up a single word about the obvious economic justification for American discontent in his article Covid-19 Reality has a liberal bias:

Indeed, the antilockdown demonstrations of recent weeks appear to have been organized in part by the same people and groups that have spent decades denying climate change.

Virus trutherism is also reminiscent of the various kinds of trutherism that ran rampant during the Obama years. Inflation truthers insisted that the government was hiding the truth about rampant inflation; unemployment truthers, including a guy named Donald Trump, insisted that the steadily improving job numbers were fake.

In my last article (which elicited no happy dancing) Scarce jobs + revenue desperation = sure Western stagflation post-corona, I noted how Western inflation gauges exclude food, energy, housing, medical care and education costs – call me a “conspiracy theorist” for saying some hiding is going on, Paul. US unemployment data counts working just one hour per week as being employed, which allows part-time work and underemployment to pad their (pre-Great Lockdown ) alleged “full employment” rate – Paul must know this, but reporting that doesn’t keep in you in New York Times clover.

The Guardian’s anti-Michigander piece (yes, I enjoy writing the word “Michigander”) I linked to from April 17 used this same “discredit-via-the-organiser” tactic – as if participants were sheep and not humans with free will – in the 5th paragraph of their story.

This is the same tactic we saw against the Yellow Vests. In the 21st century West being lower class and making economic demands automatically makes one a far-right, anti-Semitic, anti-Black, deplorable neo-fascist. Unfortunately, political understanding will progress not one millimeter with such an unfactual position, yet there is huge popular Western support for such a political interpretation.

People also think I eccentrically enjoy writing the term “fake-leftist”, but it’s really quite necessary: in the US the term “leftist” is refused by Democrats as too radical, so they prefer what Krugman used in his headline – “liberals”. US liberals have only the scantest leftist economic component to their ideology – when you press them to be honest they are resolutely anti-socialist and inevitably support not just neo-imperialism but even many aspects of far-right neoliberalism. Yes, they do not openly claim to be “leftist”, but they certainly falsely and opportunistically present themselves that way. This is why “fake-leftist” can and should be used synonymously with “liberal”.

Liberals, fake-leftists and corona hysterics have two things in common: they are now hissing and booing at the French nurses, and they cannot boogaloo.

**********************************

Corona contrarianism? How about some corona common sense? Here is my list of articles published regarding the corona crisis.

Capitalist-imperialist West stays home over corona – they grew a conscience? – March 22, 2020

Corona meds in every pot & a People’s QE: the Trumpian populism they hoped for? – March 23, 2020

A day’s diary from a US CEO during the Corona crisis (satire) March 23, 2020

MSNBC: Chicago price gouging up 9,000% & the sports-journalization of US media – March 25, 2020

Tough times need vanguard parties – are ‘social media users’ the West’s? – March 26, 2020

If Germany rejects Corona bonds they must quit the Eurozone – March 30, 2020

Landlord class: Waive or donate rent-profits now or fear the Cultural Revolution – March 31, 2020

Corona repeating 9/11 & Y2K hysterias? Both saw huge economic overreactions – April 1, 2020

(A Soviet?) Superman: Red Son – the new socialist film to watch on lockdown – April 2, 2020

Corona rewrites capitalist bust-chronology & proves: It’s the nation-state, stupid – April 3, 2020

Condensing the data leaves no doubt: Fear corona-economy more than the virus – April 5, 2020

‘We’re Going Wrong’: The West’s middling, middle-class corona response – April 10, 2020

Why does the UK have an ‘army’ of volunteers but the US has a shortage? – April 12, 2020

No buybacks allowed or dared? Then wave goodbye to Western stock market gains – April 13, 2020

Pity post-corona Millennials… if they don’t openly push socialism – April 14, 2020

No, the dollar will only strengthen post-corona, as usual: it’s a crisis, after all – April 16, 2020

Same 2008 QE playbook, but the Eurozone will kick off Western chaos not the US – April 18, 2020

We’re giving up our civil liberties. Fine, but to which type of state? – April 20, 2020

Coronavirus – Macron’s savior. A ‘united Europe’ – France’s murderer – April 22, 2020

Iran’s ‘resistance economy’: the post-corona wish of the West’s silent majority (1/2) – April 23, 2020

The same 12-year itch: Will banks loan down QE money this time? – April 26,

2020

The end of globalisation won’t be televised, despite the hopes of the Western 99% (2/2) – April 27, 2020

What would it take for proponents to say: ‘The Great Lockdown was wrong’? – April 28, 2020

ZeroHedge, a response to Mr. Littlejohn & the future of dollar dominance – April 30, 2020

Given Western history, is it the ‘Great Segregation’ and not the ‘Great Lockdown’? – May 2, 2020

The Western 1% colluded to start WWI – is the Great Lockdown also a conspiracy? – May 4, 2020

May 17: The date the Great Lockdown must end or Everything Bubble 2 pops – May 6, 2020

Reading Piketty: Does corona delay the Greens’ fake-leftist, sure-to-fail victory? – May 8, 2020

Picturing the media campaign needed to get the US back to work – May 11, 2020

Scarce jobs + revenue desperation = sure Western stagflation post-corona – May 13, 2020


Ramin Mazaheri is the chief correspondent in Paris for Press TV 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 the books Ill Ruin Everything You Are: Ending Western Propaganda on Red China’ and the NEW Socialisms Ignored Success: Iranian Islamic Socialism.

Picturing the media campaign needed to get the US back to work

May 11, 2020

Picturing the media campaign needed to get the US back to work

Ramin Mazaheri and Jeff J Brown – for The Saker Blog

We can’t always find it but there is always a tipping point. Last week I crunched the data and suggested it’s May 17: The date the Great Lockdown must end or Everything Bubble 2 pops.

Maybe I’m a few days off, but not many more: This bubble-popping is precisely why Trump is not wearing a mask, planned to end the corona task force and keeps talking about reopening; this is why 300 US CEOs and the Department of Defense sent Mexico’s president a letter threatening that they better reopen now and not screw up corporate supply chains.

But what is absolutely certain is that getting the West back to work requires some sort of propaganda campaign to do so – what will that media effort look like?

When I recently asked What would it take for proponents to say: ‘The Great Lockdown was wrong’? readers pointed that many politicians are dug in way too deep to climb out. Yet, whether they claim to be “wrong” or “right” – climb out they must:

There has never been a vaccine for a coronavirus; neoliberalism is predicated on constant growth and wage-earning; The New York Times’ irresponsible rebroadcasting of 1.1 million US deaths in “a best-case scenario wasn’t worth the paper it was printed on – the West has to end the Great Lockdown.

But Americans aren’t going to go back to work until their media stops scaremongering, as their scaremongering line is slavishly followed by European and Western media: polls show more Americans fear getting sick from the virus than economic hardship, and despite all the data showing only the elderly and medically-vulnerable are at risk (thus they are the healthy ones who should be quarantined).

The New York Times now despises Sweden for their corona-sovereignty, but even they can’t help but admit Sweden shows the only way out of the Great Lockdown: “But what about the economy? The choice is not between indefinite shutdown and Russian roulette. A transition needs to occur that balances the risks at play. From that perspective, Sweden is the future.”

The first step is talking about it – how will the West do that?

I have said from the beginning that the West’s arrogance is that whatever China can do, they can surely do: The West is employing quarantining, control methods and collective-over-individualist concepts used by Asian nations, but without having similar cultures of government economic intervention nor widespread trust in their governments, and amid their economic Great Recession on top of it all.

But can the West use the same media persuasion techniques as China?

To find out what worked for China I posed the question to Jeff J. Brown, author of the most important book on China in decades, China is Communist, Dammit! Brown lived in China for many years and realised he had to refute with data and analysis the Western absurdity that China’s rise has come via capitalist methods.

“There is always lots of debate in China, especially facilitated today with all the electronic social media platforms. There was a lot of discussion in China about citizens having more say in the mainstream media, to increase the flow of useful information during the lockdown. There were forums of every stripe, airing grievances about rules being too strict to measures being too lax, to forums on using TCM (Traditional Chinese Medicine) and old fashioned remedies to prevent/treat Covid.”

This is quite a contrast from what I dubbed The West’s middling, middle-class corona response, which inherently assumed that everyone has a comfortable home, job and savings, even though since 1980 the West’s middle-class has been blown apart. This response was designed by well-paid doctors, professors and epidemiologists, and trumpeted by well-paid Mainstream Media mouthpieces.

In Brown’s book he relates how the Chinese Communist Party is essentially the world’s largest polling agency, constantly querying public opinion on matters big and small. Frankly, if I was forced to select a single trait which separates China’s government from the West’s it would be this one, as it explains their government’s success & efficiency, the obvious & justified basis for the CCP’s popular support, and the bottom-up nature of socialist democracy as opposed to the top-down, technocratic & aristocratic model of Western liberalism.

“There were lots of differing opinions aired in neighborhood, village and town meetings. The red line to not cross is suggesting the overthrow of China’s communist-socialist system of governance, which is no different than the West, where it is verboten to demand an end to capitalism.

(FYI, when I asked Why does the UK have an ‘army’ of volunteers but the US has a shortage? I related how right up there with Iran’s “Down with England, America and Israel” chants is, “Down with those who oppose (the political principle of) the guardianship of the Islamic jurist.” Socialist-inspired revolutionary nations make it crystal clear that a return to capitalism-imperialism or a tolerance of Western-style fascist speech will never be permitted.)

Mao’s mass line continues to this day in the form of millions of surveys conducted among the people, to air concerns and catch the popular zeitgeist. It is all about learning from the bottom up. Then and now, you grab a banner and protest publicly, when all these other avenues of communication have failed. There are an estimated 300-500 public protests a day in this country of 1.4 billion citizens. China haters take this as a sign of weakness. Baba (Father) Beijing sees it as a source of strength.”

The 21st century Western reality is that taking to the streets usually makes one a far-right neo-fascist or an irresponsible anarchist: we see that in the treatment of the Yellow Vests or the recent anti-Lockdown protests in Michigan, which I immediately supported – of course, as I support democracy – in, We’re giving up our civil liberties. Fine, but to which type of state? Brown relates how China’s state is far superior in perhaps the most important thing in politics: incorporating public opinion into public policy.

If anything will be an argument for centralisation over federalism – and central planning over neoliberalism’s “invisible hand… guiding us all towards corporate fascism & neo-imperialism” – it will be the corona-return: it’s clear that the US is wasting a tremendous amount of time, energy and efficiency by having a central government whose suggestions can be and are being totally ignored at the state level.

“Public campaigns like this are done at the neighborhood and private/public employer level. These entities would get their instructions from city/town/village government units, which in turn, working up the hierarchy, got theirs from county, provincial and national level bodies. As is true in socialist countries, the national government may set the tone, but democracy devolves down to the local level, allowing for reasonable adaptation, according to needs on the ground.”

Imagine the amount of discussion – which could have gone to relating the needs of the lower classes and the Mom and Pop shopkeeper/proletariat – which the US wastes daily in political sniping and Trump Derangement Syndrome? The Eurozone common currency will be similarly hindered by disunity, which is the last thing needed in a crisis.

China was stunningly running at 75% economic capacity around February 10 because they are coordinated and united. Some US governors may even, unthinkably, play politics and delay their reopening with November election goals in mind. Americans haven’t had a war on their soil for 150 years – they just don’t know what a crisis is, and that helps explain their lack of unity in this crisis. They think that their preferred politician not taking office in November constitutes a crisis – the building historic economic catastrophe should recalibrate their realities.

Socialist-inspired nations already made the necessary changes, but the Western liberal & economic model cannot

So Brown has surprisingly shown how – as a result of their model of socialist democracy, and not liberal democracy – China really didn’t need a multi-week media campaign like I envision the West needing because there is so much communication between the people and their pubic officials, as well as such an awareness of what is going on, what is needed and what is to be done.

That makes perfect sense when we realise that socialist democracy is based around discussion-based consensus and not the unilateral decree of Western “liberal strongmen” like Emmanuel Macron nor the individualist “great man-ism” personified by Ayn Rand’s blowhard protagonists. In places like Iran and China everything is done by committee (and the CCP and Basij are essentially two huge committees, after all) because these are not only two new systems, but also systems which have inspired massive Western sabotage campaigns: these bureaucrats know that they cannot be high-handed and aloof, but instead must be receptive, responsive and always trying to keep as large a proportion of the population on the side of their socialist-inspired revolution as possible. In short: they cannot risk wasteful mistakes, but why would they even want the system the West has, especially in a few more months?

Of course, there will still be huge health concerns on May 17, especially in the US, but Condensing the data leaves no doubt: Fear corona-economy more than the virus. Of course, the “Western economy” is not at all synonymous with “global economy”, a rather vital point to Iranians, Chinese, Cubans, etc.

Western politicians, none more than state of emergency-loving France, keep reminding us that this is a war: a war necessarily needs heroes, and the West now needs ones other than nurses and rich doctors. A media campaign of, “Go back to work to save grandma’s social security (and our consumer, unplanned economy)”, is thus logical but would obviously be a complete 180 from the editorial policies and public stances of countless Western media and politicians. Such a campaign is probably only feasible for socialist-inspired nations, where collective and not individual action is lauded.

Trump says he views Americans as ‘warriors’ amid coronavirus and he got roundly mocked for it… but I don’t know what the top US public servant can do otherwise, really? America’s bureaucrats thus know the obvious truth of this article – Westerners will need some sort of inspirational campaign to get them back to work. Westerners are culturally prone to fearing others and wanting to stay at home alone even in good times: Given Western history, is it the ‘Great Segregation’ and not the ‘Great Lockdown’?

Westerners will thus likely stay hunkered down, as for months their private media has been ravenously gobbling up the higher ratings they have gotten via pounding fear into their viewers.

You can say I am underestimating the virulence of corona, but about this I am sure: in the Western Mainstream Media there has been basically zero space given to objectively giving so-called “contrarian” views which could possibly calm people’s fears. It as if I am a bad journalist because I am not scaring people?!

I am a bad journalist for immediately waving the red flag that a Great Lockdown is actually a forced suicide march for the West’s abandoned lower classes? It is not my fault that the neoliberal & neo-imperial system of the West refuses to take care of their elder class, and Pity post-corona Millennials… if they don’t openly push socialism actually contains an immediate answer to the economic chaos caused by the Great Lockdown.

Only time will tell if the Great Segregation/Lockdown was necessary, but we definitely know much more about how to handle coronavirus than on January 1 or even March 1: protect the vulnerable, isolate the sick, take personal responsibility actions in public, population-dense regions need extra precautions, and… get back to normal before the Western double-bubble economy pops.

**********************************

Corona contrarianism? How about some corona common sense? Here is my list of articles published regarding the corona crisis, and I hope you will find them useful in your leftist struggle!

Capitalist-imperialist West stays home over corona – they grew a conscience? – March 22, 2020

Corona meds in every pot & a People’s QE: the Trumpian populism they hoped for? – March 23, 2020

A day’s diary from a US CEO during the Corona crisis (satire) March 23, 2020

MSNBC: Chicago price gouging up 9,000% & the sports-journalization of US media – March 25, 2020

Tough times need vanguard parties – are ‘social media users’ the West’s? – March 26, 2020

If Germany rejects Corona bonds they must quit the Eurozone – March 30, 2020

Landlord class: Waive or donate rent-profits now or fear the Cultural Revolution – March 31, 2020

Corona repeating 9/11 & Y2K hysterias? Both saw huge economic overreactions – April 1, 2020

(A Soviet?) Superman: Red Son – the new socialist film to watch on lockdown – April 2, 2020

Corona rewrites capitalist bust-chronology & proves: It’s the nation-state, stupid – April 3, 2020

Condensing the data leaves no doubt: Fear corona-economy more than the virus – April 5, 2020

‘We’re Going Wrong’: The West’s middling, middle-class corona response – April 10, 2020

Why does the UK have an ‘army’ of volunteers but the US has a shortage? – April 12, 2020

No buybacks allowed or dared? Then wave goodbye to Western stock market gains – April 13, 2020

Pity post-corona Millennials… if they don’t openly push socialism – April 14, 2020

No, the dollar will only strengthen post-corona, as usual: it’s a crisis, after all – April 16, 2020

Same 2008 QE playbook, but the Eurozone will kick off Western chaos not the US – April 18, 2020

We’re giving up our civil liberties. Fine, but to which type of state? – April 20, 2020

Coronavirus – Macron’s savior. A ‘united Europe’ – France’s murderer – April 22, 2020

Iran’s ‘resistance economy’: the post-corona wish of the West’s silent majority (1/2) – April 23, 2020

The same 12-year itch: Will banks loan down QE money this time? – April 26,

2020

The end of globalisation won’t be televised, despite the hopes of the Western 99% (2/2) – April 27, 2020

What would it take for proponents to say: ‘The Great Lockdown was wrong’? – April 28, 2020

ZeroHedge, a response to Mr. Littlejohn & the future of dollar dominance – April 30, 2020

Given Western history, is it the ‘Great Segregation’ and not the ‘Great Lockdown’? – May 2, 2020

The Western 1% colluded to start WWI – is the Great Lockdown also a conspiracy? – May 4, 2020

May 17: The date the Great Lockdown must end or Everything Bubble 2 pops – May 6, 2020

Reading Piketty: Does corona delay the Greens’ fake-leftist, sure-to-fail victory? – May 8, 2020


Ramin Mazaheri is the chief correspondent in Paris for Press TV 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 the books ‘I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’ and the upcoming ‘Socialism’s Ignored Success: Iranian Islamic Socialism’.

Reading Piketty: Does corona delay the Greens’ fake-leftist, sure-to-fail victory?

May 09, 2020

Reading Piketty: Does corona delay the Greens’ fake-leftist, sure-to-fail victory?

By Ramin Mazaheri – for the Saker Blog

A party built around climate change is a luxury only the West can afford, and like most luxuries it is a corrupting influence.

While covering a protest in France several years ago a union member told me how she hoped Iran would stop selling its oil in order to protect the environment.

“Sure,” I told her, “how many billions of euros can we expect France to send us so we can buy food?” I assume she is still ignoring this inconvenient truth and enormous flaw in climate change demands on non-Western countries.

Nobody knows how things will shake out in May 2020 – just how bad the West’s Double Bubble + Great Lockdown economy will soon be – but prior to coronavirus green parties were poised to become a top two party across the West for the first time. In 2019 European Parliament elections they shockingly won 10% of seats and 13% of France’s.

That’s not a majority, but the up-to-the-minute reality is that everybody else has been discredited across the Eurozone: the conservatives, the fake-leftists/pseudo-socialists, the nouveau centrists like Emmanuel Macron, the real-but-disliked leftists. Voters who don’t go far-right have only one choice, and that’s a Green party.

The corona overreaction is throwing a spanner into the works, but are we really predicting a revolution in the Western political trajectory?

It’s certain that the neoliberal response cannot possibly satisfy the lower classes, thus incumbents aren’t going to survive their next election: the next five years should be the same as pre-corona – green parties will play the role of ineffectual opposition/status quo-enforcers to far-right corporate fascists who are more jingoistic than patriotic. That’s what politics will be in much of the West, though not in the two-party Anglophone world.

And yet greens will do what fake-leftists always do: screw up, sell out and falsely claim total ownership of the moral high ground.

Given that greens are the political force most poised to profit in the post-corona profit we should ask: Why are the greens such fake-leftists and so unable to provide adequate solutions for the Western lower classes?

Thomas Piketty and why we have to remind hippies that humans have feelings too, just like crystals do

On a moral level greens are human-hating Malthusians at heart – who could deny that? They put rocks and squirrels ahead of people.

On a political level the problem with handing the greens power amid an economic crisis is how very neoliberal their economics are: capitalism-imperialism fringed with a green garland is still rapacious capitalism-imperialism, after all. Perhaps because they are such animal and nature worshippers greens have totally swallowed the idea that “animal spirits” are the only thing which can possibly guide the economy. Which totem animal corresponds to the spirt of compound debt, I wonder?

We can now understand how very easy it will be for the Western 1% to pivot and embrace green parties as a “solution” to pacify the masses post-corona, much like Barry Obama rebranded the US in 2008.

To prove my point: take this extended interview from April 27 with economist-of-the-decade Thomas Piketty by The Intelligencer, which is part of the fake-leftist New York Media digital empire: here we can witness fake-leftist Westerners have it dawn on them that… oh yeah, it seems politics actually can shape economic outcomes?

Piketty is known as the “scholar of inequality”, and while such issues are the focus of leftists it does not mean he automatically is a socialist and not a capitalist. In the interview he discusses his new book and its solution to the Great Recession-cum-Great Depression 2: “participatory socialism”.

Much like Bernie Sanders (the Democratic Party chiefs he repeatedly bows to surely think: “Thank God we have a donkey like him!”) and his “democratic socialism”, Piketty also misunderstands socialism so very much that he thinks he needs a modifying adjective. At best, we can say that these fake-leftists only grasp the primary aspect of socialism (economic redistribution), but not its second, twin pillar (political power redistribution).

The idea that socialism is not “participatory” is easily and overwhelmingly disproven:

Last year Cuba approved a new constitution: “Some 133,680 meetings were held in neighborhoods and places of work and study. There were 8,945,521 participants, with an estimated two million attending more than one, so that the participation rate was approximately three-quarters of the population. There were 1,706,872 commentaries by the people, with 783,174 proposed modifications, additions, or eliminations.  On the basis of the opinions and proposals of the people, the Constitutional Commission revised the draft.  More than 50% of the proposals of the people were included in the modifications; nearly 60% of the articles were modified in some form.

Is that not “participatory” enough?

Piketty seems to have swallowed the lie that socialism has no second pillar which upholds political empowerment of the humble citizen? We see how millions of Cuban hands wrote their constitution in a bottom-up manner, as opposed to the top-down technocracy/aristocracy of Western liberalism.

Fake-leftists fear socialism because they made no personal effort to understand it, thus their conception of socialism is based on ignorance, propaganda and self-interest, and not logic or history. We see all of these things on display from the otherwise estimable Piketty in this interview.

The West gives Piketty a chance: if he doesn’t seize the moment now then he is an idol in an ivory tower

What can we expect New York Media to say when confronted with the rapacity of neoliberalism anything but, “We had no idea?!”

We should expect more from Piketty – we can judge here if he is more than just a detached theoretician who poses no threat to status quo capitalism-imperialism.

The Intelligencer: One of the main responses to the last book, at least among the American audience, was to treat r > g (Piketty’s shorthand for the fact that the returns to capital have been greater than the growth of the economy as a whole) as though it were a law of nature that could be modified only very occasionally through exceptional political change. But actually, the fact that a rich person’s bank account grows faster than the national GDP, that’s just a phenomenon created by a particular political structure too. It’s a creation of politics.

This illustrates my point: Western fake-leftists – from those approved by investor banker scions to write for New York Media group to the greens – have no idea about how politics shapes economics even though this is the very stuff which socialism’s first pillar is made of. Yes, of course economics are created by a political structure! We see that the neoliberally-indoctrinated never question their core beliefs and “animal spirits” until it is too late.

Piketty’s mildest-of-responses – apologetic and inexplicably guilty – shows why he is so appealing to fake-leftist Westerners: the West’s favourite “leftist economist” shows how his values are not based around socialist critiques but the values of diversity drawn from cosmopolitanism, and culminating in a relativistic moral nihilism which is absolutely unacceptable in the black and white field of economics, with its measurable outcomes.

Piketty: It is.

Probably I was not sufficiently clear about that.

I must say in general I have learned a lot from all the discussion from my previous book. I have learned a lot by traveling to many countries to which I had not traveled sufficiently before. I think by broadening the scope of countries and historical trajectories I look at, it also made me realize this incredible diversity of human ideologies and human imagination to restructure all the time the societies. And that’s probably the main lesson of history, that the idea that there is only one way and there is no alternative is just wrong. 

The Intelligencer: You heard that a lot starting in the 1990s and all through 2008: There’s only one way. (The standard formation of this is ‘TINA: There Is No Alternative (to neoliberalism and neo-imperialism)’.)

PikettyIt’s wrong.

We “heard that a lot” from Westerners – everywhere else people who were not aspiring to being Western clients/puppets were disagreeing… and getting bombed/blockaded for it.

Being “wrong” on this issue merits a lot of public admission of shame and guilt, but Piketty is content to allow decades of deadly mismanagement to be summarised with two words! I wish my teachers had been so leniently brief when I was wrong.

He doesn’t have to be a political firebrand or a raging poet, but we need more than just two words here: Piketty’s reticence is both culturally self-serving (Piketty is French) and also dangerous because the West’s refusal to let anyone go their own way has had such deadly and impoverishing results. Their conversation continues:

The Intelligencer: Since the crash, there has been a sort of acknowledgment from places like the IMF, World Bank, Financial Times, The Economist, all these voices of elite globalized neoliberalism saying, “Okay, there are some real problems here.” But they still aren’t thinking much about alternative models.

PikettyIf you look at how things happen, you’ll see a potential for political mobilization and historical change through social and economic and political processes, which always happen much faster than what the dominant discourse tends to imagine.

The journalist is essentially saying to Piketty: give us an alternative model, please! But Piketty backs away and exonerates those entities by saying, “Well, life moves fast.”

That’s his whole answer – it isn’t much. It’s as if Piketty wants to stay on the good side of these institutions and media – to keep getting book reviews, praise and invites to speak.

Today is the 75th anniversary of Victory in Europe Day – do you know the socialist version of what happened?

It only takes a few paragraphs…

What Piketty does not say is that we need to learn from the history of socialism, which is an alternative model that has been in practice for over a century but which neoliberalism violently opposes.

Western fake-leftists know what waits for them if they say that history openly: blacklisting, de facto censorship, no more invites to speak, no more fawning reviews – it’s the same glass ceiling/first-to-be-fired which vocal union members face in their jobs. This is partially why Piketty wants to invent a “new” socialist model and thus erase a century of global history – he doesn’t want to risk his position.

Another component is that for Westerners socialism in any form is not an “alternative model” but a dead model, even though – gasp! – it clearly is a victorious model. This historical revisionism/ignorance goes back to the millions-murdering formative years of industrial capitalism (the last third of the 19th century), as I wrote about last week in The Western 1% colluded to start WWI – is the Great Lockdown also a conspiracy?

Crucially, Piketty’s generation – and the one before it and the one after it – was taught that US-led “freedom” defeated fascism. Please note neither has an economic component – it is good versus evil, liberty versus repression – whereas socialism always has a loaded economic component; the pity is that its political component (democracy both direct and indirect, like in Western democracies) was caricatured into a totalitarian dictatorship by a capitalist-imperialist 1% waging perpetual war.

Thus, 75 years later the West still does not realise that WWII saw corporate fascism defeat other corporate fascists – the US, full of Jim Crow and a military-industry complex, was indeed a corporate fascist state which defeated the German and Japanese corporate fascists.

However, even that view is false propaganda! It is the Soviet and Chinese socialists who bore the brunt of the effort to topple corporate fascism in Europe and East Asia. Western ideology rejects the obviously exponentially-larger WWII sacrifices of socialist- inspired nations, and thus for them socialism is a tragic experiment instead of a victorious concept. US corporate fascism continued unabated – it began regrowing corporate fascism (now rebranded as “neoliberalism”) in Japan, Germany and the Eurozone.

This socialist analyst crucially shows how “Corporate fascism with American characteristics” was thus never discredited, until 2008.

This illogical historical analysis is why the West is so at a loss to deal with their problems caused by modern corporate fascism (neoliberalism), and why they scratch their head say “Gee, maybe politics can influence economic outcomes?” “Of course!” is what I would have said if I only was given two words, but Piketty says, almost lamenting, “It’s true.”

We can pick up directly with the interview, continuing with the journalist’s intellectual ignorance/faux-shock with Piketty’s academic detachment/indifference. They were discussing the failure of neoliberalism’s leading lights and the possibility of “thinking” about – not discussing nor implementing – alternative models.

Piketty is not about to stand up for human, suffering Yellow Vests, but he will for Mother Nature

The Intelligencer: But of course it’s also true that those people can help design the system and how it evolves, especially in the case of something like the Great Recession. How much did that recovery worsen inequality, in your view? A layman might look at the history and say, “It’s those who have access to capital who can buy distressed assets, and, as a result, unless there is really dramatic intervention, it will always be the forces of capital that benefit from the crisis.” Is that a fair read of how we emerged from the recession?

The journalist suggested the truth – capitalism is always collusion – but Piketty does not rise to the occasion.

PikettyYou’re right that the people at the top have done better once again than average. How do you explain this? I think it’s because if you take the whole compact of fiscal, social, legal, competition policy, there has been insufficient change. In the end, probably the only lesson from the 1929 crisis both from the right and the left, if you look at economist Milton Friedman, monetary economists, everybody agreed that the Federal Reserve and the central banks in Europe made a huge mistake in the 1930s by letting banks fall one after the other. The only lesson from history in a way was “We are going to do whatever it takes, we are going to print whatever money needs to be printed, in order to save the financial sector.” Indeed, it allowed us to avoid the worst, which is a complete fall in economic activity of the kind we had in the 1930s. It’s good news in a way. We have learned something from history.

The problem, of course, is that we are not going to solve everything with central banks. There was nothing else, really, in store. What I’m a bit concerned with today is that even though there’s a lot of motivation to address structural problems, in particular the climate crisis or today’s pandemic crisis, I think there’s insufficient thinking about how to change the economic rules, the organization of property relations in particular, how much private property we want. We need to take seriously the fact that the distribution of the burden has to be discussed from a democratic viewpoint, has to be distributed across income groups. Sometimes, the climate activists, environmental activists, are so convinced that the No. 1 problem is the climate that they don’t want to hear about anything that sounds like income or wages.

Piketty does, however, agree with the thesis of my 10-part series last winter: that Western bankers are the West’s vanguard, enlightened party which is tasked to “solve everything”. But Infinity QE proves that the Western “bankocracy” model cannot promote anything new – there is “nothing else, really, in store”. We should not expect any vanguard party to admit otherwise either, including the Chinese Communist Party or the Iranian Basij, because all three groups view themselves as their system’s champions and saviors. The latter two, of course, have the advantages of being grassroots in composition, thus embodying political power redistribution, who are then tasked with enforcing economic redistribution, which goes a very long way in explaining their enduring popular support. Bankocrats… not so much.

Right after “central banks” was when Piketty could have proposed a “Western, secular Basij” or a “Party for Socialism with European Characteristics”, but not only does he totally ignore these examples – he thinks he has to reinvent the wheel, which is far worse: Piketty dismissed as insufficient the century of theory and practice socialists have already given “about how to change the economic rules, the organization of property relations in particular, how much private property we want.”

If this is what this academic is teaching his 18-year old students he is letting them believe that something called “socialism” never even existed. But, for Piketty, socialism is both a dead idea and one that may make his own career dead. The interview continues:

The Intelligencer: Some climate activists think the solution is to shrink our economies. They call it “degrowth.”

And now we see clearly the reason for this article – the danger of letting greens run the corona recovery. Piketty just hinted at this when he discussed the “climate crisis or today’s pandemic crisis” (clearly, in terms of urgency the latter is the bigger crisis, yet it is secondary for Piketty) – the open Malthusianism of the Greens, which can never satisfy the 99%.

What is posited by The Intelligencer is that humans are the problems – not the tools they use nor choice of systems. It’s a fake-leftist tack which says the problem is not unfair distribution of economic and political power, but the mere act of production. Rather then perfecting socialism – let’s choose de-progress? Piketty knows he is treading on revolutionary ground with such a (dumb) idea:

PikettyWhich has to be discussed very precisely because then you need to be very careful about what exactly you are proposing to the bottom 50 percent in societies. I think it’s possible to design a plan, but we have to be very careful. In France, we had the yellow-vest movement. The government said that it was going to raise the energy tax and carbon tax for the good of the climate….

Piketty then reaches back to a Sarkozy-era initiative of carbon pricing – he has only brought up the Yellow Vests as a cautionary tale, not to relate their socioeconomic views. That is even though – despite the constant propaganda campaigns which glorified the weekly repression of them – (the rarely commissioned) polls showed the Yellow Vests have always been supported by at least 50% of the country. Piketty believes the Yellow Vests exist not as equals, peers and co-leaders but as a wild force who exist to menace the status quo as a sort of way to keep the Western elite honest.

Piketty knows, though would never say it, that if he regularly marched among the Yellow Vests he’d no longer be invited for interviews by New York Media, The Economist, the World Bank, etc. Piketty gets these calls because even as he calls for change he supports the status quo – he is as much an “EU patriot” as Emmanuel Macron and so many of their elite peers. Piketty admits later that EU patriotism is a fundamentally-elitist waste of time:

PikettyWhat this shows is that we should all be concerned about how we rewrite the system. Many people find this very boring, and I can tell you when you try to talk about the transformation and the democratization of European institutions, most people stop listening after five minutes. 

We can now elucidate the main problem of the Western left: they cannot galvanise anybody. They have no ideas and no language to excite people to support this status quo that arrived via unbloody “velvet revolutions” and which have continued via an apathy and anti-democratic disconnect built into the US-written pan-European project.

In Iran, for example, they created a new language: people like Ali Shariati combined the revolutionary language of socialism with the revolutionary language, symbols and heroes of Islam (with an emphasis on Shia heroes) to inspire the masses. Forty years later the staunchest Zionist must concede that the ability of “Revolutionary Shi’ism” to galvanise is succeeding in a broad enough manner so as to thwart any neoliberal “velvet (counter) revolution” in Iran. Contrarily, if they’d actually honor democratic votes the EU might be dissolved this very day.

Semi-pantheistic, human-hating Western greens are not about to die for change, nor are they about to inspire anyone in the lower classes (or the Yellow Vests, who expertly dissect French and EU politics).

Therefore what is interesting is not the upcoming multiyear battle between green parties and far-right parties as the new “two mainstream parties” in the West, but what comes after this: What does Europe do when their fake-leftists prove to be the same old neoliberals who sell out the masses, but this time give you more flowers?

Do they finally turn to socialism, or return to corporate fascism & neo-imperialism? Even with corona, we may need another five years to find that out.

The times make the man – who is left and who is not will be crystal clear post-corona

Piketty is not a fake-leftist on the level of the New York Media group, but he is certainly not a socialist: he supports MMT (modern monetary theory) and its notion that QE can actually be given without banker middlemen directly to the people, but not nationalising banks; he supports a basic universal income which hardly sounds like the massive redistributions enacted in the USSR, China, Iran, etc.; he laments that to pay for that “you have to have progressive taxation” instead calling for taxing only capital and the rich (in Iran, because of this fundamental socialist principle, half the country pays no taxes and no farmer does).

Piketty should be lauded for documenting inequality and some of his ideas go left of the mainstream, but he doesn’t go much further than that. The upcoming months of chaos will tell if he is an “objective” intellectual, just as journalists are supposed to be in the West – stuck in an ivory tower, where they have no social responsibility; despite their greater awareness of a problem, they are told not to feel any personal responsibility as well. The same goes for Western pop culture stars – any political involvement contrary to the 1%’s stances means no fawning airtime.

Yes, Piketty cares about inequality and changing economic structures – “Over the past ten years, we’ve been saving banks, but have we solved our problem with rising inequality, with global warming?” – but he also cares about saving the planet a tremendous, tremendous amount. He cares about it so much that he has apparently not had time to actually examine socialism and become persuaded that class warfare is continuously waged by the capitalist-imperialist 1% against the 99%.

Bottom line: In the 21st century there is no major issue which is so class-neutered as ecology.

Thus, I refuse to play along: a global ecological solution obviously requires global cooperation, which is something only socialism can offer and which is impossible under a capitalist system, as it is based instead on competition.

Talk about the environment is thus just empty talk until capitalism-imperialism is eradicated – this is why a Green party takeover will be welcomed by the Western 1% as a brand change as effective as Barack Obama was in 2008.

It’s not hard for a neo-pantheist to grasp: The West could profit from Iranian oil for decades, but once we get it – oh, the time for oil is over? Either fork over many, MANY scores of billions or: Pump away, Iran!

The reality is that if Piketty ever consistently marched with the Yellow Vests he’d realise they also care deeply about the environment. But Earth will not be destroyed before “la fin du mois” (“the end of the month” – the primary slogan of the Vesters, which illustrates how they struggle to pay their most basic bills at the end of each month) whereas the lives of millions of Frenchmen will be destroyed amid this corona hysteria. Mother Nature is not the problem – Western politics are.

It should be clear: green parties are a useless distraction – they should not be accepted as a substitute for true leftism. Maybe the Double Bubble + Great Lockdown will set off a revolution, but for now neoliberal, Malthusian, pantheistic, fake-leftist green parties remain the West’s political trajectory.

***********************************

Corona contrarianism? How about some corona common sense? Here is my list of articles published regarding the corona crisis, and I hope you will find them useful in your leftist struggle!

Capitalist-imperialist West stays home over corona – they grew a conscience? – March 22, 2020

Corona meds in every pot & a People’s QE: the Trumpian populism they hoped for? – March 23, 2020

A day’s diary from a US CEO during the Corona crisis (satire) March 23, 2020

MSNBC: Chicago price gouging up 9,000% & the sports-journalization of US media – March 25, 2020

Tough times need vanguard parties – are ‘social media users’ the West’s? – March 26, 2020

If Germany rejects Corona bonds they must quit the Eurozone – March 30, 2020

Landlord class: Waive or donate rent-profits now or fear the Cultural Revolution – March 31, 2020

Corona repeating 9/11 & Y2K hysterias? Both saw huge economic overreactions – April 1, 2020

(A Soviet?) Superman: Red Son – the new socialist film to watch on lockdown – April 2, 2020

Corona rewrites capitalist bust-chronology & proves: It’s the nation-state, stupid – April 3, 2020

Condensing the data leaves no doubt: Fear corona-economy more than the virus – April 5, 2020

‘We’re Going Wrong’: The West’s middling, middle-class corona response – April 10, 2020

Why does the UK have an ‘army’ of volunteers but the US has a shortage? – April 12, 2020

No buybacks allowed or dared? Then wave goodbye to Western stock market gains – April 13, 2020

Pity post-corona Millennials… if they don’t openly push socialism – April 14, 2020

No, the dollar will only strengthen post-corona, as usual: it’s a crisis, after all – April 16, 2020

Same 2008 QE playbook, but the Eurozone will kick off Western chaos not the US – April 18, 2020

We’re giving up our civil liberties. Fine, but to which type of state? – April 20, 2020

Coronavirus – Macron’s savior. A ‘united Europe’ – France’s murderer – April 22, 2020

Iran’s ‘resistance economy’: the post-corona wish of the West’s silent majority (1/2) – April 23, 2020

The same 12-year itch: Will banks loan down QE money this time? – April 26, 2020

The end of globalisation won’t be televised, despite the hopes of the Western 99% (2/2) – April 27, 2020

What would it take for proponents to say: ‘The Great Lockdown was wrong’? – April 28, 2020

ZeroHedge, a response to Mr. Littlejohn & the future of dollar dominance – April 30, 2020

Given Western history, is it the ‘Great Segregation’ and not the ‘Great Lockdown’? – May 2, 2020

The Western 1% colluded to start WWI – is the Great Lockdown also a conspiracy? – May 4, 2020

May 17: The date the Great Lockdown must end or Everything Bubble 2 pops – May 6, 2020


Ramin Mazaheri is the chief correspondent in Paris for Press TV 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 the books ‘I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’ and the upcoming ‘Socialism’s Ignored Success: Iranian Islamic Socialism’.

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