© Copyright 2004, From The Wilderness Publications, www.fromthewilderness.com. All Rights
Reserved. May be reprinted, distributed or posted on an Internet web site for
non-profit purposes only.
PERSIAN PERIL
Is the Bush administration about to commit the fatal
imperial error in Iran?
by Stan Goff
Saber-rattling Neocons are frightening the rest of the
US elite.
[Just when the Bush administration seemed to have figured
out that invading Iraq was a mistake, they tell us to expect the next act in
their Axis of Evil Traveling Roadshow. Iran is the subject of the latest
non-diplomatic broadsides, and the media are already buying ringside seats. So
what is this thing called "Iran"? Which corporation manufactured it?
Or is it one of those pre-American places where people wear funny costumes?
These and other questions may or may not be explored in the briefing rooms of
the Exceedingly White House. For the rest of us, a closer examination of the
history of this ancient and culturally unique regional power may help explain
the coming wave of imperial belligerence. FTW's military editor Stan Goff
presents a highly useful narrative of Iran's place in modern geopolitics and
asks, Is the Bush administration about to commit the fatal imperial error in
Iran? -JAH]
The United States on Monday confirmed it had granted
protected status to nearly 4,000 members of the People's Mujahadeen, Iran's
main armed opposition group, now confined to a military-run camp in Iraq.
However, the
State Department stressed that the move, which has drawn a warning from Tehran,
had no effect on the US designation of the group -- also known as the
Mujahadeen e Khalq (MEK) or National Council of Resistance of Iran -- as a
"foreign terrorist organization."
-Agence
France Presse, July 26, 2004
Contrary to an increasingly popular belief, imperialism is
not new, and it is not being produced by the right-wing clique that runs the
present administration. This is easy to believe because of the slightly crazed
character of the neocons, but it is deceptive precisely because it is such an
easy conclusion to reach.
In the past three weeks, Jimmy Carter's former national
security advisor, Zbigniew Brzezinski, has been making the interview circuit to
inaugurate a high level resistance to the apparent intent of the Bush
administration to escalate - perhaps even to the point of armed aggression -
its demonstrated hostility toward Iran.
The emerging fight between the "realists" and the
neocons will only serve to further muddy the waters on the question of what the
neocons are up toÉ and what the realists are up to as well.
The so-called 9/11 Commission report, that has shamelessly
identified the wrong scoundrels (the intelligence agencies) for the September
11 attacks (since they are already the goats for Iraq intelligence
"failures"), is a mirror image of the obfuscation now being generated
by the realist-neocon debate. In every case, these public exchanges are
designed to camouflage the real forces behind US policies.
The US already has a track record for regime change in Iran, when the CIA orchestrated
a coup d'etat
against Mohammed Mossdegh. Most political history buffs know this story, and
the American Left is quick to cite it as a kind of passion play to demonstrate
official hypocrisy on the question of democracy. But like many anecdotal
accounts of history, this ignores a larger process and it obscures the relation
of class forces that were the primary actors in many of these dramas.
This essay will try to trace not only the development of a
uniquely US imperialism and the danger that system faces in the present
conjuncture, amplified and accelerated by its engagement in Southwest Asia, but
the interplay of Anglo-American relations throughout the 20th Century that
accounts for the Bush-Blair relation we see today.
Iran is former Persia, and it is inhabited primarily by
people who consider themselves Persians. This ethno-cultural group is to be
specifically contrasted with Arabs, as I will explain. Persian civilization,
like all "Old World" societies, underwent a series of often violent
transformations that eventually led to a somewhat stable community that shared
a language and a culture. Persians had their own religion, Zoroastrianism,
which endured as the state religion until the mid 7th Century, when Arab armies
swept over Persia and forced the conversion to Islam. Nevertheless, the
Persians amalgamated their own distinct beliefs into Islam, creating a
heterodox form of the religion as a cultural weapon against the oppressive Arab
rulers. That form became Shia. And while the Persians adopted the Arabic
script, they reclaimed their own language, an Indo-European tongue (related to
a wide range of languages from India to Ireland - including English) which we
now call Farsi.
In the 19th Century Great Britain established itself in
Iran, when the venal Qajar monarchy parceled Iran out to foreign
concessionaires at fire sale prices. The first British interest to gain a
foothold there was the British Tobacco Company. The other great nation that
coveted Iran was Russia, and it invaded Iran in 1826 seeking a warm water port
to its south. In 1856, Great Britain attacked Iran and forced her to surrender
what is now Afghanistan. Throughout the second half of the 19th Century, Great
Britain and Russia would share Iran.
It was at the turn of the century, in 1900, that a British
company would stake its claim on a comparatively minor commodity, the petroleum
of Southwest Iran, which would in short order become the most important
commodity in the world. That company was the Anglo-Persian Oil Company. The
Russians had begun taking oil from the north, around Baku.
With the introduction of the automobile, the airplane, and
mechanized warfare, by the time World War I broke out, Iran had captured the
interest of the all the Great Gamesmen. Russian and British interests converged
in a combined struggle against the Ottoman Turks, who also shared a border with
Iran and were equally covetous of Iranian oil.
In 1920, an Iranian cavalry officer, Reza Shah, led a
rebellion against the Qajar dynasty, and five years later Reza crowned himself.
This was troublesome but not critical to the British and the RussiansÉ yet.
Between the two world wars, however, Reza opened up several
new trade partnerships. One was with Germany. By the time World War II broke
out, over half of Iran's trade was with Germany, now controlled by Hitler's
Nazi Party. Reza had embarked on an industrialization program to more
effectively exploit Iran's oil, and most of its new machinery was German.
Iran declared itself neutral in WWII, but the reality was
that the British needed the oil, and the now-Soviet Union needed the warm water
port and a rail line to receive supplies from the Americans and English, and both
Stalin and Churchill had strong reasons to doubt the neutrality of Reza, so the
British and the Soviets conducted a concurrent military occupation of Iran in
1941, that lasted through all of WWII.
This led to deep consternation in the United States, which,
while allied with the Soviets and the British, had designs of its own - not the
least of which was the British Empire itself. The US, as the dominant financial
partner in the Allied enterprise, prevailed on Britain and the USSR to accept
Reza's son (whom the British and Soviets had themselves appointed as a
figurehead) as the legitimate post-war ruler of Iran, and secured the promise
of both occupiers that they would dismantle their military presence there upon
cessation of hostilities.
The British left immediately after the war, and the
suspicious Russians (for good reason, as it turned out) hung on until 1946,
when they too departed.
The Roosevelt administration that oversaw the entry into
World War II was a new government imbued with a new philosophy of capitalist
imperial governance. It's important to digress for a moment to describe that
philosophy, because it goes to the heart of the tension between the neocons and
the realists today.
From 1860 until 1933, the Republican Party dominated American
politics. This was a period of the rapid expansion of national capitalism. The
Civil War not only broke the political power of the formerly predominant
slave-holding South, it engendered a period of rapid technological innovation
alongside the concentration of capital into the first big US corporations. Its
ideology was laissez faire, and its practice was expansion, economic and territorial.
This resulted in rapid industrialization, which led to
inevitable conflicts between capitalists and labor. It was no accident, for
example, that the military occupation of the South that was Reconstruction was
officially ended in the same year, 1877, that the US saw its first wave of
nationwide strikes. This open class antagonism lasted all the way into the
first year of the FDR administration.
The Republican Party was the party of labor suppression, but
also the party identified with manumission and Reconstruction; they were
centralizers, identifying themselves with Hamiltonian federalism; and they
tended to support a strong and activist central government. The Democratic
Party was avowedly white supremacist, and identified with the more decentralist
South, which had associated the struggle to preserve Slavery with "states
rights," the more Jeffersonian political tradition.
A challenge to both parties erupted in the 1890s with the
Populist movement, which in the South even forged political alliances between
Black Republicans and white Populists, the Fusionists. This movement was
violently suppressed in the South by the Democrats, including a virtual coup
d'etat against a
Fusion government in North Carolina in 1898.
This led to the development of an elite political movement
of "progressive" federalists who sought to contain the turbulence of
grassroots politics, and to co-opt social movements. These
"reformers" included Franklin Roosevelt. Their philosophy was, in the
words of Loren Goldner, "to transform politics into management by
experts." They set about exposing a host of social ills that afflicted the
various sectors of their emerging base - poor southern whites, western farmers,
and northern industrial workers - and offered federal solutions. This was the
policy essence of the New Deal. Its political essence was the control-driven
bureaucratization of the Democratic Party in order to protect it from undue
grassroots pressure.
In foreign policy, these technocrats preferred this jujitsu
to the karate of the gunboat, too. That didn't mean they were averse to
military power projection, but they were sensitive to the ebb and flow of
international power politics and they understood that sometimes you bend so you
don't break.
In today's inescapably international, interdependent world,
isolationism is no longer an option. But the predisposition of the federalist
technocrats - like Brzezinski - is to move through the room without breaking
the China (no pun intended). There is still a strong appreciation of the danger
lurking in the grassroots. This is the danger that they believe the neocons -
who have adopted Jeffersonian decentralism for their racist domestic agendas -
are ignoring. On that account, they may be right.
At any rate, the technocratic tradition was inherited by
Harry Truman after the war, where it was combined with the emerging Cold War in
Iran.
Shah Pahlavi became the unquestioned autocrat of Iran after
the Soviet withdrawal in 1946. He presided over two nations. One was the
semi-feudal countryside, where the Majlis - the big landowners - subjected
millions of peasants. The other was a growing urban Iran, where the oil
business was articulating its own industrial proletariat.
In 1949, Mao Zedong stunned the world when his People's War
succeeded in seizing state power over the most populous nation in the world,
even in the face of massive US assistance to Mao's nemesis, Chiang Kai-shek.
Truman's advisors noted that the system and conditions that engendered the
Chinese Revolution were similar in many respects to the situation in Iran, and
that Iranian industrial workers were filling the ranks of the Tudeh, the new
Iranian communist party. They advised - being veteran technocrat federalists -
assistance for modernization and land reform. But Truman was so spellbound by
the phenomenon in China that he staggered into a proxy war with the Chinese on
the Korean peninsula only a year later.
The Iranians were in fact watching China, and the resistance
to the Shah accelerated. There were two powerful sectors who opposed him: the
Majdi, who controlled the parliament, and who weren't keen on the land reform
program being suggested by the United States, and the industrial workers, who
also saw Pahlavi as an Anglo-American puppet. It was this theme, that Pahlavi
was a puppet of the US, which resonated with both sectors, and so the
resistance developed - as had the Chinese Revolution - as a struggle for national independence.
The National Front that developed was led by the Majdi,
Mohammed Mossadegh. In 1951, under great grassroots pressure, the Shah
appointed Mossadegh prime minister. Mossadegh was a good choice from the perspective
of the peasants as well, because like the rest of the xenophobic Majdi he
opposed US influence. And he supported land reform, which he said could be
financed with oil revenues, much of which would go to paying off the Majdi for
the land they would cede.
For the Americans and for the British, this raised the
specter of nationalization of the Anglo-Iranian Oil Company. They were right.
Mossadegh signed the expropriation order in March, 1951. This action - wildly
popular in Iran - ignited a prairie fire of grassroots activity that threatened
to become revolutionary.
When the next US president, Dwight Eisenhower, managed to
cut free the Korean anchor around the US neck, it was 1953, and his CIA
Director, the infamous Allen Dulles, told him, "If Iran succumbs to the
Communists, there is little doubt that in short order the other areas of the
Middle East, with some 60% of the world's oil reserves, will fall under
Communist control."
This fear was "confirmed" in its own
self-fulfilling way, when the US engineered a trade embargo against Iran,
forcing Mossadegh to sign a trade agreement that same year with the only nation
that had the inclination or ability to violate the embargo - the Soviet Union.
A month later, the Shah abdicated.
By August, with substantial aid and direction from the CIA,
monarchists in the Iranian army staged a coup, and the Shah was restored.
Dulles - himself a crafty technocrat - was running policy in
Iran by then, and he badgered Eisenhower to push Pahlavi into social reforms as
soon as possible to preclude another build-up of grassroots resistance. But
Eisenhower dithered with studies and policy pronouncements, kept the money
flowing to Pahlavi, and then turned the whole mess over to John F. Kennedy.
Kennedy was aggressive to the point of pissing off Pahlavi,
but by 1963 he prevailed on Pahlavi to begin a process of modernization and
reform. This was a top-down program of reform called the White (as opposed to
Red) Revolution. Land reform was implemented, and there was massive improvement
in health and (secular, male/female) universal education. This led to ten years
of relative stability, that blunted the nationalist charges of "US
puppet" that continued to come from the Tudeh on the left, and from the
anti-modernization clerics on the right, one of whom was Ayatollah Ruhollah
Khomeini.
Richard Nixon took office in 1968, inheriting the
hair-raising collapse of the US Treasury Department's gold reserves and the
unwinnable war in Vietnam that had caused it.
In 1969, the Nixon administration started hinting to key
allies that US oil production was about to peak and then go into irreversible
decline. This and the destruction of the gold pool had everyone's thinking caps
on, and the one weapon that the US had in its economic arsenal was
the-dollar-as-international-currency.
There is strong
circumstantial evidence that suggests the Nixon administration then colluded
with Saudi Arabia and Iran in the so-called Arab Oil Embargo of 1973.
The Nixon administration had completed is abandonment of
gold and fixed exchange rates, allowing a 20% devaluation of the dollar that
hammered European and Japanese creditors. They were also facing the growing
threat of autarkic national liberation movements in Latin America (Chile was
overthrown that same year by the Nixon administration.) and Africa. Since oil
payments were denominated in dollars, the jump in the price of oil from the
embargo was a destabilizing jump in the price for Europe, Japan, Africa, and
Latin America. The US, on the other hand, owned the printing press for dollars.
By recycling the oil crisis, via petrodollars, through these regions, the US
effectively killed several birds with one stone.
By all accounts, Nixon's relationship with Pahlavi was very
warm. They had been personal friends since Nixon was Eisenhower's vice
president. William Safire, Nixon's former speech-writer, once stated that
Pahlavi was Nixon's favorite head of state. Nixon offered to sell Pahlavi's
regime any weapon they needed, short of nuclear. That offer was not rescinded
during the ostensibly hostile oil embargo in 1973-4, and Iran continued to make
outlandish weapons procurements from the US.
Those procurements coincided with the jump in oil prices,
and the combination completely destabilized Pahlavi's Iran. Lightning inflation
ensued, and with it mass migration into the cities, followed by housing
shortages (compounded by inadequate urban infrastructure) and a re-expanding
chasm between the richest and the poorest. Grassroots agitation, from almost
every sector now, resumed.
Then in 1978, in neighboring Afghanistan, the
Washington-approved strong man Mohammed Daoud Khan began arresting the leaders
of the influential People's Democratic Party, a pro-Soviet political formation
that had substantial support within the Afghan army. As it turns out, this was
an action that Washington was fomenting in order to provoke a Soviet response -
hoping to trap the Russians in a guerrilla struggle in Afghanistan. The author
of this plot was none other than arch-realist/technocrat Zbigniew Brzezinski,
Jimmy Carter's national security advisor. It worked.
The leftist officers organized a coup against Daoud and shot
him, establishing a secular socialist government. The CIA began funneling
support to right-wing clerical opponents of the regime inside and outside
Afghanistan, and the Soviets were eventually drawn into a protracted and
destructive military occupation of Afghanistan.
As part of this fight against the left, the Shah in
neighboring Iran increased his repression of left secular forces inside Iran,
driving them back into a tactical alliance with Iran's own clerical right-wing,
and this alliance poured into the streets in 1978. That security crisis
exacerbated the existing economic and political crisis that broke Pahlavi's power.
Carter's Ambassador in Tehran, William Sullivan, tried to warn the
administration of the impending revolution. A contingency plan was even
organized for a US military takeover of Iran that was later rejected as
unlikely to succeed.
In 1979 the Shah was overthrown; the clerical forces had
suppressed the secular left; and fifty-two Americans were taken hostage inside
the US Embassy in Tehran. For the US, this was an utter debacle, and it led to
Jimmy Carter's defeat in the 1980 election.
When Reagan's people took power, they turned to the one
leader in the region who might be able to confront Persian-clerical Iran:
Iraq's Arab secular nationalist, Saddam Hussein, even as the administration was
colluding behind the scenes with Iran to finance its illegal war in Nicaragua.
Massively supported by the US, Saddam's Iraq inaugurated a
grueling eight-year, high-attrition border war with Iran that chewed up around
a million human beings. On the other side of Iran, in Afghanistan, the US was
providing massive materiel and training support to the Sunni jihadists who
would eventually constitute the Taliban government of Afghanistan and the
network associated with Osama bin Laden. This element operated out of Pakistan
for more than a decade, and came to exert a tremendous social and political
influence on large sectors of Pakistan, including its intelligence service and
military.
This foreign policy kept at least one partner stable within
the region, tacking back and forth between the tides and currents. It developed
a partnership with Zionist Israel as a surrogate US military in the region, and
the result has been a relatively stable American hegemony over the area for the
last sixty years. But such a policy causes pressurized violence in the imperial
periphery, the kind that eventually burst into the imperial center on September
11th, 2001. It came not from Iran, and not from Iraq, but from Saudi Arabia and
tangentially from Pakistan in response to the basing of military troops in
Saudi Arabia, home to the holiest sites in Islam.
The general outcry in reaction to 9/11 was for retaliation,
with very little understanding of the provocations and machinations that led to
the attacks, and less notice still that the US actually withdrew its troops
from Saudi Arabia shortly after 9/11, clearly recognizing that the Wahabbist
grievance, as stated, was the provocation, and not some generalized
"hatred of freedom and democracy."
It was this recognition - that there was a real threat
growing in the streets of places like Riyadh, as political Islam had come to
give voice to mass grievances in the place of the very nationalism that
Islamism had been deployed to crush - that gave the sense of urgency to the
entire US ruling class to re-establish control over this key strategic region.
The only argument was over the method, which does not speak to the issue of
whether it was or is possible to contain the social crisis in Southwest Asia.
The Bush doctrine in the region is certainly powered by
immense hubris and the apparent belief that the US can simply impose its will
directly, and thereby restructure the global economy by dint of arms.
This is, in the eyes of the realist-technocrats, a grave
miscalculation. Whether the technocrats have an alternative solution to the
underlying crisis that is driving the neocons' assault on Southwest Asia is an
open question. But their fears may be very well founded.
Under the largest trade deficit in world history, the dollar
is propped up by dollar-denominated Saudi oil sales on one side and by American
bullets on the other. That system of monetary-military imperialism is tottering
with contradictions, and the only question is where and when the catalyst will
come that tips it over. If the military failure in Iraq caused consternation,
talk of attacking Iran is setting off alarm bellsÉ for some.
By Stan Goff
[This is the second installment of Stan Goff's report on
the simmering Persian Peril. Where Part One set out a history of modern Iran in
its relations with Western imperial powers, the current piece explains the
petrodollar system that underlies our ugly situation in the Middle East and the
world. As Catherine Austin Fitts says, nothing will really change until we
change the way money works. "Petrodollar," "fiat currency,"
"speculative attack," "balance of trade" --- these are the
lexicographical little friends whom we need by our sides if we are to make it
out of the propaganda labyrinth. Goff's essay explains just why the world puts up
with the American bully. It isn't just the horrible weapons of death; it's the
horrible weapon of debt: in this ongoing American dream, "we" do the
borrowing - and everyone else does the owing. -JAH]
Rosa Luxemburg and Geography
"Imperialism is the expression of the political accumulation
of capital in its competitive struggle for what remains still open of the
non-capitalist environment."
-Rosa Luxemburg, "The Accumulation of Capital,"
1913
Rosa Luxemburg, as unfortunately happens all too often with
notable women in history, has been badly overlooked. She is remembered mostly
as a leftist leader in Poland and Germany who was the victim of political
assassination, and for her sharp debates with Lenin. But in her 470 page opus, The
Accumulation of Capital, she made a significant contribution to the theoretical understanding
of imperialism, one that has been incorporated into world system theory and
into feminist critiques of political economy.
Luxemburg said that "capitalism," an economic
system based on the self-expansion of monetary value for a propertied class,
has never functioned nor can it ever function without external, non-capitalist inputs. The expansion of British
capitalism, for example, could not have happened without colonization and
exploitation of more "primitive" economies, or without direct
military plunder of colonized people and resources. The same applies to
American capitalism that was built up first using non-waged (slave) labor, and
military expansion into indigenous lands.
Marx himself recognized this as an essential dynamic for the
build-up of modern capitalism in Volume I of Capital, where he stated:
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, signalised the rosy dawn of the era of capitalist production.
These idyllic proceedings are the chief momenta of primitive accumulation. On their
heels treads the commercial war of the European nations, with the globe for a
theatre. It begins with the revolt of the Netherlands from Spain, assumes giant
dimensions in England's Anti-Jacobin War, and is still going on in the opium
wars against China, &c."
Luxemburg's point is that this reliance on "primitive
accumulation" is a constant within developed capitalism and that it is
magnified as capitalism generalizes into various forms of imperialism.
Even today, this is demonstrably true. Because geography has
divided the industrial capitalist centers from the subjugated peripheries, we
can easily delude ourselves that our bustling, SUV-infested highways, our
shopping malls crammed with luxury commodities, and our shiny grocery
warehouses bursting with food are natural features of a superior social system.
We do not see the exhausted legions of foreigners - many living in
pre-industrial, pre-capitalist societies - or their exhausted lands, which make
this licentiousness possible.
But now we have arrived in a historical moment where one key
and irreplaceable resource, a resource that forms the energetic foundation of
the global system, has opened a window on the international interdependence -
petroleum.
Maria Mies paraphrased Luxemburg's analysis in her own 1986
work, Patriarchy and Accumulation on a World Scale - Women in the
International Division of Labor, this way:
[Luxemburg] had come to
the conclusion that Marx's model of accumulation was based on the assumption
that capitalism was a closed system where there were only wage laborers and
capitalists. [She] showed that historically such a system had never existed,
that capitalism had always needed what she called 'non-capitalist milieux and
strata' for the extension of labour force, resources, and above all the
extension of markets. These non-capitalist milieux and strata were initially
the peasants and artisans with their 'natural economy,' later the colonies.
Colonialism for Rosa Luxemburg is therefore not only the last stage of
capitalism [as Lenin claimed], but its constant necessary condition. In other
words, without colonies capital accumulation or extended reproduction of
capital would come to a stop.
Robert Biel in The New Imperialism - Crisis and
Contradictions in North/South Relations (2000) said that "the general problem
raised by Luxemburg's contribution to imperialism theory [is the question,] is
capital accumulation renewing itself or merely exhausting its own basis?"
Peak oil is a dramatic answer to this question, and it is
central to the occupation of Iraq and the saber-rattling at Iran, no matter how
many sophisticates attempt to portray petroleum as secondary or passŽ.
When we speak of capital in this way, we are talking about
money. So it seems important at this juncture to examine money itself, because
what we don't think about with regard to money may contain the key to a number
of riddles.
What is money? When you think about it, this is not easy to
answer. We know it when we see it, but do we really know how it works? Why do
people accept it as a universal equivalent of exchange? Are all moneys really
universal? What does it really represent?
On the international exchange today, I can get around 11.4
pesos for one US dollar. So if I go to Wal-Mart down the road to pick up a DVD of
"Jaws" for $9.44, that's $10.13 with tax, why won't they accept 116
Mexican pesos? Not only will they not accept it, my bank won't take them
either. But when I was in Xalapa, Mexico three years ago, I had no problem
getting Mexican merchants and bankers to accept or exchange dollars on the
spot. What's up with that?
The first time I was in Haiti, I could get 15 gourdes for
one US dollar. That same dollar now gets me about 48 gourdes. This may seem
like a great deal, except that many things in Haiti are being shipped there
from the US - especially the main food, rice. For Haitians, this is a disaster,
because prices went up without pay going up, and now they have to pay 48
gourdes for a dollar's worth of rice instead of 15 gourdes.
On the other hand, if I were to exchange US dollars for
Euros today, I'd get fewer Euros than I did two years ago.
There are two points to be made here. (1) The value of money
is not fixed. It fluctuates. (2) Some money is more 'universal' than others.
If a hypothetical country lives in a bubble, isolated from
all other countries, in a 'money economy', this country has a central bank that
is run by the government. That central bank says how much money to print,
controls interests rates, and so on. Many bankers like to talk about a
"free" market, but they know that this is complete horseshit, because
without a regulated market a lot of bad things happenÉ. really fast. And who
decides what passes for legitimate money, after all? The government needs to
begin by making that decision, then controlling the supply of money by
exercising a monopoly over the printing presses. If not, they have no means of
collecting taxesÉ unless they want to start accepting chickens, sacks of flour,
wool sweaters, free haircuts, and such.
In this fictional isolated country, the central bank tries
to measure the total value of all commodities circulating in the economy and to
maintain around the same value in circulating money with a little extra to
extend credit for something called "growth."
If the central bank prints too much money, then prices go up
(inflation). This might not seem like a big deal if wages go up, too. But
lenders (banks, loan-sharking companies, etc.) have an issue with this, because
it eats into the buying power of the interest they collect on debts.
If the government prints too little money, prices fall
(deflation), which sounds like a good deal until you think about owing money.
If you owe $10,000 in debts, and suddenly $10,000 buys twice as much as it did
before you incurred the debts, your debts represent a greater liability against
your buying power. In the United States right now, with the average household
debt at nearly $20,000, this would be seriously bad news. It wouldn't bother me
much because I had someone do the numbers for me recently, and my net worth is
minus $15. I can eat that without much pain. But a lot of people, when they
look at their debt liabilities, have much scarier minuses. It's scary, because
with deflation, wages drop through the floor, people get laid off by the
zillions, but all those debts still stand at the same numerical value.
The problem is there is no such fictional Bubble-Country. We
live in a world with a lot of countries that are grossly unequal.
Here's my point about printing money. There is one country
right now that prints all the money it wants to, and everyone else in the world
will accept this money for all the stuff they make, even though they know
damned well it's not fair. It's the United States.
The standard of living that is being maintained right now in
the United States is being maintained because we can print all that money and
because other countries are forced to accept it regardless of how few
commodities we actually produce. The main commodity we produce isÉ dollars.
Other countries produce things to get dollars. (See US Dollar Hegemony has
got to go, by Henry
C. K. Liu, "Asia Times," April 11, 2002, at http://www.atimes.com/global-econ/DD11Dj01.html.)
It's a scam of the first order, and if it quits functioning, the dollar will
fall to its "natural" market value, and all you Visa shoppers and
home mortgage equity borrowers will be joining the legions of the depressingly
destitute in a modern-day version of the Dust Bowl migrations.
So how does this work? Why does the US dollar continue to
soar around like a turkey buzzard on an Appalachian updraft, instead of falling
to the ground like a homesick brick the way the market says it's supposed to
when you are running the printing presses at the velocity of a meth lab?
Okay, I'll get to that.
Let's return for a moment to what money is. It used to be
any damn thing people would accept as a universal exchange equivalent - but an actual thing. Pretty shells, or pastry
dough, or goldÉ it doesn't matter. People just have to agree to accept it for a
lot of other things. Gold and silver were faves. But came paper money (more
portable, for one thing), that supposedly you could cash in at the central bank
for silver or gold, which made it sort of a government check against precious
metal.
Then we slipped into 'monetary faith' by degrees, when money
was only partly redeemable for gold, then in 1971, in the US, for reasons I'll
touch on later, they said to hell with it, we'll just issue paper without the
gold backing. Well, by then people were used to it, and everyone had a stake in
the stuff being accepted, and paper "fiat" money (that means without
anything behind it but faith in the system) stuck. Nowadays, you don't even
need to handle paper. You can send virtual money around with computers. So,
okay, what is this "money," really?
It's an entitlement. It's a claim on someone else. But on
what exactly? This is where radical political economists can help us out. They
say it's an entitlement to your energy - your work-energy, that is. Money is an
entitlement to someone else's labor.
We don't see it that way, because when I buy the
"Jaws" DVD I don't head over to Wal-Mart thinking I'm going to use
this money to lay claim to the expended energy of the people who work in the
DVD factory or the residuals due to the people who worked to make the movie or
to the truck driver that delivered the DVD's, etc., etc., etc. Nobody does
that. We just go buy the DVD. But the monetary value of that DVD is based on
all the energy that was expended to get it to the rack at Wal-Mart. Since we
don't SEE the work being done, from rendering silicon for chips to packing
those little plastic containers into cardboard boxes, we tend not to think
about it, so we also fail to think about money being this claim, this
entitlement.
Think about it. No one gave you the money. You had to go
someplace you didn't want to be for eight hours every day, put up with some
dim-witted boss's bullshit, and deal with people you wouldn't give the time of
day otherwise, just to get paid the money. That money claimed you. It entitled
the boss to your energy and time.
This is the whole system, really. People who have the inside
skinny on accumulating money (by owning everything) then assert their
"claims" by working the shit out of all the rest of us so they can
have wild cocaine orgies, buy yachts, collect million dollar horses, or ride
around in limosÉ different things float their boats, but you get the picture.
They play, and we serve. Because we "need" the money.
Yet there is a dimension to all this that goes beyond the
rich and the not-so-rich in one place. It's the geographical dimension.
There is an international division that is even sharper than
what most of us in the industrialized metropolis ever realize.
Just like Rosa Luxemburg said, there are a few rich
countries that suck the labor and resources out of a lot of poor countries. But
the rich countries can't get away with this unless at least most of their own
population is complacent. So to get this political complacency, they allow key
fractions of their own working people to have some nice thingsÉ a ranch house,
a line of credit to buy that useless, gas-guzzling SUV, cheese sticks in
individual wrappers, liquor, televisions, and DVDs.
The worst of these rich countries is the United States,
where statistics show that we are on average the most wasteful, expensive
individuals in the world. We have plenty of poor people, but on average we use
more land per capita to feed ourselves, consume more water per capita, burn up
more fossil fuel, make more trash, and consume more non-essential luxury crap
than any society in history. It has made many of us soft and stupid, which is
why we don't realize thatÉ
We couldn't do that right now if we didn't have monetary
printing presses and the most expensive, unwieldy, and lethal military on the
planet. And the two - the printing press and the military - are inseparable.
Lose one, and the whole party comes to a screeching halt.
I'll come back to that, too.
One country's currency can now change its value relative to
other currencies on any given day, which has led to gambling on the price of
money.
When I was in El Salvador in 1985, the official exchange
rate was 4 colones to $1 US. But the rate in the street - the black market -
changed almost hourly. Rich Salvadorans could not use colones to pay their big
international debts. They had to have dollars, the recognized international
currency. So ever so often there would be a bidding war for dollars that
spilled into the street where the mini-mafiosi had hundreds of
money-exchangers. When that happened, if you got out there fast (Bring your
firearm!), you might get a temporary rate of ten or eleven to one, so you could
cash out $5,000 for 50,000 colones, then go to the bank that same day and get
$12,500. That's a sort of microscopic version of currency speculation on the
world market. Good deal, huh? But it doesn't last. Eventually, the banks get
wind and the official rate has to be changed to reflect the reality of this
"speculative" market. The colone (or any other currency, take your
pick) gets "devalued."
Now let's pump up this scenario. Let's say you are a huge
securities account of pooled funds from a lot of ultra-rich bastards who can
lord it over mere bank directors. You can mobilize as much credit in one day
as, say, the GDP of California. Let's also say that you don't like Country X
because they haven't gone along with your program.
Country X's currency is the gimcrack. It exchanges for ten
to the dollar. Your giant account -called a hedge fund - pulls together $10-12
billion through its credit resources and uses intermediaries to begin buying up
gimcracks. With so many gimcracks being bought up, the gimcracks begin to
exchange more dear, first at nine to one, then at eight to one, right up to
five to one.
The herd mentality takes over in the Big Casino, and
everyone wants to get in on the action - kind of like everyone did during the
dot-com boom right before they all lost their asses.
Meanwhile, these intermediaries that have been intentionally
heating up the market for gimcracks on behalf of the hedge fundÉ they start
cashing out. They cash out fast, turning gimcracks into dollars as quick as
they can, at five to one (remember, they bought in at ten and nine)É then six
to oneÉ because when people see how many are being sold, the herd stampedes the
other wayÉ then eight to oneÉ by now the hedge fund is out, richer by a fair
piece, but the gimcrack is in stampede-over-the-cliff mode, and won't hit
bottom until it is at twenty to one, meaning the entire Country X just suffered
a 50% devaluation. If you were making 10 gimcracks an hour in your local
sweatshop yesterday, you are making 10 gimcracks an hour todayÉ except every
price in the country is being jacked up 50% to protect the merchants' bottom
line.
This is called a speculative attack. It is what caused the
1998 "Asian meltdown." Not bad management. Not cronyism. Not loose
loan policies. It was done on purpose, by the Clinton administration, on the
orders of Commerce Secretary Robert Rubin, and carried out by giant hedge funds
from the finance-capital sector of the USA. Among the attackers was George
Soros, the favorite of many liberal NGOs in the US, and a key supporter of the
Kerry campaign. If you'd like to read about it, pick up Peter Gowan's The
Globalization Gamble - The Dollar-Wall Street Regime and its Consequences, at http://www.gre.ac.uk/~fa03/iwgvt/files/9-gowan.rtf
. Gowan explained how these hedge funds became "weapons of US
statecraft."
Hedge FundsÉ is a euphemism: these are speculator
organizations for making money through the buying and selling of securities on
their own account to exploit price movements over time and price differences
between markets. The biggest of these hedge funds are not marginal speculatorsÉ
they are not banks but partnerships, often registered offshore for tax-dodging
purposes. The biggest of the banks then lend huge sums of money to what are, in
effect, their creations [the hedge funds], in order that the hedge funds can
play the markets with truly enormous resources. This scale of resources is
vitally important because it enables the speculator to shift prices in the market
in the direction he wants the prices to move in through the sheer scale of
fundsÉ
There is no doubt whatever that the hedge funds were the
driving force of the attack first on the Thai baht, then on other regional
currencies and the Hong Kong stock market. The first hedge fund assault on the
baht occurred in May 1997, one month after the Clinton administration launched
its campaign demanding that Thailand and Indonesia open their financial sectors
fully to US financial operatorsÉ
The Asian crisis began in Thailand in July 1997. The next
economy to fall was Indonesia. But the really decisive financial crisis was
that [of] South Korea. It was the South Korean crisis which ended the temporary
stabilization of Indonesia and which finally brought complete collapse there.
And the South Korean crisis was responsible for plunging the whole region into
slump.
(Gowan also noted that during the Reagan administration,
since the US was running a trade deficit, the expansion of the military,
especially new military hardware, "meant that the US state was acting as a
surrogate export market for the industrial sector." This is at least part
of the calculation of our present-day neocons for preserving the wealth of
their industrial-capital cronies in a time of indeterminate war.)
How does a country protect itself from such a speculative
attack? That's a very good question. What they do is have the central bank hold
enough assets denominated in the most internationally recognized currency (the
US dollar), so in an emergency, they can use those dollars to buy up their own
currency and pull it out of the line of fire of the speculators. A significant
portion of any country's reserve currency needs to be denominated in dollars,
then, as a shield against this kind of assault.
So most countries' central banks have collected the most
available dollar-denominated asset they can get their hands on - treasury
bills. These are like Savings Bonds. They are a loan to the US government,
which the US government will pay back with a variable interest rate after
maturity. So in effect, the reserve currency in most central banks in the world
to protect the local currency from an attack is US dollars. Every country,
therefore, now has a vested interest in ensuring that there is no speculative
run on the dollar - even if by market standards it deserves to be dumped like a
dirty diaper - because devaluation of the dollar would knock the stuffing out
of their very own currency reserves.
That's some catch, that Catch-22.
Not only that, the US engineered it all the way back in the
early 70s, while it was abandoning the gold-backing and the fixed currency
exchange rates that had prevented speculative attacks (Gee!). This was made
possible by American arrangements for the major oil producing nations to invest
all their surplus money in dollar-denominated assets too, and thereby ensure
that everyone around the world who had to pay for oil had to pay inÉ dollars.
One of the key factors in the thinking of the Saudis, Kuwaitis, United Arab
Emirates, et al., was that there was only one country around who could
guarantee (and successfully monopolize) the military security of the major sea
lanes leading out of the Persian Gulf.
Guess who?
Here's the big problem. There are now so many countries
holding so many US treasury bonds that the US is categorically not capable of
paying them all off. That's right, boys and girls. If everyone we owe money to
called in their debts, Uncle Sam would be bankrupt. So no one is going to do
that, because if Uncle Sam goes bankrupt, what will happen to all those
treasury notes in our central banks? The US can now borrow from as many people
as it wants, and the debt turns into further security against anyone calling in
the debts.
Michael Hudson, the financial historian who authored Super
Imperialism - The Origin and Fundamentals of U.S. World Dominance, explained in a 2003 interview:
The U.S. has said it can't pay back its dollar debts and
doesn't intend to. As an alternative, it has proposed "funding the US
dollar overhang" into the world monetary system. Other countries would get
IMF credit equal to their dollar holdings, but these holdings no longer would
be US Treasury obligations. The US would wipe its debt to foreign central banks
off the hook. This would mean that it would have got all the
balance-of-payments deficits for the past 32 years for free, with no quid pro
quo.
The US has
been proposing this for 30 years whenever Europe raises the issue of payment
for its dollar holdings. American diplomats have said that they won't allow
central banks to use their dollars to buy US corporations, for instance. When
OPEC countries proposed this after 1973, the US Treasury reportedly informed
them that this would be considered an act of war.
Meanwhile,
people still have to have dollars to pay their international debts. Where do
you get dollars? From the United States, of course. So the treasury note system
has other countries locked in at the central banks, and the need to pay off
bigger and bigger external debts - in dollars - forces the majority to convert
their entire economies away from local development - like the old import
substitution industrialization (ISI) strategy - into export commodity platforms
oriented to the US. "The US makes dollars; everyone else makes things to
get dollars."
The two pillars of the US
imperial edifice are monetary and military. And the development of this unique
ability was closely related to the unique geographical position of the United
States, outside the lethal circumference of European wars.
Today's Imperialism -
Uniquely American
How credit and debt put the United States on topÉ so
far
By Stan Goff
[This is the third installment of Stan Goff's report on
the political economy of US imperialism, a series which started with a critique
of American policy toward Iran: "Persian Peril." That impending lunge
may or may not occur under the current Resident, but the eventuality is more
than likely. Goff's analysis is strikingly sophisticated, drawing on the World
Systems Theory of Immanuel Wallerstein,1 Rosa Luxembourg's enduring insights
into capital and power, and Goff's own considerable experience with the
machinery of American hegemony.
As this
article goes to press in the new issue of FTW's print newsletter, we learn that
India has just decided to sell $120 billion of its US Treasury reserves:
"In addition," writes Edward Luce in the Financial Times,
"India's record foreign exchange reserves represent a large
"opportunity cost", [Indian officials] say, since most of the money
is invested in low-yielding US Treasury bonds. 'We are subsidizing the American
economy,' said one official. 'These are scarce resources that can be put to
better use.'"2 And there's more news like that. China has just raised
interest rates for the first time in 9 years, so American suppliers of China's
vast appetite for raw materials are seeing their stocks bounce down. There's a
big difference between China's rising interest rates and ours: they're trying
to rein in their runaway growth, while we just want to slow the inflation of
our empty economic balloon.
How can an
isolated individual understand what's going on, without the benefit of a
fully-funded and freethinking university system? Follow the map: follow the
oil, and the gold, and the guns, and the drugs. Follow the money. -- JAH]
The United States is dominant in the world - materially
dominant, and not merely financially dominant. But the theories of Hilferding,
Hobson, and Lenin on imperialism do not accurately describe the actual
character of US domination unless we selectively censor a lot of information -
as certain sectors of the left have been wont to do.
From the very beginning, the Hilferding-Hobson-Lenin theses
centered on the needs of monopoly capital as the driving force that led to
inter-imperialist rivalry, and to the First World War. These theses held true
for Europe and the stage of imperialism that they witnessed.
But as Michael Hudson exhaustively documents in Super
Imperialism, the
United States began in the First World War by exploiting this rivalry itself to
gain advantage, and the predominant actor was not monopoly capital, but the US
state. While there is no doubt that the state was acting on behalf of its own
capitalists, it was not doing so in a largely reactive way but in a leadership
role.
The US did so first in the role of national creditor, then -
even more stunningly - in the role of national debtor.
While the US had employed direct conquest and domination in
its own hemisphere, it was not drawn into the inter-imperialist rivalry that
sparked WWI. So the US did not find itself predominantly "exporting
capital" to its colonies via private institutions, but exporting it to the
advanced capitalist states, particularly Great Britain, as loans for their war
with the Germans and Ottomans, loans approved and guaranteed by the United
States government.
The United States stayed out of the war until it became
likely that without US intervention, the Allies would lose and their debts to
America would remain unpaid. Once the war was over, Great Britain and France
were heavily indebted, and the US - far from being the benevolent post-war ally
- behaved much like any Brooklyn loan shark, bleeding its former allies so
severely that they in turn wrecked the post-war German economy with reparations
to assist the allies in their debts. This led directly to the rise of Nazism
and the Second World War.
Whereupon, the US began its participation, again, not as a fellow combatant, but as
a creditor to the other allies. It is now very clear that Franklin Roosevelt
developed financial designs on the colonies of the British Empire, and that he
maneuvered throughout the war to let others - particularly the Soviet Union,
but also England and France - take the brunt of Hitler's aggression to weaken
them, while he built up the geographically war-immune US industrial base, and
positioned the US to be a post-war creditor and the new super-power.
It is a demonstrable fact that England has been a satellite
of the United States ever since the First World War, and this accounts for the
unsavory affinity of Tony Blair's lips for George W. Bush's faux-cowboy ass.
Tony will eagerly jump aboard the bandwagon to attack Iran soon.
Britain was the principle (but not the only) target of US
post-war loan-sharking in the 20s and 30s. Prior to the 1929 crash, the US bled
the British Empire like a financial vampire, driven more by an archaic banker's
ruthlessness than by any prescient self-interest. In fact, the US state had no
idea at the time that they were becoming the principal cause of what would be
the world's most destructive war only two decades later.
After the speculative crash of 1929, with the US in the
worst economic doldrums it had ever experienced, and with significant sectors
of the US working class looking with great interest at Russia's example from
1917, Franklin Roosevelt was elected the 33rd President of the United States in
1933, with a mandate to take extraordinary measures ostensibly to relive the
suffering of the American working class masses, but more importantly - from the
point of view of US elites - to take the increasingly revolutionary edge off of
their agitations.
Roosevelt then became the first president to abandon the
gold standard and conduct a cold-blooded strategic devaluation of the US currency
as a weapon against its putative allies in Europe. This was a policy of
deliberate inflation domestically to raise prices as part of his domestic
pre-Keynesian overhaul, but it further battered the European exporters,
especially Britain, who needed to export to the US in order to acquire the
dollars to pay their compounding WWI debts.
This was the first intentional foray into state-initiated economic
warfare using currency as a weapon, and it displayed just a glimmer of
understanding that in state-to-state economic competition, the central banks
would become the primary battlefield. In the competition between private
capitals, the state would eventually become the referee to ensure the health of
the whole, and one state would dominate the general direction of global capital
accumulation. But this was only a glimmer then.
The Law of Unintended Consequences caused WWII, and hit the
US with an even deeper economic crisis. The combined refusal of the US to
negotiate new terms with the Europeans for repayment of war debts and the
strategic devaluation of the gold-free dollar led to a series of competitive
devaluations of European national currencies - a destructive race to the bottom
- that ended up hitting the United States like a tsunami.
Consistent with the arguments of Rosa Luxemburg and later
world system theorists, this period of economic disaster in the capitalist
metropoles loosened their exploitative grip on the under-developed periphery.
Andrew McKillop wrote that:
Through 1929-35 or 1929-36 in some countries of the
"civilized world" there were unremitting falls of activity in 'key
sectors.'
The uncivilized world was however less than concerned by
the event ... it gained. (A. Gunder Frank, S. Amin and suchlike will give youÉ
the related and unrelated sequences of economic change governing
metropole-colony relations). Simple facts and figures show considerable
economic growth in the 'colonial South' of the 1929-39 period.
This strengthened many of the colonies even as their
colonial ruler-states were being weakened, and contributed to the creation of
conditions that would lead to the wave of national liberation movements that
were folded into the Cold War dynamic later on. This was unanticipated by the
US, even as its assault on the British was coldly calculated. The American
intent was never to take over the formerly British (and French, German, etc.)
colonies, but to replace the Pound (Sterling) as the world reserve currency,
bringing not only the peripheral "South" under its sway, but Europe itself,
beginning with Great Britain.
Michael Hudson writes:
It would be false to say that the United States provoked
World War II out of malice or out of knowledge of the results of insisting on
repayment of its war debts by a world utterly unable to repay themÉ intolerable
burdens that the United States imposed on its allies of World War I and,
through them, on Germany. Every US administration from 1917 through the
Roosevelt era employed the strategy of compelling repayment of these war debts,
above all Britain's. The effect was to splinter Europe so that the continent
was laid open politically as a possible province of the United States.
Private finance capital could not have achieved that endÉ
[but] the world tumbled into a depression. Not only did the United States not
escape the Great Depression, it became the principle sufferer from a collapse
of its own creatingÉ The first great foray of U.S. governmental finance capital
into world power politics thus ended in ignominious failure, and ultimately in a
war [with] dimensions vaster even than World War I.
Roosevelt was a determined man, and after implementing
heroic Keynesian measures to ensure the political stability of the United
States, he turned the lemon into lemonade through his carefully calculated
commitments of the US to World War II.
The Lend-Lease Act, by which the US supported the Allies
without troops in the Second Word War for almost two years before it
intentionally provoked the Japanese into the attack on Pearl Harbor, was an
instrument that just as intentionally broke down the British Empire with debt
for the purpose of dissolving the Imperial Preference - a set of relaxed trade
rules within the British Empire - in the commonwealth. This set the stage for
the post-war displacement of the Sterling as the global reserve currency by the
dollar.
The intent was never to destroy the British, any more than
it was to replace the direct European colonial rule that World War II would
mortally wound. It was to bring Europe and ascendant Asia under the sway of the
United States as sub-imperial powers in a new global hierarchy that would
extend the influence of the US state beyond anything ever yet imagined by
former empires - in a qualitatively new way.
The British were subsumed by the United States into the
financial pole of capital, and were eventually reduced to a US financial
satellite on the border of Europe. This goes a long way toward explaining the
seemingly inexplicable subservience of successive British governments in
toadying to the US - even in harebrained military adventures like the current
Iraq quagmire. The UK has now been transformed into a financial and military
appendage of the US state.
Mark Jones (1999):
The British working class has been restructured out of
its birthright and out of its collective identity. The country is now a fiefdom
of [US] international finance capital, its working class little more than
servitors of the City [of London - a banking consortium], which has now
consolidated its national hegemony while totally internationalising itself.
The country now exists as an adjunct of the City. Apart
from finance capital, Britain's most successful trades are the Intelligence
Service, the Armed Forces and the arms industryÉFor this reason, the world
slump which is now in its early stages will have peculiarly sharp social
effects in Britain.
Britain's role as the world's largest financial offshore
island, the world's leading money-launderer (as much as $200bn of narcodollars
and dirty money in some years is washed in the City's giant laundry), its
self-appointed segregation from Europe and refusal to participate in EMU
(economic and monetary union) means that the fate of sterling, pummeled between
the euro and the dollar, will likely be grisly... The disproportionate weight
of banking, finance and transnational corporate capital in the British economy
means that the effects of crisis in these sectors will spread with lightning
speed and devastating effect through what passes for the specifically-national
economy.
Gowan noted how the US actually used the City of London to
break down the post-war Bretton Woods system after the Vietnam War almost
bankrupted the United States. "It is true that the Nixon administration
was able to exploit a breach in the Bretton Woods system, Gowan writes,
"that had already existed since the 1950s: the international role of the
City of London in financial transactions." For the details of this, see
Gowan's aforementioned extensive essay [Peter Gowan, The Globalization
Gamble - The Dollar-Wall Street Regime and its Consequences, at http://www.gre.ac.uk/~fa03/iwgvt/files/9-gowan.rtf].
The Nixon Revolution
Why the Left is wrong about "money for people and
not for war"
From the Civil War until World War I, the US had built up
its industry to surpass the British. The period from 1914 until 1939 was a
period of continuous and profound crisis, during which the US was maneuvering
to expand its influence throughout the world at the expense of the European
capitals - in particular the British. The Roosevelt administration had imposed
what Gowan called "repressive measures on the private financial pole of capital" in
order to regain the monetary stability necessary to lay the foundation for a
fresh upwave of capital accumulation after the war, using government finance capital in the
international arena. Those stabilization measures were codified at Bretton
Woods in 1944, where the debilitated Europeans consented to a new global system
in which the US would be "first among equals," in a system that fixed
the dollar to gold and established periodically negotiable but fixed currency
exchange rates, precisely to prevent overheated currency speculation, but also
to establish dollar seignorage across the planet. (In fact, there was little
that resembled "equality" in the Bretton Woods institutions - the
International Monetary Fund and World Bank - when the US had a controlling
plurality and exclusive veto power.) The fact was not unnoticed that during the
run up to and conduct of the war, the US Treasury Department had absorbed the
largest pool of gold in history.
The United Nations was established at the behest of the
United States - who had earlier rejected the League of Nations - indicating the
new US willingness to incorporate multilateralism into its imperial blueprint,
and as a politico-diplomatic adjunct to the IMF and World Bank.
The Marshall Plan was implemented as a bulwark against the
"spread of communism," simultaneously a genuine fear among many
elites as well as a new form of conflict with which to discipline US satellite
states. The Plan also provided the US with viable overseas sub-imperial
investment conduits.
But there was another dimension to this blueprint, and that
was the goal of unchallengeable military superiority, as a way of both
backstopping and expanding the newfound US international influence. NATO was
organized, and US bases proliferated in Asia, all under the guise of containing
Communism, but with the practical result of creating even deeper dependency on
the sub-imperial Japan and, using the Anglo-American bloc, on Germany and the
rest of Europe.
The two pillars of US power were US government finance capital and the US military
- both direct functions of the state. Contrary to the Hilferding-Hobson-Lenin
thesis, the US state - and not "monopoly capital" - was in the
driver's seat.
It is worth noting here that the US state has
"driven" the system into crisis that would have been avoided - though
different crises would have appeared - if short-term economic interests had
been the policy locomotive. Instead, Korea and then Vietnam led directly to the
transformation of military-monetary creditor imperialism into the current system
of military-monetary debtor imperialism.
In its attempt to fight-Communism/extend and consolidate US
influence in Asia, the US embarked on two costly wars, one that was fought to a
stalemate in Korea, and one that resulted in a shattering and domestically
destabilizing defeat in Vietnam. While these two wars undermined the myth of US
military invincibility and threw gas on the fires of national liberation
movements, they also converted the US from a net creditor in the world into a
net debtor. During Vietnam, in particular, with the French leading the way,
claims on US gold created a grave danger to the dollar, partly because the
vigorous post-Marshall Plan economies of Germany and Japan had converted the US
from a net exporter into a net importer. The combination of both - a debt and a
trade-deficit - came to head under the Nixon administration.
This became a new nodal point in US post-war imperialism,
and it decisively ended the post-WWII upwave of domestic prosperity.
In one of the boldest and most brilliant political moves of
the century, the Nixon administration played "chicken" with the rest
of the world, and unilaterally abandoned Bretton Woods. It simply quit the gold
standard and fixed currency exchange rates, in effect daring the rest of the
capitalist world to run on the dollar. Nixon calculated that dollar hegemony as
a global system was "too big to fail" for the rest of the world, and
the rest of the world backed down. We had now entered the stage of
debtor-imperialism.
This abandonment of gold and fixed exchange rates decisively
lifted the New Deal private "financial pole repression" regime, and
it was followed by a series of strategic devaluations of the dollar that wiped
billions of dollars of US foreign debt off the books in Germany and Japan, both
of whom had to sit by and fume helplessly.
This also set the stage for taking advantage of crises
generated by currency speculation for US capitals to penetrate markets
throughout the world, using the IMF as a lever with its conditional emergency
loans. This "technique" was pioneered by the Reagan administration in
response to the Mexican currency crisis of 1982.
Hudson's book, Super Imperialism, describes the US-IMF relationship
in great detail, and it is strongly recommended for anyone who wants to
understand exactly how that relationship developed.
These IMF structural adjustment programs (SAPs) are in effect a
loan-sharking operation of unimaginable magnitude imposed on almost 70 poor
nations, and they consolidated dollar hegemony in its present form. The
ballooning and essentially un-payable debts of debtor nations (with the US as
the sole exception) are denominated in US dollars, and have inexorably grown
into larger and larger fractions of the national outlays of peripheral
economies. This obligation - in the face of a crushing international economic
sanction threat - to service burgeoning external debts using US dollars is
precisely why these national economies are pressured to almost wholly export to
the US - now the world consumer of last instance - leaving local populations to
rely more and more on the increasingly stressed household, subsistence
agriculture, artisan, and primitive accumulation sectors of their own economies
(as Luxemburg said) for plain survival.
This debt-leverage system in the imperial periphery augments
the Treasury bill extortion of European and Asian sub-imperial centers, and
both systems are guaranteed in multiple dimensions by US military power.
But this system is itself now exhausted, as was indicated by
the Asian meltdown's unintended threat to the US economy and by the dot-com
bust of 2000. This same debt-liquidity crisis is reforming now in the US as a
real estate bubble that will just as certainly burst.
1For a quick overview of Wallerstein's approach, see http://www.fordham.edu/halsall/mod/wallerstein.html.
For his most recent work, see The Decline of American Power: The U.S. in a
Chaotic World (W.W. Norton, July 2003).
2See http://www.moneytec.com/forums/showthread.php?%20postid=74258%5C
and http://www.garp.com/risknews/newsfeed.asp?Category=12&MyFile=2004-10-18-9562.html.
"The Privilege of Running Free
Deficits Belongs To One Nation Alone"
by Stan Goff
[This is the fourth installment of Stan Goff's report on
the political economy of US imperialism, a series which started with a critique
of American policy toward Iran called "Persian Peril" (part five is
coming to you soon). Toward the end of this article, Goff does something a bit
unusual: he permits himself a paragraph of utopian suggestions, describing a
set of politically impossible reforms whose necessity and curative power seem
to this editor entirely convincing. When I call them politically impossible, I
mean what they meant in high school chemistry class when they described stuff
you could only do with nuclear reactions or relativistic effects:
"impossible by normal means." And just as they never mentioned those
reactions and effects, I won't say the "R" word - except to point out
that the "non-normal means" are in your kitchen cabinet, between the
cleaver and the frying pans. -JAH]
Peter Hudis described the weakness of debtor-imperialism in
his essay, "What is new in today's imperialism," from News &
Letters, November 2003:
In the Korean War the U.S. shifted from a creditor to a
debtor nation, largely due to military expenditures. The situation became
permanent with the Vietnam War. Since the 1980s, the U.S.'s debtor status as a
net importer of surplus capital has been a central feature of the world
economy. U.S. indebtedness has by now reached phenomenal levels. This year's
U.S. trade deficit is $450 billion. The federal budget deficit is $455 billion.
The two add up to 11% of U.S. GDP. This is no sign of strength. It is a sign of
WEAKNESS.
To finance these enormous deficits the U.S. is forced to
tap the resources of foreign capitalists by getting them to buy U.S. treasury
bonds and various securities. The U.S. is importing far more than it is
exporting and it's going deeper and deeper into debt. The U.S. is now more
dependent on foreign capital than at any time in the past 50 years. Foreign capitalists
now own 46% of all U.S. treasury bonds!
As Hudson said, "What is novel about the new state
capitalist form of imperialism is that it is the state itself that is siphoning
off economic surpluses....What turns this financial key-currency imperialism
into a veritable super imperialism is that the privilege of running free
deficits belongs to one nation alone."
The older theories of imperialism saw private
corporations running the system to profit, so that profits by global companies
were the measure of how much imperialism was occurring. My point is that the
largest form of exploitation, quantitatively speaking, now occurs among
governments. Another word for Super Imperialism would be Inter-Governmental
imperialism. The United States exploits the rest of the world above all via
foreign central banks accumulating dollars.
Éimperialism always has exploited mainly the rich
countries, for the same reason that Willy Sutton is said to have robbed banks:
That's where the money is. The richest nations are the ones with the most
economic surplus to appropriate. That is done not via the repatriation of
profits, but by the Treasury-bill standard and the free ride that it gives the
United States.
In paying attention solely to the machinations of the
financial-political dimension of the economy, we are apt to lose sight of the
"real" economy, where actual commodities - many of them necessities -
are produced, and - remembering Luxemburg - the "total social capital is
reproduced." It is in the interaction between the political-monetary
surface and the material transformation, movement, and consumption of goods
that we can understand the contradictory tendencies that lead to crises, and
where we can actually describe concretely what those crises are.
Loren Goldner has written a number of essays on this, as a
self-appointed "debt-deflation crisis theorist." Goldner begins by
teasing apart the term "profit" as it is generally used by
economists, by which they actually mean return on investment (ROI). More
useful, says Goldner, is the Marxian distinction of "profit" as
surplus monetary value extracted from the production, which distinguishes this
ROI from interest and ground rent. Economists refer to ROI simply as
"capitalization," which is one of the reasons they are often
incapable of seeing crisis as it approaches.
"Valorization," superficially the process of
"making money grow," is the fundamental process that drives the
entire (global) capitalist economy. But ground rent and interest are
circulatory mechanisms, while only profit can produce the new "real"
inputs to sustain "growth." So there must be equilibrium between
profit and other ROIs if the system is to remain stable.
One problem, however, is that profit is extracted from a
labor-base that also constitutes the consumer base, and the expansionary
imperative of capital growth periodically creates crises of
"overproduction." The mainstream economists, still focused on the
commodities themselves, call this "overcapacity," a glut both of goods
and of the buildings, machines, etc. etc. (fixed capital plant) that make them.
This is the mechanism of crisis in the "real" economy. This
overcapacity is exacerbated by technical innovation - in the drive to increase
"productivity" - that renders existing facilities uncompetitive or
"obsolete" and no longer capable of producing ROI. So in order to
recoup ROI, this overcapacity has to be liquidated. This is always a
destructive and painful process (recession and war), for which the dominant
class compensates itself by enclosing commons, dropping wages, closing down
public services, and using its political power to increase regressive taxation-
in effect, attacking the working class.
In imperial metropoles, this process can be ameliorated by
shunting some of the "austerity" into the periphery, thereby avoiding
political crisis at home. The current attack on European and American working
class standards is a good barometer of both the exhaustion of resources in the
periphery and the disinclination of peripheral peoples to put up with it any
longer.
But there is also what Goldner and Gowan refer to as
"fictitious" capital.
"Valorization", on the surface, means that
individual capitalists "throw" money into investment with the
expectation that, over time, it will return to them as expanded money. As long
as adequate surplus value [value appropriated from the production process
itself] is available to sustain expected rates of return as profit, interest
and ground rent, "valorization" continues. When it is not available,
there is crisis, and paper claims to wealth are destroyed or devalued. When a
new equilibrium is established between profit, interest, and ground rent on one
side, and available surplus value on the other - whatever the interim cost to
society, in depression, war, immiseration, disease, shortened longevity - a new
cycle can begin. "On the surface", then, a crisis such as the current
one occurs because the totality of existing claims to profit, interest and
ground rent cannot be "valorized" through the existing available
surplus value: they are FICTIONS which must be destroyed by
"devalorization." That is what, in a first approximation, a
"world financial meltdown" entails.
We see these fictions - fictitious capital - today [1998,
during the Asian crisis] in the vast "non-operating assets" of the
Japanese banks, the unpayable external debts of Thailand, Indonesia, Russia,
South Korea, Mexico, and Brazil; in the suddenly insolvent "hedge
funds"... in the still unliquidated real estate assets in Japan, China,
Hong Kong, the U.S., and Europe; in the multi-trillion dollar holdings of U.S.
Treasury bills, to a large extent by foreigners, and the servicing of the U.S.
government debt, Third World debt, corporate debt, and consumer debt at every
level of society.
Goldner's detailed explication can be found at http://www.geocities.com/CapitolHill/Lobby/2379/liquid.htm.
To make the long story short, pumping more and more
un-valorizable dollars into the global system has been creating a
"fictitious bubble" for decades: a growing mass of paper claims that
are being circulated not primarily in productive investment but in speculation.
The dot-com "bubble" that exploded in 2000 is already re-emerging as
a real estate bubble, because the production of un-valorizable dollars
continues.
The container for all this fictitious value is debt, and the
threat - as even Greenspan is beginning to acknowledge - is no longer inflation
(the bugaboo of interest collectors) - but deflation. People are beginning to
think again about 1929.
On the world market, this expansion of dollars is expressed
in the metaphor "dollar overhang," suggesting correctly that as this
mass of overhanging dollars expands it grows more perilously close to breaking
off and falling.
US imperialism has become paradoxical in that it is a net importer of foreign capital. Aside from the
treasury loans that the US won't pay back, what are the two sectors in which
the US enjoys industrial dominance, which might be attracting foreign capital?
Military technology and agriculture, both heavily subsidized by the US state.
This is but one dimension of the role of the US military in the world system
today. The other is direct.
Hudis:
No less key is U.S. military might. Capitalists like to
avoid risk. They feel there is no safer haven for their capital than the land
which aims to rule the world through military prowess.
It is here,
far more than on the issue of oil, that we can locate the economic basis of the
U.S. drive for permanent war. Permanent militarization projects an all-powerful
image which acts as a magnet to attract foreign capital. Unlike the Gulf War of
1991, foreign capital has not agreed to DIRECTLY pay for today's Iraq war.
However, foreign capital is footing much of the bill through a more circuitous
route. The U.S. deficits place added pressure on foreign capitalists to invest
their surplus dollars in U.S. treasury bonds, thereby transferring much of
war's cost to countries overseas--including those which opposed the war!
Hudis was wrong to suggest that oil
is a secondary consideration, but he is right when he says that foreign
governments finance the militaryÉ not the taxpayers of the US. And the basis of the US' ability
to extract this imperial tribute - at least an indispensable aspect of it - is
the globally deployed military power of the US.
There is a
false dichotomy on the left now about whether the US war in Southwest Asia is
about controlling oil or about the US attempting to intimidate the rest of the
world with a military "demonstration effect." Both theses are true,
and both of these goals are in trouble.
The deeper reality is that the global economy and therefore
the US-dominated accumulation regime is now trying to valorize the total world
capital with fewer and fewer wage laborers, even as former capitalist expansion
had ballooned the world population well above six billion persons. This is the
underlying reality that Goldner pointed to, a crisis of profit. The US as a
political power, and US capital as an economic engine, have reached the impasse
that was latent within the monetary-military system of debtor-imperialism all
along.
A restructuring at least as dramatic as the Nixon
transformation is not a mere choice, but a desperate necessity. That's why
concentrating on the neocon Republicans is a form of self-deception. The
Democrats will be equally obliged to tear down the old architecture and replace
it with something else, if that is even possible.
What the Bush administration is doing, with an able assist
from its subaltern, Great Britain, is expanding the role of the military within
that model to effect this transformation, and they are doing so- predictably -
in the most strategically important region in the world.
The external financing of US military expenditures forms the
basis of US domestic economic stability in the near term. So claiming that
"money," here understood erroneously as some unchangeable carrier of
value independent of the monetary-military world system, can be withdrawn from
the US Department of Defense in order to correct the structural social
deficiencies at home - "money for people, not for war," as the slogan
goes - is a great polemical device that will blow up in the Left's face,
because it won't work. Subtract the military, and within a month bums will be
wiping their asses with five dollar bills, and a lot of them will be jobless
because their own employment was directly or indirectly connected to the
military contracts where "the US state was acting as a surrogate export
market for the industrial sector."
The responsibility of the Left, in my humble opinion, is to
educate people, even if we are telling them what they understandably don't want
to hear, not manipulate them.
The stark fact is, there is no easy way out of the
predicament we are in, and there will be no solutions forthcoming from the
system that put us there. A doctor does not tell a patient who needs an
amputation to prevent dying of gangrene, "We can wait a few days, and
surely things will get better."
If this is to be dealt with in any meaningful way, it means
the entire US political and economic establishment will have to be removed, and
we will have to commit to at least a whole generation of bottom-up, radical
changes in every single facet of our lives.
That would merely begin with dumping half the so-called service sector jobs
in the entire economy, beginning with prisons and working up, into a massive
jobs training program, draconian progressive taxation that limits personal income
to $100,000 a year, a minimum wage of $20 an hour with imposed price controls,
free universal health care, the expropriation of agribusiness and systematic
abandonment of capitalist agriculture, the strict rationing of electricity, and
the construction of a nationwide public transportation network as a first step
to dramatically reducing dependence on fossil fuel.
Since self-delusion and denial are at the core of our
metropolitan cultural being, however, I have very little confidence that this
will happen. Most of us who give a shit are still clinging to the illusion that
this is an outcome of the right-wing cabal, and we believe we can solve it
through elections. So we'll be dragged into hell in four-year increments of
mystification and false hope.
The change will in all probability be imposed on us from the
outside. And that will begin with people around the world preparing for armed
resistance to local compradors and imperial armies, alongside a massive and
unified default on external dollar-denominated debts.
The armed resistance is already in progress, in Mesopotamia.
[In this fifth and final installment of Stan Goff's
"Persian Peril" series, our world crisis is analyzed in the three
dimensions of resource depletion, economic injustice, and the dynamics of
political power in a period of systemic breakdown. Mainstream progressives
still discuss economic and social justice without discussing Peak Oil; they
share with the free market economists a blissful ignorance of thermodynamic
reality. But conversely, many Peak Oil discussions neglect the explosive
political energies which might erupt from below during the disaster-process.
People on the imperial periphery are tired of being fed to the imperial center
and then absorbing its waste. And the working poor who form the majority in the
imperial center are likely to get irked when the economy tanks. US
petro-militarism is ill-equipped to prevent the political crises its masters
fear, at home and abroad. We shall see. - JAH]
By Stan Goff
There is nothing so blinding as success. And the United
States has had its fair share of success in the past 200 years. Success has the
vicious consequence that it seems to breed almost inevitably the conviction
that it will necessarily continue. Success is a poor guide to wise policy.
Failure at least often leads to reflection; success seldom does.
-Immanuel Wallerstein
[R]ather than a historical stage, industrial capitalism
should be understood as a functional specialization within a larger field of
accumulative strategies. Rosa Luxemburg was probably the first to see the full
implications of this. Still today, industrial capitalism is very far from the
universal condition of humankind, but rather a privileged activity, the existence
of which would be unthinkable without various other modes of transferring
surpluses of labor and resources from peripheral sectors to centers of
accumulation at different spatial scales.
-Alf Hornborg,"The Power of the Machine - Global
Inequalities of Economy, Technology, and Environment," 2001.
Why Iraq and now Iran?
There is
clearly a connection between the current war in Southwest Asia and petroleum,
but there is a great deal of confusion about the character of that connection.
The easiest error to dispense with is that the US is simply stealing the oil.
The US does not need to steal oil. Current international
arrangements give the US access to exorbitant quantities of oil at cut-rate
prices. US payments for oil, given the US ability to export its crises through
petrodollar recycling, are already so low in their net impact on the US economy
that oil is virtually an imperial tribute. There is no nation that will refuse
to sell oil, moreover, to the biggest consumer market in the world.
Another misapprehension is that the war is to protect the
dollar denomination of oil from a Euro-challenge. But so long as Europe itself
is unwilling to sell the dollar short - thereby wiping out billions of dollars
of monetary value in their own currency reserves - then the Euro can never be
more than a satellite currency. Certainly, other nations are looking to
diversify their reserve holdings into a dollar-Euro mix, but that does not
resolve in any fundamental way the game of "chicken" that the US can
continue to play with its printing presses.
Control over the largest patch of oil, on the other hand, is
leverage against all competitors who rely on imported oil. That was always
Europe and Japan. And since the 1980s, it is increasingly China.
Military power is the only card the US has to play in this
new Great Game. Forgive the paternalistic analogy that emphasizes the imperial
standpoint, but as any parent knows, when we must resort to force with our
children, it is an indication that all other measures have failed.
They are not expanding their power. They are trying to
manage their decline. The violence of that management is a reflection of the
depth of the crisis, and the question of how to manage that decline goes to the
heart of the struggle developing between the neocons and the technocrats.
The leverage that petroleum gives over the rest of the
over-developed world, as well as nuclear Russia and industrializing China is
absolutely and inescapably logical from a strictly mechanistic, military point
of view. This is the reason that Southwest Asia is now the epicenter of world
crisis.
But there is another aspect to the military solution, and
that is that the rest of the world, which - as key resources demonstrate their
geological and thermodynamic limitations - is competing for this diminishing
material base even as it sinks further into geo-economic penury.
As the number of human beings actively involved in the
process of valorizing the total global capital shrinks, leaving in its wake
billions of human beings who are now superfluous as either producers or
consumers to the accumulation process, the old post-war myth of development
that was held like a carrot in front of the under-developed nations has been
shattered.
There is now a largely urbanized, largely young, teeming
mass around the planet that must - by the logic of the market - be expelled and
eventually exterminated for the center of the center, the US, to continue to
accumulate. Marx's "reserve army of labor" has grown into a giant mass
of superfluous (to the market, except as a drag on accumulation) people.
Ecologists now tell us that it would take three additional
Earths to find the resources necessary to bring the whole world up to the
technological standard of consumption now extant in the United States.
Petroleum is only one of those resources, but it is a resource unlike other
material resources, because it has trapped within it a concentrated, portable
form of energy that is unmatched and unmatchable in the world. It has become
the thermodynamic lifeblood of industrial capitalism, and without it the entire
system will fall into utter and ruinous collapse.
The American ruling class is perfectly aware of this, and
they are also aware that their power is ultimately political - that the
ruination of the masses in the United States will lead to an upheaval that
could undermine or even end that power. So they are playing a game of
retrenchment. This is not the game of the strong, but the game of a desperately
weak system.
In 1945, the US share of global product was 50%. It is half
of that now. The US now imports 60% of its petroleum. The American trade
deficit is half a trillion dollars. The federal debt is over $6 trillion, 60%
of GDP. In 1980, that figure was $1 trillion, or 33% of GDP. My own hypothesis
is not complicated, once the question of dollar hegemony is understood. As the
monetary position of US power is continually weakened by debt and overhang, the
existing capital accumulation regime is increasingly obliged to force a change
on the world so it will accept yet another restructuring, just as Nixon forced
the last restructuring on his reluctant allies. There are two aspects to this
enforcement - the industrialized metropoles ("where the money is")
and the periphery/ semi-periphery, where this mass of superfluous people is now
a drag anchor on continued accumulation. This drag, from the standpoint of the
accumulation regime, must be systematically cut loose.
There is an international class war going on, and one reason
we only see the military dimension of it is that we only look at the economic
indices. This tells the story of "unequal exchange" in the realm of
money, but it does not explain what is happening in the material substrates of
the system, nor does it explain why petroleum in particular is unlike other
commodities.
This article has briefly described the process of
accumulation on the monetary surface, where a symbolic of "fictional"
value can create turbulence at the interface of monetary value and production -
the bubble phenomenon.
I have also
alluded to the social relations concealed beneath that surface, alluding to the
labor-theories of value pioneered by 19th Century thinkers like David Ricardo
and Karl Marx, showing how monetary value is "added" to products in
the transformation from "raw material" to finished product. I have
further alluded, though not explicitly, to the fact that labor in the
politically subjugated periphery of the world system "trades" at a
lower rate of monetary exchange than it does in the industrial metropoles -
what some theorists refer to as unequal exchange.
In every case, we are dealing with commodities as an output,
which ignores the role of hydrocarbons - particularly oil - as an input, and
not merely an input of raw materials like we get from a quarry or a forest. I
am speaking of a thermodynamic input.
Alf Hornborg notes that "Marxist theories of
imperialism, although acutely aware of global exploitation, have strangely
circumambulated their own implications for our understanding of industrial
technology itself."
A factory does not grow out of subterranean ore deposits
like a mushroom; it can reproduce itself only by exchanging its output of
products for a continuous input of specific substances like fuels and raw
materials. If this structure is generalized on a global scale, the secret of
industrialism can be seen not so much as a matter of applying increasingly
intensive technology to a certain piece of land, as of "realizing"
the industrial products on a global market at exchange rates that guarantee the
industrialized sectors a continuous negentropic buildup. The industrial
technomass cannot subsist by itselfÉ but depends on the existence of
non-industrial sectors where the price ofÉ fuels, raw materials, and the labor
to extract them is so much lower that such exchange rates can be maintained.
So we are back to Luxemburg's thesis.
But Hornborg is going a step further here than the Marxists.
He is pointing out that industrialism - inextricable from capitalism as an
historical process - is every bit as much a social relation as Marxian
"profit." The notion here is that technology is not culturally
neutral, but that technology itself represents a socially constructed form of
inequality. This is a very different proposition from orthodox Marxism, which
has implied that industrial technology might be placed under the control of a
non-capitalist politico-economic regime and transformed into an agent of
equality. In fact, it is a direct challenge to that idea.
He bases that challenge on physical laws, beginning with the
Second Law of Thermodynamics. Ergo, his use of the arcane term
"negentropy." Hornborg makes the case that the drawbacks of
industrial technology are not "circumstantial" but
"intrinsic."
Negentropy is shorthand for negative entropy; entropy is the
tendency of every system in the universe - including the universe itself - to
run towards disorder. Energy which is organized and available for work is
always being degraded into less organized forms of energy; the least-organized
is heat - random molecular motion. When a human being eats 500 calories
concentrated in a banana split, then runs out to do her day's work, that 500
calories is dissipated into the air around her as heat, no longer concentrated
in a form available for work (moving things). Hornborg is speaking of more than
heat, but I will focus on energy because it is central to this discussion and
it is a good general analog for the larger process Hornborg describes.
Globally hypertrophied capitalism - imperialism - is
fundamentally characterized by expansion, metaphorically designated
"growth." Luxemburg pointed out that one nation could not sustain
this expansion without exceeding its own borders, because both resources and
population were finite. Continuous expansion in a finite world is not possible.
While she was concentrating on the materio-economic limits
on the expansion of value, Hornborg has turned his attention on the energetic
limits of expansion. And instead of the limits imposed by a political boundary
- the state - he is looking at the planetary constraints of the biosphere.
When we look at the issue of economic
"productivity," a term used by economists to denote how much product
one can squeeze out of how much time they are paying for from workers, energy
inputs are the single most important variable in the massive increase of
"productive" output in the last 200 years. We have already alluded to
the problem with technology for capitalists, that it erodes the margin of
"surplus" value that constitutes (by the Marxian definition) profit,
and eventually forces them to run all over the planet looking for more
destitute workers to accept shittier wages. The introduction of fossil energy
to the industrial process became an immense "force magnifier" for
production, mobilizing heat for work that massively outstripped the ability of
any human or animal.
The development of this technology was not outside history.
It was developed with "growth" as the impetus, and thoroughly
embedded in the capitalist accumulation process. The first factories were
designed expressly to discipline the worker to a rate of output, by
subordinating that worker to the machine.
When we view industrial technology locally (or sectorally),
we see increased output, and as the ability ultimately to appropriate space and
time (a very important aspect of class). I jump in my Chevrolet, turn the key,
put it in Drive, and I can travel to my friends' house 25 miles away in half an
hour. Without that technology - burning fossil energy that has been concentrated
for millions of years, by the way - the trip one-way would have taken me all
day, and when I got there I would have been too tired to qualify as good
company.
But viewed globally, we can use this metaphor of growth in
an entirely different way, which Hornborg does. Hornborg examines the world
system from the point of view of its energetic flows, in much the same way we
might examine the "growth" of an organism.
As indicated above in the banana split example, an organism
is a "dissipative structure": in the process of reproducing itself it
dissipates order, running down the organized energy of complex chemical bonds
in the bananas until only heat remains - until the heat, too, is dispersed.
Hornborg looks at highly technological societies - or industrialized metropoles
- in the same way: as giant concentrations of technomass that require constant
inputs to maintain themselves. Their primary thermodynamic inputs are
hydrocarbons, the primary biomass energy inputs are food for cheap labor
(embodying 10 calories of fossil fuel in every calorie of food), and the
primary material inputs are raw materials. In tracing the energetic flows, he
notes that there is an inverse relationship between monetary value and
negentropy. The oil in the Persian Gulf leaves there with a very high potential
for doing work. It flows to one of these giant agglomerations of technomass
like New York or Tokyo, where it is then turned into, simultaneously, profit in
the productive process and useless dissipated heat.
These technomass concentrations only "grow" by
demanding ever higher, constant inputs of energy concentrates. One very
interesting statistic in this regard, even more stark in its demonstration of
international inequality than monetary figures, is the per capita energy consumption
of different countries. For a quick regional peek, go to http://www.grida.no/geo2000/english/i5a.htm
. Combining that with a map that shows where oil exports originate and end (the
annual BP statistical review available on-line has a good one at
http://www.bp.com/genericarticle.do?categoryId=111&contentId=2004184
) gives an astonishingly clear account of the current world system.
The typical Malthusian accounts of oil depletion found on
sites like www.dieoff.org and www.peakoil.org provide important empirical
accounts of the perils we face as fossil energy is depleted, but they provide
only superficial accounts of the social and political forces that constitute
the world system. This empiricism that looks at global population trends and
compares them to global fossil energy extraction trends implicitly (and
sometimes explicitly) suggests that the train wreck of the end-of-oil is
biologically determined - a direct outgrowth of something called "human
nature." This can lead the Malthusian perspective into both simplification
that obscures the socio-cultural bases of the way we use energy and to some
profoundly racist notions that the problem is fundamentally one of brown people
reproducing too quickly.
Hornborg's method of tracing energy flows demonstrates how
the industrial capitalist centers - these vast technomass concentrations that
can actually be seen now from satellites - suck in fossil energy
(thermodynamically, "order") from across the planet and draw it into
themselves, where it is dissipated. In the case of oil, capitalism's chronic
resource-drawdown has liquidated half the world's economically-extractible
supply in just over a century, though it was millions of years in the making.
This facilitates the extraction of other "orders" (raw materials and
labor) from other regions, which because they are politically powerless also
become the global toilets for the detritus of industrial capitalism.
This is the basis of the environmental justice movement:
recognition that this "disorder" is being shipped away from the rich
and onto the poor.
"Growth" accelerates this process, not just of
depletion, but of inequality, and it is not correctable so long as there is a
growth economy. Contrary to the unsubstantiated fantasies of a handful of
"alternative" energy wonks, the present system categorically cannot
carry on as is (as a growth economy - capitalism) without petroleum. Energy is
a real thing, and there is quite simply no replacement for petroleum for energy
concentration, portability, and flexibility of application. Not in this biosphere,
visions of growing alcohol-producing sugar beets across the whole state of
Texas notwithstanding.
Industrialism and capitalism are inextricable, and they are
a single system that, like an introduced species on an island, will consume the
material basis of its own continued existence. Hornborg is describing, by
adopting the organism-metaphor of "growth," the actual metabolism of
the world system. Like a beast that grows ever larger, even as it consumes its
own food base, the larger it gets (look at the explosive growth of
mega-cities), the faster the general rate of consumption becomes just to
sustain it.
This is the material basis of the inevitable conflict
between the United States and China. If current energy-demand trends in the two
countries continue, the earth's capacity to render up the black gold will be
exhausted within 25 years. Something has got to give.
The Emotions Matter
Don't ignore the people.
One of the key
issues that the technocrats have with the neocons is their demonstrated ignorance
of the cultures they aim to conquer. They seem to actually relish this
ignorance, as if the culture doesn't matter when we have the cluster bombs.
Iraq should have disabused them of this bone-headedness, but if the threatening
noises directed at Iran are any indication, it hasn't.
The weird apparent plot to unleash an Iranian-dissident
armed resistance against Iran, using the Mujahadeen e Khalq (MEK) of all
people, whom the US itself has placed on its terrorist organization list,
probably qualifies as a higher degree of self-delusion than even the intrepid
Ahmad Chalabi was able to midwife at the Defense Policy Board.
Iranian politics is complex. From the US media that always
attempts to reduce every situation to categories appropriate to the attention
span of a trout, we hear a tale of clerics versus reformers. But the political
scene is far more diverse than that, and the extreme pluralism contained within
that diversity does not now incline the Iranians to abandon political
stability, even if lurid Western headlines do occasionally declare that Iran is
"sitting on a time bomb." Sitting on journalistic bombast is closer
to the mark.
The recent resurgence of clerical forces in Iran was
assisted by the belligerence of the US, but it has not been a return to the
rule of the older clerical establishment. Younger clerics, who cling to the
centrality of Islamic law like their predecessors, recognize that the general
dissatisfaction of the Iranian public with the "reformists"
represented by Khatimi was with their inability to get things done -
particularly putting an economic "modernization" agenda on track.
Older clerics were positively negligent in economic affairs, where the younger
clerical forces are aggressively pursing deals with India, Azerbaijan, and
Russia to get an economic development program going again. Among the
non-clerical and anti-clerical forces, there is a division between the
technocrats who want economic liberalization (privatization) and the
nationalistic left that is resisting this agenda. Each of these is oriented to
a particular class-and-age base, each is itself factionalized, and no one
sector has the popular power on its own to exercise any form of political
hegemony. For this reason, no sector is willing to see a destabilization when
the outcome would be completely unpredictable. Instead, there is a kind of
pendulum effect between clerical and secular forces that inevitably, if slowly,
swings further away from the clerics, even if that pendulum is for the moment
leaning their way.
Strategically, Iran saw the fall of Saddam Hussein as a
positive, and even hoped for a rapprochement with the US, as did many American
capitalists who desperately want the trade restrictions lifted so they can sell
Iran food and join Iran in the oil business. But the Zionists within the
administration have prevailed in convincing George W. Bush that Iran is part of
an "axis of evil," reinforced by the insistence of Ariel Sharon that
Iran be the US second regime-change target.
Now Iran is looking with consternation at the US attempt to
establish a puppet-Iraq as the new regional hegemon (which is a plan falling
apart), and at the autonomous aspirations of the Kurds. Alarm at the aggressive
rhetoric of the Bush administration and Israel led directly to the clerical
reassertion of power and to the resumption of nuclear research. After all,
Iranians say, the US and Israel have nuclear weapons, why shouldn't we?
It's actually a fair question. The Iranians are also buying
Euros.
Iran is not now politically unstable, and an attack - even a
proxy attack - against Iran could further consolidate pan-Islamic solidarity
based on the justifiable perception that this is an attack against Islam.
Remember the 60% of Iraq is Shia, so the political war between the secular Arab
Saddam and the clerical Persian Khomeini - in the face of Saddam's removal and
the cyclic but steady erosion of the political power of Iran's clerical
establishment - is rapidly becoming an historical dead letter. What has grown
up in its place is a nascent pan-Islamic resistance - symbolically perceived as
a struggle against a Zionist-Anglo-American enemy, growing out of the very real
imperial and expansionist history of these three political actors in the
region. This resistance will not facilitate deeper entrenchment of the US
military. On the contrary, it will turn it into an even deeper
politico-military quagmire. More importantly, it has a huge potential to
destabilize the puppet regime in Saudi Arabia, with the largest remaining oil
pool on the planet.
This, paradoxically, is the goal of Osama bin Laden, and it
is now closer to being fulfilled than he might have dreamed five years ago.
Already, oil price escalation is threatening Bush's
equity-loan recovery with inflation that corresponds to a second recessive dip
in early 2005É the dreaded lose-lose combination of stagnation and inflation
that was termed "stagflation" in the 1970s. This anecdotal crisis -
if it happens - can still be seen against the backdrop of the larger systemic
crisis of profit described above.
The "exterminist" process of jettisoning global
surplus population, it has to be noted, will not be abrupt or direct. Instead
it is a process of accretion, depending on withdrawal, isolation, and neglect,
manifesting itself in pandemics, shortened life spans, eco-catastrophes, and
the wars of social disintegration. We are seeing the outlines of this process
most vividly now in Africa. This process is not happening in one apocalyptic
movement, but episodically.
This process represents the shrinkage of the material basis
of global accumulation, and it is this we have to understand to see into the
mind of the technocrats - their most immediate fear. If this process is
unmediated, even accelerated in one grandiose grab as the neocons are now
attempting, this accelerates not only the requirement to speed up the transfer
of disorder to the peripheries - with its attendant political destabilization
and resistance - it hastens the shifting of this burden onto the population of
the United States, upon whom the US ruling class' political stability rests.
It is notable that in this election year, the primary appeal
of the Democratic Party - that bureaucratized institutional vehicle for the
federalist technocrats - is that their patrician presidential candidate is not
George W. Bush. The subtext of this appeal is a fear of political polarization
in the United States in the face of the inexorable decline in US living
standards. These same polarities were catalyzed in the 1960s, when an
economically ruinous war polarized an American society that was seeing the end
of the post WWII consumer bash.
The Democrats are constitutionally incapable of describing
the crisis I am describing here. I am guilty of calling them cowards in
polemics, but the reality is that this is not cowardice but plain,
garden-variety self interest. Their fear of the neocons is not that the neocons
will hurt brown people half a planet away. They have shown themselves to be
equally willing to raise body counts. Bill Clinton presided over sanctions that
killed far more Iraqis than Bush's little military fiasco. Their fear is that
the kinds of questions that are raised in the public mind by the
bull-in-a-china-shop methods of the neocons might lead significant sections of
that American public
to seek out genuine answers, then act on them with social upheavals.
So, by God, let's get them an electionÉ fast!
This justifiable Democrat fear of domestic social
polarization was already in evidence when the Democrats lay down before the
Republican judicial fiat that decided the 2000 General Election. Rather than
provoke a Constitutional crisis that might awaken a whole host of social
resentments and shake the body politic out of its virtuous political inertia,
they stood down the base within their own party. Who can forget the most
astonishing scene in Michael Moore's film Fahrenheit 9/11, when Al Gore presided over a
Congress wherein every Democrat who challenged the election result - mostly
African American legislators incensed at the inattention to the Jim Crow
tactics employed by the State of Florida - was summarily shut down, and none
too politely either, by Gore himself.
This is the nightmare Brzezinski is trying to avoid: a
domestic polarization that might result in an upsurge of grassroots agitation.
This is the first danger, not the last, to the dominant class in our present
conjuncture. These technocrats are alarmed that the neocons are firing their
artillery at a distant target, which might wake up the hordes right inside the
perimeter.
Beyond that domestic "perimeter," of course, there
is a very real destruction of the all-important myth of American military
invincibility.
It is not only the armed resistance of Iraq that is making a
material contribution to the erosion of US military power. The vast
unpopularity in the Philippines of the Iraq war has forced the removal of
Filipinos from Iraq, and driven the normally compliant Filipino government to
defend its decision against the Australian government. This decision - defying
the US - was not undertaken lightly by the Arroyo government, dependent as it
is upon the US for its very existence. This is a successful assertion of
Filipino popular will against the US and against the Arroyo dependency.
The same thing was true in Turkey in the run-up to the March
2003 ground offensive, when, in a stunning defeat for the Bush administration,
the newly elected Turkish parliament - facing a massive Turkish anti-war
movement - narrowly denied the United States military its northern front for
the March ground offensive against Iraq.
The habit of thought of the powerful is to focus on others
who are powerful, and to ignore the masses. When they do see the masses in
action, they tend to judge but not interpret.
Last April we first saw the images of people in Fallujah
dragging the charred corpses of four mercenaries out of burning vehicles and
taking turns pummeling the blackened cadavers with shovels and stones, of
dragging the bodies down the street then stringing them up in a grotesque
display on a bridge.
How many people who saw that wondered where that rage came
from? Did they really believe that people in Fallujah are simply savages who
would engage in this post-mortem mutilation for entertainment?
We have since learned, those of us who are paying attention,
that Fallujans had been subjected to obscene disrespect and violence by
American troops since the beginning of the operation in March 2003, and that
many of those who vented their spleens on these roasted corpses had lost family
members and friends.
The Abu Ghraib photos gave us a glimpse of the kind of
humiliation that Iraqis, many of them simply in the wrong place at the wrong
time, were subjected to as the colonial dominator-mentality flowered among the
occupying troops.
This humiliation is now being borne collectively, and the
rage we witnessed in the streets of Fallujah is simmering just under the
surface of a whole region that has just about had enough.
* * *
Where the fall
will begin is hard to say. Will it be the deflationary avalanche that is
building under the mountain of debt? Will it be from a polarized America that
takes it back to the streets? Will it be in the Zulu Dawn of some military
debacle? Or will it be in a nuclear strike approved by the Defense Policy
Board? Or will it come as the sum of climate change, the end of oil, the
salinization of arable land, the destruction of fisheries, as civilization
collapses, as T.S. Eliot expected, "not with a bang but with a
whimper"?
We don't know, and neither do the technocrats. They just
have enough sense to be alarmed. They do not however have the power to prevent
it, only to alter slightly the direction from which it will come.
I have only one
thing to say to the Bush administration's fantasy of regime-changing Iran.
Bring it on.
© Copyright 2004, From The Wilderness Publications, www.fromthewilderness.com. All Rights
Reserved. May be reprinted, distributed or posted on an Internet web site for
non-profit purposes only.