HUMANITY IN THE FACE OF A GREAT TRANSITION
How to save the people and not the bankers
Towards the end of June 2011, the world faced for the first time in recent history, the possibility of a financial collapse that not only threatened the countries of the periphery or in one or two European countries, but also the US. Since then panic has become widespread, the price of gold has sky-rocketed, and we hear more and more about an imminent Great Depression. We truly are not before a new recession or a “double dip” like the mainstream media wants us to believe, but before the Great Depression of the 21st C. Even the data readjusted for 2011 of the US Bureau of Economic Analysis (BEA) show that the GDP of the US declined in the last quarter of 2008 by 8.9%. According to other data reported by the BEA that usually shows lower numbers after readjustments, 2009 registered a negative growth of 3.5%. Per capita GDP at current prices demonstrate that the US entered a recession already in 2005 (The Economist, August 6, 2011, p. 28). This is why we have to go more back in time to search for the causes of the depression. Let’s summarize.
Since the end of the seventies of the last century, the rate of profit declined in the productive sphere. In other words, it declined in those sectors where the real wealth is produced: value and surplus value. This is so, because since World War II the average life of fixed capital has gradually declined to the extent that the cost of technological renovation cannot be compensated by a larger reduction of the cost of labour once the technology has been introduced. Driven by the need to be ahead of the competition in the development of cutting edge technology, fixed capital’s average lifespan has been reduced at the expense of its rate of return. Since then Keynesian economics is in crisis and neoliberalism has come to take its place. The time was ripe to look for cheaper labour force outside the metropolis and/or to import cheaper labour force from the periphery. As labour became flexible globally, the reserve army of labour was to be found worldwide and the degree of exploitation in the real economy was intensified.
In the metropolis, we do not observe a move of capital towards the productive sphere instead we see how capital tries at all costs to abandon the productive sphere. Capital takes refuge more and more in the fantastic world of the self-expansion of money. In other words, capital tries to realize profit and accumulate in the speculative and unproductive spheres of the economy. Profit here tends to be higher, but it does not contribute to increase real wealth. Profits act as a form of entitlements that demand participation in real wealth, without have taken part in its creation. It is fictional capital and fictional profit. They develop as forms of dispossession and concentration of the real wealth that has been produced at the global level. Such profits intensify the competition for the distribution of the mass of surplus valued produced globally without effecting a real increase of it at global level.
In order to guarantee the good functioning of this economic logic, the deregulation of the financial system became necessary in the decade of the eighties. The measures that were adopted promoted the exponential growth of investment banking and of new financial instruments known as hedge funds and derivatives. Huge financial networks were created that functioned without any type of fiscal or legal control or constraint. In the last decades, financial capital resorted to a significant expansion of credit to finance its commitments to the future. This translated into an increased expansion of titles in financial markets that was sustained by an inverted pyramid of credit that was not backed by a major growth of the real economy. In short, with neoliberalism we enter into a casino type economy that is more and more global in scope. As long as the objective of appropriation and concentration of real wealth is maintained, credit will serve only to finance this speculative movement. This upward spiralling does not only generate (fictitious) profit, it is also a mechanism of appropriating the mass of real wealth produced in the world by a minuscule club of the super rich that have control over this process.
The actual size of the inverted pyramid of titles that is built on the ever- shrinking base of real wealth makes palpable the magnitude of fictional capital and its fictitious profits. The Bank for International Settlements (BIS) reported in its June 2011 issue of Quarterly Review that it had received information that by December 2010 a total of 601 billion dollars of derivatives had been issued. This sum is ten times more than the net world GDP, however, the real number of derivatives issued is probably an underestimation as there is no obligation to report it. Trace Mayor (“The great credit contraction,” sample 9; Premier Ark Editors, 2009) estimates that the real number of derivatives issued is 30 times the world GDP. In reality it is very hard to measure its real dimension. Sooner or later the fictional capital will disappear in an unprecedented financial collapse. The strategy of those who possess this gigantic inverted pyramid of investments is to incorporate as many mechanisms as possible that allow them to hoard the lion’s share of the productive or real wealth before or when the collapse takes place. This is a politics of subordination to the global financial networks of not only countries of the periphery like Latin America in the past, but also in the final analysis, even superpowers like the European Union and the US.
The creation of a Euro zone and the European Union was a political attempt of this continent to avoid being absorbed by the tentacles of the two financial octopuses of the City of London and Wall Street. Today we face the threat of the bankruptcy of states in the European Union and even the US. This demonstrates that not even the metropolis can stay safe from the encroachment of the Global Financial Network. We can see their unified efforts through the Financial Funds of Global Investment (FFIG) and the way big banking and corporations are strategically managed. It is a diversified network that operates with a maximum of anonymity and secrecy; it is where the struggle for the control of transnational capital takes place and where they are able to transform themselves into global financial networks. These networks function like “Private States without borders and citizens” that are unaccountable to none and nobody. It is a form of capitalism without citizenship. (See Dierckxsens, Los límites de un capitalismo sin ciudadanía, DEI, 2011; 104-108 y 152-155)
How is this global financial network structured? The findings of a study conducted by Swiss researchers Stefania Vitali, James B. Glattfelder and Stefano Battison of the ETH in Zurich, Switzerland entitled The Network of Global Corporate Control show that 737 companies control 80% of the transnational network of corporations and that only 147—what the researchers call the “super entity”—control more than 40% of this global network (http://pijamasurf.com’23.09.2011) Half of the 50 largest corporations are US American. Great Britain occupies the second place with eight, followed by Japan and France with four each, Switzerland, Holland, and Germany with two each, China, Canada, and Italy one each. Here we can draw a comparison with the secret Bilderberg Group. We can add also that 12 of the 25 companies with the greatest nodes or connections are well-known financial institutions. They are in order of importance: Barclays PLC from Great Britain, WE Morgan Chase, UBS AG, Merrill Lynch & Co, Deutsche Bank AG, Credit Suisse Group, Bank of New York Mellon, Goldman Sachs Group Inc.; Morgan Stanley; Mitsubishi Financial Group Inc.; Societé Géneralé and Bank of America Corp. The “super entity” is no longer composed mostly of big corporations of the real economy instead increasingly it has been taken over by financial institutions with Wall Street and the City of London at the forefront. (See chart below).
Chart
The Super- Entity of the World Economy
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These financial institutions have the capacity to speculate in the market and have privileged access to enormous quantity of information. Thanks to these researchers we are able to understand how the great bubbles and financial crises that we have witnessed in the last years originate, and how these great corporations in contrast to the majority of the population can report great earnings in the context of the global economic meltdown. We can understand the phrase: they are too big (powerful) to fail. The major stockholders can exert massive influence through their connections with other transnational corporations, concentrating so much power in their hands that they are able to destabilize entire countries and even the US. It is clear that the fictitious capital is concentrated in Wall Street and the City of London. The forces that subordinate productive capital at a large scale operate from these places and are in the position to control the metropolis.
The Struggle to Restructure the World Order in the Current Crisis
The current crisis is not only an economic chaos or panic that overwhelms us, but it is also the stage where different interests struggle to manage the economic and political processes at a global scale. The current crisis is the expression of the struggle to re-redistribute the global mass of real wealth. This redistribution no longer confronts countries of the metropolis against each other like in the past world wars. This time financial capital engages in a warlike strategy to enlarge its areas of influence and establish a global order under its hegemony through the creation of a global state without borders and citizens. This newly created “social territoriality” requires a new state form: a state-global financial network that has sovereignty over a social territory. This war will have winners and losers inside and among the great economic powers themselves that are based on territoriality. Formento and Merino, two Argentinean authors that wrote the excellent book The Struggle for the Reconfiguration of the World Order (Peña Lillo/Ediciones Continente, Buenos Aires, 2011) emphasize that the imposition of global financial power responds to a logic that transcends the subordination of some countries to other countries or an imperial country. In the new world order they say, “the global networks need to supersede the US as the only world superpower and advance to a new form of imperialism that has no central country as hegemonic and exclusionary power.”
In the US, we observe how the conflict of economic interests uses the global financial crisis as a strategic political struggle that resembles a financial-political-media war. The conflict of interests inside the divided Anglo-American financial power bloc is deepening and globalizing. Formento and Merino (p.9) talk about a conservative US American financial fraction led by JP Morgan and the Bank of America now steeped in crisis and the globalist financial power fraction led by Barclays, Citi Group, Lloyd’s Bank. Clearly, the global financial network is not monolithic. The latter group wants to create a state form that is global, without geographic borders and citizens and is not anchored in any territory, not even the US territory. Its territory is social. According to the global networks, Formento and Merico tell us, “there should be only colonies, no colonizing countries; colonizing countries themselves must be colonized territories”. Global financial networks have been already successful incorporating many Latin American countries, and now they are targeting the European Union and the US itself. It is through the pyramidal multiplication of fictitious capital as entitlements or rights over the ever- larger portion of the world’s real wealth produced each year that they are able to control effectively the productive assets in the world and thus, its process of reproduction. This internationalized power in the form of a global state seeks to impose its own global currency and to accomplish this it is ready to destroy the area of influence of the Euro and even the hegemony of the dollar. (Formento y Merino, p. 21)
How can we envision the new imperial modality? It is a form of imperialism that is deployed as a hierarchical network of global financial cities with cities like New York and the City of London as its centre and other local nodes in cities like Paris, Tokyo, Shanghai, Frankfurt, Moscow, Singapore, Hong Kong, Dubai, Abu Dhabi, Bombay, Sydney, Johannesburg, Sao Paolo, Buenos Aires, Mexico City and others. The principal nodes would give the global state its shape and there would be a global division of labour that assigns each region a specific role. In this context, the hegemonic power of the US as a unipolar, unilateral or even trilateral force in the world now becomes an obstacle to the realization of the Anglo-American globalist economic interests. The Anglo-American power bloc controls the largest portions of transnational financial capital and the largest financial network in the world under the leadership of Citi Group, Lloyd’s Bank, HSBC, Rothschild, Shell, Barclays and others. The Democratic Party best represents the political interests of this group since the Clinton administration, and today with the Obama – Hillary Clinton administration.
The main characteristics of the global-state-network can be summarized as follows: a) Constitution of a Global Government articulated within the G-20 as a unipolar multilateral sphere. Opposing this trend is the multi-polar multilateralism of other power fractions of the European Union that struggle not to be absorbed in this sphere. We can also mention the BRICS and China that presents a degree of autonomy and even UNASUR. It is not surprising then to watch how these groups support the Euro to prevent the European Union from falling under the aegis of dominant global financial capital b) the development of an imperialist global network consisting of a network of financial cities as a mean of social territoriality; the state modalities are constituted by the structures of strategic management of the cities. The central command are the global financial networks that make up the Financial Funds of Global Investment (FFIG). The aforementioned regional power fractions oppose this trend; c) the emission of global electronic money through the granting of Special Drawing Rights (SDRs) by the IMF or other ways of keeping the global financial networks always at the centre. This form of politics implies the elimination of the dollar as the leading currency and the dismantling of the Federal Reserve Bank as a global bank. This is opposed by the US financial bloc that seeks to maintain the hegemony of its country; ch) optimum liberalization of global commerce through the WTO; d) the development of the Global Armed Forces through NATO and UN Peacekeeping forces; e) a fictional, virtual democracy composed of demobilized and disorganized majorities, in other words, a global citizenship under the sovereignty of financial media power (See Formento and Merino, p. 57 & 58)
There is a fraction inside the US power bloc that opposes this political project. These are conservative forces that try at all costs to preserve the hegemonic power of the US. Thus, it is important to them to keep the dollar as the leading global currency in order to fund their military might. It also needs to strengthen its position vis-à-vis other groups. Their politics still rests on the control of geographic areas. According to their logic, Latin America must be annexed through free-trade agreements and the consolidation of a continental defence strategy. Latin American projects like the ALBA, UNASUR, and the South American Defence Council go against these political projects of the North. The deployment of the US Fourth Fleet ran parallel to the installation of the South American Defence Council. At the very moment that the coup in Honduras was taking place to prevent the consolidation of an autonomous South American power bloc, the Pentagon was allowed to install in Colombia seven military bases.
This US American power bloc appears as a unipolar, unilateral strategy of the Pentagon and prefers building regional blocs that are kept under the leadership of the US (Brzezinski), but this project is more and more difficult to sustain. The Pentagon and the financial fraction of JP Morgan, Bank of America, Goldman Sachs, Big Pharma, Exxon Mobil of Rockefeller and others support this political strategy. The Republican Party under the George W. Bush administration best represented this group politically. The economic weakness and backwardness of this US American power bloc was compensated by its military strategy. After loosing the midterm elections in 2010, the globalist Anglo-American fraction is having serious difficulty in imposing their program. (Formento & Merino, pp. 63-79). As the globalist and nationalist forces appear to struggle with each other, a third force arises with the mass movement ‘Occupy Wall Street’ that now advances an alternative project. The more both former parties struggle the more the alternative forces may arise.
The current wave of speculative attacks targets the public debt that has been accumulated by the governments of the metropolis. In the context of a debt crisis, the creditor banks seek to exchange the most difficult debt titles to collect against productive assets, in other words, in the real economy of the debtor countries. This type of regime was applied to Latin American towards the end of the 20th C., and the turn has come now to the countries of the metropolis. The importance of the ratings agencies in this speculative wave is significant. Many entities like the pension funds that carry billions in investments, are tied to these rating agencies of credit and are forced to submit themselves to their ratings. When the credit rating of a country is lowered (intentionally), the sale of bonds is massive and consequently they loose their price value, simultaneously raising the interest rates for new credit. The new credit can only be obtained under severe conditions of structural adjustment policies that were very well known in Latin America during the decade of the 80s of the last century. To ensure the installation of the global state without borders it is necessary to first subordinate the European Union and its Euro zone as well as the US and its dollar. The threat of bankruptcy is the weapon par excellence.
Through the Credit Default Swaps (CDS) one can engineer a financial coup against a particular country or several countries at once like the so-called PIIGS countries (Portugal, Ireland, Italy, Greece, and Spain). The CDS are derivatives of credits that act as if they were insurance policies to protect themselves from debts (public debt in this case) that have become UN-payable due to the lowering of their ranking by rating agencies or by the increase of interest rates that the their low credit rating produces. The Credit Default Swaps and the interest rate swaps are the markets of Wall Street and the City of London par excellence. The real objective of the Anglo-American globalists is not necessarily to bankrupt the countries of the periphery of Europe or that they abandon the Euro zone, but to steal their assets that were produced in the real economy. Bankruptcy is a mean to do so but not the very objective.
The Globalist Anglo-American Forces and the Euro
There are several credit rating agencies in the world, but among the most important are the Standard & Poor, Moody’s and Fitch Ratings. During the international economic crisis, rating agencies play an important role in the daily fluctuation of financial markets. Any raising or lowering of the credit score (or any other similar indicator) of a particular nation will immediately have an impact in the markets and the economy. Just as banks rank their clients using credit scores before granting a loan, international financial organizations have their own methods and objectives to rank countries in order to grant or deny them financial support.
Fitch Ratings is associated with the Bank of France and Renault and responds to the politics in Brussels. The purpose of cutting Greece’s credit rating to junk status was a step towards a greater centralization of the European government, and it appears to be working as it survived the speculative attacks at the end of the summer and the fall of 2011. S & P has its headquarters at the City of London and is part of the most global financial network that works with Barclay and others. It was the first one to lower the credit rating of Spain causing a contagion effect over all the European periphery reaching even Italy. This gave way to the speculative attacks centred on insurance contracts (securities) or Credit Default Swaps (CDS) fearing the eventual bankruptcy of these countries.
Global financial capital was able to put the European economy back on track after the experience with the Greek crisis. Through the rescue plan of the PIIGS, it was possible to transfer the risk of the peripheral countries to the central countries of the Euro zone. The Germans, Finnish, Dutch, Austrians and the French must now pay tribute to stabilize the peripheral countries of Europe. In actuality, it was all about rescuing German and French banks. It is in this context that a German-French project emerged to create the fiscal integration of Europe. This would imply the transfer of taxes from the North to the South. This transference, which began taking place in the present crisis, has provoked an ultra conservative backlash in the North. Popular sectors demanded to leave the Euro zone. Global rating agencies were of the opinion that if the crisis did not break out in the South, it should break out in the North. The risk of having northern European countries leave the Euro zone was not great. Were they to abandon the Euro zone, their exports to the South of Europe would be seriously in danger.
The ultimate goal of the German-French project is to avoid falling under the aegis of Anglo-American financial capital. The German-France axis continues to consolidate as a power bloc with a hard currency and a fiscal integration to prevent its subordination to Anglo-American global financial forces. The politics is to: a) deepen the gap between countries with trade and fiscal surplus like Germany and China and countries with a trade and fiscal deficit like the US and Great Britain. b) to increase protectionist measures and economic warfare among blocs. To preserve their domain over the real economy the German-French project is to confront Anglo-American global capital with a politics of adjustment-savings-investment-production-export-superavit. (See Formento & Merino, Op. Cit. 120-127).
To prevent subordination to Anglo-American global financial forces European financial capital finds tactical allies with other big banks in the US, like Goldman Sachs. Goldman Sachs is one of the bigger banks in New York which is not allied with mentioned Anglo-American forces. Since the Euro-crisis Goldman Sachs became a central economical and political player in Europe. Mario Draghi, the present president of Europe’s Central Bank, Mario Monti who succeeded Silvio Berlusconi in Italy, Lucas Papademos the new prime minister of Greece they all are or were part of Goldman Sachs. In this context it becomes clear that the real battle in the Euro crisis is one between the big bankers at a global scale. Will survive this alliance or will triumph the Anglo-American global financial forces, or will emerge a more radical social movement at a global scale against the bankers in general (See, Emilio Marín, ‘Goldman Sachs, dueño de parte de Europa, EE UU y algo más’, in www.rebelion.org, 11.12.2011).
Europeans find in the BRICS (Brazil, Russia, India, China, and South Africa) tactical allies for their project. In the meeting of the G-20 October 20 it became already clear that Russia and China would support the Euro. Anglo-American forces meanwhile tried to snatch the real assets of Europe through the business of speculating with the public debt and looking for bankruptcy of ever bigger countries. If they do not win this bet the burden of the collapse of fictitious capital would fall over Wall Street and the City of London. Towards the end of November 2011 it looked like if the global Anglo-American financial capital had lost an important battle: The creation of the European Fund for Financial Stability with external support represented a great loss for them. They have lost another battle, but the war continues. Amidst this confrontation of the forces of capital, a space is opened for radicalized progressive forces that fight for de-globalization and a decoupling from neoliberal globalization. As the Great Depression of 21st C looks to be a reality these forces may become more radical and internationalized. If 2011 represented springtime, harvest time might become quiet close in 2012.
The greatest fear of the Anglo-American is that the Euro zone not only transforms itself into Great Germany but it may do so, even worse, in alliance with China and Russia as part of the Euro-Asian Continental Bloc. The constitution of the Euro-Asian Continental Bloc would implicate the definitive defeat of global Anglo-American capital. The Euro-Asian Continental Bloc clashes not only against global Anglo-American capital, but also with unilateral and imperialist conservative forces of the US. In this context we observe that actually the geopolitics of Anglo-American global capital promotes the transfer of the scenarios of war in oil producing countries in Iraq and the Middle East (a major interest of US conservatives) towards countries that can break the integration of China and Russia. In the context of this encirclement of the Euro-Asian Continental Bloc we can expect an all out war against Iran. This means a possible direct confrontation with China and Russia. We can hear the drums of war again of a direct confrontation among superpowers.
The Anglo-American Forces and the Dollar
The strategic objective of the Anglo-American project is not only to destabilize the Euro, but also the dollar. At the end of June 2011 the S&P lowered the credit rating of the US for the first time in history. This was a warning that the sole superpower of the world ran the risk of not being able to pay its debt. This caused immediate panic around the world. Global bankers seem to deliberately want to destroy the dollar and the current financial system. The purpose is to produce a shock effect in order to establish a new system. Global bankers want to take advantage of the panic to replace the dollar and the Federal Reserve Bank with a global monetary authority controlled by the global bankers themselves free of any state control, even of the US government. (See John Truman Wolfe, “A Greek Tragedy, Part III www.johntrumanwolfe.com April 4, 2011).
Moody’s, the third credit rating agency, is associated with Goldman Sachs and the US conservative power bloc. It has threatened recently to lower the credit ratings of both the US and Great Britain and even find a way to integrate both countries into the formula of PIGS. (See Formento & Merino, pp. 106-11) In a scenario where Anglo-American forces advance, the opposing poles that feel threatened must find a way to protect their interests as a bloc. Conservative US anti-globalist forces need to maintain the dollar as the leading international reserve currency, guarantee their domination through the military industrial complex and the Pentagon, control the Middle East and tap into their oil reserves and deepen their intervention in Latin America. This backward fraction of Anglo-American financial power bloc is anchored in neo-conservatism and is the fraction that mostly takes the conflict to the terrain of politics and military intervention. It needs to perpetuate traditional US power and deploy a neo-conservative strategy that is both fundamentalist and militarist, and even neo-fascist.
As the conflict deepens, the division of the power bloc becomes more visible making possible the development of nationalistic social movements like the Tea Party. The internal struggles in the US reached new highs on November 2010. The midterm elections were won by the Tea Party. Bush’s nationalistic and even neo-fascist tendencies were strengthened in the process. In the event of a tie of hegemonic forces, the Tea Party begins to mobilize against who they consider the enemy of the country: Obama and the global financial oligarchy embedded in Wall Street, New York and the City of London. According to conservative groups, these centres of power want to destroy the ‘American Dream.’ The neo-conservative fraction imposes its agenda of reducing public investment (except military expenditures), putting a stop to raising taxes, defending unilateralism and militarism in foreign policy and putting forward its cultural and ideological obscurantism. The current tie between the two conflicting hegemonic forces has left the field open to new and alternative forces as Occupy Wall Street. As the Great Depression of 21st C will be a fact in 2012 social and political movements will grow to new highs in the midst of the election race.
How to Save the People or the Struggle for a New Civilization
As we could observe in 2011, the globalization project that is torn by class warfare from above and showing no boundaries has reached a climax. It has generated class warfare from below and made possible the emergence of a popular subject beyond its borders. The popular sectors that have been historically subordinated in the US and Europe take advantage of the conflict of interests inside the global financial bloc. ‘Occupy Wall Street’ best symbolizes this new space. The Great Depression of the 21st C. involves the collapse of neoliberal globalization and opens new venues for alternatives. The Great Depression of the 21st C. is not only a threat; it also constitutes a message of hope. A global rebellion is making its way in the world creating a new collective subject that has the potential of achieving a civilizatory change. The rejection of the bankers is becoming international with the movement of the ‘indignados’ or the outraged. On October 17th, there were demonstrations against the bankers in one thousand cities in over one hundred countries. Only in Spain there were one million demonstrators. Hungry has formally accused the bankers of being responsible for the financial crisis of the country. Other countries will follow. (See Geab 58 October 17th 2011)
The Great Depression of the 21st C. has provoked a crisis of legitimation of global proportions. It appears as if we would enter a new era of rebellions and revolutions that reminds us of those that took place in Europe in 1848. We can speak of a global political awakening and awareness. Although this new awakening manifests itself different in every country and region, it is global in nature. This is no longer an isolated rebellion in one country or region like North Africa or Southern Europe, it can explode in every corner of the world, even at the heart of the financial centres of New York and the City of London as we could see in the events of 2011. Western civilization itself could be put to question.
Over the last decade, we have observed in Latin America a deep questioning and decoupling away from neoliberalism. In 2008-2008 we witnessed popular uprisings in Sub-Saharan Africa due to famines. 2011 has seen famines in Somalia, Ethiopia, Eritrea and Kenya, and now the FAO warns us of a new generalized famine in Africa and other continents. This is due mainly to the increase in prices of staple grains and speculation. We have been watching in North Africa, with the exception of Algeria, rebellions against labour instability and social insecurity for decades now. For several decades, political stability was only achieved by installing dictatorships. As the opportunities for international migration diminished, the possibilities of realizing the individual or familial projects outside of the home country were shattered. The ‘American Dream’ or the ‘European Dream’ doesn’t lead to a greater politicization in the country of origin.
The crisis and unemployment in the metropolis posed serious obstacles to migration. The solution to the problems of millions and millions of migrants of the periphery since then only could be found in their own countries. This demands collective action. It has the effect of politicizing the population, in particular, the young who were the ones that migrated in droves. Rebellions surged in Northern Africa and became widespread. Economic depression and massive unemployment in Europe and the US have also provoked their own popular uprisings that we had not seen for many decades. We can no longer say that it cannot happen in core countries. Today rebellions can surge anywhere and at any moment. We are living an era of rebellion and so an era of hope and opportunities to change the world.
The economic rationality of today tends to deny life to an increasing portion of the world’s population both in the centre and the periphery; it tends to shorten the service life of workers causing great economic and social insecurity. The same logic destroys the shelf life of products as they become disposable, and even the lifespan of the machinery and business equipment is reduced in the search for having the cutting edge technology in the competition of markets. It destroys the natural world to the extent that it destroys non-renewable resources. Capital negates life in all realms as its own logic of reproduction. It promotes the death of all that is incorporated in its logic. It therefore runs the risk of succumbing to its own rationality. It is my contention that as capital negates life and sows death in so many fields, capital ends, in ultimate analysis, negating life in the reproduction of itself. In other words, it is a system that is programmed to self-destruct.
We believe that human beings are the product of history as well as the producers of history, and not the least through labour. The possibility of building a political project that can change the economic rationality does not depend exclusively on the will of the people nor is it predetermined by so-called objective conditions. Liberal democracy is not nearly the exclusive historical project of a social class. The same can be said of alternative projects, be it socialism, civilizatory change or simply another phase of global capitalism under the hegemony of a global state. The key is provided in the intersection between the political will and the historical moments that allow a change in the economic rationality. We think that the Great Depression of the 21st C. is characterized by a crisis of civilization of a specific historical moment that offers the opportunity to transcend borders based on a political project destined to change the current economic rationality.
The global crisis will promote and amplify the decoupling from neoliberalism. In the last decade, Latin America has tended to free itself from the politics of annexation of the most conservative wing of US politics. The non-approval of the ALCA as a politics of annexation was a deep disappointment for US politics. The politics of decoupling continued in Latin America with the ALBA and Petrocaribe. Ecuador and Bolivia joined the politics of decoupling and other countries followed suit. The Union of South American Countries UNASUR that was constituted in 2008 signified the emergence of a new regional power bloc and new beacon of liberty. Today we are witnessing decoupling attempts from neoliberalism even in Europe and the US.
How to Confront Bankers
Global bankers were able to subdue entire countries by using the burden of debt, something that could only be achieved in the past through war. The imposition of a debt can be understood as a financial war and therefore as odious debt. National economies have the right to defend themselves before such aggressions the way Iceland did through two referendums. Iceland did not rescue the bank (Icesave); it rescued its people. Mainstream media tries by all means possible to hide from public view the historical lesson that Iceland has taught us. Greece preferred to save foreign banks rather than its people. The Greek people had to rescue the banks by enduring a severe austerity program and a deep recession. The usual credit rating agencies committed fraud by classifying the Greek debt to junk status. Debts that have been acquired through fraudulent acts or corruption are illegitimate, and even illegal. This odious debt can and must be cancelled. The odious character of the debt can be demonstrated through an audit of the people, an audit that we support. (See Eric Toussaint: Es necesario anular las deudas ilegitimas, interviewed by Sebastian Bruklez)
The more countries and regional blocs get involved in the fight against global corporate greed and the banks, the more is it possible to conform an international mass movement that can rescue the people, and not the bankers. The Great Depression of the 21st C. creates the climate for the nationalization of the banks to make them work for the common good. The recent nationalization of the Dexia Bank is a case in point. It is necessary to regulate the banks just as it was done after the Great Depression in the 20th C. It is imperative to impose on banks where people deposit their money and savings, a financial discipline that does not join investment and commercial banking together. It is important to exclude securities from banking. It is also necessary to control and put limits on the flows and outflows of capital to a country, as it is now done timidly in Europe with the Credit Default Swaps. Obviously, to accomplish this it will be necessary that governments be forced to change their economic politics radically by decoupling from neoliberalism. (See Paul Armstrong et al. Germany riskier than the UK for the first time since January 2008, in www.bloomberg.com August 9, 2011)
How to engineer the change of history
The project of globalist bankers is to subordinate the countries of the metropolis, including the US and the European Union by stealing their productive assets. The Multilateral Agreement on Investment (MAI) was the first attempt to destroy the self-determination of the world’s nation-states in economic strategic matters. The attempt failed in 1998/1999 within the OECD. The present battle against the dollar and the Euro has the same objective. We do not believe, different from Formento & Merino, that the project of the globalist bankers will succeed. The autarchy of these so-called Private States without Borders and Citizens is very dependent on the unsustainable investments in the unproductive sphere of the economy. The lack of commitment of these Private States to its citizens and their borders is precisely their weakness in a geopolitical conflict between them and to confront the interests of economic blocs with citizens and borders that are oriented much more to the productive sphere. To envision the forthcoming collapse of western banks it is necessary to look at what is happening in the City of London and Wall Street. It has become clear that Greece and the Euro were two fingers pointing at the problem, but they were not the problem themselves. The Greek debt reveals the infamy of the banks of yesteryear and can explode any moment. The Euro is the needle that will explode the balloon in the future that is the financial system of today.
The City of London, Wall Street and the mainstream media blamed in 2011 the fiscal debt crisis on Greece and Euro throwing up in that way a smokescreen that concealed the impending débâcle of Wall Street and the City of London. One can assess the state of the western banking system by measuring the evolution of bank personnel, its performance, and stockholders. Both Wall Street and the City of London have announced since mid 2011 incessantly the lay-off of hundreds of thousands of its employees. A ‘perfect political-financial storm’ has been predicted for the end of 2011 and the first trimester of 2012. Western banks will become decimated of its personnel, benefits, and finally a large quantity of banks will go bankrupt. In 2012 we may expect the collapse of the global banking system of the City of London and wall Street. As this succeeds, the time has arrived to demand the nationalization of banks with audits of the citizens. (See geab 58, October 17 2011)
In the meantime, the real economy has moved to the emergent countries. According to The Economist, (August 6, 2011, p.66), in terms of the purchasing power these emergent countries (defined here as those countries that are not part of the OECD), encompassed in 2011 already 54% of the world’s GDP. It is really surprising to find out how 52% of car sales and 82% of cell phones are sold in these countries. The export sales of all these countries together surpassed in 2010 more than 50% of the world’s exports against 27% in 1990; together they held 81% of international reserves and only 17% the world’s public debt. These countries consumed 60% of the world’s energy, 65% of copper, 75% steel, and 55% of the oil. China is the strongest of the emergent countries with more than 49% of their GDP in investments compared to 16% of the US. As Chinese exports lowered and will lower even more during the Great Depression of 21st C, investment in China are made in huge housing- and infrastructure projects that sooner or later will lead to a new exploding bubble.
During 2009, spurred on by the government, China’s banks increased their lending by almost 1.5 trillion dollar. This is roughly twice the size of the Indian banking system. Much of this lending flowed to some 10,000 investment companies sponsored by local governments, which cannot borrow directly in their own name. These companies set about buildings roads, bridges,irrigation works and housing schemes of dubious merit. In 2010 the loans of local governments totalled about 35% of GDP (Simon Cox, ‘Keynes v Hayek in China, in The Economist, “The world in 2012” page 71). A copy of Manhattan is under construction an hour’s train ride from Beijing. Debt accumulated by companies financing local governments such as Tianjin, home to the New York lookalike project, is rising the debt disclosed by all 231 local government financing companies that sold bonds, notes or commercial paper through Dec. 10 this year. The total amounted to $622 billion, mostly in bank loans, more than the current size of the European bailout fund (Bloomberg News, ‘China Debts Dwarf Official Data With Too-Big-to-Finish Alarm’, Dec 18, 2011) . Many of these projects will fail to raise enough revenue to repay their creditors. Defaults have already surfaced in Yunnan province and elsewhere. A not determined amount of these projects will be abandoned halfway. The expected exploding bubble will impact the economies of Africa and Latin America particularly and so deepen the Great Depression of 21st C..
Latin America has a potential even in crisis time as it will be forced to a more endogenous economy. The continent geographically is bigger than Russia. Latin America is the largest producer of food in the world, and it possesses the most important biodiversity reserves and water resources of the world. The South American territories have the largest reserves not only of fossil fuels and agro-fuels, but also of minerals in the world. As these resources become more scarce and strategic to its own economies, a unified continent can channel these resources to a more endogenous use, and even preserve them for future generations. In the context of the Great Depression a politics of self-reliance or relative autarchy, becomes not only a possibility it will be from then on a necessity. All these elements build a solid base for a proper real economy in emergent countries in the context of the crisis.
Capitalism cannot survive without economic growth, independently if this occurs in the metropolis or the emergent countries. The increasing relative or even absolute scarcity of natural resources compromises the economic rationality of capitalism. A politics of preservation or of the reduction of the exploitation of natural resources as espoused by the indigenous communities and peasants organized, as “Los Sin Tierra” in Brazil will only increase the scarcity. The demand of a political project that is more endogenous in the periphery during the Great Depression of 21st C. means that fewer natural resources will be available in the world market. Sooner or later the rationality of capitalism fails against this extra-economic factor when this recession looks to be one of decades. There will be an excellent opportunity and even no other way out than expanding the shelf life of products.
The use value starts winning over the exchange value. The expansion of the life span of the use values will decrease the effective demand in terms of its value. The era of a negative growth at the world scale seems to be a fact, and it announces a new civilization. To satisfy the same need would demand less time as the average shelf life of products would expand. According to the social accountability of the content, the productivity of labour would increase. From the perspective of the form, we see the contrary, as we experience a negative growth. To be able to manage more your own natural resources in the periphery is becoming a social subject that can change the global rationality of capitalism in a more profound way than the classic seizing of power in the last centuries. Here is where we envision the beginning of a new civilization.
