Despite the lack of evidence linking Orlando mass murderer Omar Mateen to Daesh (ISIS) in any operational (direct) sense, the first inclination of U.S. Presidential hopeful Hillary Clinton was to renew American bombing of Syria, Iraq and Libya— the very nations that were destroyed by U.S. bombs directed by Mrs. Clinton and from whence Daesh arose. In so doing Mrs. Clinton made it evident that she is an unrepentant militarist whose bloodlust, combined with her longstanding interest in promoting American business interests, ties her to the U.S. imperial project of the last century and one-half. The precise moral difference between mass murders for personal and state reasons depends on a theory of the state at odds with this imperial project.
The company that employed Omar Mateen, G4S, is a British-based ‘security’ company that operates in 120 countries and as a ‘private’ supplier of public services to the Department of Homeland Security, the U.S. Army and to the very same State Department that Mrs. Clinton led as Secretary of State. The company advertises itself capable of ‘mitigating liability’ for the U.S. government— the ruse used by the CIA and other clandestine and quasi-clandestine government agencies to circumvent civil prohibitions on their activities by employing ‘private’ companies to carry them out. The NSA’s domestic surveillance programs tie to those of the FBI, DEA and CIA through this legalistic dodge. And ‘private contractors’ were behind some of the more grotesque slaughters in recent American wars.
The classical liberal separation of economic from political interests used to legitimate state violence is one that the Clintons have spent their ‘public’ careers undermining. As leading proponents of neoliberalism, the Clintons have spent three decades conflating ‘private’ interests with the public interest. In history this tie of U.S. business interests to U.S. military incursions runs from residual European imperialism, including genocide against the indigenous population and slavery, to direct wars, proxy wars, coups, assassinations, murders and particularly odious ‘wars of attrition.’ What is corruption in the liberal worldview is the nature of the capitalist-state acting in / on imperial interests in a Marxian frame. If this corruption is ‘solvable,’ such has yet to be demonstrated in the U.S.
Hillary Clinton’s use of the horrific crime in Orlando to instigate further crimes against untold innocents abroad is hidden behind manufactured fears of a lunatic and craven enemy (ISIS) that is in fact both a product of earlier U.S. atrocities across the Middle East and but a pale ghost of the savagery of combined U.S. actions in the region. The American leadership’s practice of creating crises that it must then ‘respond’ to led the way to the sequential slaughters, disruptions and dislocations that now finds substantial portions of the Middle East in ruins and millions of refugees flooding an increasingly xenophobic Europe. That this leadership never seems to learn from its ‘mistakes’ suggests motivations at work other than those presented at press conferences.
Where G4S, Omar Mateen’s employer, fits in is that Mr. Mateen was in many respects the perfect mercenary— ‘our psychopath’ if we were paying for his services. Murdering 49 people and wounding 50 more is, in addition to being an atrocity, a crime and a moral calamity, a complicated logistical feat. In 2004 U.S. Colonel James Steele was brought to Iraq, in a war that Bill Clinton publicly supported and Hillary Clinton voted for, to engineer like atrocities. Mr. Mateen’s crimes would have been business-as-usual in U.S. led slaughters of innocent civilians in Nicaragua and El Salvador in the 1980s and in Iraq in the 2000s. And G4S is precisely the type of ‘public-private partnership’ favored by the Clintons to ‘mitigate liability’ behind a veil of ‘private’ actions.
This isn’t to suggest that Hillary Clinton had any part in the murders carried out by Mr. Mateen. It is to suggest that in any human and / or moral sense she is congenitally unfit for public office. The most generous explanation of her support for George W. Bush’s criminal slaughter in Iraq is that she was misled by the manufactured evidence proffered by the Bush administration. That the war tied through history to the Clinton’s own sanctions against Iraq that resulted in half a million innocents dying from privation and to eight years of bombing that left much of the country in ruins suggests that Mrs. Clinton probably well understood that Iraq posed no threat to the U.S. in 2001. That the war was coincidentally a boon to Western business interests was / is as grotesque as it was predictable.
If conceptual clarity around these issues seems wanting here— that is the point. Neoliberalism as some unified theory of political economy ties through history to the Washington Consensus that in turn ties to American imperial history. Western imperialism— state-corporatism as division of the global economic spoils through insertion / assertion of ‘national’ interests, has five centuries of reasonably well defined history behind it. In this regard Donald Trump’s relative rhetorical reticence to use military force as a first choice is a threat to this imperial order whereas Hillary Clinton’s willingness to destroy an entire region of the world on a whim to benefit Exxon Mobil and Goldman Sachs makes her the ‘safe’ choice from the institutional perspective.
Washington Consensus precepts are:
*Fiscal discipline
*A redirection of public expenditure priorities toward fields offering both high economic returns and the potential to improve income distribution, such as primary health care, primary education, and infrastructure
*Tax reform (to lower marginal rates and broaden the tax base)
*Interest rate liberalization
*A competitive exchange rate
*Trade liberalization
*Liberalization of inflows of foreign direct investment
*Privatization
*Deregulation (to abolish barriers to entry and exit)
*Secure property rights
Against this imperial history the U.S. view that national elections are an internal matter places U.S. voters as the nominal ‘choosers’ of political economy for much of the world. In political terms, the 800+ military bases that the U.S. keeps around the globe serve as quasi-private security forces to assure repatriation of ‘profits’ for multi-national corporations in the form of resources, plentiful, cheap labor and the broader economy of imperial conquest. In fact, as opposed to theory, these profits are the reciprocal of the death, misery, subjugation and immiseration inevitably put forward by Western economists and politicians as the result of ‘free-choice’ by those on the losing end of American imperial fortune. That increasing numbers of Americans are on this losing end helps explain current (and heretofore slight) political unrest and its reciprocal in establishment support for Mrs. Clinton.
Hillary Clinton’s toxic jargon that “America never stopped being great” poses a seeming conundrum for her supporters who aren’t dedicated sociopaths. If U.S. wars in Southeast Asia, Central America, the Middle East and Northern Africa are evidence of this greatness, then what are the moral and political bases of such a judgment? Mrs. Clinton’s nostalgia for the days of alleged national unity following the attacks of September 11, 2001 is apparently for the erasure of the history that led to the attacks and not for unity per se. Conversely, given the absence of any operational link to Daesh, Omar Mateen could just as well have claimed that his crimes were motivated by Napoleon Bonaparte or Jesus Christ were ISIS not such a well-implanted foe.
Externally, and in contradiction of to the exceptionalists, the democratists and Western neoliberals, the U.S. is broadly considered the greatest threat to world peace on the planet. Brought to the fore in the current Presidential election cycle is that Western elites— inherited wealth, bailout-dependent bankers, the corporate lootocracy dependent on wildly goosed (by the Federal Reserve) asset prices and various and sundry agents, functionaries and court pleaders, are now well-understood to have interests diametrically opposed to those of the vast majority of Americans. The conceptual leap not yet taken by the American electorate is the international nature of this class divide.
Chart: the bi-Party system of electoral control in the U.S. is put forward as representing majority political views when combined it represents less than one-third of voting-age political affiliation. In terms of global political reach, the American political leadership represents such a small minority’s interests that even relatively minor rebellions could quickly overwhelm it. Source: Gallup, Pew Research.
This international ‘footprint’ is fact regardless of whether or not Americans consider it when voting. Internal economic dislocations, such as jobs lost and stagnant wages from trade agreements, find their reciprocals in indigenous economies destroyed, in ‘developing market’ industries shut out through subsidized ‘competition,’ in IMF ‘workouts’ that place ownership of developing industries in Western hands and through commodification and expropriation of millennia of accumulated knowledge to be put back as alien product against the peoples and cultures that developed it. In this respect, the ‘Clinton model’ of sweatshop labor as economic development joins the ‘Obama model’ of subverting civil law in the interests of corporate-state plutocrats.
Calls to unify behind Hillary Clinton in her bid to become President pose the heavily engineered outcome of the Democratic primaries as the popular will. In this sense they are roughly analogous to the calls to unite behind George W. Bush following the Bush v. Gore Supreme Court decision in 2000. The Clintons paved the way for Mr. Bush’s brutal militarism much as Barack Obama maintained the institutional infrastructure of the ‘unitary Presidency’ and the capacity for launching criminal wars of opportunity. Between Hillary Clinton and Donald Trump, it is Mrs. Clinton who has the proven record as guardian of empire and imperial prerogative. Her unbridled militarism is an expression of this prerogative.
The question for Democrats is how evil can someone be to still be worthy of voting for? Alleged stark differences between Hillary Clinton and George W. Bush find very high degrees of synchronicity between their actual policies (and those of Barack Obama). And lest this be unclear, it is the Democratic establishment that chose Mrs. Clinton as its candidate (chart above), and not the politically and economically dispossessed electorate. The grift that American elections reflect the popular will, and therefore confer political legitimacy, contrasts with the facts that the dominant Parties are largely and increasingly unpopular and that the popular will bears no relation to the policies decided upon and enacted by the American political establishment.
Rob Urie is an artist and political economist. His book Zen Economics is published by CounterPunch Books.
Last week a research wing of the International Monetary Fund came out with a report admitting that neoliberalism has been a failure. The report, entitled, “Neoliberalism: Oversold?” is hopefully a sign of the ideology’s death. They were only about 40 years late. As Naomi Klein tweeted about the report, “So all the billionaires it created are going to give back their money, right?”
Many of the report’s findings which strike to the core of the ideology echo what critics and victims of neoliberalism have been saying for decades.
“Instead of delivering growth,” the report explains that neoliberal policies of austerity and lowered regulation for capital movement have in fact “increased inequality.” This inequality “might itself undercut growth…” As a result, the report states that “policymakers should be more open to redistribution than they are.”
However, the report leaves out a few notable items on neoliberalism’s history and impact.
The IMF suggests neoliberalism has been a failure. But it has worked very well for the global 1%, which was always the IMF and World Bank’s intent. As Oxfam reported earlier this year, the wealthiest 1% in the world now has as much wealth as the rest of the planet’s population combined. (Similarly, investigative journalist Dawn Paley has proven in her book Drug War Capitalism that far from being a failure, the Drug War has been a huge success for Washington and multinational corporations.)
The IMF report cites Chile as a case study for neoliberalism, but never mentions once that the economic vision was applied in the country through the US-backed Augusto Pinochet dictatorship – a major omission which was no casual oversight on the part of the researchers. Across Latin America, neoliberalism and state terror typically went hand in hand.
The fearless Argentine journalist Rodolfo Walsh, in a 1977 Open Letter to the Argentine Military Junta, denounced the oppression of that regime, a dictatorship which orchestrated the murder and disappearance of over 30,000 people.
“These events, which stir the conscience of the civilized world, are not, however, the greatest suffering inflicted on the Argentinean people, nor the worst violation for human rights which you have committed,” Walsh wrote of the torture and killing. “It is in the economic policy of this government where one discovers not only the explanation for the crimes, but a greater atrocity which punishes millions of human beings through planned misery. . . . You only have to walk around greater Buenos Aires for a few hours to check the speed with which such a policy transforms the city into a ‘shantytown’ of ten million people.”
This “planned misery,” as Naomi Klein’s Shock Doctrine vividly demonstrates, was the neoliberal agenda the IMF has pushed for decades.
The day after Walsh mailed the letter to the Junta he was captured by the regime, killed, burned, and dumped into a river, one of neoliberalism’s millions of casualties.
For centuries hereditary monarchy was the dominant way to select national leaders, evolving into an intricate system that sustained itself through power and propaganda even as its ideological roots shriveled amid the Age of Reason. Yet, as monarchy became a dead idea, it still killed millions in its death throes.
Today, the dangerous “dead ideas” are neoconservatism and its close ally, neoliberalism. These are concepts that have organized American foreign policy and economics, respectively, over the past several decades – and they have failed miserably, at least from the perspective of average Americans and people of the nations on the receiving end of these ideologies.
Neither approach has benefited mankind; both have led to untold death and destruction; yet the twin “neos” have built such a powerful propaganda and political apparatus, especially in Official Washington, that they will surely continue to wreak havoc for years to come. They are zombie ideas and they kill.
Yet, the Democratic Party is poised to nominate an adherent to both “neos” in the person of Hillary Clinton. Rather than move forward from President Barack Obama’s unease with what he calls the Washington “playbook,” the Democrats are retreating into its perceived safety.
After all, the Washington Establishment remains enthralled to both “neos,” favoring the “regime change” interventionism of neoconservatism and the “free trade” globalism of neoliberalism. So, Clinton has emerged as the clear favorite of the elites, at least since the field of alternatives has narrowed to populist billionaire Donald Trump and democratic socialist Bernie Sanders.
Democratic Party insiders appear to be counting on the mainstream news media and prominent opinion-leaders to marginalize Trump, the presumptive Republican nominee, and to finish off Sanders, who faces long odds against Clinton’s delegate lead for the Democratic nomination, especially among the party regulars known as “super-delegates.”
But the Democratic hierarchy is placing this bet on Clinton in a year when much of the American electorate has risen up against the twin “neos,” exhausted by the perpetual wars demanded by the neoconservatives and impoverished by the export of decent-paying manufacturing jobs driven by the neoliberals.
Though much of the popular resistance to the “neos” remains poorly defined in the minds of rebellious voters, the common denominator of the contrasting appeals of Trump and Sanders is that millions of Americans are rejecting the “neos” and repudiating the establishment institutions that insist on sustaining these ideologies.
The Pressing Question
Thus, the pressing question for Campaign 2016 is whether America will escape from the zombies of the twin “neos” or spend the next four years surrounded by these undead ideas as the world lurches closer to an existential crisis.
The main thing that the zombie “neos” have going for them is that the vast majority of Very Important People in Official Washington have embraced these concepts and have achieved money and fame as a result. These VIPs are no more likely to renounce their fat salaries and overblown influence than the favored courtiers of a King or Queen would side with the unwashed rabble.
The “neo” adherents are also very skilled at framing issues to their benefit, made easier by the fact that they face almost no opposition or resistance from the mainstream media or the major think tanks.
The neoconservatives have become Washington’s foreign policy establishment, driving the old-time “realists” who favored more judicious use of American power to the sidelines.
Meanwhile, the neoliberals dominate economic policy debates, treating the “markets” as some new-age god and “privatization” of public assets as scripture. They have pushed aside the old New Dealers who called for a robust government role to protect the people from the excesses of capitalism and to build public infrastructure to benefit the nation as a whole.
The absence of any strong resistance to the now dominant “neo” ideologies is why we saw the catastrophic “group think” over Iraq’s WMD in 2003 and why for many years no one of great significance dared question the benefits of “free trade.”
After all, both strategies benefited the elites. Neoconservative warmongering diverted trillions of dollars into the Military-Industrial Complex and neoliberal job outsourcing has made billions of dollars for individual corporate executives and stock investors on Wall Street.
Those interests have, in turn, kicked back a share of the proceeds to fund Washington think tanks, to finance news outlets, and to lavish campaign donations and speaking fees on friendly politicians. So, for the insiders, this game has been a case of win-win.
The Losers
Not so much for the “losers,” those average citizens who have seen the Great American Middle Class hollowed out over the past few decades, watched America’s public infrastructure decay, and worried about their sons and daughters being sent off to fight unnecessary, perpetual and futile wars.
But inundated with clever propaganda – and scrambling to make ends meet – most Americans see the reality as if through a glass darkly. Many of them, as Barack Obama indelicately said during the 2008 campaign, “cling to guns or religion.” They have little else – and many are killing themselves with opiates that dull their pain or with those guns that they see as their last link to “freedom.”
What is clear, however, is that large numbers don’t trust – and don’t want – Hillary Clinton, who had a net 24-point unfavorable rating in one recent poll. It turns out that another indelicate Obama comment from Campaign 2008 may not have been true, when he vouched that “you’re likable enough, Hillary.” For many Americans, that’s not the case (although Trump trumped Clinton with a 41-point net negative).
If the Democrats do nominate Hillary Clinton, they will be hoping that the neocon/neolib establishment can so demonize Donald Trump that a plurality of Americans will vote for the former Secretary of State out of abject fear over what crazy things the narcissistic billionaire might do in the White House.
Trump’s policy prescriptions have been all over the place – and it is hard to know what reflects his actual thinking (or his genuine ignorance) as opposed to what constitutes his skillful showmanship that made him the “survivor” in the real-life reality TV competition for the Republican nomination.
Does Trump really believe that global warming is a hoax or is he just pandering to the know-nothing element of the Republican Party? Does he actually consider Obama’s Iran nuclear deal to be a disaster or is he just playing to the hate-Obama crowd on the Right?
Opposing the ‘Neos’
But Trump is not a fan of the “neos.” He forthrightly takes on the neocons over the Iraq War and excoriates ex-Secretary of State Clinton for her key role in another “regime change” disaster in Libya. Further, Trump calls for cooperation with Russia and China rather than the neocon-preferred escalation of tensions.
In his April 27 foreign policy speech, Trump called for “a new foreign policy direction for our country – one that replaces randomness with purpose, ideology with strategy, and chaos with peace. …It’s time to invite new voices and new visions into the fold. …
“My foreign policy will always put the interests of the American people, and American security, above all else. That will be the foundation of every decision that I will make. America First will be the major and overriding theme of my administration.”
Such comments – suggesting that “new voices” are needed and that “ideology” should be cast aside – were fighting words for the neocons, since it is their voices that have drowned out all others and their ideology that has dominated U.S. foreign policy in recent years.
To make matters worse, Trump outlined an “America First” strategy in contrast to neocon demands that the U.S. military be dispatched abroad to advance the interests of Israel and other “allies.” Trump is not interested in staging “regime changes” to eliminate leaders who are deemed troublesome to Israel.
The real estate tycoon also has made criticism of “free trade” deals a centerpiece of his campaign, arguing that those agreements have sold out American workers by forcing them to compete with foreign workers receiving a fraction of the pay.
Sen. Sanders has struck similar themes in his insurgent Democratic campaign, criticizing Hillary Clinton’s longtime support for “free trade” and her enthusiasm for “regime change” wars, such as those in Iraq and Libya.
Examining her long record in public life, there can be little doubt that Clinton is a neocon on foreign policy and a neolib on economic strategies. She stands firmly with the consensus of Official Washington’s establishment, which is why she has enjoyed its warm embrace.
She has followed Wall Street’s beloved neoliberal attitude toward “free trade,” which has been very good for multinational corporations as they shipped millions of U.S. manufacturing jobs to low-wage countries. (She has only cooled her ardor for trade deals to stanch the flow of Democratic voters to Bernie Sanders.)
Wars and More Wars
On foreign policy, Clinton has consistently supported neoconservative wars, although she might shy from the neocon label per se, preferring its less noxious synonym “liberal interventionist.”
But as arch-neocon Robert Kagan, who has recast himself as a “liberal interventionist,” told The New York Times in 2014, “I feel comfortable with her on foreign policy. If she pursues a policy which we think she will pursue it’s something that might have been called neocon, but clearly her supporters are not going to call it that; they are going to call it something else.”
Summing up the feeling of thinkers like Kagan, the Times reported that Clinton “remains the vessel into which many interventionists are pouring their hopes.”
In February 2016, distraught over the rise of Trump, Kagan, whose Project for the New American Century wrote the blueprint for George W. Bush’s Iraq War, openly threw his support to Clinton, announcing his decision in a Washington Post op-ed.
And Kagan is not mistaken when he views Hillary Clinton as a fellow-traveler. She has often marched in lock step with the neocons as they have implemented their aggressive “regime change” schemes against governments and political movements that don’t toe Washington’s line or that deviate from Israel’s goals in the Middle East.
She has backed coups, such as in Honduras (2009) and Ukraine (2014); invasions, such as Iraq (2003) and Libya (2011); and subversions such as Syria (from 2011 to the present) all with various degrees of disastrous results. [For more details, see Consortiumnews.com’s “Yes, Hillary Clinton Is a Neocon” and “Would a Clinton Win Mean More Wars?”]
Seeking ‘Coercion’
A glimpse of what a Clinton-45 presidency might do could be seen in a recent Politico commentary by Dennis Ross, a former special adviser to Secretary of State Clinton now working at the staunchly pro-Israel Washington Institute for Near East Policy.
In the article, Ross painted a surreal world in which the problems of the Middle East have been caused by President Obama’s hesitancy to engage militarily more aggressively across the region, not by the neocon-driven decision to invade Iraq in 2003 and the similar schemes to overthrow secular governments in Libya and Syria in 2011, leaving those two countries in ruin.
Channeling the desires of right-wing Israeli Prime Minister Benjamin Netanyahu, Ross called for the United States to yoke itself to the regional interests of Israel, Saudi Arabia and other members of the Gulf Cooperation Council (GCC) in their rivalry against Shiite-led Iran.
Ross wrote: “Obama believes in the use of force only in circumstances where our security and homeland might be directly threatened. His mindset justifies pre-emptive action against terrorists and doing more to fight the Islamic State. But it frames U.S. interests and the use of force to support them in very narrow terms. …
“The Saudis acted in [invading] Yemen in no small part because they feared the United States would impose no limits on Iranian expansion in the area, and they felt the need to draw their own lines.”
To counter Obama’s hesitancy to apply military force, Ross calls for a reassertion of a muscular U.S. policy in the Middle East, much along the lines that the neocon establishment and Hillary Clinton also favor, including:
–Threatening Iran with “blunt, explicit language on employing force, not sanctions” if Iran deviates from the Obama-negotiated agreement to constrain its nuclear program (the bomb-bomb-bomb-Iran zombie lives!);
–“Contingency planning with GCC states and Israel … to generate specific options for countering Iran’s growing use of Shiite militias to undermine regimes in the region”;
–A readiness to arm Sunni tribes in Iraq if Iraq’s prime minister doesn’t;
–Establish “safe havens with no-fly zones” inside Syria if Russian President Vladimir Putin does not force Syrian President Bashar al-Assad to step down.
Employing the classic tough talk of the neocons, Ross concludes, “Putin and Middle Eastern leaders understand the logic of coercion. It is time for us to reapply it.”
One might note the many logical inconsistencies of Ross’s arguments, including his failure to note that much of Iran’s supposed meddling in the Middle East has involved aiding the Syrian and Iraqi governments in their battle against the Islamic State and Al Qaeda. Or that Russia’s intervention in Syria also has been to support the internationally recognized government in its fight against Sunni extremists and terrorists.
But the significance of Ross’s prescription to “reapply” U.S. “coercion” across the region is that he is outlining what the world can expect from a Clinton-45 presidency.
Clinton made many of the same points in her speech before the American Israel Public Affairs Committee and in debates with Bernie Sanders. If she stays on that track as president, there would be at least a partial U.S. military invasion of Syria, a very strong likelihood of war with Iran, and an escalation of tensions (and possible war) with nuclear-armed Russia.
The logic of how all that is supposed to improve matters is lost amid the classic neocon growling about showing toughness or reapplying “coercion.”
So, the Democratic Party seems to be betting that Hillary Clinton’s flood of ugly TV ads against Trump can frighten the American people enough to give the neocons and the neolibs one more lease on the White House – and four more years to wreak their zombie havoc on the world.
Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated Press and Newsweek in the 1980s. You can buy his latest book, America’s Stolen Narrative, either in print here or as an e-book (from Amazon and barnesandnoble.com).
Reposted below is the introduction and sample chapter from John Perkin’s “The New Confessions of an Economic Hitman” (also available in pdf form on his site here).
Introduction
The New Confessions
I’m haunted every day by what I did as an economic hit man (EHM). I’m haunted by the lies I told back then about the World Bank. I’m haunted by the ways in which that bank, its sister organizations, and I empowered US corporations to spread their cancerous tentacles across the planet. I’m haunted by the payoffs to the leaders of poor countries, the blackmail, and the threats that if they resisted, if they refused to accept loans that would enslave their countries in debt, the CIA’s jackals would overthrow or assassinate them.
I wake up sometimes to the horrifying images of heads of state, friends of mine, who died violent deaths because they refused to betray their people. Like Shakespeare’s Lady Macbeth, I try to scrub the blood from my hands.
But the blood is merely a symptom.
The treacherous cancer beneath the surface, which was revealed in the original Confessions of an Economic Hit Man, has metastasized. It has spread from the economically developing countries to the United States and the rest of the world; it attacks the very foundations of democracy and the planet’s life-support systems.
All the EHM and jackal tools—false economics, false promises, threats, bribes, extortion, debt, deception, coups, assassinations, unbridled military power—are used around the world today,even more than during the era I exposed more than a decade ago. Although this cancer has spread widely and deeply, most people still aren’t aware of it; yet all of us are impacted by the collapse it has caused. It has become the dominant system of economics, government, and society today.
Fear and debt drive this system. We are hammered with messages that terrify us into believing that we must pay any price,assume any debt, to stop the enemies who, we are told, lurk at our doorsteps. The problem comes from somewhere else. Insurgents. Terrorists. “Them.” And its solution requires spending massive amounts of money on goods and services produced by what I call the corporatocracy—vast networks of corporations, banks, colluding governments, and the rich and powerful people tied to them. We go deeply into debt; our country and its financial henchmen at the World Bank and its sister institutions coerce other countries to go deeply into debt; debt enslaves us and it enslaves those countries.
These strategies have created a “death economy”—one based on wars or the threat of war, debt, and the rape of the earth’s resources. It is an unsustainable economy that depletes at ever-increasing rates the very resources upon which it depends and at the same time poisons the air we breathe, the water we drink, and the foods we eat. Although the death economy is built on a form of capitalism, it is important to note that the word capitalism refers to an economic and political system in which trade and industry are controlled by private owners rather than the state. It includes local farmers’ markets as well as this very dangerous form of global corporate capitalism, controlled by the corporatocracy, which is predatory by nature, has created a death economy, and ultimately is self-destructive.
I decided to write The New Confessions of an Economic Hit Man because things have changed so much during this past decade. The cancer has spread throughout the United States as well as the rest of the world. The rich have gotten richer and everyone else has got-ten poorer in real terms.
A powerful propaganda machine owned or controlled by the corporatocracy has spun its stories to convince us to accept a dogma that serves its interests, not ours. These stories contrive to convince us that we must embrace a system based on fear and debt, accumulating stuff, and dividing and conquering everyone who isn’t “us.” The stories have sold us the lie that the EHM system will provide security and make us happy.
Some would blame our current problems on an organized global conspiracy. I wish it were so simple. Although, as I point out later,there are hundreds of conspiracies—not just one grand conspiracy—that affect all of us, this EHM system is fueled by something far more dangerous than a global conspiracy. It is driven by concepts that have become accepted as gospel. We believe that all economic growth benefits humankind and that the greater the growth, the more widespread the benefits. Similarly, we believe that those people who excel at stoking the fires of economic growth should be exalted and rewarded, while those born at the fringes are available for exploitation. And we believe that any means—including those used by today’s EHMs and jackals—are justified to promote economic growth; preserve our comfortable, affluent Western way of life; and wage war against anyone (such as Islamic terrorists) who might threaten our economic well-being, comfort, and security.
In response to readers’ requests, I have added many new details and accounts of how we did our work during my time as an EHM, and I have clarified some points in the previously published chapters. More importantly, I have added an entirely new part 5, which explains how the EHM game is played today—who today’s economic hit men are, who today’s jackals are, and how their deceptions and tools are more far-reaching and enslaving now than ever.
Also in response to readers’ requests, part 5 includes new chapters that reveal what it will take to overthrow the EHM system, and specific tactics for doing so.
The book ends with a section titled “Documentation of EHM Activity, 2004–2015,” which complements my personal story by offering detailed information for readers who want further proof of the issues covered in this book or who want to pursue these subjects in more depth.
Despite all the bad news and the attempts of modern-day robber barons to steal our democracy and our planet, I am filled with hope. I know that when enough of us perceive the true workings of this EHM system, we will take the individual and collective actions necessary to control the cancer and restore our health. The New Confessions of an Economic Hit Man reveals how the system works today and what you and I—all of us—can do to change it.
Tom Paine inspired American revolutionaries when he wrote,“If there must be trouble, let it be in my day, that my child may have peace.” Those words are as important today as they were in 1776. My goal in this new book is nothing less than Paine’s: to inspire and empower us all to do whatever it takes to lead the way to peace for our children.
CHAPTER 34
Conspiracy: Was I Poisoned?
The situation has gotten much worse since Confessions of an Economic Hit Man was first published. Twelve years ago, I expected that books like mine would wake people up and inspire them to turn things around. The facts were obvious. I and others like me had created an EHM system that supported the corporatocracy. Together, the EHMs, corporate magnates, Wall Street robber barons, governments and jackals, and all their networks around the world have created a global economy that fails everyone. It is based on war or the threat of war, debt, an extreme form of materialism that pillages the earth’s resources and is consuming itself into extinction. In the end, even the very rich will fall victim to this death economy.
Most of us have bought into it in a big way; we are collaborators—often unconscious ones. Now it is time to change. I had hoped that exposing these facts, making people conscious, would inspire a movement that, by 2016, would have resulted in a new vision, anew story.
People were in fact shaken awake. Activities in so many parts of the world, including localized ones such as the Occupy movements,national ones in places as diverse as Iceland, Ecuador, and Greece, and regional ones such as the Arab Spring and Latin America’s Bolivarian Alliance for the Peoples of Our America (ALBA), have demonstrated that we understand our world is collapsing.
What I had not anticipated was the flexibility in the EHM system or its absolute determination to defend and promote the death economy. I had not anticipated the rise of an entirely new class of EHMs and jackals.
I made it clear in the original book that I did not believe the EHM system was driven by some nefarious, illegal, secret plan devised by a small group of people determined to control the world; in other words, I did not believe in some unified “grand conspiracy.”
Then something strange happened.
In late March 2005, less than five months after publication of the book, I flew to New York City on a Monday. I was scheduled to speak at the United Nations the next day. I was in perfect health,as far as I knew. A man who identified himself only as a free-lance journalist had been hounding my publicist for an interview. Because his credentials were sketchy and I was receiving a lot of press at that time, she kept putting him off. But when he suggested picking me up at LaGuardia Airport, taking me to lunch, and driving me to the apartment where I was staying with a friend, she consulted with me and I acquiesced. He was waiting for me when I exited the airport. He took me to a small cafe, told me how much he admired my book, asked some of what had become rather standard questions about my life as an EHM, and then drove me to my friend’s apartment on the Upper West Side.
I never saw that man again, and meeting him would have been an unmemorable event—except that a couple hours later I suffered severe internal bleeding. I lost about half the blood in my body,went into shock, and was rushed to Lenox Hill Hospital. I ended up spending two weeks there and having more than 70 percent of my large intestine removed.
As I lay recovering in that hospital bed, I thought that perhaps my illness was a message to slow down, that my body was over-taxed and I needed to cut back on writing and the speaking tours.
The New York gastroenterologist told me that I’d suffered from complications due to a severe case of diverticulosis. I was shocked to hear this, because I’d recently had a colonoscopy. My Florida doctor had assured me that there were no signs of cancer, which had been my main concern. He mentioned that I had some diverticula, “like most people your age,” and ended by advising me to come back in five years.
Of course, my UN speech was canceled, as were numerous other media events. Word of my operation got out very quickly, and soon I was receiving lots of e-mails. Most supported me and expressed concern for my well-being. Some e-mails came from people who accused me of being a traitor to my country. Several assured me that I’d been poisoned.
When I asked my gastroenterologist, he responded that he was“quite certain” I hadn’t been poisoned, but that he’d also learned“never to say never.” In any case, all of it got me to thinking and reading more about conspiracies.
I still do not believe in the grand conspiracy theory. In my experience, there is no secret club of individuals who get together to plot illegal, world-dominating strategies. However, I do know that part of the power of the EHM system is that it foments many small conspiracies. By “small,” I mean that they are focused on specific objectives. Such conspiracies—secret actions to accomplish illegal goals—happened when I was just beginning school, such as the CIA coup that replaced the democratically elected Iranian prime minister, Mossadegh, with the shah, in 1953. They continued during my high school years; consider the CIA-supported Bay of Pigs invasion of Cuba, in 1963. But I became most aware of them when I was an EHM and the CIA arranged the assassinations of my two clients, Ecuador’s Roldós and Panama’s Torrijos, in 1981. Then, as I began writing the original of this book in 2002, there was the US-led conspiracy to overthrow Venezuela’s president, Hugo Chávez. After that came the conspiratorial lie about weapons of mass destruction in Iraq. This was followed by a flurry of conspiracies against leaders and governments in the Middle East and Africa.
While I was an EHM, the goals of most conspiracies were to further US and corporate interests in the economically developing countries—to do whatever it took, including overthrowing or killing government leaders, to enable our companies to exploit resources. After my colon operation, as I lounged around my home reading various reports, it became obvious that the tools I had used in Indonesia, Panama, Egypt, Iran, Saudi Arabia, and other countries were now being applied in Europe and the United States. Fortified by the so-called threat of global terrorism after 9/11, these conspiracies have given excessive power to the very wealthy individuals who control global corporations. Among the most striking are conspiracies to implement “free” trade agreements such as NAFTA and CAFTA, and the more recent Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), which empower corporations to assume defacto sovereignty over governments in countries around the world; to convince politicians to pass laws that permit the rich to avoid paying taxes, to control the media, and to use media to influence politics; and to terrify US citizens into fighting endless wars.
These and many other conspiracies took the EHM system far beyond where it had been in the 1970s. Despite all that I had writ-ten, I had to admit that I’d missed much of what had been going on beneath the surface. The old tools had been sharpened and new ones invented. The heart of this system remained the same: an economic and political ideology based on enslavement through debt and enforced by paralyzing people with fear. In my day, it had convinced the majority of Americans and much of the rest of the world that all actions were justified if they protected us from Communist subversives; the fear had now switched to Muslim terrorists,immigrants, and anyone threatening to rein in corporations. The dogma was similar, but the impact was now much greater.
Recuperating from that operation also sent me into the dark abyss of guilt. I’d wake up in the middle of the night haunted by memories of leaders I’d bribed and threatened. I had not yet come to terms with my EHM past.
I asked myself why I’d stayed in that job for ten long years. And then I realized how difficult it had been to escape. It wasn’t just the seduction of money, flying first class, staying in the best hotels, and all the other perks. Nor was it the pressure exerted by my bosses and fellow employees at MAIN. It was also the aura of the job, my title—the very story of my culture. I was doing what I’d been schooled to do, what I’d been told was the right thing to do. I was educated as an American whose job it was to sell America and to believe and convince everyone else that Communist regimes were out to destroy us.
One day, a friend e-mailed me a photograph of a poster like one that had hung on the wall of the boys’ bathroom in my elementary school. It depicted a sinister-looking man who asked, “Is your washroom breeding Bolsheviks?” It was an ad for Scott paper towels, and the subtitle read, “Employees lose respect for a company that fails to provide decent facilities for their comfort.” It sent a strong message that not buying American was akin to treason.
That photograph got me thinking about those most formative years in my life. After the Soviet Union launched Sputnik, the first satellite, we all became convinced that nuclear warheads were on the way. The chilling scream of sirens sent us scampering under our desks in weekly drills, to hide from imagined Soviet missiles. Movies and TV shows like I Led Three Lives, a gripping drama based on the memoir of an FBI agent who infiltrated a Communist cell in the United States, warned us to be vigilant; Red provocateurs, like the evil Bolshevik in the poster, lurked among us, ready to pounce.
By the time I entered the EHM ranks, it had become apparent that we were losing in Vietnam, a nation portrayed as a Sino-Soviet puppet. We were told that there would be a “domino effect”—that Indonesia would go next, then Thailand, South Korea, the Philip-pines, and on and on. It wouldn’t be long before the Red tide would sweep Europe and then engulf the United States. Democracy and capitalism were doomed—unless we halted the onslaught. And that meant doing whatever it would take to promote companies such as Scott, which portrayed themselves as bulwarks against communism.
Delving into my feelings of guilt helped me see the ease with which I had deceived myself in those years. It opened my mind to understanding that millions of people are in positions similar to mine. They are no longer taught to fear communism, but they still fear Russia, China, and North Korea, in addition to al-Qaeda and other terrorists. They may not travel to foreign lands and confront, face-to-face, the consequences of what their companies do. They may not personally stand beside oil spills in the Amazon or see the hovels where sweatshop workers sleep. Instead, they anesthetize themselves with TV. They succumb to assurances by their schools, banks, human relations experts, and government officials that they are contributing to progress. But in their hearts they know other-wise. Deep down, they—we—realize that the stories misrepresent. And now it is time to admit to our complicity.
On a trip to Boston, not long after my operation, I reconnected with my former Boston University professor and the author of A People’s History of the United States, Howard Zinn. Now in his eighties, he was still actively campaigning to reform a system he saw as an experiment that hadn’t worked. When I shared with him the guilt that so often threatened to overwhelm me, he urged me to keep opening to it.
“Don’t be afraid of it,” he said. “You are guilty. We’re all guilty. We have to admit that although the big corporations own the propaganda machine, we allow ourselves to be duped. You can set an example. Show people that the way out, redemption, comes from changing it.”
I told him that I often thought of middle-class Americans as being like the medieval bourgeoisie—the majority of the people, who lived in the bourgs outside the castle walls. “We pay our taxes so soldiers and jackals will defend us from the knights in the neighboring castles.”
“Exactly,” he said, with that smile of his that had enchanted and inspired so many students. “We will do anything to maintain a system that has failed us.”
I came to understand, during those days following my operation and in discussions with Howard, that my most important lesson since the publication of Confessions of an Economic Hit Man was similar to the one I had learned as a Peace Corps volunteer working with Andean brick makers: the only reason the EHM system works is because the rest of us give it permission to work. At best, we look the other way; at worst, we actively support it. One of the things that most bothered me was having to admit to myself that I not only had looked the other way but also had convinced many people to actively support that system. I made a commitment to myself that I’d be more diligent; I’d watch more closely what was going on in my own community, my country, and the world.
Although I was determined to follow Howard’s advice, I also found myself envying another man, who did not struggle with his conscience—a friend who became an immense support during my physical recuperation in Florida and who seemed to have no problem justifying his own violent actions. He was a jackal, taking a short leave of absence from the Middle East.
ABOUT THE AUTHOR
As Chief Economist at a major international consulting firm, John Perkins advised the World Bank, United Nations, IMF, U.S.Treasury Department, Fortune 500 corporations, and leaders of countries in Africa, Asia, Latin America, and the Middle East.
The New Confessions of an Economic Hit Man(2016), a follow-up to John’s classic New York Times bestseller, brings the story of economic hit men and jackal assassins up to date and chillingly home to the U.S. It goes on to provide practical strategies to transform the failing global death economy into a regenerative life economy. Confessions of an Economic Hit Man(70 weeks on the New York Times bestseller list, 32 languages), The Secret History of the American Empire(New York Times bestseller) and Hoodwinked were ground-breaking exposés of the clandestine operations that created the current global crises; they set the stage for the revelations and strategies detailed in The New Confessions of an Economic Hit Man.
John is a founder and board member of Dream Change and The Pachamama Alliance, nonprofit organizations devoted to establishing a world future generations will want to inherit, has lectured at Harvard, Oxford, and more than 50 other universities around the world, and is the author of books on indigenous cultures and transformation, including Shapeshifting, The World Is As You Dream It, Psychonavigation, Spirit of the Shuar, and The Stress-Free Habit. He has been featured on ABC, NBC, CNN, CNBC, NPR, A&E, the History Channel, Time, The New York Times, The Washington Post,Cosmopolitan, Elle, Der Spiegel, and many other publications, as well as in numerous documentaries including The End of Poverty?, Zeitgeist Addendum, and Apology of an Economic Hit Man. He was awarded the Lennon Ono Grant for Peace 2012, and Rainforest Action Network Challenging Business As Usual Award, 2006.
On February 28, Hillary Clinton told an audience from the pulpit of a Memphis church: ‘we need more love and kindness in America’. This was something she felt ‘from the bottom of my heart’.
These benevolent sentiments recalled the national ‘purpose’ identified by President George H.W. Bush in 1989, shortly before he flattened Iraq. It was, he said, ‘to make kinder the face of the nation and gentler the face of the world’.
Clinton, of course, meant North America, specifically the United States. But other places in America are short on love and kindness, too. Consider Honduras, for example.
On June 28, 2009, the Honduran President Manuel Zelaya was kidnapped at gunpoint by masked soldiers and forced into exile. Since the ousting, the country ‘has been descending deeper into a human rights and security abyss’ as the military coup ‘threw open the doors to a huge increase in drug trafficking and violence, and… unleashed a continuing wave of state-sponsored repression’. In 2012, Honduras had a murder rate of 90.4 per 100,000 population, then the highest rate in the world. In 2006, three years before the coup, the murder rate had stood at 46.2 per 100,000.
The years since 2009 have seen ‘an explosive growth in environmentally destructive megaprojects that would displace indigenous communities. Almost 30 percent of the country’s land was earmarked for mining concessions, creating a demand for cheap energy to power future mining operations. To meet this need, the government approved hundreds of dam projects around the country, privatizing rivers, land, and uprooting communities.’ In 2015, Global Witness reported that Honduras was ‘the most dangerous country to be an environmental defender’.COPINH
Berta Cáceres, a mother of four children, was co-founder and general coordinator of the COPINH (Consejo Cívico de Organizaciones Populares e Indígenas de Honduras) group opposing this state-corporate exploitation. Last year, Cáceres was awarded the Goldman Environmental Prize, the world’s leading award recognising grassroots environmental activists, for her work opposing a major dam project. Many of COPINH’s leaders have been murdered in recent years. In 2013, Cáceres said:
The army has an assassination list of 18 wanted human rights fighters with my name at the top. I want to live, there are many things I still want to do in this world. I take precautions, but in the end, in this country where there is total impunity I am vulnerable. When they want to kill me, they will do it.
Last week, on the night of March 3, armed men burst through the back door of Cáceres’s house and shot her four times, killing her in her bed. US media watch site Fairness and Accuracy in Reporting (FAIR) commented:
There was widespread outcry and grief over her death, and the story was covered by major media in the United States. But there was a glaring problem with the coverage: Almost none of it mentioned that the brutal regime that likely killed Cáceres came to power in a 2009 coup d’état supported by the United States, under President Barack Obama and then-Secretary of State Hillary.
Confidential – The Embassy Perspective
Following the 2009 coup, the United Nations, the Organization of American States (OAS) and the European Union all condemned Zelaya’s removal as a military coup. A confidential US Embassy cable, later published by Wikileaks, commented:
The Embassy perspective is that there is no doubt that the military, Supreme Court and National Congress conspired on June 28 in what constituted an illegal and unconstitutional coup against the Executive Branch… There is equally no doubt from our perspective that Roberto Micheletti’s assumption of power was illegitimate.
That was behind closed doors. In public, fifteen US House Democrats urged the US regime to ‘fully acknowledge that a military coup has taken place and… follow through with the total suspension of non-humanitarian aid, as required by law’. Writing for the Common Dreams website, Alexander Main supplied some detail:
Ann-Marie Slaughter, then director of Policy Planning at the State Department, sent an email to [Secretary of State] Clinton on August 16 [2009] strongly urging her to “take bold action” and to “find that [the] coup was a ‘military coup’ under U.S. law,” a move that would have immediately triggered the suspension of all non-humanitarian U.S. assistance to Honduras.
This, Hillary Clinton’s State Department refused to do, thus implicitly recognising the military takeover. As FAIR noted, Clinton makes clear in her memoirs that she had no intention of restoring President Zelaya to power:
In the subsequent days [after the coup] I spoke with my counterparts around the hemisphere, including Secretary Espinosa in Mexico. We strategized on a plan to restore order in Honduras and ensure that free and fair elections could be held quickly and legitimately, which would render the question of Zelaya moot.
In September 2009, US State Department officials blocked the OAS from adopting a resolution that would have rejected the legitimacy of Honduran elections carried out under the dictatorship, thus giving the coup the final US seal of approval.
Ousted former president, Manuel Zelaya, said last year:
Secretary Clinton had many contacts with us. She is a very capable woman, intelligent, but she is very weak in the face of pressures from groups that hold power in the United States, the most extremist right-wing sectors of the U.S. government, known as the hawks of Washington. She bowed to those pressures. And that led U.S. policy to Honduras to be ambiguous and mistaken.
Zelaya added:
President Obama has not wanted to hear our peoples. He has turned a deaf ear on the cry of the people. First we protested in the opposition. A few months ago, they physically removed me from the Congress, the National Congress, because our party mounted a peaceful protest. The military removed us, using tear gas in the Congress. They expelled us, beating us with batons, beating us into the street. This is the government that President Obama supports, a government that is repressive, a government that violates human rights, as has been shown by the very Inter-American Commission on Human Rights of the Organization of American States. It has shown this to be the case.
Alexander Main concluded:
A careful reading of the Clinton emails and Wikileaked U.S. diplomatic cables from the beginning of her tenure, expose a Latin America policy that is often guided by efforts to isolate and remove left-wing governments in the region.
An assertion supported by the increase in US military assistance to Honduras even as state-corporate violence has massively escalated. Noam Chomsky explained the logic:
Zelaya was moving somewhat tentatively towards the kinds of social reforms that the United States has always opposed and will try to stop if it can.
A Local Matter – The Media Response
Corporate politics and media, of course, never tire of proclaiming the West’s ‘responsibility to protect’ in places like Iraq, Libya and Syria. So how did these same humanitarians respond to the murder of a compassionate, respected and awesomely courageous activist in Honduras? FAIR commented on the overwhelming evidence of US support for the coup:
One wouldn’t know any of this reading US reports of Cáceres’ death. The coup, and its subsequent purging of environmental, LGBT and indigenous activists, is treated as an entirely local matter… The Washington Post, Guardian, NBC, CNN and NPR didn’t mention the 2009 coup that brought to power Cáceres’ likely murderers, let alone the US’s tacit involvement in the coup.
On the same day FAIR’s report was published, the first and only reference to these hidden truths in the UK press recorded by the Nexis media database was supplied by Jonathan Watts in the Guardian:
But Washington’s role is also controversial because the US backed the current government, which took power after a 2009 coup that ousted the democratically elected president Manuel Zelaya. The US is now providing fund [sic] for the Honduran police force.
Watts quoted International Rivers, an NGO that worked with Cáceres:
We must note that during the 2009 military coup in Honduras, the US government, with Hillary Clinton as secretary of state, worked behind the scenes to keep Honduras’ elected government from being reinstated. Additionally, the US government continues to fund the Honduran military, despite the sharp rise in the homicide rate, political repression, and the murders of political opposition and peasant activists.
While hardly exhaustive, this is the only mention of these issues we have found in the UK corporate press. A more recent piece by the Guardian’s Washington correspondent, David Smith, mentioned the coup but not US involvement. With touching naivety, Smith observed that ‘the US, determined to stop the flow of illegal immigrants from Central America, has been pouring money into Honduras’s security apparatus’.
The Times – so vocal in promoting Western ‘intervention’ to ‘protect’ human rights from Official Enemies – printed 68 words on the killing penned by the Associated Press. The Telegraph gave the story a single mention. In the Independent, Phil Davison wrote of Cáceres:
As if anyone needed reminding, her murder brought back to Honduras the dark days of the 1980s Central American guerrilla wars, in which they and their neighbours fought to rid themselves of dictators backed by the US.
But in stark contrast to the courage of Cáceres and so many others in Honduras, Davison was not able to bring himself to mention that the tyranny in Honduras is today being backed by the region’s great superpower. Also in the Independent, Caroline Mortimer made no mention of US complicity in the coup. Nor, unsurprisingly, did the BBC in two pieces here and here on the killing.
As ever, ‘mainstream’ ‘compassion’ turns out to be rooted in rather more ‘pragmatic’ concerns. If an Official Enemy had been responsible for Cáceres’s death, the cries of outrage, horror and denunciation would have blazed from our corporate front pages and TV screens. Action would have been demanded, perhaps even ‘intervention’. But when the horror is committed by a faithfully corrupt and brutal servant of Empire aided and abetted by the ‘Leader of the Free World’, none of the buttons on the vast, high-tech propaganda machine are pressed and the story is quickly buried along with the victim.
Needless to say, awareness of the kind offered here threatens to jam a spanner in the conditionally ‘compassionate’ propaganda waterworks and must be scrupulously ignored or, at best, ridiculed.
American society is morally bankrupt and politically broken, and its vision of the future appears utterly dystopian. As the United States descends into the dark abyss of an updated form of totalitarianism, the unimaginable has become imaginable in that it has become possible not only to foresee the death of the essential principles of constitutional democracy, but also the birth of what Hannah Arendt once called the horror of dark times. The politics of terror, a culture of fear, and the spectacle of violence dominate America’s cultural apparatuses and legitimate the ongoing militarization of public life and American society.
Unchecked corporate power and a massive commodification, infantilization, and depoliticization of the polity have become the totalitarian benchmarks defining American society. In part, this is due to the emergence of a brutal modern-day capitalism, or what some might call neoliberalism. This form of neoliberal capitalism is a particularly savage, cruel, and exploitative regime of oppression in which not only are the social contract, civil liberties and the commons under siege, but also the very notion of the political, if not the planet itself. The dystopian moment facing the United States, if not most of the globe, can be summed up in Fred Jameson’s contention “that it is easier to imagine the end of the world than to imagine the end of capitalism.” He goes on to say that “We can now revise that and witness the attempt to imagine capitalism by way of imagining the end of the world.”1
One way of understanding Jameson’s comment is through the ideological and affective spaces in which the neoliberal subject is produced and market-driven ideologies are normalized. Capitalism has made a virtue out of self-interest and the pursuit of material wealth and in doing so has created a culture of shattered dreams and a landscape filled with “Broken highways, bankrupt cities, collapsing bridges, failed schools, the unemployed, the underpaid and the uninsured: all suggest a collective failure of will. These shortcomings are so endemic that we no longer know how to talk about what is wrong, much less set about repairing it.”[i]
Yet, there is a growing recognition that casino capitalism is driven by a kind of mad violence and form of self-sabotage and that if it does not come to an end what we will experience in all probability is the destruction of human life and the planet itself. Certainly, more recent scientific reports on the threat of ecological disaster from researchers at the University of Washington, NASA, and the Intergovernmental Panel on Climate Change reinforce this dystopian possibility.2 The undermining of public trust and public values has now given way to a market-driven discourse that produces a society that has lost any sense of democratic vision and social purpose and in doing so resorts to state terrorism, the criminalization of social problems, and culture of cruelty. Institutions that were once defined to protect and enhance human life now function largely to punish and maim.
As Michael Yates points out throughout this book, capitalism is devoid of any sense of social responsibility and is driven by an unchecked desire to accumulate capital at all costs. As power becomes global and politics remains local, ruling elites no longer make political concessions to workers or any other group that they either exploit or consider disposable.
Security and crisis have become the new passwords for imposing a culture of fear and for imposing what Giorgio Agamben has called a permanent state of exception and a technology of government repression.[ii] A constant appeal to a state of crisis becomes the new normal for arming the police, curtailing civil liberties, expanding the punishing state, criminalizing everyday behavior, and supressing dissent. Fear now drives the major narratives that define the United States and give rise to dominant forms of power free from any sense of moral and political conviction, if not accountability.
In the midst of this dystopian nightmare, there is the deepening abyss of inequality, one that not only separates the rich from the poor, but also increasingly relegates the middle and working classes to the ranks of the precariat. Concentrations of wealth and income generate power for the financial elite and unchecked misery for most people, a fear/insecurity industry, and a growing number of social pathologies.
Michael Yates in The Great Inequality provides a road map for both understanding the registers that produce inequality as well as the magnitude of the problems it poses across a range of commanding spheres extending from health care and the political realm to the environment and education. At the same time, he exposes the myths that buttress the ideology of inequality. These include an unchecked belief in boundless economic growth, the notion that inequality is chosen freely by individuals in the market place, and the assumption that consumption is the road to happiness. Unlike a range of recent books on inequality, Yates goes beyond exposing the mechanisms that drive inequality and the panoply of commanding institutions that support it. He also provides a number of strategies that challenge the deep concentrations of wealth and power while delivering a number of formative proposals that are crucial for nurturing a radical imagination and the social movements necessary to struggle for a society that no longer equates capitalism with democracy.
As Yates makes clear throughout this book, money now engulfs everything in this new age of disposability. Moreover, when coupled with a weakening of movements to counter the generated power of capitalists, the result has been a startling increase in the influence of predatory capitalism, along with inequities in wealth, income, power, and opportunity. Such power breeds more than anti-democratic tendencies, it also imposes constraints, rules, and prohibitions on the 99 percent whose choices are increasingly limited to merely trying to survive. Capitalists are no longer willing to compromise and have expanded their use of power to dominate economic, political, and social life. For Yates, it is all the more crucial to understand how power works under the reign of global capitalism in order to grasp the magnitude of inequality, the myriad of factors that produce it, and what might be done to change it.
Accompanying the rise of a savage form of capitalism and the ever-expanding security state is the emergence of new technologies and spaces of control. One consequence is that labor power is increasing produced by machines and robotic technologies which serve to create “a large pool of more or less unemployed people.” Moreover, as new technologies produce massive pools of unused labor, it also is being used as a repressive tool for collecting “unlimited biometric and genetic information of all of its citizens.”[iii]
The ongoing attack on the working class is matched by new measures of repression and surveillance. This new weaponized face of capitalism is particularly ominous given the rise of the punishing state and the transformation of the United States from a democracy in progress to a fully developed authoritarian society. Every act of protest is now tainted, labeled by the government and mainstream media as either treasonous or viewed as a potential act of terrorism. For example, animal rights activists are put on the terrorist list. Whistleblowers such as Edward Snowden are painted as traitors. Members of the Black Lives Matter movement are put under surveillance,[iv] all electronic communication is now subject to government spying, and academics who criticize government policy are denied tenure or worse.
Under neoliberalism, public space is increasingly converted into private space undermining those sphere necessary for developing a viable sense of social responsibility, while also serving to transform citizenship into mostly an act of consumption. Under such circumstances, the notion of crisis is used both to legitimate a system of economic terrorism as well as to accentuate an increasing process of depoliticization. Within this fog of market induced paralysis, language is subject to the laws of capitalism, reduced to a commodity, and subject to the “tyranny of the moment….emaciated, impoverished, vulgarized and squeezed out of the meanings it was resumed to carry.”[v]
As the latest stage of predatory capitalism, neoliberalism is part of a broader economic and political project of restoring class power and consolidating the rapid concentration of capital, particularly financial capital.[vi] As a political project it includes “the deregulation of finance, privatization of public services, elimination and curtailment of social welfare programs, open attacks on unions, and routine violations of labor laws.”[vii] As an ideology, it casts all dimensions of life in terms of market rationality, construes profit making as the arbiter and essence of democracy, consuming as the only operable form of citizenship, and upholds the irrational belief that the market can both solve all problems and serve as a model for structuring all social relations. As a mode of governance, it produces identities, subjects, and ways of life driven by a survival-of-the fittest-ethic, grounded in the idea of the free, possessive individual, and committed to the right of ruling groups and institutions to exercise power removed from matters of ethics and social costs. As a policy and political project, it is wedded to the privatization of public services, the dismantling of the connection of private issues and public problems, the selling off of state functions, liberalization of trade in goods and capital investment, the eradication of government regulation of financial institutions and corporations, the destruction of the welfare state and unions, and the endless marketization and commodification of society.
Nothing engenders the wrath of conservatives more than the existence of the government providing a universal safety net, especially one that works, such as either Medicare or Social Security. As Yates points out, government is viewed by capitalists as an institution that gets in the way of capital. One result is a weakening of social programs and provisions. As Paul Krugman observes regarding the ongoing conservative attacks on Medicare, “The real reason conservatives want to do away with Medicare has always been political: It’s the very idea of the government providing a universal safety net that they hate, and they hate it even more when such programs are successful.”[viii] In opposition to Krugman and other liberal economists, Michael Yates argues rightly in this book that the issue is not simply preserving Medicare but eliminating the predatory system that disavows equality of wealth, power, opportunity, and health care for everyone.
Neoliberalism has put an enormous effort into creating a commanding cultural apparatus and public pedagogy in which individuals can only view themselves as consumers, embrace freedom as the right to participate in the market, and supplant issues of social responsibility for an unchecked embrace of individualism and the belief that all social relation be judged according to how they further one’s individual needs and self-interests. Matters of mutual caring, respect, and compassion for the other have given way to the limiting orbits of privatization and unrestrained self-interest, just as it is has become increasingly difficult to translate private troubles into larger social, economic, and political considerations. One consequence is that it has become more difficult for people to debate and question neoliberal hegemony and the widespread misery it produces for young people, the poor, middle class, workers, and other segments of society– now considered disposable under neoliberal regimes which are governed by a survival-of-the fittest ethos, largely imposed by the ruling economic and political elite. Unable to make their voices heard and lacking any viable representation in the process makes clear the degree to which the American public, in particular, are suffering under a democratic deficit producing a profound dissatisfaction that does not always translate into an understanding of how neoliberal capitalism has destroyed democracy or what it might mean to understand and challenge its diverse apparatuses of persuasion and power. Clearly, the surge of popularity behind the presidential candidacy of a buffoon such as Donald Trump testifies to both a deep seated desire for change and the forms it can take when emotion replaces reason and any viable analysis of capitalism and its effects seem to be absent from a popular sensibility.
What Michael Yates makes clear in this incisive book on inequality is that democratic values, commitments, integrity, and struggles are under assault from a wide range of sites in an age of intensified violence and disposability. Throughout the book he weaves a set of narratives and critiques in which he lays bare the anti-democratic tendencies that are on display in a growing age of lawlessness and disposability. He not only makes clear that inequality is not good for the economy, social bonds, the environment, politics, and democracy, Yates also argues that capitalism in the current historical moment is marked by an age that thrives on racism, xenophobia, the purported existence of an alleged culture of criminality, and a massive system of inequality that affects all aspects of society. Worth repeating is that at the center of this book, unlike so many others tackling inequality, is an attempt to map a number of modalities that give shape and purpose to widespread disparities in wealth and income, including the underlying forces behind inequality, how it works to secure class power, how it undermines almost every viable foundation needed for a sustainable democracy, and what it might mean to develop a plan of action to produce the radical imagination and corresponding modes of agency and practice that can think and act outside of the reformist politics of capitalism.
Unlike so many other economists such as Paul Krugman and Joseph Stiglitz who address the issue of inequality, Yates refuses the argument that the system is simply out of whack and can be fixed. Nor does he believe that capitalism can be described only in terms of economic structures. Capitalism is both a symbolic pathological economy that produces particular dispositions, values, and identities as well as oppressive institutional apparatuses and economic structures. Yates goes even further arguing that capitalism is not only about authoritarian ideologies and structures, it is also about the crisis of ideas, agency, and the failure of people to react to the suffering of others and to the conditions of their own oppression. Neoliberal capitalism has no language for human suffering, moral evaluation, and social responsibility. Instead, it creates a survival-of-the fittest ethos buttressed by a discourse that is morally insensitive, sadistic, cannibalistic, and displays a hatred of those whose labor cannot be exploited, do not buy into the consumerist ethic, or are considered other by virtue of their race, class, and ethnicity. Neoliberalism is the discourse of shadow games, committed to highlighting corporate power and making invisible the suffering of others, all the while leaving those considered disposable in the dark to fend for themselves.
Yates makes visible not only the economic constraints that bear down on the poor and disposable in the neoliberal age of precarity, he also narrates the voices, conditions, hardships and suffering workers have to endure in a variety of occupations ranging from automobile workers and cruise ship workers to those who work in restaurants and as harvester on farms. He provides a number of invaluable statistics that chart the injuries of class and race under capitalism but rather than tell a story with only statistics and mind boggling data, he also provides stories that give flesh to the statistics that mark a new historical conjuncture and a wide range of hardships that render work for most people hell and produce what has been called the hidden injuries of class. Much of what he writes is informed by a decade long research trip across the United States in which he attempted to see first-hand what the effects of capitalism have been on peoples’ lives, the environment, work, unions, and other crucial spheres that inform everyday life. His keen eye is particularly riveting as he describes his teaming up with Cesar Chavez and the United Farm Workers in the 1970s and his growing disappointment with a union that increasingly betrayed its own principles.
For Yates, the capitalist system is corrupt, malicious, and needs to be replaced. Capitalism leaves no room for the language of justice, the social, or, for that matter, democracy itself. In fact, one of its major attributes is to hide its effects of power, racial injustice, militarized state violence, domestic terrorism, and new forms of disposability, especially regarding those marginalized by class and race. The grotesque inequalities produced by capitalism are too powerful, deeply rooted in the social and economic fabric, and unamenable to liberal reforms. Class disparities constitute a machinery of social death, a kind of zombie-like machine that drains life out of most of the population poisoning both existing and future generations.
The politics of disposability has gone mainstream as more and more individuals and groups are now considered surplus and vulnerable, consigned to zones of abandonment, surveillance, and incarceration. At one level, the expansive politics of disposability can be seen in the rising numbers of homeless, the growing army of debt-ridden students, the increasingly harsh treatment of immigrants, the racism that fuels the school-to-prison pipeline, and the growing attack on public servants. On another level, the politics of disposability has produced a culture of lawlessness and cruelty evident by the increasing rollback of voting rights, the war waged against women’s reproductive rights, laws that discriminate against gays, the rise of the surveillance state, and the growing militarization of local police forces. Yates argues convincingly that there is a desperate need for a new language for politics, solidarity, shared responsibilities, and democracy itself. Yates sees in the now largely departed Occupy Movement an example of a movement that used a new discourse and set of slogans to highlight inequality, make class inequities visible, and to showcase the workings of power in the hands of the financial elite. For Yates, Occupy provided a strategy that can be and is being emulated by a number of groups, especially those emerging in the black community in opposition to police violence. Such a strategy begins by asking what a real democracy looks like and how does it compare to the current society in which we live. One precondition for individual and social agency is that the horizons for change must transcend the parameters of the existing society, and the future must be configured in such a way as to not mimic the present.
What is remarkable about The Great Inequality is that Yates does not simply provide a critique of capitalism in its old and new forms, he also provides a discourse of possibility developed around a number of suggested policies and practices designed to not reform capitalism but to abolish it. This is a book that follows in the manner of Dr. Martin Luther King’s call to break the silence. In it Yates functions as a moral witness in reporting on the hardships and suffering produced by grotesque forms of inequality. As such, he reveals the dark threats that capitalism in its ruthlessly updated versions poses to the planet. Yet, his narrative is never far from either hope or a sense that there is a larger public for whom his testimony matters and that such a public is capable of collective resistance. The Great Inequality also serves to enliven the ethical imagination, and speak out for those populations now considered outcast and voiceless. Yates provides a furious reading of inequality and the larger structure of capitalism. In doing so he exhibits a keen and incisive intellect along with a welcomed sense of righteous fury.
Notes.
[i] Tony Judt, Ill Fares the Land, (New York, N.Y.: The Penguin Press, 2010), p. 12.
[ii] Giorgio Agamben, “The Security State and a theory of destituent power,” Philosophers for Change, (February 25, 2014). Online:
[v] Zygmunt Bauman and Leonidas Donskis, Moral Blindness: The loss of Sensitivity in Liquid Modernity, (Cambridge, UK: Polity Press, 2013), p. 46.
[vi] I have taken up the issue of neoliberalism extensively in Henry A. Giroux, Against the Terror of Neoliberalism (Boulder: Paradigm, 2008) . See also, David Harvey, A Brief History of Neoliberalism (New York: Oxford University Press, 2007); Manfred B. Steger and Ravi K. Roy, Neoliberalism: A Very Short Introduction (New York: Oxford University Press, 2010); Gerad Dumenil and Dominique Levy, The Crisis of Neoliberalism (Cambridge: Harvard University Press, 2011). Henry A. Giroux, Twilight of the Social (Boulder: Paradigm, 2013); Henry A. Giroux, and in Against the Violence of Organized Forgetting: Beyond America’s Disimagination Machine (San Francisco: City Lights, 2014);
Wendy Brown, Undoing the Demos: Neoliberalism’s Stealth Revolution (Cambridge: Zone Books 2015).
A nightmare scenario of U.S. geopolitical strategists is coming true: foreign independence from U.S.-centered financial and diplomatic control. China and Russia are investing in neighboring economies on terms that cement Eurasian integration on the basis of financing in their own currencies and favoring their own exports. They also have created the Shanghai Cooperation Organization (SCO) as an alternative military alliance to NATO.[1] And the Asian Infrastructure Investment Bank (AIIB) threatens to replace the IMF and World Bank tandem in which the United States holds unique veto power.
More than just a disparity of voting rights in the IMF and World Bank is at stake. At issue is a philosophy of development. U.S. and other foreign investment in infrastructure (or buyouts and takeovers on credit) adds interest rates and other financial charges to the cost structure, while charging prices as high as the market can bear (think of Carlos Slim’s telephone monopoly in Mexico, or the high costs of America’s health care system), and making their profits and monopoly rents tax-exempt by paying them out as interest.
By contrast, government-owned infrastructure provides basic services at low cost, on a subsidized basis, or freely. That is what has made the United States, Germany and other industrial lead nations so competitive over the past few centuries. But this positive role of government is no longer possible under World Bank/IMF policy. The U.S. promotion of neoliberalism and austerity is a major reason propelling China, Russia and other nations out of the U.S. diplomatic and banking orbit.
On December 3, 2015, Prime Minister Putin proposed that Russia “and other Eurasian Economic Union countries should kick-off consultations with members of the SCO and the Association of Southeast Asian Nations (ASEAN) on a possible economic partnership.”[2] Russia also is seeking to build pipelines to Europe through friendly secular countries instead of Sunni jihadist U.S.-backed countries locked into America’s increasingly confrontational orbit.
Russian finance minister Anton Siluanov points out that when Russia’s 2013 loan to Ukraine was made, at the request of Ukraine’s elected government, Ukraine’s “international reserves were barely enough to cover three months’ imports, and no other creditor was prepared to lend on terms acceptable to Kiev. Yet Russia provided $3 billion of much-needed funding at a 5 per cent interest rate, when Ukraine’s bonds were yielding nearly 12 per cent.”[3]
What especially annoys U.S. financial strategists is that this loan by Russia’s National Wealth Fund was protected by IMF lending practice, which at that time ensured collectability by withholding credit from countries in default of foreign official debts, or at least not bargaining in good faith to pay. To cap matters, the bonds are registered under London’s creditor-oriented rules and courts.
Most worrisome to U.S. strategists is that China and Russia are denominating their trade and investment in their own currencies instead of dollars. After U.S. officials threatened to derange Russia’s banking linkages by cutting it off from the SWIFT interbank clearing system, China accelerated its creation of the alternative China International Payments System (CIPS), and its own credit card system to protect Eurasian economies from the threats made by U.S. unilateralists.
Russia and China are simply doing what the United States has long done: using trade and credit linkages to cement their diplomacy. This tectonic geopolitical shift is a Copernican threat to New Cold War ideology: Instead of the world economy revolving around the United States (the Ptolemaic idea of America as “the indispensible nation”), it may revolve around Eurasia. As long as global financial control remains grounded in Washington at the offices of the IMF and World Bank, such a shift in the center of gravity will be fought with all the power of an American Century (and would-be American Millennium) inquisition.
Any inquisition needs a court system and enforcement vehicles. So does resistance to such a system. That is what today’s global financial, legal and trade maneuvering is all about. And that is why today’s world system is in the process of breaking apart. Differences in economic philosophy call for different institutions.
To U.S. neocons the specter of AIIB government-to-government investment creates fear of nations minting their own money and holding each other’s debt in their international reserves instead of borrowing dollars, paying interest in dollars and subordinating their financial planning to the U.S. Treasury and IMF. Foreign governments would have less need to finance their budget deficits by selling off key infrastructure. And instead of dismantling public spending, a broad Eurasian economic union would do what the United States itself practices, and seek self-sufficiency in banking and monetary policy.
Imagine the following scenario five years from now. China will have spent half a decade building high-speed railroads, ports, power systems and other construction for Asian and African countries, enabling them to grow and export more. These exports will be coming online to repay the infrastructure loans. Also, suppose that Russia has been supplying the oil and gas energy for these projects on credit.
To avert this prospect, suppose an American diplomat makes the following proposal to the leaders of countries in debt to China, Russia and the AIIB: “Now that you’ve got your increased production in place, why repay? We’ll make you rich if you stiff our adversaries and turn back to the West. We and our European allies will support your assigning your nations’ public infrastructure to yourselves and your supporters at insider prices, and then give these assets market value by selling shares in New York and London. Then, you can keep the money and spend it in the West.”
How can China or Russia collect in such a situation? They can sue. But what court in the West will accept their jurisdiction?
That is the kind of scenario U.S. State Department and Treasury officials have been discussing for more than a year. Implementing it became more pressing in light of Ukraine’s $3 billion debt to Russia falling due by December 20, 2015. Ukraine’s U.S.-backed regime has announced its intention to default. To support their position, the IMF has just changed its rules to remove a critical lever on which Russia and other governments have long relied to ensure payment of their loans.
The IMF’s role as enforcer of inter-government debts
When it comes to enforcing nations to pay inter-government debts, the IMF is able to withhold not only its own credit but also that of governments and global bank consortia participating when debtor countries need “stabilization” loans (the neoliberal euphemism for imposing austerity and destabilizing debtor economies, as in Greece this year). Countries that do not privatize their infrastructure and sell it to Western buyers are threatened with sanctions, backed by U.S.-sponsored “regime change” and “democracy promotion” Maidan-style. The Fund’s creditor leverage has been that if a nation is in financial arrears to any government, it cannot qualify for an IMF loan – and hence, for packages involving other governments. That is how the dollarized global financial system has worked for half a century. But until now, the beneficiaries have been U.S. and NATO lenders, not been China or Russia.
The focus on a mixed public/private economy sets the AIIB at odds with the Trans-Pacific Partnership’s aim of relinquishing government planning power to the financial and corporate sector, and the neoliberal aim of blocking governments from creating their own money and implementing their own financial, economic and environmental regulation. Chief Nomura economist Richard Koo, explained the logic of viewing the AIIB as a threat to the U.S.-controlled IMF: “If the IMF’s rival is heavily under China’s influence, countries receiving its support will rebuild their economies under what is effectively Chinese guidance, increasing the likelihood they will fall directly or indirectly under that country’s influence.”[4]
This was the setting on December 8, when Chief IMF Spokesman Gerry Rice announced: “The IMF’s Executive Board met today and agreed to change the current policy on non-toleration of arrears to official creditors.” Russian Finance Minister Anton Siluanov accused the IMF decision of being “hasty and biased.”[5] But it had been discussed all year long, calculating a range of scenarios for a sea change in international law. Anders Aslund, senior fellow at the NATO-oriented Atlantic Council, points out:
The IMF staff started contemplating a rule change in the spring of 2013 because nontraditional creditors, such as China, had started providing developing countries with large loans. One issue was that these loans were issued on conditions out of line with IMF practice. China wasn’t a member of the Paris Club, where loan restructuring is usually discussed, so it was time to update the rules.
The IMF intended to adopt a new policy in the spring of 2016, but the dispute over Russia’s $3 billion loan to Ukraine has accelerated an otherwise slow decision-making process.[6]
The target was not only Russia and its ability to collect on its sovereign loan to Ukraine, but China even more, in its prospective role as creditor to African countries and prospective AIIB borrowers, planning for a New Silk Road to integrate a Eurasian economy independent of U.S. financial and trade control. The Wall Street Journal concurred that the main motive for changing the rules was the threat that China would provide an alternative to IMF lending and its demands for crushing austerity. “IMF-watchers said the fund was originally thinking of ensuring China wouldn’t be able to foil IMF lending to member countries seeking bailouts as Beijing ramped up loans to developing economies around the world.”[7] So U.S. officials walked into the IMF headquarters in Washington with the legal equivalent of suicide vests. Their aim was a last-ditch attempt to block trade and financial agreements organized outside of U.S. control and that of the IMF and World Bank.
The plan is simple enough. Trade follows finance, and the creditor usually calls the tune. That is how the United States has used the Dollar Standard to steer Third World trade and investment since World War II along lines benefiting the U.S. economy. The cement of trade credit and bank lending is the ability of creditors to collect on the international debts being negotiated. That is why the United States and other creditor nations have used the IMF as an intermediary to act as “honest broker” for loan consortia. (“Honest broker” means being subject to U.S. veto power.) To enforce its financial leverage, the IMF has long followed the rule that it will not sponsor any loan agreement or refinancing for governments that are in default of debts owed to other governments. However, as the afore-mentioned Aslund explains, the IMF could easily
change its practice of not lending into [countries in official] arrears … because it is not incorporated into the IMF Articles of Agreement, that is, the IMF statutes. The IMF Executive Board can decide to change this policy with a simple board majority. The IMF has lent to Afghanistan, Georgia, and Iraq in the midst of war, and Russia has no veto right, holding only 2.39 percent of the votes in the IMF. When the IMF has lent to Georgia and Ukraine, the other members of its Executive Board have overruled Russia.[8]
After the rules change, Aslund later noted, “the IMF can continue to give Ukraine loans regardless of what Ukraine does about its credit from Russia, which falls due on December 20.[9]
The IMF rule that no country can borrow if it is in default to a foreign government was created in the post-1945 world. Since then, the U.S. Government, Treasury and/or U.S. bank consortia have been party to nearly every major loan agreement. But inasmuch as Ukraine’s official debt to Russia’s National Wealth Fund was not to the U.S. Government, the IMF announced its rules change simply as a “clarification.” What its rule really meant was that it would not provide credit to countries in arrears to the U.S. government, not that of Russia or China.
It remains up to the IMF board – and in the end, its managing director – whether or not to deem a country creditworthy. The U.S. representative can block any foreign leaders not beholden to the United States. Mikhail Delyagin, Director of the Institute of Globalization Problems, explained the double standard at work: “The Fund will give Kiev a new loan tranche on one condition: that Ukraine should not pay Russia a dollar under its $3 billion debt. … they will oblige Ukraine to pay only to western creditors for political reasons.”[10]
The post-2010 loan packages to Greece are a case in point. The IMF staff saw that Greece could not possibly pay the sums needed to bail out French, German and other foreign banks and bondholders. Many Board members agreed, and have gone public with their whistle blowing. Their protests didn’t matter. President Barack Obama and Treasury Secretary Tim Geithner pointed out that U.S. banks had written credit default swaps betting that Greece could pay, and would lose money if there were a debt writedown). Dominique Strauss-Kahn backed the hard line US- European Central Bank position. So did Christine Lagarde in 2015, overriding staff protests.[11]
Regarding Ukraine, IMF executive board member Otaviano Canuto, representing Brazil, noted that the logic that “conditions on IMF lending to a country that fell behind on payments [was to] make sure it kept negotiating in good faith to reach agreement with creditors.”[12] Dropping this condition, he said, would open the door for other countries to insist on a similar waiver and avoid making serious and sincere efforts to reach payment agreement with creditor governments.
A more binding IMF rule is Article I of its 1944-45 founding charter, prohibiting the Fund from lending to a member state engaged in civil war or at war with another member state, or for military purposes in general. But when IMF head Lagarde made the last loan to Ukraine, in spring 2015, she merely expressed a vapid token hope there might be peace. Withholding IMF credit could have been a lever to force peace and adherence to the Minsk agreements, but U.S. diplomatic pressure led that opportunity to be rejected. President Porochenko immediately announced that he would step up the civil war with the Russian-speaking population in the eastern Donbass region.
The most important IMF condition being violated is that continued warfare with the East prevents a realistic prospect of Ukraine paying back new loans. The Donbas is where most Ukrainian exports were made, mainly to Russia. That market is being lost by the junta’s belligerence toward Russia. This should have blocked Ukraine from receiving IMF aid. Aslund himself points to the internal contradiction at work: Ukraine has achieved budget balance because the inflation and steep currency depreciation has drastically eroded its pension costs. But the resulting decline in the purchasing power of pension benefits has led to growing opposition to Ukraine’s post-Maidan junta. So how can the IMF’s austerity budget be followed without a political backlash? “Leading representatives from President Petro Poroshenko’s Bloc are insisting on massive tax cuts, but no more expenditure cuts; that would cause a vast budget deficit that the IMF assesses at 9-10 percent of GDP, that could not possibly be financed.”[13]
By welcoming and financing Ukraine instead of treating as an outcast, the IMF thus is breaking four of its rules:
Not to lend to a country that has no visible means to pay back the loan. This breaks the “No More Argentinas” rule, adopted after the IMF’s disastrous 2001 loan.
Not to lend to a country that repudiates its debt to official creditors. This goes against the IMF’s role as enforcer for the global creditor cartel.
Not to lend to a borrower at war – and indeed, to one that is destroying its export capacity and hence its balance-of-payments ability to pay back the loan.
Finally, not to lend to a country that is not likely to carry out the IMF’s austerity “conditionalities,” at least without crushing democratic opposition in a totalitarian manner.
The upshot – and new basic guideline for IMF lending – is to split the world into pro-U.S. economies going neoliberal, and economies maintaining public investment in infrastructure n and what used to be viewed as progressive capitalism. Russia and China may lend as much as they want to other governments, but there is no global vehicle to help secure their ability to be paid back under international law. Having refused to roll back its own (and ECB) claims on Greece, the IMF is willing to see countries not on the list approved by U.S. neocons repudiate their official debts to Russia or China. Changing its rules to clear the path for making loans to Ukraine is rightly seen as an escalation of America’s New Cold War against Russia and China.
Timing is everything in such ploys. Georgetown University Law professor and Treasury consultant Anna Gelpern warned that before the “IMF staff and executive board [had] enough time to change the policy on arrears to official creditors,” Russia might use “its notorious debt/GDP clause to accelerate the bonds at any time before December, or simply gum up the process of reforming the IMF’s arrears policy.”[14] According to this clause, if Ukraine’s foreign debt rose above 60 percent of GDP, Russia’s government would have the right to demand immediate payment. But President Putin, no doubt anticipating the bitter fight to come over its attempts to collect on its loan, refrained from exercising this option. He is playing the long game, bending over backward to behave in a way that cannot be criticized as “odious.”
A more immediate reason deterring the United States from pressing earlier to change IMF rules was the need to use the old set of rules against Greece before changing them for Ukraine. A waiver for Ukraine would have provided a precedent for Greece to ask for a similar waiver on paying the “troika” – the European Central Bank (ECB), EU commission and the IMF itself – for the post-2010 loans that have pushed it into a worse depression than the 1930s. Only after Greece capitulated to eurozone austerity was the path clear for U.S. officials to change the IMF rules to isolate Russia. But their victory has come at the cost of changing the IMF’s rules and those of the global financial system irreversibly. Other countries henceforth may reject conditionalities, as Ukraine has done, as well as asking for write-downs on foreign official debts.
That was the great fear of neoliberal U.S. and Eurozone strategists last summer, after all. The reason for smashing Greece’s economy was to deter Podemos in Spain and similar movements in Italy and Portugal from pursuing national prosperity instead of eurozone austerity. “Imagine the Greek government had insisted that EU institutions accept the same haircut as the country’s private creditors,” Russian finance minister Anton Siluanov asked. “The reaction in European capitals would have been frosty. Yet this is the position now taken by Kiev with respect to Ukraine’s $3 billion eurobond held by Russia.”[15]
The consequences of America’s tactics to make a financial hit on Russia while its balance of payments is down (as a result of collapsing oil and gas prices) go far beyond just the IMF. These tactics are driving other countries to defend their own economies in the legal and political spheres, in ways that are breaking apart the post-1945 global order.
Countering Russia’s ability to collect in Britain’s law courts
Over the past year the U.S. Treasury and State Departments have discussed ploys to block Russia from collecting by suing in the London Court of International Arbitration, under whose rules Russia’s bonds issued to Ukraine are registered. Reviewing the excuses Ukraine might use to avoid paying Russia, Prof. Gelpern noted that it might declare the debt “odious,” made under duress or corruptly. In a paper for the Peterson Institute of International Economics (the banking lobby in Washington) she suggested that Britain should deny Russia the use of its courts as a means of reinforcing the financial, energy and trade sanctions passed after Crimea voted to join Russia as protection against the ethnic cleansing from the Right Sector, Azov Battalion and other paramilitary groups descending on the region.[16]
A kindred ploy might be for Ukraine to countersue Russia for reparations for “invading” it and taking Crimea. Such a claim would seem to have little chance of success (without showing the court to be an arm of NATO politics), but it might delay Russia’ ability to collect by tying the loan up in a long nuisance lawsuit. But the British court would lose credibility if it permits frivolous legal claims (called barratry in English) such as President Poroshenko and Prime Minister Yatsenyuk have threatened.
To claim that Ukraine’s debt to Russia was “odious” or otherwise illegitimate, “President Petro Poroshenko said the money was intended to ensure Yanukovych’s loyalty to Moscow, and called the payment a ‘bribe,’ according to an interview with Bloomberg in June this year.”[17] The legal and moral problem with such arguments is that they would apply equally to IMF and U.S. loans. They would open the floodgates for other countries to repudiate debts taken on by dictatorships supported by IMF and U.S. lenders.
As Foreign Minister Sergei Lavrov noted, the IMF’s change of rules, “designed to suit Ukraine only, could plant a time bomb under all other IMF programs.” The new rules showed the extent to which the IMF is subordinate to U.S. aggressive New Cold Warriors: “since Ukraine is politically important – and it is only important because it is opposed to Russia – the IMF is ready to do for Ukraine everything it has not done for anyone else.”[18]
In a similar vein, Andrei Klimov, deputy chairman of the Committee for International Affairs at the Federation Council (the upper house of Russia’s parliament) accused the United States of playing “the role of the main violin in the IMF while the role of the second violin is played by the European Union, [the] two basic sponsors of the Maidan – the … coup d’état in Ukraine in 2014.”[19]
Putin’s counter-strategy and the blowback on U.S.-European relations
Having anticipated that Ukraine would seek excuses to not pay Russia, President Putin refrained from exercising Russia’s right to demand immediate payment when Ukraine’s foreign debt rose above 60 percent of GDP. In November he even offered to defer any payment at all this year, stretching payments out to “$1 billion next year, $1 billion in 2017, and $1 billion in 2018,” if “the United States government, the European Union, or one of the big international financial institutions” guaranteed payment.[20] Based on their assurances “that Ukraine’s solvency will grow,” he added, they should be willing to put their money where their mouth was. If they did not provide guarantees, Putin pointed out, “this means that they do not believe in the Ukrainian economy’s future.”
Implicit was that if the West continued encouraging Ukraine to fight against the East, its government would not be in a position to pay. The Minsk agreement was expiring and Ukraine was receiving new arms support from the United States, Canada and other NATO members to intensify hostilities against Donbas and Crimea.
But the IMF, European Union and United States refused to back up the Fund’s optimistic forecast of Ukraine’s ability to pay in the face of its continued civil war against the East. Foreign Minister Lavrov concluded that, “By having refused to guarantee Ukraine’s debt as part of Russia’s proposal to restructure it, the United States effectively admitted the absence of prospects of restoring its solvency.”[21]
In an exasperated tone, Prime Minister Dmitry Medvedev said on Russian television: “I have a feeling that they won’t give us the money back because they are crooks … and our Western partners not only refuse to help, but they also make it difficult for us.” Accusing that “the international financial system is unjustly structured,” he nonetheless promised to “go to court. We’ll push for default on the loan and we’ll push for default on all Ukrainian debts,” based on the fact that the loan
was a request from the Ukrainian Government to the Russian Government. If two governments reach an agreement this is obviously a sovereign loan…. Surprisingly, however, international financial organisations started saying that this is not exactly a sovereign loan. This is utter bull. Evidently, it’s just an absolutely brazen, cynical lie. … This seriously erodes trust in IMF decisions. I believe that now there will be a lot of pleas from different borrower states to the IMF to grant them the same terms as Ukraine. How will the IMF possibly refuse them?[22]
And there the matter stands. On December 16, 2015, the IMF’s Executive Board ruled that “the bond should be treated as official debt, rather than a commercial bond.”[23] Forbes quipped: “Russia apparently is not always blowing smoke. Sometimes they’re actually telling it like it is.”[24]
Reflecting the degree of hatred fanned by U.S. diplomacy, U.S.-backed Ukrainian Finance Minister Natalie A. Jaresko expressed an arrogant confidence that the IMF would back the Ukrainian cabinet’s announcement on Friday, December 18, of its intention to default on the debt to Russia falling due two days later. “If we were to repay this bond in full, it would mean we failed to meet the terms of the I.M.F. and the obligations we made under our restructuring.”[25]
Adding his own bluster, Prime Minister Arseny Yatsenyuk announced his intention to tie up Russia’s claim for payment by filing a multibillion-dollar counter claim “over Russia’s occupation of Crimea and intervention in east Ukraine.” To cap matters, he added that “several hundred million dollars of debt owed by two state enterprises to Russian banks would also not be paid.”[26] This makes trade between Ukraine and Russia impossible to continue. Evidently Ukraine’s authorities had received assurance from IMF and U.S. officials that no real “good faith” bargaining would be required to gain ongoing support. Ukraine’s Parliament did not even find it necessary to enact the new tax code and budget conditionalities that the IMF loan had demanded.
The world is now at war financially, and all that seems to matter is whether, as U.S. Defense Secretary Donald Rumsfeld had put matters, “you are for us or against us.” As President Putin remarked at the 70th session of the UN General Assembly regarding America’s support of Al Qaeda, Al Nusra and other allegedly “moderate” ISIS allies in Syria: “I cannot help asking those who have caused this situation: Do you realize now what you have done? … I am afraid the question will hang in the air, because policies based on self-confidence and belief in one’s exceptionality and impunity have never been abandoned.”[27]
The blowback
America’s unilateralist geopolitics are tearing up the world’s economic linkages that were put in place in the heady days after World War II, when Europe and other countries were so disillusioned that they believed the United States was acting out of idealism rather than national self-interest. Today the question is how long Western Europe will be willing to forego its trade and investment interests by accepting U.S.-sponsored sanctions against Russia, Iran and other economies. Germany, Italy and France already are feeling the strains.
The oil and pipeline war designed to bypass Russian energy exports is flooding Europe with refugees, as well as spreading terrorism. Although the leading issue in America’s Republican presidential debate on December 15, 2015, was safety from Islamic jihadists, no candidate thought to explain the source of this terrorism in America’s alliance with Wahabist Saudi Arabia and Qatar, and hence with Al Qaeda and ISIS/Daish as a means of destabilizing secular regimes in Libya, Iraq, Syria, and earlier in Afghanistan. Going back to the original sin of CIA hubris – overthrowing the secular Iranian Prime Minister leader Mohammad Mosaddegh in 1953 – U.S. foreign policy has been based on the assumption that secular regimes tend to be nationalist and resist privatization and neoliberal austerity.
Based on this assumption, U.S. Cold Warriors have aligned themselves against democratic regimes seeking to promote their own prosperity and resist neoliberalism in favor of maintaining their own traditional mixed public/private economies. That is the back-story of the U.S. fight to control the rest of the world. Tearing apart the IMF’s rules is only the most recent chapter. Arena by arena, the core values of what used to be American and European social democratic ideology are being uprooted by the tactics being used to hurt Russia, China and their prospective Eurasian allies.
The Enlightenment’s ideals were of secular democracy and the rule of international law applied equally to all nations, classical free market theory (of markets free from unearned income and rent extraction by special interests), and public investment in infrastructure to hold down the cost of living and doing business. These are all now to be sacrificed to a militant U.S. unilateralism. Putting their “indispensable nation” above the rule of law and parity of national interests (the 1648 Westphalia treaty, not to mention the Geneva Convention and Nuremburg laws), U.S. neocons proclaim that America’s destiny is to prevent foreign secular democracy from acting in ways other than in submission to U.S. diplomacy. Behind this lie the special U.S. financial and corporate interests that control American foreign policy.
This is not how the Enlightenment was supposed to turn out. Industrial capitalism a century ago was expected to evolve into an economy of abundance worldwide. Instead, we have American Pentagon capitalism, with financial bubbles deteriorating into a polarized rentier economy and a resurgence of old-fashioned imperialism. If and when a break comes, it will not be marginal but a seismic geopolitical shift.
The Dollar Bloc’s Financial Curtain
By treating Ukraine’s repudiation of its official debt to Russia’s National Wealth Fund as the new norm, the IMF has blessed its default. President Putin and foreign minister Lavrov have said that they will sue in British courts. The open question is whether any court exist in the West not under the thumb of U.S. veto?
America’s New Cold War maneuvering has shown that the two Bretton Woods institutions are unreformable. It is easier to create new institutions such as the AIIB than to retrofit the IMF and World Bank, NATO and behind it, the dollar standard – all burdened with the legacy of their vested interests.
U.S. geostrategists evidently thought that excluding Russia, China and other Eurasian countries from the U.S.-based financial and trade system would isolate them in a similar economic box to Cuba, Iran and other sanctioned adversaries. The idea was to force countries to choose between being impoverished by such exclusion, or acquiescing in U.S. neoliberal drives to financialize their economies under U.S. control.
What is lacking here is the idea of critical mass. The United States may arm-twist Europe to impose trade and financial sanctions on Russia, and may use the IMF and World Bank to exclude countries not under U.S. hegemony from participating in dollarized global trade and finance. But this diplomatic action is producing an equal and opposite reaction. That is the Newtonian law of geopolitics. It is propelling other countries to survive by avoiding demands to impose austerity on their government budgets and labor, by creating their own international financial organization as an alternative to the IMF, and by juxtaposing their own “aid” lending to that of the U.S.-centered World Bank.
This blowback requires an international court to handle disputes free from U.S. arm-twisting. The Eurasian Economic Union accordingly has created its own court to adjudicate disputes. This may provide an alternative to Judge Griesa’s New York federal kangaroo court ruling in favor of vulture funds derailing Argentina’s debt settlements and excluding that country from world financial markets.
The more nakedly self-serving U.S. policy is – from backing radical fundamentalist outgrowths of Al Qaeda throughout the Near East to right-wing nationalists in Ukraine and the Baltics – then the greater the pressure will grow for the Shanghai Cooperation Organization, AIIB and related institutions to break free of the post-1945 Bretton Woods system run by the U.S. State, Defense and Treasury Departments and their NATO superstructure of coercive military bases. As Paul Craig Roberts recently summarized the dynamic, we are back with George Orwell’s 1984 global fracture between Oceania (the United States, Britain and its northern European NATO allies as the sea and air power) vs. Eurasia as the consolidated land power.
Footnotes:
[1] The SCO was created in 2001 in Shanghai by the leaders of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. India and Pakistan are scheduled to join, along with Iran, Afghanistan and Belarus as observers, and other east and Central Asian countries as “dialogue partners.”
[2] “Putin Seeks Alliance to Rival TPP,” RT.com (December 04 2015). The Eurasian Economic Union was created in 2014 by Russia, Belarus and Kazakhstan, soon joined by Kyrgyzstan and Armenia. ASEAN was formed in 1967, originally by Indonesia, Malaysia the Philippines, Singapore and Thailand. It subsequently has been expanded. China and the AIIB are reaching out to replace World Bank. The U.S. refused to join the AIIB, opposing it from the outset.
[8] Anders Åslund, “Ukraine Must Not Pay Russia Back,” Atlantic Council, November 2, 2015 (from Johnson’s Russia List, November 3, 2015, #50).
[9] Anders Aslund, “The IMF Outfoxes Putin,” op. cit.
[10] Quoted in Tamara Zamyantina, “IMF’s dilemma: to help or not to help Ukraine, if Kiev defaults,” TASS, translated on Johnson’s Russia List, December 9, 2015, #9.
[11] I provide a narrative of the Greek disaster in Killing the Host (2015).
[15] Anton Siluanov, “Russia wants fair rules on sovereign debt,” Financial Times, op. cit.. He added: “Russia’s financing was not made for commercial gain. Just as America and Britain regularly do, it provided assistance to a country whose policies it supported. The US is now supporting the current Ukrainian government through its USAID guarantee programme.”
“Lavrov: U.S. admits lack of prospects of restoring Ukrainian solvency,” November 7, 2015, translated on Johnson’s Russia List, December 7, 2015, #38.[21]
[24] Kenneth Rapoza, “IMF Says Russia Right About Ukraine $3 Billion Loan,” Forbes.com, December 16, 2015. The article added: “the Russian government confirmed to Euroclear, at the request of the Ukrainian authorities at the time, that the Eurobond was fully owned by the Russian government.”
Toward the end of his 250-page hymn to digital-age innovation, The Industries of the Future, Alec Ross pauses to offer a rare cautionary note. Silicon Valley may have incubated all the wonders and conveniences one can imagine—and oh, so many more! But for the international business elites looking to remake their emerging market economies in the Valley’s gleaming, khaki-clad image, there’s some bad news: It can no longer be done. A “decades-long head start” has granted too great a competitive advantage to the charmed peninsula along the Northern California coast.
Not to worry, though! On-the-make tech globalists can still make a go of it, provided they’re prepared to embrace “specific cultural and labor market characteristics that can contradict both a society’s norms and the more controlling impulses of government leaders.”
Stripped of the vague and glowing techno-babble, this is a prescription for good old-fashioned neoliberal market discipline. Everywhere Ross looks across the radically transformed world of digital commerce, the benign logic of market triumphalism wins the day. When Terry Gou—the Taiwanese CEO of Foxconn, the vast Chinese electronics sweatshop that doubles as an incubator for worker suicides—plans to eliminate the headache of supervising an unstable human workforce by replacing it with “the first fully automated plant” in manufacturing history, why, he’s simply “responding to pure market forces”: i.e., an increase in Chinese wages that cuts into Foxconn’s ridiculously broad profit margins. And you and I might see the so-called sharing economy as a means to casualize service workers into nonunion, benefit-free gigs that transfer economic value on a massive scale to a rentier class of Silicon Valley app marketers. But bouncy New Economy cheerleaders like Ross see “a way of making a market out of anything, and a microentrepreneur out of anyone.”
When confronted with the spiraling of income inequality in the digital age, Ross, like countless other prophets of better living through software, sagely counsels that “rapid progress often comes with greater instability.” Sure, the “wealthy generally benefit over the short term,” but remember, kids: “Innovations have the potential to become cheaper over time and spread throughout the greater population.”
Ross first stormed into political prominence as an architect of Barack Obama’s “technology and innovation plan” during his 2008 presidential campaign, and he has spent four years captaining his own charmed, closed circle of tech triumphalism as the White House’s “senior advisor for innovation” under Secretary of State Hillary Clinton. This renders The Industries of the Future something more than another breathless, Tom Friedman-style tour of the wonderments being hatched in startups, trade confabs and gadget factories. Ross’ book is also a tech-policy playbook for the likely Democratic presidential nominee, who has spared no effort in soliciting the policy input—and landing the campaign donations—of the Silicon Valley mogul set. As such, it should give any Hillary-curious supporter of economic justice considerable pause.
To be sure, Ross raises some vague concerns about how, for example, the runaway growth of the sharing economy drains workers of job security, healthcare benefits, pensions and the like. He avers that “as the sharing economy grows … the safety net needs to grow with it,” but, much like his politically savvy boss, he offers nothing in the way of policy specifics besides the inarguable yet unactionable truism that if the sharing economy “generates enormous amounts of wealth for the platform owners, then the platform owners can and should help pay for added costs to society.”
The larger point for Ross, in any event, is that the innovative megafirms of tomorrow will come to spontaneously serve the public good. Not to mention that many IPO investors “are pension funds,” Ross coos, which “manage the retirement funds for people in the working class like teachers, police officers, and other civil servants.” Never mind, of course, that the neoliberal logic of the Uber model means that we’re creating a workforce that’s unlikely ever to come within shouting distance of a pension benefit again.
This kind of terminal Silicon Valley myopia also accounts for the vast economic and political blindspots that continually undermine Ross’ relentlessly chipper TED patter. To take just one instructive instance, in a book that devotes considerable real estate to the innovations of “fintech” (the streamlining of global digital currency exchanges and investment transactions) nowhere does the author acknowledge the pivotal role that tech-savvy Wall Street analysts—the “quants” as they’re known in Street argot—played in stoking the early-aughts housing bubble that led to the near-meltdown of the global economy.
That’s because it’s an axiomatic faith for this brand of techno-prophecy that innovation can never actually make anything worse—in just the same fashion that the quants were insisting, right up until the end, that there could never be a downturn in the national housing market. If this is the kind of wisdom Hillary Clinton relied on to promote her global innovation agenda at the State Department, one shudders to think of how it might run riot through the White House come next January.
After the Crash 