The American Empire self-destructs.

Posted on March 18, 2022 by Reid Mukai

By Michael Hudson

But nobody thought that it would happen this fast.

Empires often follow the course of a Greek tragedy, bringing about precisely the fate that they sought to avoid. That certainly is the case with the American Empire as it dismantles itself in not-so-slow motion.

The basic assumption of economic and diplomatic forecasting is that every country will act in its own self-interest. Such reasoning is of no help in today’s world. Observers across the political spectrum are using phrases like “shooting themselves in their own foot” to describe U.S. diplomatic confrontation with Russia and allies alike.

For more than a generation the most prominent U.S. diplomats have warned about what they thought would represent the ultimate external threat: an alliance of Russia and China dominating Eurasia. America’s economic sanctions and military confrontation has driven them together, and is driving other countries into their emerging Eurasian orbit.

American economic and financial power was expected to avert this fate. During the half-century since the United States went off gold in 1971, the world’s central banks have operated on the Dollar Standard, holding their international monetary reserves in the form of U.S. Treasury securities, U.S. bank deposits and U.S. stocks and bonds. The resulting Treasury-bill Standard has enabled America to finance its foreign military spending and investment takeover of other countries simply by creating dollar IOUs. U.S. balance-of-payments deficits end up in the central banks of payments-surplus countries as their reserves, while Global South debtors need dollars to pay their bondholders and conduct their foreign trade.

This monetary privilege – dollar seignorage – has enabled U.S. diplomacy to impose neoliberal policies on the rest of the world, without having to use much military force of its own except to grab Near Eastern oil.

The recent escalation U.S. sanctions blocking Europe, Asia and other countries from trade and investment with Russia, Iran and China has imposed enormous opportunity costs – the cost of lost opportunities – on U.S. allies. And the recent confiscation of the gold and foreign reserves of Venezuela, Afghanistan and now Russia, along the targeted grabbing of bank accounts of wealthy foreigners (hoping to win their hearts and minds, along with recovery of their sequestered accounts), has ended the idea that dollar holdings or those in its sterling and euro NATO satellites are a safe investment haven when world economic conditions become shaky.

So I am somewhat chagrined as I watch the speed at which this U.S.-centered financialized system has de-dollarized over the span of just a year or two. The basic theme of my Super Imperialism has been how, for the past fifty years, the U.S. Treasury-bill standard has channeled foreign savings to U.S. financial markets and banks, giving Dollar Diplomacy a free ride. I thought that de-dollarization would be led by China and Russia moving to take control of their economies to avoid the kind of financial polarization that is imposing austerity on the United States. But U.S. officials are forcing them to overcome whatever hesitancy they had to de-dollarize.

I had expected that the end of the dollarized imperial economy would come about by other countries breaking away. But that is not what has happened. U.S. diplomats have chosen to end international dollarization themselves, while helping Russia build up its own means of self-reliant agricultural and industrial production. This global fracture process actually has been going on for some years now, starting with the sanctions blocking America’s NATO allies and other economic satellites from trading with Russia.For Russia, these sanctions had the same effect that protective tariffs would have had.

Russia had remained too enthralled by free-market ideology to take steps to protect its own agriculture or industry. The United States provided the help that was needed by imposing domestic self-reliance on Russia (via sanctions). When the Baltic states lost the Russian market for cheese and other farm products, Russia quickly created its own cheese and dairy sector – while becoming the world’s leading grain exporter.

Russia is discovering (or is on the verge of discovering) that it does not need U.S. dollars as backing for the ruble’s exchange rate. Its central bank can create the rubles needed to pay domestic wages and finance capital formation. The U.S. confiscations thus may finally lead Russia to end neoliberal monetary philosophy, as Sergei Glaziev has long been advocating in favor of MMT.

The same dynamic undercutting ostensible U.S aims has occurred with U.S. sanctions against the leading Russian billionaires. The neoliberal shock therapy and privatizations of the 1990s left Russian kleptocrats with only one way to cash out on the assets they had grabbed from the public domain. That was to incorporate their takings and sell their shares in London and New York. Domestic savings had been wiped out, and U.S. advisors persuaded Russia’s central bank not to create its own ruble money.

The result was that Russia’s national oil, gas and mineral patrimony was not used to finance a rationalization of Russian industry and housing. Instead of the revenue from privatization being invested to create new Russian means of protection, it was burned up on nouveau-riche acquisitions of luxury British real estate, yachts and other global flight-capital assets. But the effect of making the Russian dollar, sterling and euro holdings hostage has been to make the City of London too risky a venue in which to hold their assets. By imposing sanctions on the richest Russians closest to Putin, U.S. officials hoped to induce them to oppose his breakaway from the West, and thus to serve effectively as NATO agents-of-influence. But for Russian billionaires, their own country is starting to look safest.

For many decades now, the Federal Reserve and Treasury have fought against gold recovering its role in international reserves. But how will India and Saudi Arabia view their dollar holdings as Biden and Blinken try to strong-arm them into following the U.S. “rules-based order” instead of their own national self-interest? The recent U.S. dictates have left little alternative but to start protecting their own political autonomy by converting dollar and euro holdings into gold as an asset free of political liability of being held hostage to the increasingly costly and disruptive U.S. demands.

U.S. diplomacy has rubbed Europe’s nose in its abject subservience by telling its governments to have their companies dump the Russian assets for pennies on the dollar after Russia’s foreign reserves were blocked and the ruble’s exchange rate plunged. Blackstone, Goldman Sachs and other U.S. investors moved quickly to buy up what Shell Oil and other foreign companies were unloading.

Nobody thought that the postwar 1945-2020 world order would give way this fast. A truly new international economic order is emerging, although it is not yet clear just what form it will take. But “prodding the Bear” with the U.S./NATO confrontation with Russia has passed critical-mass level. It no longer is just about Ukraine. That is merely the trigger, a catalyst for driving much of the world away from the US/NATO orbit.

The next showdown may come within Europe itself. Nationalist politicians could seek to lead a break-away from the over-reaching U.S. power-grab over its European and other Allies, trying in vain to keep them dependent on U.S.-based trade and investment. The price of their continuing obedience is to impose cost-inflation on their industry while relinquishing their democratic electoral politics in subordination to America’s NATO proconsuls.

These consequences cannot really be deemed “unintended.” Too many observers have pointed out exactly what would happen – headed by President Putin and Foreign Secretary Lavrov explaining just what their response would be if NATO insisted in backing them into a corner while attacking Eastern Ukrainian Russian-speakers and moving heavy weaponry to Russia’s Western border. The consequences were anticipated. The neocons in control of U.S. foreign policy simply didn’t care. Recognizing its concerns was deemed to make one a Putinversteher.

European officials did not feel uncomfortable in telling the world about their worries that Donald Trump was crazy and upsetting the apple cart of international diplomacy. But they seem to have been blindsided at the Biden Administration’s resurgence of visceral Russia-hatred by Secretary of State Blinken and Victoria Nuland-Kagan. Trump’s mode of expression and mannerisms may have been uncouth, but America’s neocon gang has much more globally threatening confrontation obsessions. For them, it was a question of whose reality would emerge victorious: the “reality” that they believed they could make, or economic reality outside of U.S. control.

What foreign countries have not done for themselves – replacing the IMF, World Bank and other arms of U.S. diplomacy – American politicians are forcing them to do. Instead of European, Near Eastern and Global South countries breaking away out of their own calculation of their long-term economic interests, America is driving them away, as it has done with Russia and China. More politicians are seeking voter support by asking whether they would be better served by new monetary arrangements to replace dollarized trade, investment and even foreign debt service.

The energy and food price squeeze is hitting Global South countries especially hard, coinciding with their own Covid-19 problems and the looming dollarized debt service coming due. Something must give. How long will these countries impose austerity to pay foreign bondholders?

How will the U.S. and European economies cope in the face of their sanctions against imports of Russian gas and oil, cobalt, aluminum, palladium and other basic materials? American diplomats have made a list of raw materials that their economy desperately needs and which therefore are exempt from the trade sanctions being imposed. This provides Mr. Putin a handy list of pressure points to use in reshaping world diplomacy, in the process helping European and other countries break away from the Iron Curtain that America has imposed to lock its satellites into dependence on high-priced U.S. supplies.

But the final breakaway from NATO’s adventurism must come from within the United States itself. As this year’s midterm elections approach, politicians will find a fertile ground in showing U.S. voters that the price inflation led by gasoline and energy is a policy byproduct of the Biden administration blocking Russian oil and gas exports. Gas is needed not only for heating and energy production, but to make fertilizer, of which there already is a world shortage. This is exacerbated by blocking Russian and Ukrainian grain exports, sending U.S. and European food prices soaring.

Trying to force Russia to respond militarily and thereby looking bad to the rest of the world is turning out to be a stunt aimed simply at demonstrating Europe’s need to contribute more to NATO, buy more U.S. military hardware and lock itself deeper into trade and monetary dependence on the United States. The instability that this has caused is turning out to have the effect of making the United States look as threatening as Russia.

The Fear Pandemic and the Crisis of Capitalism. Sleepwalking Towards A Global Economic Crisis?

Posted on October 7, 2021 by Reid Mukai

By Colin Todhunter

Source: Global Research

In October 2019, in a speech at an International Monetary Fund conference, former Bank of England governor Mervyn King warned that the world was sleepwalking towards a fresh economic and financial crisis that would have devastating consequences for what he called the “democratic market system”.

According to King, the global economy was stuck in a low growth trap and recovery from the crisis of 2008 was weaker than that after the Great Depression. He concluded that it was time for the Federal Reserve and other central banks to begin talks behind closed doors with politicians.

In the repurchase agreement (repo) market, interest rates soared on 16 September. The Federal Reserve stepped in by intervening to the tune of $75 billion per day over four days, a sum not seen since the 2008 crisis.

At that time, according to Fabio Vighi, professor of critical theory at Cardiff University, the Fed began an emergency monetary programme that saw hundreds of billions of dollars per week pumped into Wall Street.

Over the last 18 months or so, under the guise of a ‘pandemic’, we have seen economies closed down, small businesses being crushed, workers being made unemployed and people’s rights being destroyed. Lockdowns and restrictions have facilitated this process. The purpose of these so-called ‘public health measures’ has little to do with public health and much to do with managing a crisis of capitalism and ultimately the restructuring of the economy.

Neoliberalism has squeezed workers income and benefits, offshored key sectors of economies and has used every tool at its disposal to maintain demand and create financial Ponzi schemes in which the rich can still invest in and profit from. The bailouts to the banking sector following the 2008 crash provided only temporary respite. The crash returned with a much bigger bang pre-Covid along with multi-billion-dollar bailouts.

The dystopian ‘great reset’ that we are currently witnessing is a response to this crisis. This reset envisages a transformation of capitalism.

Fabio Vighi sheds light on the role of the ‘pandemic’ in all of this:

“… some may have started wondering why the usually unscrupulous ruling elites decided to freeze the global profit-making machine in the face of a pathogen that targets almost exclusively the unproductive (over 80s).”

Vighi describes how, in pre-Covid times, the world economy was on the verge of another colossal meltdown and chronicles how the Swiss Bank of International Settlements, BlackRock (the world’s most powerful investment fund), G7 central bankers and others worked to avert a massive impending financial meltdown.

The world economy was suffocating under an unsustainable mountain of debt. Many companies could not generate enough profit to cover interest payments on their own debts and were staying afloat only by taking on new loans. Falling turnover, squeezed margins, limited cashflows and highly leveraged balance sheets were rising everywhere.

Lockdowns and the global suspension of economic transactions were intended to allow the Fed to flood the ailing financial markets (under the guise of COVID) with freshly printed money while shutting down the real economy to avoid hyperinflation.

Vighi says:

“… the stock market did not collapse (in March 2020) because lockdowns had to be imposed; rather, lockdowns had to be imposed because financial markets were collapsing. With lockdowns came the suspension of business transactions, which drained the demand for credit and stopped the contagion. In other words, restructuring the financial architecture through extraordinary monetary policy was contingent on the economy’s engine being turned off.”

It all amounted to a multi-trillion bailout for Wall Street under the guise of COVID ‘relief’ followed by an ongoing plan to fundamentally restructure capitalism that involves smaller enterprises being driven to bankruptcy or bought up by monopolies and global chains, thereby ensuring continued viable profits for these predatory corporations, and the eradication of millions of jobs resulting from lockdowns and accelerated automation.

Author and journalist Matt Taibbi noted in 2020:

“It retains all the cruelties of the free market for those who live and work in the real world, but turns the paper economy into a state protectorate, surrounded by a kind of Trumpian Money Wall that is designed to keep the investor class safe from fear of loss. This financial economy is a fantasy casino, where the winnings are real but free chips cover the losses. For a rarefied segment of society, failure is being written out of the capitalist bargain.”

The World Economic Forum says that by 2030 the public will ‘rent’ everything they require. This means undermining the right of ownership (or possibly seizing personal assets) and restricting consumer choice underpinned by the rhetoric of reducing public debt or ‘sustainable consumption’, which will be used to legitimise impending austerity as a result of the economic meltdown. Ordinary people will foot the bill for the ‘COVID relief’ packages.

If the financial bailouts do not go according to plan, we could see further lockdowns imposed, perhaps justified under the pretext of ‘the virus’ but also ‘climate emergency’.

It is not only Big Finance that has been saved. A previously ailing pharmaceuticals industry has also received a massive bailout (public funds to develop and purchase the vaccines) and lifeline thanks to the money-making COVID jabs.

The lockdowns and restrictions we have seen since March 2020 have helped boost the bottom line of global chains and the e-commerce giants as well and have cemented their dominance. At the same time, fundamental rights have been eradicated under COVID government measures.

Capitalism and labour

Essential to this ‘new normal’ is the compulsion to remove individual liberties and personal freedoms. A significant part of the working class has long been deemed ‘surplus to requirements’ – such people were sacrificed on the altar of neo-liberalism. They lost their jobs due to automation and offshoring. Since then, this section of the population has had to rely on meagre state welfare and run-down public services or, if ‘lucky’, insecure low-paid service sector jobs.

What we saw following the 2008 crash was ordinary people being pushed further to the edge. After a decade of ‘austerity’ in the UK – a neoliberal assault on the living conditions of ordinary people carried out under the guise of reining in public debt following the bank bail outs – a leading UN poverty expert compared Conservative welfare policies to the creation of 19th-century workhouses and warned that, unless austerity is ended, the UK’s poorest people face lives that are “solitary, poor, nasty, brutish, and short”.

Philip Alston, the UN rapporteur on extreme poverty, accused ministers of being in a state of denial about the impact of policies. He accused them of the “systematic immiseration of a significant part of the British population”.

In another 2019 report, the Institute for Public Policy Research think tank laid the blame for more than 130,000 deaths in the UK since 2012 at the door of government policies. It claimed that these deaths could have been prevented if improvements in public health policy had not stalled as a direct result of austerity cuts.

Over the past 10 years in the UK, according to the Trussell Group, there has been rising food poverty and increasing reliance on food banks.

And in a damning report on poverty in the UK by Professor David Gordon of the University of Bristol, it was found that almost 18 million cannot afford adequate housing conditions, 12 million are too poor to engage in common social activities, one in three cannot afford to heat their homes adequately in winter and four million children and adults are not properly fed (Britain’s population is estimated at around 66 million).

Moreover, a 2015 report by the New Policy Institute noted that the total number of people in poverty in the UK had increased by 800,000, from 13.2 to 14.0 million in just two to three years.

Meanwhile, The Equality Trust in 2018 reported that the ‘austerity’ years were anything but austere for the richest 1,000 people in the UK. They had increased their wealth by £66 billion in one year alone (2017-2018), by £274 billion in five years (2013-2018) and had increased their total wealth to £724 billion – significantly more than the poorest 40% of households combined (£567 billion).

Just some of the cruelties of the ‘free market’ for those who live and work in the real world. And all of this hardship prior to lockdowns that have subsequently devastated lives, livelihoods and health, with cancer diagnoses and treatments and other conditions having been neglected due to the shutdown of health services.

During the current economic crisis, what we are seeing is many millions around the world being robbed of their livelihoods. With AI and advanced automation of production, distribution and service provision on the immediate horizon, a mass labour force will no longer be required.

It raises fundamental questions about the need for and the future of mass education, welfare and healthcare provision and systems that have traditionally served to reproduce and maintain labour that capitalist economic activity has required.

As the economic is restructured, labour’s relationship to capital is being transformed. If work is a condition of the existence of the labouring classes, then, in the eyes of capitalists, why maintain a pool of (surplus) labour that is no longer needed?

A concentration of wealth power and ownership is taking place as a result of COVID-related policies: according to research by Oxfam, the world’s billionaires gained $3.9 trillion while working people lost $3.7 trillion in 2020. At the same time, as large sections of the population head into a state of permanent unemployment, the rulers are weary of mass dissent and resistance. We are witnessing an emerging biosecurity surveillance state designed to curtail liberties ranging from freedom of movement and assembly to political protest and free speech.

The global implications are immense too. Barely a month into the COVID agenda, the IMF and World Bank were already facing a deluge of aid requests from developing countries that were asking for bailouts and loans. Ideal cover for rebooting the global economy via a massive debt crisis and the subsequent privatisation of national assets.

In 2020, World Bank Group President David Malpass stated that poorer countries will be ‘helped’ to get back on their feet after the various lockdowns but such ‘help’ would be on condition that neoliberal reforms become further embedded. In other words, the de facto privatisation of states (affecting all nations, rich and poor alike), the (complete) erosion of national sovereignty and dollar-denominated debt leading to a further strengthening of US leverage and power.

In a system of top-down surveillance capitalism with an increasing section of the population deemed ‘unproductive’ and ‘useless eaters’, notions of individualism, liberal democracy and the ideology of free choice and consumerism are regarded by the elite as ‘unnecessary luxuries’ along with political and civil rights and freedoms.

We need only look at the ongoing tyranny in Australia to see where other countries could be heading. How quickly Australia was transformed from a ‘liberal democracy’ to a brutal totalitarian police state of endless lockdowns where gathering and protests are not to be tolerated.

Being beaten and thrown to the ground and fired at with rubber bullets in the name of protecting health makes as much sense as devastating entire societies through socially and economically destructive lockdowns to ‘save lives’.

It makes as much sense as mask-wearing and social-distancing mandates unsupported by science, misused and flawed PCR tests, perfectly healthy people being labelled as ‘cases’, deliberately inflated COVID death figures, pushing dangerous experimental vaccines in the name of health, ramping up fear, relying on Neil Ferguson’s bogus modelling, censoring debate about any of this and the WHO declaring a worldwide ‘pandemic’ based on a very low number of global ‘cases’ back in early 2020 (44,279 ‘cases’ and 1,440 supposed COVID deaths outside China out of a population of 6.4 billion).

There is little if any logic to this. But of course, If we view what is happening in terms of a crisis of capitalism, it might begin to make a lot more sense.

The austerity measures that followed the 2008 crash were bad enough for ordinary people who were still reeling from the impacts when the first lockdown was imposed.

The authorities are aware that deeper, harsher impacts as well as much more wide-ranging changes will be experienced this time around and seem adamant that the masses must become more tightly controlled and conditioned to their coming servitude.

Locked Down and Locking in the New Global Order

Posted on April 20, 2020 by Reid Mukai

By Colin Todhunter

Source: CounterPunch

On 12 March, British PM Boris Johnson informed the public that families would continue to “lose loved ones before their time” as the coronavirus outbreak worsens. He added:

“We’ve all got to be clear, this is the worst public health crisis for a generation.”

In a report, the Imperial College had warned of modelling that suggested over 500,000 would die from the virus in the UK. The lead author of the report, epidemiologist Neil Ferguson, has since revised the estimate downward to a maximum of 20,000 if current ‘lockdown’ measures work. Johnson seems to have based his statement on Ferguson’s original figures.

Before addressing the belief that a lockdown will help the UK, it might be useful to turn to an ongoing public health crisis that receives scant media and government attention – because context is everything and responses that are proportionate to crises are important.

The silent public health crisis

In a new 29-page open letter to Fiona Godlee, editor-in-chief of the British Medical Journal, environmentalist Dr Rosemary Mason spends 11 pages documenting the spiralling rates of disease that she says (supported by numerous research studies cited) are largely the result of exposure to health-damaging agrochemicals, not least the world’s most widely used weedkiller – glyphosate.

The amount of glyphosate-based herbicides sprayed by UK farmers on crops has gone from 226,762 kg in 1990 to 2,240,408 kg in 2016, a 10-fold increase. Mason discusses links between multiple pesticide residues (including glyphosate) in food and steady increases in the number of cancers both in the UK and worldwide as well as allergic diseases, chronic kidney disease, Alzheimer’s, Parkinson’s, obesity and many other conditions.

Mason is at pains to stress that agrochemicals are a major contributory factor (or actual cause) for the spikes in these diseases and conditions. She says this is the real public health crisis affecting the UK (and the US). Each year, she argues, there are steady increases in the numbers of new cancers in the UK and increases in deaths from the same cancers, with no treatments making any difference to the numbers.

Of course, it would be unwise to lay all the blame at the door of the agrochemicals sector: we are subjected each day to a cocktail of toxic chemicals via household goods, food processing practices and food additives and environmental pollution. Yet there seems to be a serious lack of action to interfere with corporate practices and profits on the part of public bodies, so much so that a report by the Corporate Europe Observatory said in 2014 that the then outgoing European Commission had become a willing servant of a corporate agenda.

In a 2017 report, Hilal Elver, UN Special rapporteur on the right to food, and UN Special Rapporteur on human rights and hazardous substances and wastes Baskut Tuncak were severely critical of the global corporations that manufacture pesticides, accusing them of the “systematic denial of harms”, “aggressive, unethical marketing tactics” and heavy lobbying of governments which has “obstructed reforms and paralysed global pesticide restrictions”.

The authors said that pesticides have catastrophic impacts on the environment, human health and society as a whole, including an estimated 200,000 deaths a year from acute poisoning. They concluded that it is time to create a global process to transition toward safer and healthier food and agricultural production.

At the time, Elver said that, in order to tackle this issue, the power of the corporations must be addressed.

While there is currently much talk of the coronavirus placing immense strain on the NHS, Mason highlights that the health service is already creaking and that due to weakened immune systems brought about by the contaminated food we eat, any new virus could spell disaster for public health.

But do we see a ‘lockdown’ on the activities of the global agrochemical conglomerates? Not at all. As Mason has highlighted in her numerous reports, we see governments and public health bodies working hand in glove with the agrochemicals and pharmaceuticals manufacturers to ensure ‘business as usual’. So, it might seem strange to many that the UK government is seemingly going out of its way (by stripping people of their freedoms) under the guise of a public health crisis but is all too willing to oversee a massive, ongoing one caused by the chemical pollution of our bodies.

Mason’s emphasis on an ongoing public health crisis brought about by poisoned crops and food is but part of a wider story. And it must be stated that it is a ‘silent’ crisis because the mainstream media and various official reports in the UK have consistently ignored or downplayed the role of pesticides in fuelling this situation.

Systemic immiseration

Another part of the health crisis story involves ongoing austerity measures.

The current Conservative administration in the UK is carrying out policies that it says will protect the general population and older people in particular. This is in stark contrast to its record over the previous decade which demonstrates contempt for the most vulnerable in society.

In 2019, a leading UN poverty expert compared Conservative welfare policies to the creation of 19th-century workhouses and warned that unless austerity is ended, the UK’s poorest people face lives that are “solitary, poor, nasty, brutish, and short”. Philip Alston, the UN rapporteur on extreme poverty, accused ministers of being in a state of denial about the impact of policies. He accused them of the “systematic immiseration of a significant part of the British population”.

In another 2019 report, it was claimed that more than 130,000 deaths in the UK since 2012 could have been prevented if improvements in public health policy had not stalled as a direct result of austerity cuts.

Over the past 10 years in the UK, there has been rising food poverty and increasing reliance on food banks, while the five richest families are now worth more than the poorest 20% and about a third of Britain’s population lives in poverty.

Almost 18 million cannot afford adequate housing conditions; 12 million are too poor to engage in common social activities; one in three cannot afford to heat their homes adequately in winter; and four million children and adults are not properly fed (Britain’s population is estimated at 63 to 64 million). Welfare cuts have pushed hundreds of thousands below the poverty line since 2012, including more than 300,000 children.

In the wake of a lockdown, we can only speculate about how a devastated economy might be exploited to further this ‘austerity’ agenda. With bailouts being promised to companies and many workers receiving public money to see them through the current crisis, this will need to be clawed back from somewhere. Will that be the excuse for defunding the NHS and handing it over to private healthcare companies with health insurance firms in tow? Are we to see a further deepening of the austerity agenda, let alone an extension of the surveillance state given the current lockdown measures which may not be fully rolled back?

The need for the current lockdown and the eradication of our freedoms has been questioned by some, not least Lord J. Sumption, former Supreme Court Justice. He has questioned the legitimacy of Boris Johnson’s press conference/statement to deprive people of their liberty and has said:

“There is a difference between law and official instructions. It is the difference between a democracy and a police state”.

Journalist Peter Hitchens says a newspaper headline for what Sumption says might be – ‘Former Supreme Court justice says Johnson measures lead towards police state’ or ‘TOP JUDGE WARNS OF POLICE STATE’.

But, as Hitchens implies, such headlines do not appear. Indeed, where is the questioning in the mainstream media or among politicians about any of this? To date, there have been a few isolated voices, with Hitchens himself being one.

In his recent articles, Hitchens has questioned the need for the stripping of the public’s rights and freedoms under the pretext of a perceived coronavirus pandemic. He has referred to esteemed scientists who question the need for and efficacy of ‘social distancing’ and keeping the public under virtual ‘house arrest’.

An open Letter from Dr. Sucharit Bhakdi, emeritus professor of medical microbiology at the Johannes Gutenberg University Mainz, to Angela Merkel calls for an urgent reassessment of Germany’s lockdown response to Covid-19. Then there is Dr Ioannidis, a professor of medicine and professor of epidemiology and population health at Stanford University. He argues that we have made such decisions on the basis of unreliable data. These two scientists are not alone. On the OffGuardian website, two articles have appeared which present the views of 22 experts who question policies and/or the data that is being cited about the coronavirus.

Shift in balance of power

Professor Michel Chossudovsky has looked at who could ultimately benefit from current events and concludes that certain pharmaceutical companies could be (are already) major beneficiaries as they receive lavish funding to develop vaccines. He asks whether we can trust the main actors behind what could amount to a multibillion dollar global (compulsory) vaccination (surveillance) project.

The issue of increased government surveillance has also been prominent in various analyses of the ongoing situation, not least in pushing the world further towards cashless societies (under the pretext that cash passes on viruses) whereby our every transaction is digitally monitored and a person’s virtual money could be declared null and void if a government so decides. Many discussions have implicated the Bill and Melinda Gates Foundation in this – an entity that for some time has been promoting the roll-out of global vaccine programmes and a global ‘war on cash’.

For instance, financial journalist Norbert Haring notes that the Gates Foundation and US state-financial interests had an early pivotal role in pushing for the 2016 demonestisation policy with the aim of pushing India further towards a cashless society. However, the policy caused immense damage to the economy and the lives and livelihoods of hundreds of millions in India who rely on cash in their everyday activities.

But that does not matter to those who roll out such policies. What matters is securing control over global payments and the ability to monitor and block them. Control food you control people. Control digital payments (and remove cash), you can control and monitor everything a country and its citizens do and pay for.

India has now also implemented a lockdown on its population and tens of millions of migrant workers have been returning to their villages. If there is a risk of corona virus infection, masses of people congregating in close proximity then returning to the countryside does not bode well.

Indeed, the impact of lockdowns and social isolation could have more harm than the effects of the coronavirus itself in terms of hunger, depression, suicides and the overall deterioration of the health of older people who are having operations delayed and who are stuck indoors with little social interaction or physical movement.

If current events show us anything, it is that fear is a powerful weapon for securing hegemony. Any government can manipulate fear about certain things while conveniently ignoring real dangers that a population faces. In a recent article, author and researcher Robert J Burrowes says:

“… if we were seriously concerned about our world, the gravest and longest-standing health crisis on the planet is the one that starves to death 100,000 people each day. No panic about that, of course. And no action either.”

And, of course, each day we live with the very real danger of dying a horrific death because of the thousands of nuclear missiles that hang over our heads. But this is not up for discussion. The media and politicians say nothing. Fear perception can be deliberately managed, while Walter Lippmann’s concept of the ‘bewildered herd’ cowers on cue and demands the government to further strip its rights under the guise of safety.

Does the discussion thus far mean that those who question the mainstream narrative surrounding the coronavirus are in denial of potential dangers and deaths that have been attributed to the virus? Not at all. But perspective and proportionate responses are everything and healthy debate should still take place, especially when our fundamental freedoms are at stake.

Unfortunately, many of those who would ordinarily question power and authority have meekly fallen into line: those in the UK who would not usually accept anything at face value that Boris Johnson or his ministers say, are now all too easily willing to accept the data and the government narrative. This is perplexing as both the government and the mainstream media have serious trust deficits (putting it mildly) if we look at their false narratives in numerous areas, including chemical attacks in Syria, ‘Russian aggression’, baseless smear campaigns directed at Jeremy Corbyn and WMDs in Iraq.

What will emerge from current events is anyone’s guess. Some authors like economist and geopolitical analyst Peter Koenig have presented disturbing scenarios for a future authoritarian world order under the control of powerful state-corporate partners. Whatever the eventual outcome, financial institutions, pharmaceuticals companies and large corporations will capitalise on current events to extend their profits, control and influence.

Major corporations are already in line for massive bailouts despite them having kept workers’ wages low and lining the pockets of top executives and shareholders by spending zero-interest money on stock buy backs. And World Bank Group President David Malpass has stated that poorer countries will be ‘helped’ to get back on their feet – on the condition that further neoliberal reforms and the undermining of public services are implemented and become further embedded:

“Countries will need to implement structural reforms to help shorten the time to recovery and create confidence that the recovery can be strong. For those countries that have excessive regulations, subsidies, licensing regimes, trade protection or litigiousness as obstacles, we will work with them to foster markets, choice and faster growth prospects during the recovery.”

In the face of economic crisis and stagnation at home, this seems like an ideal opportunity for Western capital to further open up and loot economies abroad. In effect, the coronavirus provides cover for the further entrenchment of dependency and dispossession. Global conglomerates will be able to hollow out the remnants of nation state sovereignty, while ordinary people’s rights and ability to organise and challenge the corporate hijack of economies and livelihoods will be undermined by the intensified, globalised system of surveillance that beckons.

Neoliberal Economics Destroyed the Economy and the Middle Class

Posted on January 3, 2020 by Reid Mukai

By Paul Craig Roberts

Source: PaulCraigRoberts.com

According to official US government economic data, the US economy has been growing for 10.5 years since June of 2009. The reason that the US government can produce this false conclusion is that costs that are subtrahends from GDP are not included in the measure. Instead, many costs are counted not as subtractions from growth but as additions to growth. For example, the penalty interest on a person’s credit card balance that results when a person falls behind his payments is counted as an increase in “financial services” and as an increase in Gross Domestic Product. The economic world is stood on its head.

It is aggregate demand that drives the economy. Payments made on a rise in interest rates on credit card balances from 19% to a 29% penalty rate reduce consumers’ ability to contribute to aggregate demand by purchasing goods and the services of doctors, lawyers, plumbers, electricians, and carpenters. Contrary to logic, the fee is magically counted in the “financial services” category as a contributor to GDP growth. The extortion of a fee that reduces aggregate demand lowers GDP, but builds paper wealth in the financial services sector.

GDP growth is also artificially inflated by counting as GDP abstract concepts that do not produce income streams. For example, for homeowners the US Department of Commerce estimates the rental values of owner-occupied housing, that is, the amount owners would be paying if they rented instead of owned their homes, and counts this imputed rent as GDP.

These and other absurdities have caused economist Michael Hudson to conclude correctly that the “financial reality of how the U.S. economy works is no longer captured in GDP statistics.”
https://michael-hudson.com/2019/10/asset-price-inflation-and-rent-seeking/

Today we have two economies. One is the real economy of production and consumption. The other is the financialized economy of paper wealth. The former is doing poorly, and the latter is doing well. The financialized economy is growing much faster than the real economy. Indeed, the real economy might not be growing at all.

Michael Hudson describes the difference. The stock market is at all time highs that have created massive wealth in financial assets for stock and bond owners. In the real economy the situation is totally different: “The Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2018 reports that 39% of Americans do not have $400 cash available for a medical or other emergency, and that a quarter of adults skipped medical care in 2018 because they could not afford it ( https://www.federalreserve.gov/publications/files/2018-report-economic-well-being-us-households-201905.pdf ). The latest estimates by the U.S. Government Accountability Office (GAO) report that nearly half (48 percent) of households headed by someone 55 and older lack any retirement savings or pension benefits ( https://www.aarp.org/retirement/retirement-savings/info-2019/no-retirement-money-saved.html ). Even in what the press calls an economic boom, most Americans feel stressed and many are chronically angry and worried. According to a 2015 survey by the American Psychological Association, financial worry is the “number one cause of stress in America today” ( https://www.apa.org/news/press/releases/2015/02/money-stress ).

The data is completely clear. The rich are becoming much richer, and the rest are becoming poorer. Michael Hudson explains:

“The creation and trading of property and financial assets at rising prices has been fueled by rising debt levels owed to the financial sector. This sector’s returns therefore are best seen not as real wealth on the asset side of the balance sheet, but as overhead on the liabilities side. And the process is multi-layered: income accruing to the financial wealth owned by the top 10 Percent is paid mainly by the bottom 90 percent in the form of rising debt service and other returns to financial and other property.

“In the textbook models of industrial capitalism’s mass production and consumption, an asset’s price is determined by its cost of production. If the price rises above this level, competitors will offer it cheaper. But in the financialized economy an asset’s price is determined by how much credit buyers can borrow to buy it, not by its cost of production. A home is worth as much as a bank will lend to a bidder.

“The engine of industrial capitalism and its consumer society is a positive feedback loop in which widely shared income growth, expanding consumption and markets generated yet more investment and growth. By contrast, the feedback loop of financial capitalism is an exponential growth of credit-driven debt, driving up asset prices and hence requiring yet more borrowing to buy homes, retirement income and other assets. Corporate management and investment today is mainly about obtaining capital gains for real estate, stocks and bonds than about earning income.

“We illustrate this by charting the flow of income and capital gains in the real estate sector to show the dominance of asset-price gains over net rental income – and how rental income is used up paying interest in our financialized economy. Likewise, corporate income is spent (and new debt taken on) largely for stock buybacks to raise share prices. The resulting dynamic is exponential and destabilizing.”

This dynamic is destabilizing, because as more of consumers’ discretionary income is drawn off to service mortgage, credit card, automobile and student debt and for compulsory health insurance, less is left to purchase the goods and services in the real economy. Consequently, credit-driven debt grows faster than the income that services it, and this impoverishes the 90%. However, for the 10%, money creation by the Federal Reserve in order to protect the balance sheets of the “banks too big to fail or jail” drives up the values of financial assets. As a result the distribution of income and wealth becomes hightly polarized.

Think about the many Americans who meet their living expenses by making only the minimum payment on their credit card balance. At 19% interest their debt grows monthly. Eventually they hit a credit card debt cap and can no longer use the card to cover their living expenses. But they have the burden of a large debt balance to service without an income stream capable of servicing it.

Think about the corporation that decapitalizes itself in order to produce short to intermediate term capital gains for shareholders and executives by indebting the firm in order to buy back the firm’s shares. The end result is that all income goes for debt service.

In a financialized economy, the only possible outcomes are debt forgiveness or collapse.

As Michael Hudson makes clear, the combination of nonsensical categories in the National Income and Product Accounts and a financialized economy means we have no accurate picture of the economy’s condition. Michael Hudson has a proposal for correcting these problems and making GDP accounting more accurate, but as ecological economists such as Herman Daly have made clear, GDP measurement also omits the external costs of production. This means that we do not know whether GDP is growing or declining. It is entirely possible that the ecological and social costs of an increase in GDP (as currently measured) are greater than the value of the increased output. (See Paul Craig Roberts, The Failure of Laissez-Faire Capitalism, https://www.amazon.com/Failure-Laissez-Faire-Capitalism/dp/0986036250/ref=sr_1_2?crid=16NHZEQ9G3JRW&keywords=paul+craig+roberts+books&qid=1576440032&s=books&sprefix=Paul+Craig%2Caps%2C173&sr=1-2 )

Perhaps the major way in which GDP is overstated is the exclusion of external or social costs. External or social costs are costs of producing a product that the producer does not incur but imposes on third parties or on the environment. For example, untreated sewage dumped into a stream imposes costs on people downstream. Runoff of chemical fertilizers from commercial farming produces dead zones in the Gulf of Mexico and toxic algal blooms such as Red Tide that result in massive fish kills, make seafood unsafe, cause human ailments and adversely impact the tourist trade of beach areas. The result is lost incomes, ruined vacations, health expenses, and none of these costs are born by the commercial farmers.

Real estate development produces massive external costs. Scenic views from existing properties are blocked, thus reducing their values. Construction noise and congestion impose costs on existing residents and reduces the quality of their lives. Water runoff problems are often created. Infrastructure has to be provided, such as larger highways to provide evacuation from hurricane-impacted areas, usually financed by taxpayers. If the global warming case is correct, the external cost of human economic activity can be the life of the planet.

Lakshmi Sarah in the May/June, 2019, issue of the Sierra Club magazine provides an excellent detailed account of the external costs of coal-fired power plants being built in India by the Indian conglomerate Tata with a loan from the International Finance Corporation, a branch of the World Bank. The ground water in the area has been ruined and is no longer drinkable. Farmers are no longer able to grow crops on half of the area farmland. Heated wastewater that is dumped into the Gulf of Kutch is destroying fishing. The ecology and the livelihoods of the population are essentially destroyed. None of these costs are born by the private power companies.

Tired of being doormats for capitalists and the World Bank, the residents of the affected provinces rebelled. They have succeeded in getting their case before the US Supreme Court. It seems that the International Finance Corporation is so accustomed to financing projects that produce large external costs that it overlooked its obligation to examine the environmental impact of the projects it finances. This oversight resulted in Indian farmers and fishermen getting their case before the US Supreme Court. The International Finance Corporation’s lawyers argued that the World Bank lending agency had “absolute immunity.” The Supreme Court said no and remanded the case to the circuit court to rule on the damages.

Perhaps the most surprising thing about this apparent victory for ordinary faraway little people in an American court against the World Bank, a principle instrument of American imperialism, is that the Trump administration appeared in court as a friend of the Indian farmers and fishermen. The US Solicitor General, represented by Jonathan Ellis, rejected the notion that international orgnizations have absolute immunity. The Establishment exists on its immunity. Here we see the ultimate reason that the ruling Establishment wants rid of Trump.

Already the senior staff of the International Finance Corporation have come to the realization that they have other responsibilities than just to shuffle money out the lending shute. If the Indian farmers and fishermen succeed in protecting themselves from ruination by external costs, perhaps Americans who suffer external costs will follow their lead.

Perhaps economists will also come to the realization that they owe us accurate GDP accounting and not fanciful accounts that serve elite wealth in the financialized economy.

Offering Choice but Delivering Tyranny: The Corporate Capture of Agriculture

Posted on September 24, 2019 by Reid Mukai

By Colin Todhunter

Source: Off-Guardian

Many lobbyists talk a lot about critics of genetic engineering technology denying choice to farmers. They say that farmers should have access to a range of tools and technologies to maximise choice and options.

At the same time, somewhat ironically, they decry organic agriculture and proven agroecological approaches, presumably because these practices have no need for the proprietary inputs of the global agrochemical/agritech corporations they are in bed with.

And presumably because agroecology represents liberation from the tyranny of these profiteering, environment-damaging global conglomerates.

It is fine to talk about ‘choice’ but we do not want to end up offering a false choice (rolling out technologies that have little value and only serve to benefit those who control the technology), to unleash an innovation that has an adverse impact on others or to manipulate a situation whereby only one option is available because other options have been deliberately removed. And we would certainly not wish to roll out a technology that traps farmers on a treadmill that they find difficult to get off.

Surely, a responsible approach for rolling out important (potentially transformative) technologies would have to consider associated risks, including social, economic and health impacts.

Take the impact of the Green Revolution in India, for instance. Sold on the promise that hybrid seeds and associated chemical inputs would enhance food security on the basis of higher productivity, agriculture was transformed, especially in Punjab. But to gain access to seeds and chemicals many farmers had to take out loans and debt became (and remains) a constant worry.

Many became impoverished and social relations within rural communities were radically altered: previously, farmers would save and exchange seeds but now they became dependent on unscrupulous money lenders, banks and seed manufacturers and suppliers. Vandana Shiva in The Violence of the Green Revolution (1989) describes the social marginalisation and violence that accompanied the process.

On a macro level, the Green Revolution conveniently became tied to an international (neo-colonial) system of trade based on chemical-dependent agro-export mono-cropping linked to loans, sovereign debt repayment and World Bank/IMF structural adjustment (privatisation/deregulation) directives.

Many countries in the Global South were deliberately turned into food deficit regions, dependent on (US) agricultural imports and strings-attached aid.

The process led to the massive displacement of the peasantry and, according to the academics Eric Holt-Giménez et al, (Food rebellions: Crisis and the hunger for Justice, 2009), the consolidation of the global agri-food oligopolies and a shift in the global flow of food: developing countries produced a billion-dollar yearly surplus in the 1970s; they were importing $11 billion a year by 2004.

And it’s not as though the Green Revolution delivered on its promises.

In India, it merely led to more wheat in the diet, while food productivity per capita showed no increased or even actually decreased (see New Histories of the Green Revolution by Glenn Stone). And, as described by Bhaskar Save in his open letter (2006) to officials, it had dire consequences for diets, the environment, farming, health and rural communities.

The ethics of the Green Revolution – at least it was rolled out with little consideration for these impacts – leave much to be desired.

As the push to drive GM crops into India’s fields continues (the second coming of the green revolution – the gene revolution), we should therefore take heed. To date, the track record of GMOs is unimpressive, but the adverse effects on many smallholder farmers are already apparent (see Hybrid Bt cotton: a stranglehold on subsistence farmers in India by A P Gutierrez).

Aside from looking at the consequences of technology roll outs, we should, when discussing choice, also account for the procedures and decisions that were made which resulted in technologies coming to market in the first place.

Steven Druker, in his book Altered Genes, Twisted Truth, argues that the decision to commercialise GM seeds and food in the US amounted to a subversion of processes put in place to serve the public interest.

The result has been a technology roll out which could result (is resulting) in fundamental changes to the genetic core of the world’s food. This decision ultimately benefited Monsanto’s bottom line and helped the US gain further leverage over global agriculture.

We must therefore put glib talk of the denial of technology by critics to one side if we are to engage in a proper discussion of choice. Any such discussion would account for the nature of the global food system and the dynamics and policies that shape it. This would include looking at how global corporations have captured the policy agenda for agriculture, including key national and international policy-making bodies, and the role of the WTO and World Bank.

Choice is also about the options that could be made available, but which have been closed off or are not even considered. In Ethiopia, for example, agroecology has been scaled up across the entire Tigray region, partly due to enlightened political leaders and the commitment of key institutions.

However, in places where global agribusiness/agritech corporations have leveraged themselves into strategic positions, their interests prevail. From the false narrative that industrial agriculture is necessary to feed the world to providing lavish research grants and the capture of important policy-making institutions, these firms have secured a thick legitimacy within policymakers’ mindsets and mainstream discourse.

As a result, agroecological approaches are marginalised and receive scant attention and support.

Monsanto had a leading role in drafting the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights to create seed monopolies. The global food processing industry wrote the WTO Agreement on the Application of Sanitary and Phytosanitary Measures.

Whether it involves Codex or the US-India Knowledge Initiative on Agriculture aimed at restructuring (destroying) Indian agriculture, the powerful agribusiness/food lobby has secured privileged access to policy makers and sets the policy agenda.

From the World Bank’s ‘enabling the business of agriculture’ to the Gates Foundation’s role in opening up African agriculture to global food and agribusiness oligopolies, democratic procedures at sovereign state levels are being bypassed to impose seed monopolies and proprietary inputs on farmers and to incorporate them into a global supply chain dominated by powerful corporations.

We have the destruction of indigenous farming in Africa as well as the ongoing dismantling of Indian agriculture and the deliberate impoverishment of Indian farmers at the behest of transnational agribusiness. Where is the democratic ‘choice’?

It has been usurped by corporate-driven Word Bank bondage (India is its biggest debtor in the bank’s history) and by a trade deal with the US that sacrificed Indian farmers for the sake of developing its nuclear sector.

Similarly, ‘aid’ packages for Ukraine – on the back of a US-supported coup – are contingent on Western corporations taking over strategic aspects of the economy. And agribusiness interests are at the forefront. Something which neoliberal apologists are silent on as they propagandise about choice, and democracy.

Ukraine’s agriculture sector is being opened up to Monsanto/Bayer. Iraq’s seed laws were changed to facilitate the entry of Monsanto.

India’s edible oils sector was undermined to facilitate the entry of Cargill. And Bayer’s hand is possibly behind the ongoing strategy to commercialise GM mustard in India. Whether on the back of militarism, secretive trade deals or strings-attached loans, global food and agribusiness conglomerates secure their interests and have scant regard for choice or democracy.

The ongoing aim is to displace localised, indigenous methods of food production and allow transnational companies to take over, tying farmers and regions to a system of globalised production and supply chains dominated by large agribusiness and retail interests. Global corporations with the backing of their host states, are taking over food and agriculture nation by nation.

Many government officials, the media and opinion leaders take this process as a given. They also accept that (corrupt) profit-driven transnational corporations have a legitimate claim to be owners and custodians of natural assets (the ‘commons’).

There is the premise that water, seeds, food, soil and agriculture should be handed over to these conglomerates to milk for profit, under the pretence these entities are somehow serving the needs of humanity.

Ripping land from peasants and displacing highly diverse and productive smallholder agriculture, rolling out very profitable but damaging technologies, externalising the huge social, environmental and health costs of the prevailing neoliberal food system and entire nations being subjected to the policies outlined above: how is any of it serving the needs of humanity?

It is not. Food is becoming denutrified, unhealthy and poisoned with chemicals and diets are becoming less diverse. There is a loss of plant and insect diversity, which threatens food security, soils are being degraded, water tables polluted and depleted and millions of smallholder farmers, so vital to global food production, are being pushed into debt in places like India and squeezed off their land and out of farming.

It is time to place natural assets under local ownership and to develop them in the public interest according to agroecological principles. This involves looking beyond the industrial yield-output paradigm and adopting a systems approach to food and agriculture that accounts for local food security and sovereignty, cropping patterns to ensure diverse nutrition production per acre, water table stability and good soil structure. It also involves pushing back against the large corporations that hold sway over the global food system and more generally challenging the leverage that private capital has over all our lives.

That’s how you ensure liberation from tyranny and support genuine choice.

Colin Todhunter is an independent journalist who writes on development, environmental issues, politics, food and agriculture. He was named in August 2018 by Transcend Media Services as one of 400 Living Peace and Justice Leaders and Models in recognition of his journalism.

Saker interview with Michael Hudson on Venezuela, February 7, 2019

Posted on February 11, 2019 by Reid Mukai

By The Saker and Michael Hudson

Source: The Saker

Introduction: There is a great deal of controversy about the true shape of the Venezuelan economy and whether Hugo Chavez’ and Nicholas Maduro’s reform and policies were crucial for the people of Venezuela or whether they were completely misguided and precipitated the current crises. Anybody and everybody seems to have very strong held views about this. But I don’t simply because I lack the expertise to have any such opinions. So I decided to ask one of the most respected independent economists out there, Michael Hudson, for whom I have immense respect and whose analyses (including those he co-authored with Paul Craig Roberts) seem to be the most credible and honest ones you can find. In fact, Paul Craig Roberts considers Hudson the “best economist in the world“!
I am deeply grateful to Michael for his replies which, I hope, will contribute to a honest and objective understanding of what really is taking place in Venezuela.
The Saker

The Saker: Could you summarize the state of Venezuela’s economy when Chavez came to power?

Michael Hudson: Venezuela was an oil monoculture. Its export revenue was spent largely on importing food and other necessities that it could have produced at home. Its trade was largely with the United States. So despite its oil wealth, it ran up foreign debt.

From the outset, U.S. oil companies have feared that Venezuela might someday use its oil revenues to benefit its overall population instead of letting the U.S. oil industry and its local comprador aristocracy siphon off its wealth. So the oil industry – backed by U.S. diplomacy – held Venezuela hostage in two ways.

First of all, oil refineries were not built in Venezuela, but in Trinidad and in the southern U.S. Gulf Coast states. This enabled U.S. oil companies – or the U.S. Government – to leave Venezuela without a means of “going it alone” and pursuing an independent policy with its oil, as it needed to have this oil refined. It doesn’t help to have oil reserves if you are unable to get this oil refined so as to be usable.

Second, Venezuela’s central bankers were persuaded to pledge their oil reserves and all assets of the state oil sector (including Citgo) as collateral for its foreign debt. This meant that if Venezuela defaulted (or was forced into default by U.S. banks refusing to make timely payment on its foreign debt), bondholders and U.S. oil majors would be in a legal position to take possession of Venezuelan oil assets.

These pro-U.S. policies made Venezuela a typically polarized Latin American oligarchy. Despite being nominally rich in oil revenue, its wealth was concentrated in the hands of a pro-U.S. oligarchy that let its domestic development be steered by the World Bank and IMF. The indigenous population, especially its rural racial minority as well as the urban underclass, was excluded from sharing in the country’s oil wealth. The oligarchy’s arrogant refusal to share the wealth, or even to make Venezuela self-sufficient in essentials, made the election of Hugo Chavez a natural outcome.

The Saker: Could you outline the various reforms and changes introduced by Hugo Chavez? What did he do right, and what did he do wrong?

Michael Hudson: Chavez sought to restore a mixed economy to Venezuela, using its government revenue – mainly from oil, of course – to develop infrastructure and domestic spending on health care, education, employment to raise living standards and productivity for his electoral constituency.

What he was unable to do was to clean up the embezzlement and built-in rake-off of income from the oil sector. And he was unable to stem the capital flight of the oligarchy, taking its wealth and moving it abroad – while running away themselves.

This was not “wrong”. It merely takes a long time to change an economy’s disruption – while the U.S. is using sanctions and “dirty tricks” to stop that process.

The Saker: What are, in your opinion, the causes of the current economic crisis in Venezuela – is it primarily due to mistakes by Chavez and Maduro or is the main cause US sabotage, subversion and sanctions?

Michael Hudson: There is no way that’s Chavez and Maduro could have pursued a pro-Venezuelan policy aimed at achieving economic independence without inciting fury, subversion and sanctions from the United States. American foreign policy remains as focused on oil as it was when it invaded Iraq under Dick Cheney’s regime. U.S. policy is to treat Venezuela as an extension of the U.S. economy, running a trade surplus in oil to spend in the United States or transfer its savings to U.S. banks.

By imposing sanctions that prevent Venezuela from gaining access to its U.S. bank deposits and the assets of its state-owned Citco, the United States is making it impossible for Venezuela to pay its foreign debt. This is forcing it into default, which U.S. diplomats hope to use as an excuse to foreclose on Venezuela’s oil resources and seize its foreign assets much as Paul Singer hedge fund sought to do with Argentina’s foreign assets.

Just as U.S. policy under Kissinger was to make Chile’s “economy scream,” so the U.S. is following the same path against Venezuela. It is using that country as a “demonstration effect” to warn other countries not to act in their self-interest in any way that prevents their economic surplus from being siphoned off by U.S. investors.

The Saker: What in your opinion should Maduro do next (assuming he stays in power and the USA does not overthrow him) to rescue the Venezuelan economy?

Michael Hudson: I cannot think of anything that President Maduro can do that he is not doing. At best, he can seek foreign support – and demonstrate to the world the need for an alternative international financial and economic system.

He already has begun to do this by trying to withdraw Venezuela’s gold from the Bank of England and Federal Reserve. This is turning into “asymmetrical warfare,” threatening what to de-sanctify the dollar standard in international finance. The refusal of England and the United States to grant an elected government control of its foreign assets demonstrates to the entire world that U.S. diplomats and courts alone can and will control foreign countries as an extension of U.S. nationalism.

The price of the U.S. economic attack on Venezuela is thus to fracture the global monetary system. Maduro’s defensive move is showing other countries the need to protect themselves from becoming “another Venezuela” by finding a new safe haven and paying agent for their gold, foreign exchange reserves and foreign debt financing, away from the dollar, sterling and euro areas.

The only way that Maduro can fight successfully is on the institutional level, upping the ante to move “outside the box.” His plan – and of course it is a longer-term plan – is to help catalyze a new international economic order independent of the U.S. dollar standard. It will work in the short run only if the United States believes that it can emerge from this fight as an honest financial broker, honest banking system and supporter of democratically elected regimes. The Trump administration is destroying illusion more thoroughly than any anti-imperialist critic or economic rival could do!

Over the longer run, Maduro also must develop Venezuelan agriculture, along much the same lines that the United States protected and developed its agriculture under the New Deal legislation of the 1930s – rural extension services, rural credit, seed advice, state marketing organizations for crop purchase and supply of mechanization, and the same kind of price supports that the United States has long used to subsidize domestic farm investment to increase productivity.

The Saker: What about the plan to introduce a oil-based crypto currency? Will that be an effective alternative to the dying Venezuelan Bolivar?

Michael Hudson: Only a national government can issue a currency. A “crypto” currency tied to the price of oil would become a hedging vehicle, prone to manipulation and price swings by forward sellers and buyers. A national currency must be based on the ability to tax, and Venezuela’s main tax source is oil revenue, which is being blocked from the United States. So Venezuela’s position is like that of the German mark coming out of its hyperinflation of the early 1920s. The only solution involves balance-of-payments support. It looks like the only such support will come from outside the dollar sphere.

The solution to any hyperinflation must be negotiated diplomatically and be supported by other governments. My history of international trade and financial theory, Trade, Development and Foreign Debt, describes the German reparations problem and how its hyperinflation was solved by the Rentenmark.

Venezuela’s economic-rent tax would fall on oil, and luxury real estate sites, as well as monopoly prices, and on high incomes (mainly financial and monopoly income). This requires a logic to frame such tax and monetary policy. I have tried to explain how to achieve monetary and hence political independence for the past half-century. China is applying such policy most effectively. It is able to do so because it is a large and self-sufficient economy in essentials, running a large enough export surplus to pay for its food imports. Venezuela is in no such position. That is why it is looking to China for support at this time.

The Saker: How much assistance do China, Russia and Iran provide and how much can they do to help? Do you think that these three countries together can help counter-act US sabotage, subversion and sanctions?

Michael Hudson: None of these countries have a current capacity to refine Venezuelan oil. This makes it difficult for them to take payment in Venezuelan oil. Only a long-term supply contract (paid for in advance) would be workable. And even in that case, what would China and Russia do if the United States simply grabbed their property in Venezuela, or refused to let Russia’s oil company take possession of Citco? In that case, the only response would be to seize U.S. investments in their own country as compensation.

At least China and Russia can provide an alternative bank clearing mechanism to SWIFT, so that Venezuela can by pass the U.S. financial system and keep its assets from being grabbed at will by U.S. authorities or bondholders. And of course, they can provide safe-keeping for however much of Venezuela’s gold it can get back from New York and London.

Looking ahead, therefore, China, Russia, Iran and other countries need to set up a new international court to adjudicate the coming diplomatic crisis and its financial and military consequences. Such a court – and its associated international bank as an alternative to the U.S.-controlled IMF and World Bank – needs a clear ideology to frame a set of principles of nationhood and international rights with power to implement and enforce its judgments.

This would confront U.S. financial strategists with a choice: if they continue to treat the IMF, World Bank, ITO and NATO as extensions of increasingly aggressive U.S. foreign policy, they will risk isolating the United States. Europe will have to choose whether to remain a U.S. economic and military satellite, or to throw in its lot with Eurasia.

However, Daniel Yergin reports in the Wall Street Journal (Feb. 7) that China is trying to hedge its bets by opening a back-door negotiation with Guaido’s group, apparently to get the same deal that it has negotiated with Maduro’s government. But any such deal seems unlikely to be honored in practice, given U.S. animosity toward China and Guaido’s total reliance on U.S. covert support.

The Saker: Venezuela kept a lot of its gold in the UK and money in the USA. How could Chavez and Maduro trust these countries or did they not have another choice? Are there viable alternatives to New York and London or are they still the “only game in town” for the world’s central banks?

Michael Hudson: There was never real trust in the Bank of England or Federal Reserve, but it seemed unthinkable that they would refuse to permit an official depositor from withdrawing its own gold. The usual motto is “Trust but verify.” But the unwillingness (or inability) of the Bank of England to verify means that the formerly unthinkable has now arrived: Have these central banks sold this gold forward in the post-London Gold Pool and its successor commodity markets in their attempt to keep down the price so as to maintain the appearance of a solvent U.S. dollar standard.

Paul Craig Roberts has described how this system works. There are forward markets for currencies, stocks and bonds. The Federal Reserve can offer to buy a stock in three months at, say, 10% over the current price. Speculators will by the stock, bidding up the price, so as to take advantage of “the market’s” promise to buy the stock. So by the time three months have passed, the price will have risen. That is largely how the U.S. “Plunge Protection Team” has supported the U.S. stock market.

The system works in reverse to hold down gold prices. The central banks holding gold can get together and offer to sell gold at a low price in three months. “The market” will realize that with low-priced gold being sold, there’s no point in buying more gold and bidding its price up. So the forward-settlement market shapes today’s market.

The question is, have gold buyers (such as the Russian and Chinese government) bought so much gold that the U.S. Fed and the Bank of England have actually had to “make good” on their forward sales, and steadily depleted their gold? In this case, they would have been “living for the moment,” keeping down gold prices for as long as they could, knowing that once the world returns to the pre-1971 gold-exchange standard for intergovernmental balance-of-payments deficits, the U.S. will run out of gold and be unable to maintain its overseas military spending (not to mention its trade deficit and foreign disinvestment in the U.S. stock and bond markets). My book on Super-Imperialism explains why running out of gold forced the Vietnam War to an end. The same logic would apply today to America’s vast network of military bases throughout the world.

Refusal of England and the U.S. to pay Venezuela means that other countries means that foreign official gold reserves can be held hostage to U.S. foreign policy, and even to judgments by U.S. courts to award this gold to foreign creditors or to whoever might bring a lawsuit under U.S. law against these countries.

This hostage-taking now makes it urgent for other countries to develop a viable alternative, especially as the world de-dedollarizes and a gold-exchange standard remains the only way of constraining the military-induced balance of payments deficit of the United States or any other country mounting a military attack. A military empire is very expensive – and gold is a “peaceful” constraint on military-induced payments deficits. (I spell out the details in my Super Imperialism: The Economic Strategy of American Empire (1972), updated in German as Finanzimperium(2017).

The U.S. has overplayed its hand in destroying the foundation of the dollar-centered global financial order. That order has enabled the United States to be “the exceptional nation” able to run balance-of-payments deficits and foreign debt that it has no intention (or ability) to pay, claiming that the dollars thrown off by its foreign military spending “supply” other countries with their central bank reserves (held in the form of loans to the U.S. Treasury – Treasury bonds and bills – to finance the U.S. budget deficit and its military spending, as well as the largely military U.S. balance-of-payments deficit.

Given the fact that the EU is acting as a branch of NATO and the U.S. banking system, that alternative would have to be associated with the Shanghai Cooperation Organization, and the gold would have to be kept in Russia and/or China.

The Saker: What can other Latin American countries such as Bolivia, Nicaragua, Cuba and, maybe, Uruguay and Mexico do to help Venezuela?

Michael Hudson: The best thing neighboring Latin American countries can do is to join in creating a vehicle to promote de-dollarization and, with it, an international institution to oversee the writedown of debts that are beyond the ability of countries to pay without imposing austerity and thereby destroying their economies.

An alternative also is needed to the World Bank that would make loans in domestic currency, above all to subsidize investment in domestic food production so as to protect the economy against foreign food-sanctions – the equivalent of a military siege to force surrender by imposing famine conditions. This World Bank for Economic Acceleration would put the development of self-reliance for its members first, instead of promoting export competition while loading borrowers down with foreign debt that would make them prone to the kind of financial blackmail that Venezuela is experiencing.

Being a Roman Catholic country, Venezuela might ask for papal support for a debt write-down and an international institution to oversee the ability to pay by debtor countries without imposing austerity, emigration, depopulation and forced privatization of the public domain.

Two international principles are needed. First, no country should be obliged to pay foreign debt in a currency (such as the dollar or its satellites) whose banking system acts to prevents payment.

Second, no country should be obliged to pay foreign debt at the price of losing its domestic autonomy as a state: the right to determine its own foreign policy, to tax and to create its own money, and to be free of having to privatize its public assets to pay foreign creditors. Any such debt is a “bad loan” reflecting the creditor’s own irresponsibility or, even worse, pernicious asset grab in a foreclosure that was the whole point of the loan.

The Saker: Thank you very much for taking the time to reply to my questions!

Degrowth: closing the global wealth divide

Posted on January 23, 2019 by Reid Mukai

Contradicting the dominant paradigm that economic growth equals development, degrowth theorists argue that serious cutbacks are crucial to protect life on our planet.

By Riccardo Mastini

Source: ROAR

Today, some 4.3 billion people — more than 60 percent of the world’s population — live in debilitating poverty, struggling to survive on less than the equivalent of $5 per day (which is the mean average of all the national poverty lines in the Global South). Half do not have access to enough food. And these numbers have been growing steadily over the past few decades.

With these data, Jason Hickel, an anthropology professor and global development expert, starts his controversial book, The Divide: A Brief Guide to Global Inequality and Its Solutions, in which he meticulously and convincingly debunks the narrative told by the UN and the likes of Bill Gates and Steven Pinker. In fact, while the good-news story leads us to believe that poverty has been decreasing around the world, in reality the only places this holds true are in China and East Asia. And these are some of the only places in the world where free-market capitalism was not forcibly imposed by the World Bank and the IMF, allowing these governments to pursue state-led development policies and gradually liberalize their economies on their own terms.

Development agencies, NGOs and the world’s most powerful governments explain that the plight of poor countries is a technical problem — one that can be solved by adopting the right institutions and the right economic policies, by working hard and accepting a bit of help. As Hickel writes: “It is a familiar story, and a comforting one. It is one that we have all, at one time or another, believed and supported. It maintains an industry worth billions of dollars and an army of NGOs, charities and foundations seeking to end poverty through aid and charity.” But it’s against this narrative that Hickel takes aim.

ECONOMIC UNEQUAL EXCHANGE OVER THE CENTURIES

The main argument presented in the book is that the discourse of aid distracts us from seeing the broader picture. It hides the patterns of extraction that are actively causing the impoverishment of the Global South today and actively impeding meaningful development. “The charity paradigm obscures the real issues at stake: it makes it seem as though the West is ‘developing’ the Global South, when in reality the opposite is true. Rich countries aren’t developing poor countries; poor countries are effectively developing rich countries — and they have been since the late 15th century,” argues Hickel.

In the book it is laid bare for all to see that underdevelopment in the Global South is not a natural condition, but a consequence of the way Western powers have organized the world economic system.

It’s not that the $128 billion in aid disbursements that the West gives to the Global South every year doesn’t exist — it does. But if we broaden our view and look at it in context, we see that it is vastly outstripped by the financial resources that flow in the opposite direction.

If all of the financial resources that get transferred between rich and poor countries each year are tallied up, we find that in 2012, the last year of recorded data, developing countries received a little over $2 trillion, including all aid, investment and income from abroad. But more than twice that amount, some $5 trillion, flowed out of them in the same year. In other words, developing countries “sent” $3 trillion more to the rest of the world than they received.

What do these large outflows from the Global South consist of? “Well, some of it is payments on debt. Today, poor countries pay over $200 billion each year in interest alone to foreign creditors, much of it on old loans that have already been paid off many times over, and some of it on loans accumulated by greedy dictators,” states Hickel. Another major contributor is the income that foreigners make on their investments in developing countries and then repatriate. Think of all the profits that Shell extracts from Nigeria’s oil reserves, for example, or that Anglo American pulls out of South Africa’s gold mines.

But by far the biggest chunk of outflows has to do with capital flight. A big proportion of this takes place through “leakages” in the balance of payments between countries. Another takes place through an illegal practice known as “trade misinvoicing.” Basically, corporations report false prices on their trade invoices in order to spirit money out of developing countries directly into tax havens and secrecy jurisdictions. A similarly large amount flows out annually through “abusive transfer pricing”, a mechanism that multinational companies use to steal money from developing countries by shifting profits illegally between their own subsidiaries in different countries. But perhaps the most significant loss has to do with exploitation through trade.

Hickel explains that “from the onset of colonialism through to globalization, the main objective of the North has been to force down the cost of labor and goods bought from the South. In the past, colonial powers were able to dictate terms directly to their colonies. Today, while trade is technically “free,” rich countries are able to get their way because they have much greater bargaining power.” On top of this, trade agreements often prevent poor countries from protecting their workers in ways that rich countries do. And because multinational corporations now have the ability to scour the planet in search of the cheapest labor and goods, poor countries are forced to compete to drive costs down. As a result of all this, there is a yawning gap between the “real value” of the labor and goods that poor countries sell and the prices they are actually paid for them. This is what economists call “unequal exchange.”

Since the 1980s, countries of the West have been using their power as creditors to dictate economic and trade policies to indebted countries in the South, effectively governing them by remote control, without the need for bloody interventions. “Leveraging debt,” argues Hickel, “they imposed “structural adjustment programs” that reversed all the economic reforms that Global South countries had painstakingly enacted in the previous two decades. In the process, the West went so far as to ban the very protectionist and Keynesian policies that it had used for its own development, effectively kicking away the ladder to success.”

DEGROWTH FOR SUSTAINABLE AND FAIR LIVELIHOODS

Hickel then ponders over how — if these unfair trade and business practices were amended — poor countries could actually go about developing their economies following the same path as the one embraced by the Global North over the past two centuries. He references a study by the economist David Woodward in which the latter shows that given our existing economic model, poverty eradication can’t happen. Not that it probably won’t happen, but that it physically can’t. It is a structural impossibility.

He explains that:

Right now, the main strategy for eliminating poverty is to increase global GDP growth. The idea is that the yields of growth will gradually trickle down to improve the lives of the world’s poorest people. But all the data we have shows quite clearly that GDP growth doesn’t really benefit the poor. While global GDP per capita has grown by 65 percent since 1990, the number of people living on less than $5 a day has increased by more than 370 million. Why does growth not help reduce poverty? Because the yields of growth are very unevenly distributed. The poorest 60 percent of humanity receive only 5 percent of all new income generated by global growth. The other 95 percent of the new income goes to the richest 40 percent of people. And that’s under best-case-scenario conditions.

Given this distribution ratio, Woodward calculates that it will take more than 100 years to eradicate absolute poverty at $1.25 a day. At the more accurate level of $5 a day, eradicating poverty will take 207 years. To eradicate poverty at $5 a day, global GDP would have to increase to 175 times its present size. In other words, we need to extract, produce and consume 175 times more commodities than we presently do. It is worth pausing for a second to think about what this means. Even if such outlandish growth were possible, the consequences would be disastrous. We would quickly chew through our planet’s ecosystems, destroying the forests, the soils and, most importantly, the climate.

According to data compiled by researchers at the Global Footprint Network in Oakland, our planet only has enough ecological capacity for each of us to consume 1.8 “global hectares” annually — a standardized unit that accounts for resource use, waste, pollution and emissions. Anything over this means a degree of resource consumption that the Earth cannot replenish, or waste that it cannot absorb; in other words, it locks us into a pathway of progressive degradation. The figure of 1.8 global hectares is roughly what the average person in Ghana or Guatemala consumes.

By contrast, Europeans consume 4.7 global hectares per person, while in the US and Canada the average person consumes 8 — many times their fair share. To get a sense of how extreme this overconsumption is: if we were all to live like the average citizen of the average high-income country, we would require the ecological capacity equivalent to 3.4 Earths. Hickel elaborates:

Scientists tell us that even at existing levels of aggregate global consumption we are already overshooting our planet’s ecological capacity by about 60 percent each year. And all of this is just at our existing levels of aggregate economic activity — with the existing levels of consumption in rich and poor countries. If poor countries increase their consumption, which they will have to do to some extent in order to eradicate poverty, they will only tip us further towards disaster. Unless, that is, rich countries begin to consume less.

If we want to have a chance of keeping within the 2°C threshold — which the Paris Agreement on climate change sets as an absolute cap — we can emit no more than another 805 gigatons of CO2 at the global level. Now, let’s accept that poor countries will need to use a portion of this carbon budget in order to grow their incomes enough to eradicate poverty; after all, we know that for poor countries human development requires an increase in emissions, at least up to a relatively lowish point. This principle is already widely accepted in international agreements, which recognize that all countries have a “common but differentiated responsibility” to reduce emissions. Because poor countries did not contribute much to historical emissions, they have a right to use more of the carbon budget than rich countries do — at least enough to fulfill basic development goals (as I also argue in this article). This means that rich countries have to figure out how to make do with the remaining portion of the budget.

Professor Kevin Anderson, one of Britain’s leading climate scientists, has been devising potential scenarios for how to make this work. If we want to have a 50 percent chance of staying under 2°C, there’s basically only one feasible way to do it — assuming, of course, that negative emissions technologies is not a real option. In this scenario, poor countries can continue to grow their economies at the present rate until 2025, using up a disproportionate share of the global carbon budget. That’s not a very long time, so this strategy will only work to eradicate poverty if the gains from growth are distributed with a heavy bias towards the poor.

As Hickel writes: “The only way for rich countries to keep within what’s left of the carbon budget is to cut emissions aggressively, by about 10 percent per year. Efficiency improvements and clean energy technologies will contribute to reducing emissions by at most 4 percent per year, which gets them part of the way there. But to bridge the rest of the gap, rich countries are going to have to downscale production and consumption by around 6 percent each year. And poor countries are going to have to follow suit after 2025, downscaling economic activity by about 3 percent per year.” This strategy of downscaling the production and consumption of a country is called “degrowth.”

Hickel describes this visionary idea as follows: “All it means is easing the intensity of our economy, cutting the excesses of the very richest, sharing what we have instead of plundering the Earth for more, and liberating ourselves from the frenetic consumerism that we all know does nothing to improve our wellbeing or happiness.” And since the book first came out in 2017, Hickel has been developing an increasingly clearer position on how we can go about making such changes happen.

His thinking on degrowth was recently encapsulated in a captivating blog exchange he had with Branko Milanović, another global development expert. But Milanović still maintains that economic growth should be at the core of poverty relief. Paraphrasing a passage from Kate Raworth’s Doughnut Economics, we could summarize Milanović’s position as “economic growth is still necessary, and so it must be possible,” while Hickel argues that “economic growth is no longer possible, and so it cannot be necessary.” I side with the latter, simply because the laws of physics trump the laws of economics.

In light of this, perhaps we should regard countries like Costa Rica not as underdeveloped, but rather as appropriately developed. We should look at societies where people live long and happy lives at low levels of income and consumption not as backwaters that need to be developed according to Western models, but as exemplars of efficient living — and begin to call on rich countries to cut their excess consumption.

Exposing the Giants: The Global Power Elite

Posted on September 3, 2018 by Reid Mukai

Diego Rivera, Man at the Crossroads/Man, Controller of the Universe, 1933

By Robert J. Burrowes

Developing the tradition charted by C. Wright Mills in his 1956 classic The Power Elite, in his latest book, Professor Peter Phillips starts by reviewing the transition from the nation state power elites described by authors such as Mills to a transnational power elite centralized on the control of global capital.

Thus, in his just-released study Giants: The Global Power Elite, Phillips, a professor of political sociology at Sonoma State University in the USA, identifies the world’s top seventeen asset management firms, such as BlackRock and J.P Morgan Chase, each with more than one trillion dollars of investment capital under management, as the ‘Giants’ of world capitalism. The seventeen firms collectively manage more than $US41.1 trillion in a self-invested network of interlocking capital that spans the globe.

This $41 trillion represents the wealth invested for profit by thousands of millionaires, billionaires and corporations. The seventeen Giants operate in nearly every country in the world and are ‘the central institutions of the financial capital that powers the global economic system’. They invest in anything considered profitable, ranging from ‘agricultural lands on which indigenous farmers are replaced by power elite investors’ to public assets (such as energy and water utilities) to war.

In addition, Phillips identifies the most important networks of the Global Power Elite and the individuals therein. He names 389 individuals (a small number of whom are women and a token number of whom are from countries other than the United States and the wealthier countries of Western Europe) at the core of the policy planning nongovernmental networks that manage, facilitate and defend the continued concentration of global capital. The Global Power Elite perform two key uniting functions, he argues: they provide ideological justifications for their shared interests (promulgated through their corporate media), and define the parameters of action for transnational governmental organizations and capitalist nation-states.

More precisely, Phillips identifies the 199 directors of the seventeen global financial Giants and offers short biographies and public information on their individual net wealth. These individuals are closely interconnected through numerous networks of association including the World Economic Forum, the International Monetary Conference, university affiliations, various policy councils, social clubs, and cultural enterprises. For a taste of one of these clubs, see this account of The Links in New York. As Phillips observes: ‘It is certainly safe to conclude they all know each other personally or know of each other in the shared context of their positions of power.’

The Giants, Phillips documents, invest in each other but also in many hundreds of investment management firms, many of which are near-Giants. This results in tens of trillions of dollars coordinated in a single vast network of global capital controlled by a very small number of people. ‘Their constant objective is to find enough safe investment opportunities for a return on capital that allows for continued growth. Inadequate capital-placement opportunities lead to dangerous speculative investments, buying up of public assets, and permanent war spending.’

Because the directors of these seventeen asset management firms represent the central core of international capital, ‘Individuals can retire or pass away, and other similar people will move into their place, making the overall structure a self-perpetuating network of global capital control. As such, these 199 people share a common goal of maximum return on investments for themselves and their clients, and they may seek to achieve returns by any means necessary – legal or not…. the institutional and structural arrangements within the money management systems of global capital relentlessly seek ways to achieve maximum return on investment, and … the conditions for manipulations – legal or not – are always present.’

Like some researchers before him, Phillips identifies the importance of those transnational institutions that serve a unifying function. The World Bank, International Monetary Fund, G20, G7, World Trade Organization (WTO), World Economic Forum (WEF), Trilateral Commission, Bilderberg Group, Bank for International Settlements, Group of 30 (G30), the Council on Foreign Relations and the International Monetary Conference serve as institutional mechanisms for consensus building within the transnational capitalist class, and power elite policy formulation and implementation. ‘These international institutions serve the interests of the global financial Giants by supporting policies and regulations that seek to protect the free, unrestricted flow of capital and debt collection worldwide.’

But within this network of transnational institutions, Phillips identifies two very important global elite policy-planning organizations: the Group of Thirty (which has 32 members) and the extended executive committee of the Trilateral Commission (which has 55 members). These nonprofit corporations, which each have a research and support staff, formulate elite policy and issue instructions for their implementation by the transnational governmental institutions like the G7, G20, IMF, WTO, and World Bank. Elite policies are also implemented following instruction of the relevant agent, including governments, in the context. These agents then do as they are instructed. Thus, these 85 members (because two overlap) of the Group of Thirty and the Trilateral Commission comprise a central group of facilitators of global capitalism, ensuring that ‘global capital remains safe, secure, and growing’.

So, while many of the major international institutions are controlled by nation-state representatives and central bankers (with proportional power exercised by dominant financial supporters such as the United States and European Union countries), Phillips is more concerned with the transnational policy groups that are nongovernmental because these organizations ‘help to unite TCC power elites as a class’ and the individuals involved in these organizations facilitate world capitalism. ‘They serve as policy elites who seek the continued growth of capital in the world.’

Developing this list of 199 directors of the largest money management firms in the world, Phillips argues, is an important step toward understanding how capitalism works globally today. These global power elite directors make the decisions regarding the investment of trillions of dollars. Supposedly in competition, the concentrated wealth they share requires them to cooperate for their greater good by identifying investment opportunities and shared risk agreements, and working collectively for political arrangements that create advantages for their profit-generating system as a whole.

Their fundamental priority is to secure an average return on investment of 3 to 10 percent, or even more. The nature of any investment is less important than what it yields: continuous returns that support growth in the overall market. Hence, capital investment in tobacco products, weapons of war, toxic chemicals, pollution, and other socially destructive goods and services are judged purely by their profitability. Concern for the social and environmental costs of the investment are non-existent. In other words, inflicting death and destruction are fine because they are profitable.

So what is the global elite’s purpose? In a few sentences Phillips characterizes it thus: The elite is largely united in support of the US/NATO military empire that prosecutes a repressive war against resisting groups – typically labeled ‘terrorists’ – around the world. The real purpose of ‘the war on terror’ is defense of transnational globalization, the unimpeded flow of financial capital around the world, dollar hegemony and access to oil; it has nothing to do with repressing terrorism which it generates, perpetuates and finances to provide cover for its real agenda. This is why the United States has a long history of CIA and military interventions around the world ostensibly in defense of ‘national interests’.

Wealth and Power

An interesting point that emerges for me from reading Phillips thoughtful analysis is that there is a clear distinction between those individuals and families who have wealth and those individuals who have (sometimes significantly) less wealth (which, nevertheless, is still considerable) but, through their positions and connections, wield a great deal of power. As Phillips explains this distinction, ‘the sociology of elites is more important than particular elite individuals and their families’. Just 199 individuals decide how more than $40 trillion will be invested. And this is his central point. Let me briefly elaborate.

There are some really wealthy families in the world, notably including the families Rothschild (France and the United Kingdom), Rockefeller (USA), Goldman-Sachs (USA), Warburgs (Germany), Lehmann (USA), Lazards (France), Kuhn Loebs (USA), Israel Moses Seifs (Italy), Al-Saud (Saudi Arabia), Walton (USA), Koch (USA), Mars (USA), Cargill-MacMillan (USA) and Cox (USA). However, not all of these families overtly seek power to shape the world as they wish.

Similarly, the world’s extremely wealthy individuals such as Jeff Bezos (USA), Bill Gates (USA), Warren Buffett (USA), Bernard Arnault (France), Carlos Slim Helu (Mexico) and Francoise Bettencourt Meyers (France) are not necessarily connected in such a way that they exercise enormous power. In fact, they may have little interest in power as such, despite their obvious interest in wealth.

In essence, some individuals and families are content to simply take advantage of how capitalism and its ancilliary governmental and transnational instruments function while others are more politically engaged in seeking to manipulate major institutions to achieve outcomes that not only maximize their own profit and hence wealth but also shape the world itself.

So if you look at the list of 199 individuals that Phillips identifies at the centre of global capital, it does not include names such as Bezos, Gates, Buffett, Koch, Walton or even Rothschild, Rockefeller or Windsor (the Queen of England) despite their well-known and extraordinary wealth. As an aside, many of these names are also missing from the lists compiled by groups such as Forbes and Bloomberg, but their absence from these lists is for a very different reason given the penchant for many really wealthy individuals and families to avoid certain types of publicity and their power to ensure that they do.

In contrast to the names just listed, in Phillips’ analysis names like Laurence (Larry) Fink (Chairman and CEO of BlackRock), James (Jamie) Dimon (Chairman and CEO of JPMorgan Chase) and John McFarlane (Chairman of Barclays Bank), while not as wealthy as those listed immediately above, wield far more power because of their positions and connections within the global elite network of 199 individuals.

Predictably then, Phillips observes, these three individuals have similar lifestyles and ideological orientations. They believe capitalism is beneficial for the world and while inequality and poverty are important issues, they believe that capital growth will eventually solve these problems. They are relatively non-expressive about environmental issues, but recognize that investment opportunities may change in response to climate ‘modifications’. As millionaires they own multiple homes. They attended elite universities and rose quickly in international finance to reach their current status as giants of the global power elite. ‘The institutions they manage have been shown to engage in illegal collusions with others, but the regulatory fines by governments are essentially seen as just part of doing business.’

In short, as I would characterize this description: They are devoid of a legal or moral framework to guide their actions, whether in relation to business, fellow human beings, war or the environment and climate. They are obviously typical of the elite.

Any apparent concern for people, such as that expressed by Fink and Dimon in response to the racist violence in Charlottesville, USA in August 2017, is simply designed to promote ‘stability’ or more precisely, a stable (that is, profitable) investment and consumer climate.

The lack of concern for people and issues that might concern many of us is also evident from a consideration of the agenda at elite gatherings. Consider the International Monetary Conference. Founded in 1956, it is a private yearly meeting of the top few hundred bankers in the world. The American Bankers Association (ABA) serves as the secretariat for the conference. But, as Phillips notes: ‘Nothing on the agenda seems to address the socioeconomic consequences of investments to determine the impacts on people and the environment.’ A casual perusal of the agenda at any elite gathering reveals that this comment applies equally to any elite forum. See, for example, the agenda of the recent WEF meeting in Davos. Any talk of ‘concern’ is misleading rhetoric.

Hence, in the words of Phillips: The 199 directors of the global Giants are ‘a very select set of people. They all know each other personally or know of each other. At least 69 have attended the annual World Economic Forum, where they often serve on panels or give public presentations. They mostly attended the same elite universities, and interact in upperclass social setting[s] in the major cities of the world. They all are wealthy and have significant stock holdings in one or more of the financial Giants. They are all deeply invested in the importance of maintaining capital growth in the world. Some are sensitive to environmental and social justice issues, but they seem to be unable to link these issues to global capital concentration.’

Of course, the global elite cannot manage the world system alone: the elite requires agents to perform many of the functions necessary to control national societies and the individuals within them. ‘The interests of the Global Power Elite and the TCC are fully recognized by major institutions in society. Governments, intelligence services, policymakers, universities, police forces, military, and corporate media all work in support of their vital interests.’

In other words, to elaborate Phillips’ point and extend it a little, through their economic power, the Giants control all of the instruments through which their policies are implemented. Whether it be governments, national military forces, ‘military contractors’ or mercenaries (with at least $200 billion spent on private security globally, the industry currently employs some fifteen million people worldwide) used both in ‘foreign’ wars but also likely deployed in future for domestic control, key ‘intelligence’ agencies, legal systems and police forces, major nongovernment organizations, or the academic, educational, ‘public relations propaganda’, corporate media, medical, psychiatric and pharmaceutical industries, all instruments are fully responsive to elite control and are designed to misinform, deceive, disempower, intimidate, repress, imprison (in a jail or psychiatric ward), exploit and/or kill (depending on the constituency) the rest of us, as is readily evident.

Defending Elite Power

Phillips observes that the power elite continually worries about rebellion by the ‘unruly exploited masses’ against their structure of concentrated wealth. This is why the US military empire has long played the role of defender of global capitalism. As a result, the United States has more than 800 military bases (with some scholars suggesting 1,000) in 70 countries and territories. In comparison, the United Kingdom, France, and Russia have about 30 foreign bases. In addition, US military forces are now deployed in 70 percent of the world’s nations with US Special Operations Command (SOCOM) having troops in 147 countries, an increase of 80 percent since 2010. These forces conduct counterterrorism strikes regularly, including drone assassinations and kill/capture raids.

‘The US military empire stands on hundreds of years of colonial exploitation and continues to support repressive, exploitative governments that cooperate with global capital’s imperial agenda. Governments that accept external capital investment, whereby a small segment of a country’s elite benefits, do so knowing that capital inevitably requires a return on investment that entails using up resources and people for economic gain. The whole system continues wealth concentration for elites and expanded wretched inequality for the masses….

‘Understanding permanent war as an economic relief valve for surplus capital is a vital part of comprehending capitalism in the world today. War provides investment opportunity for the Giants and TCC elites and a guaranteed return on capital. War also serves a repressive function of keeping the suffering masses of humanity afraid and compliant.’

As Phillips elaborates: This is why defense of global capital is the prime reason that NATO countries now account for 85 percent of the world’s military spending; the United States spends more on the military than the rest of the world combined.

In essence, ‘the Global Power Elite uses NATO and the US military empire for its worldwide security. This is part of an expanding strategy of US military domination around the world, whereby the US/ NATO military empire, advised by the power elite’s Atlantic Council, operates in service to the Transnational Corporate Class for the protection of international capital everywhere in the world’.

This entails ‘further pauperization of the bottom half of the world’s population and an unrelenting downward spiral of wages for 80 percent of the world. The world is facing economic crisis, and the neoliberal solution is to spend less on human needs and more on security. It is a world of financial institutions run amok, where the answer to economic collapse is to print more money through quantitative easing, flooding the population with trillions of new inflation-producing dollars. It is a world of permanent war, whereby spending for destruction requires further spending to rebuild, a cycle that profits the Giants and global networks of economic power. It is a world of drone killings, extrajudicial assassinations, death, and destruction, at home and abroad.’

Where is this all heading?

So what are the implications of this state of affairs? Phillips responds unequivocally: ‘This concentration of protected wealth leads to a crisis of humanity, whereby poverty, war, starvation, mass alienation, media propaganda, and environmental devastation are reaching a species-level threat. We realize that humankind is in danger of possible extinction’.

He goes on to state that the Global Power Elite is probably the only entity ‘capable of correcting this condition without major civil unrest, war, and chaos’ and elaborates an important aim of his book: to raise awareness of the importance of systemic change and the redistribution of wealth among both the book’s general readers but also the elite, ‘in the hope that they can begin the process of saving humanity.’ The book’s postscript is a ‘A Letter to the Global Power Elite’, co-signed by Phillips and 90 others, beseeching the elite to act accordingly.

‘It is no longer acceptable for you to believe that you can manage capitalism to grow its way out of the gross inequalities we all now face. The environment cannot accept more pollution and waste, and civil unrest is everywhere inevitable at some point. Humanity needs you to step up and insure that trickle-down becomes a river of resources that reaches every child, every family, and all human beings. We urge you to use your power and make the needed changes for humanity’s survival.’

But he also emphasizes that nonviolent social movements, using the Universal Declaration of Human Rights as a moral code, can accelerate the process of redistributing wealth by pressuring the elite into action.

Conclusion

Peter Phillips has written an important book. For those of us interested in understanding elite control of the world, this book is a vital addition to the bookshelf. And like any good book, as you will see from my comments both above and below, it raised more questions for me even while it answered many.

As I read Phillips’ insightful and candid account of elite behavior in this regard, I am reminded, yet again, that the global power elite is extraordinarily violent and utterly insane: content to kill people in vast numbers (whether through starvation or military violence) and destroy the biosphere for profit, with zero sense of humanity’s now limited future. See ‘The Global Elite is Insane Revisited’ and ‘Human Extinction by 2026? A Last Ditch Strategy to Fight for Human Survival’ with more detailed explanations for the violence and insanity here: ‘Why Violence?’ and ‘Fearless Psychology and Fearful Psychology: Principles and Practice ’.

For this reason I do not share his faith in moral appeals to the elite, as articulated in the letter in his postscript. It is fine to make the appeal but history offers no evidence to suggest that there will be any significant response. The death and destruction inflicted by elites is highly profitable, centuries-old and ongoing. It will take powerful, strategically-focused nonviolent campaigns (or societal collapse) to compel the necessary changes in elite behavior. Hence, I fully endorse his call for nonviolent social movements to compel elite action where we cannot make the necessary changes without their involvement. See ‘A Nonviolent Strategy to End Violence and Avert Human Extinction’ and Nonviolent Campaign Strategy.

I would also encourage independent action, in one or more of several ways, by those individuals and communities powerful enough to do so. This includes nurturing more powerful individuals by making ‘My Promise to Children’, participating in ‘The Flame Tree Project to Save Life on Earth’ and signing the online pledge of ‘The People’s Charter to Create a Nonviolent World’.

Fundamentally, Giants: The Global Power Elite is a call to action. Professor Peter Phillips is highly aware of our predicament – politically, socially, economically, environmentally and climatically – and the critical role played by the global power elite in generating that predicament.

If we cannot persuade the global power elite to respond sensibly to that predicament, or nonviolently compel it to do so, humanity’s time on Earth is indeed limited.

Biodata: Robert J. Burrowes has a lifetime commitment to understanding and ending human violence. He has done extensive research since 1966 in an effort to understand why human beings are violent and has been a nonviolent activist since 1981. He is the author of ‘Why Violence?’ http://tinyurl.com/whyviolence His email address is flametree@riseup.net and his website is here. http://robertjburrowes.wordpress.com

Robert J. Burrowes
P.O. Box 68
Daylesford, Victoria 3460
Australia

Email: flametree@riseup.net

Websites:
Nonviolence Charter
Flame Tree Project to Save Life on Earth
‘Why Violence?’
Feelings First
Nonviolent Campaign Strategy
Nonviolent Defense/Liberation Strategy
Anita: Songs of Nonviolence
Robert Burrowes
Global Nonviolence Network

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After the Crash

Dispatches From a Long Recovery (Est. 10/2024)

Tag Archives: World Bank

Offering Choice but Delivering Tyranny: The Corporate Capture of Agriculture

Saker interview with Michael Hudson on Venezuela, February 7, 2019