World Depression: Regional Wars and the Decline of the US Empire

[MikeWB]

World Depression: Regional Wars and the Decline of the US Empire

Part I

by Prof. James Petras

http://.globalresearch.ca/index.php?con ... &aid=12955

All the idols of capitalism over the past three decades crashed. The assumptions and presumptions, paradigm and prognosis of indefinite progress under liberal free market capitalism have been tested and have failed. We are living the end of an entire epoch: Experts everywhere witness the collapse of the US and world financial system, the absence of credit for trade and the lack of financing for investment. A world depression, in which upward of a quarter of the world's labor force will be unemployed, is looming. The biggest decline in trade in recent world history – down 40% year to year – defines the future. The immanent bankruptcies of the biggest manufacturing companies in the capitalist world haunt Western political leaders. The 'market' as a mechanism for allocating resources and the government of the US as the 'leader' of the global economy have been discredited. (Financial Times, March 9, 2009) All the assumptions about 'self-stabilizing markets' are demonstrably false and outmoded. The rejection of public intervention in the market and the advocacy of supply-side economics have been discredited even in the eyes of their practitioners. Even official circles recognize that 'inequality of income' contributed to the onset of the economic crash and should be corrected. Planning, public ownership, nationalization are on the agenda while socialist alternatives have become almost respectable. ...

Contrary to the theorists who argue that 'finance' and 'post-industrial' capitalism have 'destroyed' or de-industrialized the world economy and put in its place a kind of "casino" or speculative capital, in fact, we have witnessed the most spectacular long-term growth of industrial capital employing more industrial and salaried workers than ever in history. Driven by rising rates of profit, large scale and long-term investments have been the motor force for the penetration by industrial and related capital of the most remote underdeveloped regions of the world. New and old capitalist countries spawned enormous economic empires, breaking down political and cultural barriers to incorporating and exploiting billions of new and old workers in a relentless process. As competition from the newly industrialized countries intensified, and as the rising mass of profits exceeded the capacity to reinvest them most profitably in the older capitalist centers, masses of capital migrated to Asia, Latin America, Eastern Europe, and to a lesser degree, into the Middle East, Southern Africa.

 Huge surplus profits spilled over into services, including finance, real estate, insurance, large-scale real estate and urban lands.

 The dynamic growth of capitalism's technological innovations found expression in greater social and political power – dwarfing the organization of labor, limiting its bargaining power and multiplying its profits. With the growth of world markets, workers were seen merely as 'costs of production' not as final consumers. Wages stagnated; social benefits were limited, curtailed or shifted onto workers. Under conditions of dynamic capitalist growth, the state and state policy became their absolute instrument: restrictions, controls, regulation were weakened. What was dubbed "neo-liberalism" opened new areas for investment of surplus profits: public enterprises, land, resources and banks were privatized.

 As competition intensified, as new industrial powers emerged in Asia, US capital increasingly invested in financial activity. Within the financial circuits it elaborated a whole series of financial instruments, which drew on the growing wealth and profits from the productive sectors.

 US capital did not 'de-industrialize' – it relocated to China, Korea and other centers of growth, not because of "falling profits" but because of surplus profits and greater profits overseas.

 Capital's opening in China provided hundreds of millions of workers with jobs subject to the most brutal exploitation at subsistence wages, no social benefits, little or no organized social power. A new class of Asian capitalist collaborators, nurtured and facilitated by Asian state capitalism, increased the enormous volume of profits. Rates of investments reached dizzying proportions, given the vast inequalities between income/property owning class and wageworkers. Huge surpluses accrued but internal demand was sharply constrained. Exports, export growth and overseas consumers became the driving force of the Asian economies. US and European manufacturers invested in Asia to export back to their home markets – shifting the structure of internal capital toward commerce and finance. Diminished wages paid to the workers led to a vast expansion in credit. Financial activity grew in proportion to the entrance of commodities from the dynamic, newly industrialized countries. Industrial profits were re-invested in financial services. Profits and liquidity grew in proportion to the relative decline in real value generated by the shift from industrial to financial/commercial capital.

 Super profits from world production, trade, finances and the recycling of overseas earnings back to the US through both state and private financial circuits created enormous liquidity. It was far beyond the historical capacity of the US and European economies to absorb such profits in productive sectors.

 The dynamic and voracious exploitation of the huge surplus labor forces in China, India, and elsewhere and the absolute pillage and transfer of hundreds of billions from ex-communist Russia and 'neo-liberalized' Latin America filled the coffers of new and old financial institutions.

 Over-exploitation of labor in Asia, and the over-accumulation of financial liquidity in the US led to the magnification of the paper economy and what liberal economist later called "global disequilibrium" between savers/industrial investors/ exporters (in Asia) and consumers/financiers/importers(in the US). Huge trade surpluses in the East were papered over by the purchase of US T-notes. The US economy was precariously backed by an increasingly inflated paper economy.

 The expansion of the financial sector resulted from the high rates of return, taking advantage of the 'liberalized' economy imposed by the power of diversified investment capital in previous decades. The internationalization of capital, its dynamic growth and the enormous growth of trade outran the stagnant wages, declining social payments, the huge surplus labor force. Temporarily, capital sought to bolster its profits via inflated real estate based on expanded credit, highly leveraged debt and outright massive fraudulent 'financial instruments' (invisible assets without value). The collapse of the paper economy exposed the overdeveloped financial system and forced its demise. The loss of finance, credit and markets, reverberated to all the export-oriented industrial manufacturing powers. The lack of social consumption, the weakness of the internal market and the huge inequalities denied the industrial countries any compensatory markets to stabilize or limit their fall into recession and depression. The dynamic growth of the productive forces based on the over-exploitation of labor, led to the overdevelopment of the financial circuits, which set in motion the process of 'feeding off' industry and subordinating and undermining the accumulation process to highly speculative capital.

 Cheap labor, the source of profits, investment, trade and export growth on a world scale, could no longer sustain both the pillage by finance capital and provide a market for the dynamic industrial sector. What was erroneously dubbed a financial crisis or even more narrowly a "mortgage" or housing crisis, was merely the "trigger" for the collapse of the overdeveloped financial sector. The financial sector, which grew out of the dynamic expansion of 'productive' capitalism, later 'rebounded' against it. The historic links and global ties between industry and financial capital led inevitably to a systemic capitalist crisis, embedded in the contradiction between impoverished labor and concentrated capital. The current world depression is a product of the 'over-accumulation' process of the capitalist system in which the crash of the financial system was the 'detonator' but not the structural determinant. This is demonstrated by the fact that industrial Japan and Germany experienced a bigger fall in exports, investments and growth than 'financial' US and England.

The capitalist system in crisis destroys capital in order to 'purge itself' of the least efficient, least competitive and most indebted enterprises and sectors, in order to re-concentrate capital and reconstruct the powers of accumulation – political conditions permitting. The re-composition of capital grows out of the pillage of state resources – so-called bailouts and other massive transfers from the public treasury (read 'taxpayers'), which results from the savage reduction of social transfers (read 'public services') and the cheapening of labor through firings, massive unemployment, wage, pension and health reductions and the general reduction of living standards in order to increase the rate of profit. ...

[joeblow]

World Depression: Regional Wars and the Decline of the US Empire

Part I

by Prof. James Petras

http://.globalresearch.ca/index.php?con ... &aid=12955

Contrary to the theorists who argue that 'finance' and 'post-industrial' capitalism have 'destroyed' or de-industrialized the world economy and put in its place a kind of "casino" or speculative capital, in fact, we have witnessed the most spectacular long-term growth of industrial capital employing more industrial and salaried workers than ever in history.

I stopped believing anything he was saying after this statement, but unusually he seems to be a fervent anti-Zionist, strange:

Petras' latest book, Rulers and Ruled in the U.S. Empire: Bankers, Zionists, Militants (2007) deals with what he considers to be the malign influence of American-born Jews over U.S. foreign policy. According to its publisher, Clarity Press, the book exposes the global hegemony exercised by "the financial ruling class, the Zionist power configuration and their collaborator client rulers."[7]

In The Power of Israel in the United States, Petras puts forth the thesis that American Jews are less than 2% of the population, yet represent 25-30% of U.S.'s wealthiest families (citing Forbes). He asserts that they wield their wealth effectively. As an example (citing Richard Cohen in the Washington Post) -- supplying 60% and 35% of the total contributions respectively of the American Democratic and Republican political parties.[8]

[sullivan]

Contrary to the theorists who argue that 'finance' and 'post-industrial' capitalism have 'destroyed' or de-industrialized the world economy and put in its place a kind of "casino" or speculative capital, in fact, we have witnessed the most spectacular long-term growth of industrial capital employing more industrial and salaried workers than ever in history.

I stopped believing anything he was saying after this statement, but unusually he seems to be a fervent anti-Zionist, strange

It is strange, as the evidence suggests the opposite - a decline, perhaps not in industrial capital, but in industrial output. Industrial capital and finance capital aren't necessarily distinct entities, as many of the same players who own the banks and brokerage houses also have fingers in industrial pie.