By Michael Hudson with permission and supplied to the Saker Blog
“Taken from an interview with the newly founded German magazine “ViER” which will be published in August 2022.” ViER (FOUR), stands for the media as fourth power in checks and balances.
(1.) Prof. Hudson, your new book “The Destiny of Civilization” is out now. This lecture series on finance capitalism and the New Cold War presents an overview of your unique geo-political perspective.
You talk about an ongoing ideological and material conflict between financialized and de-industrialized countries like United States against the mixed-economies of China and Russia. What is this conflict about and why is the world right now at a unique “point of fracture” as your book states?
Today’s global fracture is dividing the world between two different economic philosophies: In the US/NATO West, finance capitalism is de-industrializing economies and has shifted manufacturing to Eurasian leadership, above all China, India and other Asian countries in conjunction with Russia providing basic raw materials and arms.
These countries are a basic extension of industrial capitalism evolving into socialism, that is, into a mixed economy with strong government infrastructure investment to provide education, health care, transportation and other basic needs by treating them as public utilities with subsidized or free services for these needs.
In the neoliberal US/NATO West, by contrast, this basic infrastructure is privatized as a rent-extracting natural monopoly.
The result is that the US/NATO West is left as a high-cost economy, with its housing, education and medical expenses increasingly debt financed, leaving less and less personal and business income to be invested in new means of production (capital formation). This poses an existential problem for Western finance capitalism: How can it maintain living standards in the face of de-industrialization, debt deflation and financialized rent-seeking impoverishing the 99% to enrich the One Percent?
The first U.S. aim is to deter Europe and Japan from seeking a more prosperous future to lie in closer trade and investment ties with Eurasia and the Shanghai Cooperation Organization (SCO, a more helpful way of thinking about the global fracture from the BRICS). To keep Europe and Japan as satellite economies, U.S. diplomats are insisting on a new economic Berlin Wall of sanctions to block trade between East and West.
For many decades U.S. diplomacy has meddled in European and Japanese internal politics, sponsoring pro-neoliberal officials into government leadership. These officials feel that their destiny (and also their personal political fortunes) is closely allied with U.S. leadership. Meanwhile, European politics has now become basically NATO politics run from the United States.
The problem is how to hold the Global South – Latin America, Africa and many Asian countries – in the US/NATO orbit. Sanctions against Russia have the effect of hurting the trade balance of these countries by sharply raising oil, gas and food prices (as well as prices for many metals) that they must import. Meanwhile, rising U.S. interest rates are drawing financial savings and bank credit into U.S.-dollar-denominated securities. This has raised the dollar’s exchange rate, making it much harder for SCO and Global South countries to pay their dollarized debt service falling due this year.
This forces a choice on these countries: either go without energy and food in order to pay foreign creditors – thereby putting international financial interests before their domestic economic survival – or defaulting on their debts, as occurred in the 1980s after Mexico announced in 1982 that it could not pay foreign bondholders
(2.) How do you see the ongoing war/special military operation in Ukraine? Which economic consequences do you foresee?
Russia has secured the Russian-speaking Eastern Ukraine and its southern Black Sea coastline. NATO will continue to “poke the bear” by sabotage and new ongoing attacks, especially by Polish fighters.
NATO countries have dumped their old and obsolete weapons into Ukraine, and now must spend immense sums modernizing their military hardware. The outflow of payments to the U.S. military-industrial complex will put downward pressure on the euro and British sterling – all coming on topo of their own rising energy and food deficits. So the euro and sterling are headed down toward parity with the U.S. dollar. The euro is almost there now (about $1.07). This means sharply rising price inflation for Europe.
I read and hear conflicting information on the new sanctions. Some experts in the East and West believe this will harm the national economy of the Russian Federation tremendously. Other experts tend to believe this will backfire or have a huge boomerang-effect on the Western countries indeed.
The overriding U.S. policy is to fight against China, hoping to break of the Western Uighur regions and divide China into smaller states. To do that, it is necessary to break away Russian military and raw-materials support for China – and in due course to break it up into a number of smaller states (the Western large cities, northern Siberia, a southern flank, etc.).
Sanctions were imposed in hopes of making living conditions so unpleasant for Russians that they would press for regime change. The NATO attack in Ukraine was designed to drain Russia militarily – by having the bodies of Ukrainians deplete Russia’s supply of bullets and bombs by giving their lives simply to absorb Russian arms.
The effect has been to increase Russian support for Putin – just the opposite of what was intended. There is a growing disillusion with the West, after seeing what the Harvard Boys did to Russia when the United States backed Yeltsin to create a domestic kleptocrat class that tried to “cash out” its privatizations by selling shares in oil, nickel and public utilities to the West, and then spurring military attacks from Georgia and Chechnya. There is a general agreement that Russia is making a long-term turn Eastward instead of Westward.
So the effect of U.S. sanctions and military opposition to Russia has been to impose a political and economic Iron Curtain locking in Europe to dependency on the United States, while driving Russia together with China instead of prying them apart. Meanwhile, the cost of European sanctions against Russian oil and food – much to the benefit of U.S. LNG gas suppliers and agricultural exporters – threatens to create long-term European opposition to U.S. unipolar global strategy. A new “Ami go home” movement is likely to develop.
But for Europe, the damage already has been done, and neither Russia nor China are likely to trust that European government officials can withstand the bribery and personal pressure brought to bear by U.S. interference.
Here in Germany I’m listening to the new Minister for Economy, Mr Robert Habeck from the Green Party, who talks about activating the federal “emergency gas” and asks the Emirates for resources (this “deal” seems to be failed already, news say). We see the end of North Stream II and huge dependency for Berlin and Brussels on Russian resources. How this will all sum up?
In effect, U.S. officials have asked Germany to commit economic suicide and bring on a depression, higher consumer prices and lower living standards. German chemical companies have already begun to shut down their fertilizer production, given Germany’s acceptance of trade and financial sanctions that prevent it from buying Russian gas (the raw material for most fertilizer). And German car companies are suffering from supply cut-offs.
These European economic shortages are a huge benefit to the United States, which is making enormous profits on more expensive oil (which is controlled largely by U.S. companies, followed by British and French oil companies). Europe’s replenishment of the arms that it donated to Ukraine also is a boon to the U.S. military-industrial complex, whose profits are soaring.
But the United States is not recycling these economic gains to Europe, which is looking like the big loser.
Arab oil producers already have rejected U.S. demands that they charge less for their oil. They look to be windfall gainers from the NATO attack on the Ukraine proxy battlefield.
It seems unlikely that Germany can simply give back to Russia Nord Stream 2 and the Gazprom affiliates that have conducted trade with Germany. Trust has been broken. And Russia is afraid to accept payments by European banks since the theft of $300 billion of its foreign reserves. Europe is no longer economically safe for Russia.
The question is just how soon Russia will simply stop supplying Europe altogether.
It looks like Europe is becoming an appendage of the U.S. economy, in effect bearing the fiscal burden of America’s Cold War 2.0, with no political representation in the United States. The logical solution is for Europe to join the United States politically, giving up its governments but at least getting a few Europeans in the U.S. Senate and House of Representatives.
(3.) Which role does the a) New Cold War and the b) neoliberal finance capitalism play in the current war between Russia and Ukraine? According to your recent research.
The US/NATO war in Ukraine is the first battle in what looks like a 20-year attempt to isolate the Dollar Area West from Eurasia and the Global South. U.S. politicians promise to keep the Ukraine war going indefinitely, hoping that this may become Russia’s “new Afghanistan.” But this tactic now looks like it may threaten to be America’s own Afghanistan. It is a proxy war, whose effect is to lock in Europe’s dependency on the United States as a client oligarchy with the euro as a satellite currency to the dollar.
U.S. diplomacy tried to disable Russia in three major ways. First, isolating it financially by blocking it from SWIFT bank clearing, system. Russia responded by smoothly moving over to China’s bank-clearing system.
The second tactic was to seizing Russian deposits in U.S. banks and holdings of U.S. financial securities. Russia responded by picking up U.S. and European investments in Russia on the cheap as the West dumped them.
The third tactic was to block NATO members from trading with Russia. The effect has been that Russian imports from the West have declined, while its exports of oil, gas and food are soaring. That has raised the ruble’s exchange rate instead of hurting it. And as sanctions block Russia’s imports from the West, President Putin has announced that his government will invest heavily in import substitution. The effect will be a permanent loss of Russian markets for European suppliers and exporters.
Meanwhile, the Trump tariffs against European exports to the United States remain in place, leaving European industry with shrinking business opportunities. The European Central Bank may continue to buy European stocks and bonds to protect the wealth of the One Percent, but if anything will cut back on domestic social spending so as to comply with the 3% limit of budget deficits that the eurozone has imposed on itself.
In the medium and long run, the US/NATO sanctions are therefore aimed mainly against Europe. And Europeans don’t even seem to see that they are the primary victims of this new U.S. economic war for self-serving energy, food and financial dominance.
(4.) In Germany the stopped energy project Nord Stream II is still a big political issue. In your recent online article “The Dollar Devours the Euro” you wrote: “It is now clear that today’s escalation of the New Cold War was planned over a year ago. America’s plan to block Nord Stream 2 was really part of its strategy to block Western Europe (“NATO”) from seeking prosperity by mutual trade and investment with China and Russia.” Could you explain this to our readers? source: https://michael-hudson.com/2022/04/the-dollar-devours-the-euro/
What you characterize as “blocking Nord Stream 2” is really a Buy-American policy. The United States has persuaded Europe not to buy in the lowest-price market, but to pay as much as seven times more for its gas from U.S. LGN suppliers, and to spend a reported $5 billion on expanding port capacity – that will not even be available for a year years.
This threatens a very uncomfortable interregnum for Germany and other European countries following U.S. dictates. Basically, national parliaments are now subservient to NATO, whose policies are run from Washington.
One price that Europe will pay, as noted above, is declining exchange rate against the U.S. dollar. European investors are likely to move their savings and investments out of Europe to the United States in order maximize their capital gains and simply avoid price declines for their stocks and bonds as measured in dollars.
(5.) Prof. Hudson, let’s take a look at further developments in Germany. In May the German parliament – Bundestag – passed a new bill: German lawmakers approved possible expropriation of energy companies. This could enable the Berlin government to put energy companies under trusteeship if they can no longer fulfil their tasks and if the security of supply is at risk. According to REUTERS, the renewed law – which still needs to pass the upper house of parliament – could be applied for the first time if no solution is found on the ownership of the PCK Refinery oil refinery in Schwedt/Oder (East Germany), which is majority-owned by Russian state-owned Rosneft.
It looks like Europe and America will confiscate Russian investments in their countries, and sell off (or have Russia confiscate) NATO-country investments in Russia. This means a de-linking of the Russian economy from the West, and a closer linking with China – which looks like the next economy to be sanctioned by NATO as it becomes an Eastern Pacific Treaty Organization involving Europe in tis confrontation in the China Sea.
I would be surprised if Russia resumes selling oil and gas to Europe without being reimbursed for what Europe (and also the United States) has seized. This demand would help bring European pressure on the United States to give back the $300 billion in foreign reserves that it has grabbed.
But even after such a give-back and reparations settlement, trade seems unlikely to be resumed. A phase change has occurred, a change in consciousness as to how the world is splitting up under U.S. diplomatic attacks on allies and adversaries alike.
My question would be: Socialism is a big topic in your new book. What’s your view on those “socialist” measures taken now by a capitalist country like Germany?
A century ago, the “final stage” of industrial capitalism was expected to be socialism. There were many different kinds of socialism: State socialism, Marxian socialism, Christian socialism, anarchist socialism, libertarian socialism. But what occurred after World War I was the antithesis of socialism. It was finance capitalism and a militarized Finance capitalism.
The common denominator of all socialist movements, from the right to the left of the political spectrum, was stronger government infrastructure spending. The transition to socialism was being led (in the United States and Germany) by industrial capitalism itself, seeking to minimize the cost of living (and hence the basic living wage) and the cost of doing business by government investment in basic infrastructure, whose services were to be provided freely, or at least at subsidized prices.
That aim would prevent basic services from becoming opportunities for monopoly rent. The antithesis was the Thatcher-neoliberal doctrine of privatization. Governments turned over public utilities to private investors. Companies were bought on credit, adding interest and other financial charges to profits and payments to management. The result has been to turn neoliberal Europe and America into high-cost economies unable to compete in production prices with countries pursuing socialist polities instead of financialized neoliberalism.
This opposition in economic systems is the key to understanding today’s world global fracture.
(6.) Especially Russian oil and gas are in the focus right now. Moscow demands payments in Rouble only and is expanding their field of buyers filling it with China, India or Saudi-Arabia. But it seems Western buyers can still pay in Euro or US Dollar. What is your take on this ongoing war on resources? The Rouble appears to be a winner.
The rouble certainly is rising. But this does not make Russia a “winner” if its economy is disrupted by the sanctions blocking its own imports needed for its supply chains to operate smoothly.
Russia will end up the winner if it can mount an industrial import-substitution program, and re-create public infrastructure to replace what has been privatized under U.S. direction by the Harvard Boys in the 1990s.
Do we see the end of the petro-dollar and a rise of a new financial architecture in the East accompanied by a strengthening of BRICS and Shanghai Cooperation Organization (SCO)?
There will still be petrodollars, but also a variety of currency-area blocs as the world de-dollarizes its international trade and investment arrangements. In late May, Foreign Secretary Lavrov said that Saudi Arabia and Argentina want to join BRICS. As Pepe Escobar recently noted, BRICS+ may expand to include MERCOSUR and the South African Development Community (SADC)
These arrangements probably will call for a non-U.S. alternative to the IMF to create credit and provide a vehicle for official foreign-exchange reserves for the non-NATO countries. The IMF will still survive to impose austerity on U.S. satellite countries while subsidizing capital flight from Global South countries and creating SDRs to finance U.S. military spending abroad.
Summer 2022 will be a testing ground as Global South countries suffer a balance-of-payments crisis from the rising oil and food deficits alongside the higher domestic-currency costs of carrying their foreign dollar debts. The IMF may offer new SDRs for them to pay US dollar bondholders to keep the illusion of solvency going. But the SCO countries can offer oil and food – IF countries give assurances of repaying credit by repudiating their dollar debts to the West.
This financial diplomacy promises to introduce “interesting times.”
(7.) In your recent interview with Michael Welch (“Accidental Crisis?”) you have a specific analysis on the current events in Ukraine/Russia:
“The war isn’t against Russia. The war isn’t against Ukraine. The war is against Europe and Germany.” Could you please elaborate on that?
As I explained above, the U.S. trade and financial sanctions are locking in Germany to dependency on U.S. exports of LNG, and purchases of US military arms to upgrade NATO into the de facto European Governing Authority.
The effect is to destroy any European hopes for mutual trade and investment gains with Russia. It is being turned into the junior partner (very junior) in its new trade an investment relations with the increasingly protectionist and nationalistic United States.
(8.) The real problem for United States seems to be this: “The only way of maintaining prosperity if you can’t create it at home is to get it from abroad.” What is Washington’s strategy in there?
My book Super Imperialism has explained how, for the past 50 years, ever since the United States went off gold in August 1971, the U.S. Treasury Bill standard has given the United States a free ride at foreign expense. Foreign central banks have recycled their dollar inflow resulting from the U.S. balance-of-payments deficit into loans to the U.S. Treasury – that is, to buy U.S. Treasury securities to hold their savings. This arrangement has enabled the United States to undertake foreign military spending for its nearly 800 military bases around Eurasia without having to depreciate the dollar or tax its own citizens. The cost has been borne by countries whose central banks have built up their dollar loans to the U.S. Treasury.
But now that it has become unsafe for countries to hold dollar-denominated U.S. bank deposits or government securities or investments if they “threaten” to defend their own economic interests or if their policies diverge from those dictated by U.S. diplomats, how can America continue to get a free ride?
In fact, how can it import basic materials from Russia to fill parts of its industrial and economic supply chain that is being broken down by the sanctions?
That is the challenge for U.S. foreign policy. One way or another, it aims to tax Europe and make other countries into economic satellites. The exploitation may not be as blatant as the U.S. grabbing of Venezuelan, Afghan and Russian official reserves. It is likely to involve undercutting foreign self-sufficiency to force other countries into economic dependency on the United States, so that the U.S. can threaten these countries with disruptive sanctions if they seek to put their own national interests over what U.S. diplomats want them to do.
(9.) How will all this affect Western Europe’s (Germany / France / Italy) balance of payments and hence the euro’s exchange rate against the dollar? And why do you think the European Union is on a path to become new “Panama, Puerto Rico and Liberia”?
The euro already is a satellite currency to the United States. Its member countries cannot run domestic budget deficits to cope with the coming inflationary depression resulting from the U.S.-sponsored sanctions and resulting Global Fracture.
The key is turning out to be military dependency. This is “cost sharing” for the U.S. sponsored Cold War 2.0. That cost sharing is what has led U.S. diplomats to realize that they need to control domestic European politics to prevent its populations and businesses from acting in their own interests. Their economic squeeze is “collateral damage” to today’s New Cold War.
(10.) A philosopher from Switzerland wrote a critical essay in mid of March for the German socialist newspaper „Neues Deutschland“, a former news outlet for the GDR government. Ms Tove Soiland criticized the international Left for current behaviours regarding Ukraine crisis and covid management. The Left, she says, is too much pro authoritarian government/state – and thereby copying methods of the traditional right-wing parties. Do you share this view? Or is it too harsh?
How would you answer this question, esp. regarding the thesis in your new book: “… the alternative path is broadly mixed-economy industrial capitalism leading to socialism …”. source: https://www.nd-aktuell.de/artikel/1162247.die-linke-und-corona-ein-postideologischer-totalitarismus.html
The State Department and CIA’s “mighty Wurlitzer” has focused on gaining control of Europe’s Social Democratic and Labour parties, anticipating that the great threat to U.S.-centered finance capitalism will be socialism. That has included the “green” parties, to the point where their pretense of opposing global warming is shown to be hypocritical in light of the vast carbon footprint and pollution of the NATO military warfare in Ukraine and related air force and naval exercises. You can’t be pro-environment and pro-war at the same time!
This has left the right-wing nationalist parties less influenced by U.S. political meddling. That is where the opposition to NATO is coming from, as in France and Hungary.
And in the United States itself, the only votes against the new $30 billion contribution to military spending against Russia came from Republicans. The entire “left wing” Democratic Party “squad” voted for the war spending.
The Social Democratic parties are basically bourgeois parties whose supporters have hopes of rising into the rentier class, or at least becoming stock and bond investors in miniature. The result is that neoliberalism has been led by Tony Blair in Britain and his counterparts in other countries. I discuss this political alignment in The Destiny of Civilization.
U.S. propagandists call governments that keep natural monopolies as public utilities “autocratic.” To be “democratic” means to let U.S. firms by control of these commanding heights, being “free” of government regulation and taxation of finance capital. So “left” and “right,” “democracy” and “autocracy,” have become an Orwellian Doublespeak vocabulary sponsored by America’s oligarchy (which it euphemizes as “democracy”).
(11.) Could the war in Ukraine be a landmark to show a new geopolitical map in the world? Or is the neoliberal New World Order on its rise? How do you see it?
As I explained in your Question #1, the world is being split into two parts. The conflict is not merely national by the West against the East, but is a conflict of economic systems: predatory finance capitalism against industrial socialism aiming at self-sufficiency for Eurasia and the SCO.
The non-aligned countries were not able to “go it alone” in the 1970s because they lacked a critical mass to produce their own food, energy and raw materials. But now that the United States has de-industrialized its own economy and outsourced its production to Asia, these countries have an option not to remain in dependency on U.S. Dollar Diplomacy.
If you want to understand economics, read Michael Hudson. He makes it clear that the only real basis for wealth is production. In a just society, everyone gets a fair share. Under finance capitalism, the rich use usury, and government uses taxation and inflation, to skim all they can while everyone else fights for survival. This is the vision of society the US now enforces worldwide at gunpoint. The World Economic Forum should be called the World Parasitic Forum.
It’s been known for decades that the Spanish Empire collapsed due to its focus on finance – stealing Sth American gold and silver – instead of industrial production.
At least the gold and silver was tangible, yet the US has de-industrialised to focus on intangibles – futures, derivatives, fiat money. Unbelievable!
I hear the trouble with finance, and yet, I’m curious about this focus on de-industrialization as being relevant to anything about the empire and warmongering and so forth. In particular:
1. The dramatic movement of factories (and delinking of median wages from productivity growth) happened decades ago. Nothing fundamentally changed about the power of the transnational globalists (this is part of what makes their power base transnational, after all).
2. Hyping this is a misuse of basic math. Increasing the amount of services produced reduces the percentage of the whole that is goods and fixed investment. It doesn’t reduce the amount of goods and fixed investment.
And even what is services isn’t simply finance. Healthcare, for example, (massively supported directly and indirectly by government in the US) is actually larger than financial services and insurance. The problem isn’t that hospital systems and medical schools and so forth are services. The problem is massive waste and massive wage inequality (the connected insiders are paid far more than the typical worker). This is one of the great ironies of discussing de-industrialization in economics. What value, by that perspective, do economists and media outlets and so forth produce? They’re services (or just outright government consumption), not goods or fixed investment.
3. Perhaps most plainly, the de-industrialization lens is inconsistent with quantitative reality. Just from GDP, which is a subset of overall economic activity, last year the US produced $5.5 trillion worth of goods ($2 trillion durable, $3.5 trillion non-durable) as well as $4.1 trillion in fixed investment. And then the empire got other countries to send a net of another $1.1 trillion worth of goods to the US in exchange for services and some USD currency units that Zone B elites seem to prefer over their own domestic currency units. That’s well over $10 trillion worth of ‘stuff’ – coincidentally, approximately the same size as services. Even if you devalue the amount of stuff substantially by arguing that the US dollar is overvalued relative to what it ‘ought’ to be (yet, for some reason, isn’t…), you would just have devalued the amount of services, too, leaving the overall private sector mix at roughly 50/50.
Hi there citizen8,
You said ” I’m curious about this focus on de-industrialization as being relevant to anything about the empire and warmongering and so forth.”
I’m no expert, but as I see it if you de-industrialise you lose control of the ability to sustain warfare for any significant length of time. If you are not belligerent you might get away with it, but if, like the US you cause chaos wherever you go, it will come back to bite you.
Particularly in a war of attrition fought on your soil. No industrial base means no replacement of destroyed material at worst, or difficult replacement at best. The same goes for the engineers and technicians necessary to keep gear operational.
Check out the Martyonov blog, he regularly refers to this.
Purely by co-incidence, his blog today is about this very topic – the real economy rather than a delusional one.
Steve – While I don’t mean to post too much on one thread, I think you are right on target for the big picture economic conversation throughout the SMO.
I agree with you if the US was actually de-industrialized. But it’s not; that’s what I’m contesting. If what has happened was going to send the empire the way of the Spanish empire, it would have happened roughly contemporaneously with the collapse of the USSR. Certainly by the time of GWOT. Hudson is trying to make distinctions (finance capitalism, industrial capitalism, etc.) that don’t add much explanatory value because he’s trapped intellectually between wanting to criticize the empire more yet not actually being as anti-establishment as he is presented (or allowed by the powers that be? it’s always tough to know who is influenced behind the scenes). So he sort of criticizes the power of government via the lens of finance and then turns around and proposes more government as the solution.
That there is a delusional part of the economy doesn’t change the fact that the US also makes actual stuff, too. Many of the basics that you can build a base on, like food, energy, mining, and vehicles. I don’t know Martyonov well, but my impression is he is a more practical military-minded man rather than the academic economist that Hudson is. I don’t think they are addressing the some things, at least with the same framework/definitions.
I agree there would be real challenges for the US as currently structured to switch cold turkey to a war footing with a sufficient industrial base against a major power. I think that’s true of all countries today, though, rather than a unique feature of the US. We have no idea what a major war would even be like, never mind how civilian resources would be retooled for military use or what resource dependencies the US actually has. The cyber warfare element alone raises so many uncertainties that I’m not sure how any analysis, especially civilian analysis outside the access to the secret part of the US economy/military, could have any reasonable assessment of industrial capacity useful for a lengthy war.
All we can do is look at how things are currently, and currently the Five Eyes in general and the US in particular has access to substantial resources and capacity to make stuff. In order to critique the GDP numbers you have to critique the USD, which becomes self-referential because the USD is king until the rest of the world stops using it. And who knows what happens to the rest of the world if they stopped using it cold turkey. I mean, are we going to wake up to a world where the CNY/USD peg ends, or is reset dramatically differently or something? On whose country would that be a bigger shock?
And at any rate, that there are a bunch of globalist financiers behind the curtain is as much a problem for the RF and PRC as the US. I’m not even sure how to attempt the logistics for a country to fight a conventional war of attrition to occupy North America across the Pacific Ocean?
Percy – yep, it’s been a brilliant maneuver from the perspective of the ruling class. They became fabulously wealthy and the empire should have dwindled away. Instead the rest of the world has supplied natural and human resources to the empire for over half a century.
“I agree there would be real challenges for the US as currently structured to switch cold turkey to a war footing with a sufficient industrial base against a major power.”
No war against a ‘major power’?
“By the time you got to the first Bush administration, after the collapse of the Soviet Union, they came out with a national defense policy and strategic policy. What they basically said is that we’re going to have wars against what they called much weaker enemies and these have to be carried out quickly and decisively or else there will be embarrassment—a way of saying that popular reaction is going to set in. And that’s the way it’s been. It’s not pretty, but it’s some kind of constraint.”
If I understand you correctly on item #1, what we did via de-industrialization was to export our inflation so as to allows us to further increase and uncouple borrowing and spending from consequences.
I’m no expert on geo-politics or economics, but I do know that de-industrialisation by the US has a strong smell of free market ideology about it.
One of the many crazy ideas from free market ideology has it that nations should specialise in the fields in which they have a natural affinity. According to this idea, everyone becomes rich as a result.
So for example Portugal produced great wines and struggled while the UK went for manufacturing and grew rich. Any kid can see through it, but as Andrei Martyonov says, the Western education system is so poor now that we are governed by ignorant fools who just happen to have a uni degree.
As a result, when the US became rich, this was quickly followed by the free market bandwagon, and US elites fell for their own bullshit. They de-industrialised thinking that they could now focus on financial services. Crazy stuff.
Viewed through the “de-industrialization” lens as you say, The US services sector – led by an outrageously exaggerated financial component- is roughly four (4) times larger than the industrial sector, not “50-50”. Consequently the US must import roughly a quarter of its consumption from overseas… all of which converts into an annual trade deficit careening towards $1.5 Trillions. A trade deficit of this magnitude piled on top of private and government debt means the US is more or less bankrupt. Dollars re-cycled as central bank holdings keep the Ponzi- apparatus going as long as most of the world believes that trade must be conducted in dollars. Once demand for dollars falls, then US insolvency becomes formal. With the US no longer able to “import for free”, US living standards collapse along with the entire financial architecture, and military spending. It’s the formal end of Empire… Michael Hudson is correct in his perspective.
This seems likely, also I don’t think faith in the dollar will collapse, the USA has too much good far areas and resources
“The euro already is a satellite currency to the United States. Its member countries cannot run domestic budget deficits to cope with the coming inflationary depression resulting from the U.S.-sponsored sanctions and resulting Global Fracture.”
This continues to be the blind spot Hudson isn’t comfortable (or able?) to address. Solutions to the empire have nothing to do with aggregate spending or net deficit spending. The issue is distributional – who receives currency units from government and who pays them as taxes to government. Over the past half century we have now built up tens of trillions of USD (and GBP, EUR, JPY, etc.) of wasted currency units given to grifters, fraudsters, thieves, warmongers, and other criminals. We don’t need to give them more currency units. We need to prosecute them.
In short, government today is too powerful, not too small. You have to shrink the power of Zone A national governments to end the empire’s war against Russia. Anything else is irrelevant at best and intentionally deceptive at worst.
“In short, government today is too powerful, not too small.”
This is the perceptional problem right there. That the ‘problem’ is government per se. Which is exactly the perception the grifters, fraudsters, thieves and warmongers have sold us to expand their scam of the last half century.
Whilst Hudson and many others would most likely completely concur with the statement:
“Over the past half century we have now built up tens of trillions of USD (and GBP, EUR, JPY, etc.) of wasted currency units given to grifters, fraudsters, thieves, warmongers, and other criminals. We don’t need to give them more currency units. We need to prosecute them”.
They go further by arguing this is a direct result of finacialisation of the Western economies where even useless negative outcomes are counted as positive GDP outputs.
Their argument is that Government in the West, and any satellite states controlled by the Western model, has been fully captured by (feudal) rentier interests.
Thus: “education, health care, transportation and other basic needs” – along with infrastructure – “is privatized as a rent-extracting natural monopoly.
Under the Western neo-liberal (economic), neo-conservative (foreign) and neo-feudal (social) model – as succinctly described in the above quote about grifters, fraudsters etc – Government is the servant of the elite 1%. With politicians of all types being merely another form of manager (in this instance the term ‘manager’ should be defined as ‘coper’, as in, to cope means to manage) answerable to their paymasters rather than voters and the wider public/social interest.
In other articles/interviews on this subject, particularly by Pepe Escobar but also, if I recall accurately, by Michael Hudson, a distinction is made with the model adopted by China (and Russia*) in which the relationship is the other way around. ie. The government is the Master of the Privateers not the servant. Which has resulted in China lifting some 600 million people out of poverty.
The precise opposite of the pseudo Governments of the West which have been hijacked to varying degrees by the ‘fraudsters, grifters, etc. Where you can have any brand of the same cola product you want; blue (Coca); Red (Ppsi); Yellow (Virgin;) or purple (Generic). But water, unlike in the alternative models in China, Russia etc, will never ever be on offer.
Indeed, the model seems to have changed little, if at all, since General Smedley-Butler described it as a larger version of the Chicago rackets run by Al Capone in the 1930’s. Arguably, the most graphic depiction of the Western model can be found in the Hollywood film ‘Donny Brasco’. Where people who would laugh at the suggestion they do a days graft for ‘the man’ and his targets spend every waking hour working their nuts off to meet the monthly targets of the higher up mobster bosses robbing the public sphere in a lose-lose game.
In respect of the earlier observation concerning financilisation and manufacturing the point as I understand the argument is that the bare quantitative numbers/figures are not as comparable in terms of outcomes as suggested in the observation.
A starting point for why this is so can be found in the articles in this series:
Starting here: https://www.harrowell.org.uk/blog/2018/01/31/in-the-eternal-inferno-fiends-torment-ronald-coase-with-the-fate-of-his-ideas/
In short, there exists a significant qualitative difference between a financialised system and a manufacturing one. Which is why much of the infrastructure of the USA/UK (where this is more pronounced) is in poor state – where qualitative features which are irrelevant to the bottom line financialisation model like maintenance – along with experience, expertise, knowledge and gumption – is not part of the value system.
Ditto for the quality and standards of what passes for ‘manufacturing’ in the financialised Western model. From the F35 to health care to the military to the education system.
*Compared to Russia – which I visited in 2017 – which has a more mixed economy model where, unlike the UK, you can still find street sweepers, park keepers, and even bikers with hair.
The fact that what happened to the Spanish/Iberian empires has not yet occurred proves nothing and also highlights a key feature of the Western model and its approach. Which is that those of us stuck within it have been conditioned to to expect instant outcomes and results. This was not the case with the Spanish/Iberian example – which took decades to decline. Why should it be any different with the Western model?
But I guess we may well be some way along that particular path right now. Which was the point of this article.
I laughed out loud at “It looks like Europe is becoming an appendage of the U.S. economy, in effect bearing the fiscal burden of America’s Cold War 2.0, with no political representation in the United States. The logical solution is for Europe to join the United States politically, giving up its governments but at least getting a few Europeans in the U.S. Senate and House of Representatives.” I hope that Michael Hudson telling it like it is will go over with the Vier German readership.
“Summer 2022 will be a testing ground as Global South countries suffer a balance-of-payments crisis from the rising oil and food deficits alongside the higher domestic-currency costs of carrying their foreign dollar debts. The IMF may offer new SDRs for them to pay US dollar bondholders to keep the illusion of solvency going. But the SCO countries can offer oil and food – IF countries give assurances of repaying credit by repudiating their dollar debts to the West.” Since the release date of the issue is August, we will see if Mr. Hudson’s prescient comment is confirmed. At the present pace of things he does seem on point…
I like this, in not sure what Vier Germany is but it sounds nationalistic and I like it. Go mess with your own states USA
I do not agree that it is a war between economic models is excessively reductionist. It is a cultural and religious war.
A few days ago the US embassy in the Vatican displayed the LGTBI flag.
In Latin America many countries are being forced to “buy” abortion, euthanasia, LGTBI civil unions and other aberrations in exchange for economic investment and free trade, if they don’t, then there they have Venezuela, Guatemala and another country that I don’t remember suffering economic crises for refusing to kneel before evil.
The same thing happens in equatorial Africa, Africa is full of conflicts provoked by the world elites by saying no to abortion and sexual perversion.
I say this because of what a missionary in Africa tells me first-hand: If you don’t pervert yourself, there is no money.
Europe is already perverted
The religion and cultural thing is just a smokescreen to keeps us off balance and fight one another. They are many other tools , just like this being used.
Michael Hudson is absolutely correct, and has never waivered in his assessments, like so many others. The world has always been run by the manipulation of finances/ capital. Bribery and corruption the Norm. Religion with some decent qualities is merely an appendage.
The financial masters only pay lip service to religion and also promote LGBT etc, etc..
The tribal and cultural conflicts are promoted and financed to keep all of us in perpetual turmoil. That is the 99& of us. For those who still believe in the your superiority, you must be in the 1% bracket.
– The world has always been run by … capital
It is maxism
“Deep State: The Invisible Government Behind the Scenes” by Alex Newman
Who are the deep state? Alex Newman can only give some 100s public name. But that is not the answer?
I say Ukraine is the heart of deep state, and Odessa used to be the international center.
When white washing is the subject – think Ukraine.
“Early deep state”
Notice how Genova, Monaco, Crete, Corsica, Crimea and Georgia were part of “early deep state”.
Next Amsterdam was added.
We beleive Fidel Castro is some “revolutionary”. No, he is Italian elite. Justin Trudeau is a Castro.
– The Farnese family was an influential family in Renaissance Italy. The titles of Duke of Parma and Piacenza and Duke of Castro were held by various members of the family.
– Its most important members included Pope Paul III, Alessandro Farnese (a cardinal), Alexander Farnese, Duke of Parma (a military commander and Governor of the Spanish Netherlands), and Elisabeth Farnese, who became Queen of Spain and whose legacy was brought to her Bourbon descendants.
When how to profit from Russian oil is the question (-> Greek shipping) – think Greek Oligarchs. Who are they?
Perfectly stated, Karl luck!
“The religion and cultural thing is just a smokescreen to keeps us off balance and fight one another. They are many other tools , just like this being used.”
This is a truth that cannot be repeated often enough. I see my friends and family get sucked into passionate, and often angry, culture war arguments that lead to nothing but seething resentment and helpless despair. Nothing is ever solved or settled in battles over “culture” and religion. It’s a type of masochistic merry-go-round that the rulers of the west promote at every turn to, as you say, keep us off balance and fighting amongst ourselves while in the background they continue to loot and plunder with impunity.
I too was once a sucker who spent far too much time getting worked up over idiots on the internet or the latest “woke” identity politics nonsense that’s regularly served up by our dear leaders. They do things like fly the gay flag at the Vatican precisely because people on all sides of the issue will pile in and fight over it. It’s a calculated provocation that works not unlike trolling on the internet.
The West’s (particularly the United States’) biggest strength is not its weapons, “liberal values”, democracy or the “rules based international order” it claims to promote but its domination of global communication channels and platforms, both digital and analogue, and the copious amount of indirect propaganda it produces under the guise of news and entertainment. Because English is the lingua franca of the world and the way Western propaganda is so decentralized and pervasive (on the internet and in the news media but also in Hollywood/BBC produced films, TV programs, Netflix shows, video games etc.) it has enormous reach and influence. They have been doing this since the days of Edward Bernays.
Yes, the internet has made it possible to access high quality information that challenges conventional wisdom but for the most part smartphones and the 24/7/365 onslaught of information has rendered the public more “brainwashed” than ever before. A significant majority of people just go with the flow and buy into whatever the major news outlets and popular culture tells them and they adjust their thoughts and behavior accordingly. There are approved “right wing” and “left wing” versions of “reality” for people to follow. Limited hangouts and controlled opposition abounds (sorry Trump and Bernie fans). Everything and everyone that is heavily promoted in the mainstream – from BLM to Tucker Carlson – is a trap for people who yearn for truth and moral guidance. Not everyone who might listen to some of what a BLM or a Carlson have to say is a total fool of course. It’s just that these entities are fully controlled opposition and not at all what they seem and by following them you will get roped into a narrative that supports the status quo.
The proliferation of screens and digital devices has made controlling the masses easier, not harder. The skeptics and truth seekers who visit sites like this one and think for themselves are a small minority. It is possible to influence family and friends who buy into mainstream narratives but it has to done subtly. A few years ago a friend I hadn’t talked to in a while called me and said “wow you were right, the war in Europe really was won by the Soviet Union!” He had been firmly convinced that America beat the Nazis in World War 2 and got angry when I told him that he was just plain wrong and should go read a reputable WW2 history book. He’d been so thoroughly conditioned to believe that “Russia” were the bad guys and surely could never be as strong or as capable as “America” that it just floored him to learn the truth. But if I’d called him an idiot or a brainwashed fool he never would have looked it up and learned that truth for himself.
Generally I don’t try to change anyone’s mind even if they are obviously wrong or are victims of bad information. Like the saying goes it’s easier to fool someone then to convince them that they’ve been fooled. But if they learn on their own that they’ve been lied to or played for suckers they will change their minds and maybe even become more skeptical of other “truths” that everyone around them believes but never questions.
IMO the best one can do is suggest they do their own research and let them do their own unlearning. In the Ukraine context suggesting they look up what MSM outlets said about the Azov Regiment before February 24th, 2022 is an example of how this could work. Someone learning via their own curiosity that Azov are dyed-in-the-wool Nazis is much more effective than their “pro-Russian” friend or some “Putin puppet” online telling them this.
Sorry I kind of jumped all over the place here and went off topic a bit. But yeah I fully agree the culture war stuff is toxic and just encourages powerless individuals to attack and blame other powerless individuals for the nefarious mess created and perpetuated by the powerful. It’s a classic divide and rule tactic.
I deeply disagree. The economy, geopolitics, etc. are nothing more than political tools, not the end that is always to obtain the power to carry out your project and that sustains and gives substance to this power, religion.
We have the Liberalism that emerged at the end of the Middle Ages / Renaissance and that was adopted by Protestantism, this in turn led to political liberalism (liberal democracy) and state liberalism (totalitarianism) we have two religious aspects of this: Protestant, atheist and pagan/luciferian Lastly, and with immense influence in the Americas and Europe: Freemasonry (Davos, Bildeberg), which emerged in 1717. Of a Luciferian and anti-Christian nature; deny objective truth.
The goal of liberalism and Freemasonry is to enslave man by stripping him of his God-given dignity. Why do you think there is fighting in the Middle East between Israel and Muslims? or in Northern Ireland and in India and Pakistan
When will the Euro cattle/sheep break from their pens and burn down their traitorous Parliaments and National Propaganda Outlets?
It’s most disconcerting how feeble and spineless these Europeons and their public servants are.
Michael is not stating Germany’s & EU’s reality correctly. Germany is an occupied country. It is a suzerainty of the Financial Empire and controlled through the private money €. No mention of MONETARY IMPERIALISM & PRIVATE MONEY at all in the interview. Aren’t those factors the core elements of strategic construct of Europe & NATO. Disappointing.
Name a nation in the West not using private money. The West has been successfully captured by the Global Financial Syndicate. Name a democracy that isn’t a suzerainty. Why & how would these captured Invisible Private Plantations act independently? Why such a misleading assumption, Michael?
“The true equation is ‘democracy’ = government by world financiers.”
– J.R.R. Tolkien
“Democracy” is a temporary phase of history which allows the Global Financial Syndicate to take control from the earlier generation of dominant power players: the monarchies. The fact is that most democracies are a suzerainty externally and an Animal Farm internally. The U$ 💲, €, £, Yen,… are Private Money. Please define the global strategic construct correctly to comprehend the reality.
Global Financial Syndicate:
I wish so often we could like posts, thanks!
Indeed Max, until it’s recognized that all central banks are branches of The Bank for International Settlements (BIS) , and, that the BIS is owned by shareholders there will be a fog over ones understanding of the globe’s “Interesting Times”.
It seems that there are some flaws in his explanations. Euro as satellite currency to the US dollar can very simply be stopped by assigning the Euro to silver or gold. Then the Euro would prosper together with the Rouble. But this does not fix the real problem, the explosion of money by factor 5 since 2015, resp. 2008. Money must align again to material assets. That means an inflation of 86% without spending more uncovered money for bond issues. Because otherwise the spiral of inflation will continue on and on.
Exactly *who* in Western Europe has the power or the motive in suddenly switching the Euro to silver or gold?
We need to understand that the wealthy West Europeans are making LOTS of profit within the US/EU Financial Systems.
They are not about to “commit financial suicide” by switching from the Euro/US$$ system to only a euro currency.
No, you are right, they won’t do that. But we can switch to silver and gold because these metals are manipulated at staying low in regards to €/$. It’s so simple, it’s how we define to make our payments between each other – you don’t need banks for this ;-)
The same banking cabal own the central bank of the US and the EU.
The EU central bank is owned jointly by the the central banks of each member country, that are all privately owned by exactly the same secretive banking cabal.
By contrast, China’s central bank is owned by the Chinese government to enable spending on infrastructure and the public welfare without incurring debt to privately owned foreign banks.
It’s now become the rule. Celebrities that criticize Russia’s liberation of Donbass, hold large US dollar assets or investments and thus perform as mouthpiece for Washington. In the news, Pele – Brazilian football player – has called on Russia and President V. Putin, ‘… to end this unjustifiable war in Ukraine.’ During his heyday in the 60s, an interviewer asked Pele what was his opinion about the military rule in Brazil at the time? He said he was just an athlete and didn’t know about politics. Later they saw him attend a party with José de Magalhães Pinto, the former Brazilian dictator that came into power by CIA assisted coup. It seems even Pele is afraid he might have his assets frozen by the US banking system – be it inside or outside Brazil. I had so much respect for Pele before this, but he’s tarnished his whole reputation. Too bad for Pele.
Thanks so much for continuing to consistently publish Prof Hudson. Followed my two favorites, Michael Hudson and Pepe Escobar, to The Saker some time ago. Love that you post them so assiduously! Also enjoy reading many of the comments from the parochial Saker community. Gives a lot of interesting insight into the Russophile conservative Orthodox perspective. Actually feel Western Elites care little for cultural or religious issues, except as useful wedges to fragment populations on one hand and unify support on the other. The thing they are truly serious about is economic dominance. Much is made of racism, ethnic prejudices, religion, historical context, gender and cultural issues. All these frictions indeed exist on a secondary level. But were the Russians to bow down a la Yeltsin to US economic hegemony, all things Russian would suddenly become wonderful and all cultural objections would suddenly disappear from the Western mainstream narrative. We’ve seen this for decades with the US relationship with the conservative, completely un-woke, religiously committed, murderous Saudis. Human Rights? Who cares. Social Justice? Wink, wink. Sand niggers? Hey wanna dance! Capitalism naturally and very effectively grinds up, exploits or ignores social norms and morality for profits and control. Enjoy your manipulation.
Extremely informative. Should be for compulsory reading for all Vineyard commenters.
The world being split in two – is critical to the success of the human species, given the prospect of Jared Diamond’s Collapse & Naomi Klein’s The Shock Doctrine – The Rise of Disaster Capitalism (also see convo in the Moveable Feast between Messrs Mr P. & A.H.H.).
All signs in the US is pointing in the same direction. Gas in Cali is now $8.00+/gal, hordes of young teenage girls rampage through clothing stores in the wealthier cities eg Boston & NYC smashing & grabbing as much as they can. Gangs of younger members, i.e. teenagers, are claiming their respective territory in major cities. People in NYC are being robbed as they exit supermarkets, etc.
And then there’s the gun violence.
5 months out from the November Midterms, the Dems have moved on from Biden (who’s increasingly isolated) Biden will be blamed for the loss of the HoR & Senate & be replaced with V-P Harris. Because she is so incompetent – thats where the real worry lays. But by then with the N. Hemisphere’s winter Europe will be freezing
And that’s a whole other story.
I’m praying for “the Comedian” being placed under house arrest by his own forces & extradited to Moscow to be charged with Crimes Against Humanity and, of course, Ukraine’s unconditional surrender.
And then, if President Putin wants to partition whats left of Ukraine amongst the Poles, Slovaks, Hungarians, Belorussians & Moldovans on a one-in-all-in basis, he can (although this doesn’t solve the problem of the Neo-Nazi infiltrating those countries’ militaries – it does make it someone lese’s problem).
– All signs in the US is pointing in the same direction.
I say WWII was about taking down the Germans.
Todays world is not about taking down the Russians, neither the Chinese.
WWIII will be about taking down White America.
Implication is it is not “US” who is attacking Putin. The Americans are typical antiwar and supporters of the denazification.
Instead of these interviewers asking broad-based questions, as is very common, how about asking these far more pertinent queries for Dr. Hudson:
1. Explain the huge volatility going on in the US Financial Market with, for instance, Tech Stocks taking a nose dive. Where are the Super Wealthy gambling their money: on Big Oil, Hedge Funds; WHAT and WHY?
2. To what extent are America’s Monopolists causing immense rises in food, merchandizing shortages, rental costs, gas costs and other basic needs?
3. How active are Hedge Funds & Banks/Real Estate barons in building tiny apartments with sky-high rental costs?
4. Which Big Industries, Big Corporate Stores are losing out as a result of the current US economy?
– Where are the Super Wealthy gambling their money
Apple, Microsoft, Google made them rich.
We should all have bought Apple, Microsoft, Google instead of Gold.
Today coal and wheat is maybe a better alternative
Exactly *who* in Western Europe has the power or the motive in suddenly switching the Euro to silver or gold?
We need to understand that the wealthy West Europeans are making LOTS of profit within the US/EU Financial Systems.
They are not about to “commit financial suicide” by switching from the Euro/US$$ system to only a euro currency.
There is a bloodless (so far) “civil war” going on over Russia’s economy. Which side will win, will determine whether Russia can win the economic war with the West or not. So far it’s a draw,the economy isn’t collapsing, but it isn’t making any progress either. Just overcoming, or finding go arounds to the Western sanctions is not progress by the way. People being employed, inflation not harming peoples incomes,new companies being established,and seeing economic output figures raising is what making progress is, and we aren’t seeing that. Stablishing the Ruble by doing what patriotic economists have been begging for years to be done,is a start. But still a Ruble around 60 to the dollar is still at least 30 Rubles too much. Many economists have long said the Ruble was vastly under-valued. And an inflation rate said to be being contained at 20% is even worse than that in the West,which is off the charts for those states.
The infighting between those wanting to assure the things I mentioned as progress.And those not wanting to do anything is keeping the economy stagnant. You could actually say that what progress over the last years Russia has made,and it is substantial. Has been made not because of the government’s policies,but in spite of them. Russia hasn’t even make some of the moves that the EU states have in their anti-Russia actions. The foreign companies haven’t been put under state conservatorship when they announce they are leaving Russia. Which would keep those companies functioning until a more permanent solution is decided. And keep the jobs open for the Russians employed in them. Adding more unemployment payments,which is what the government is doing now over that problem is not a viable solution. It only adds large increases to the state budget that shouldn’t have to be made. And it gives those newly unemployed citizens reasons to lose faith in the governments ability to handle the economic situation.
With the vast resources available in Russia. And the fantastic talents of the Russian people, there is absolutely no acceptable reason that Russia shouldn’t have a wealthy developed society. Having a large number of famously rich oligarchs with yachts, palatial homes, and massive bank accounts outside of Russia doesn’t count for a wealthy society. It’s the inability of the government to start making the decisions needed,and listen to the advise of patriotic Russian economists that is the main reason it isn’t. That is far more of a reason than the Western sanctions are. The enormous amounts of wealth looted by 5th column elements over the years (and still continuing today).Helped by their colleagues among some of the government elite,that is to blame for the situation in Russia today.
The situation of the SMO and the immense upsurge of patriotic feeling unleashed among so many Russians gives the perfect opportunity for the hard choices to be made to restructure the economy. Choices that are years overdue. But so far except for speculation, and ideas put out by patriotic economists.None acted on,and some even refused. All we can see is just talk. The stagnation needs to end,and progress needs to start being make or the Russian economy can not more forward to deliver a future for her population they can be proud of.
Too negative for me, almost comes across as a troll, have to wonder what country you come from. Russia will do just fine, in fact far better than the west which is teetering on the brink of a depression. I wonder what the west would look like with over a thousand sanctions placed on it and Russia stealing $300 billion, seeing in reality WE have no growth of all, a GDP made up of everything from the kitchen sink to everything on up.
So do you think Dr Glaznev famous Russian economist and who currently is minister for integration and macroeconomics of the Eurasian Economic Commission (EEC, aka EAEU ), the bloc of former Soviet states coordinating customs, central banking, trade and fiscal management policies together,is a troll too. He seems to think about the situation the same as I do:
“The global crisis, which began in 2008 as a financial one, turned into a pandemic in 2020 and is now continuing as a military-political one it represents three phases of a global hybrid war waged by the US government and financial elite for the preservation of global dominance. As the crisis deepens, it becomes more and more aggressive in an effort to stop the development of China that has pulled ahead. At the same time, it gets mainly to Russia, which Anglo-Saxon politicians, sick with hereditary Russophobia, all want to destroy and break its strategic partnership with China. The damage from the anti-Russian sanctions imposed by the United States and the EU is collectively estimated at $1 trillion. They are aggravating the 8-year stagnation of the Russian economy caused by the ridiculous policy of the Bank of Russia. Under the guise of ‘targeting’ inflation, the Bank gave the formation of the ruble exchange rate to currency speculators and paralyzed investment activity by a sharp increase in the key interest rate. The consequence of such a policy of economic suicide was the underproduction of goods and services by almost 50 trillion rubles.”
“I can mathematically prove that 80% of the losses of the Russian economy — which could grow by 8% of GDP growth per year on the basis of the available resources — are explained by the policy of the Bank of Russia, and 20% by the negative impact of sanctions. I think this proportion will continue in the future if monetary policy is not radically changed in accordance with the best international practice. Meanwhile, we could develop no worse than China if we implemented the policy of advanced economic development that we have been proposing for a long time. To do this, we have all the necessary resources: production facilities loaded by barely half; labour resources capable of increasing output by 20% at full capacity utilization, and which can be increased due to the common labour market of the EEC [EAEU] and labour migration from Ukraine and Central Asia; inexhaustible volumes of raw materials which can be processed into finished products instead of exports; as well as a powerful scientific and technical potential, used by barely a third. The only thing our economy lacks is loans – they have become inaccessible to most manufacturing enterprises due to the systematic overestimation of the key rate by the Bank of Russia.”
“In a much worse situation after the default of 1998, the [Prime Minister Yevgeny] Primakov–[CBR Governor Viktor] Gerashchenko government managed to stabilize the macroeconomic situation within a month and launch production growth, the pace of which in industry reached 2% per month. This was achieved by a combination of stabilization of the ruble exchange rate by cutting off speculators from the foreign exchange market and expanding lending to output by enterprises which took advantage of the sharp devaluation of the ruble to produce import-substituting products. Gerashchenko did not raise the refinancing rate, which remained much lower than inflation all this time, and he fixed the currency position of commercial banks in order not to give them the opportunity to play down the ruble exchange rate.”
“Now the Bank of Russia, on the contrary, has sharply raised the key rate, and blocked the operation of the exchange, giving commercial banks the opportunity to speculate on the foreign exchange market without restraint. Thus, [the Bank] blocked the increase in credit to enterprises which could increase the output of import-substituting products, and instead allowed banks to profit from currency speculation. The government, not having sufficient opportunities to stimulate the growth of production and investment, has taken the path of deregulation of imports to the detriment of domestic producers. Instead of increasing the output of domestic products now to replace European and American goods which have left the Russian market, the bet is on filling it with substandard cheap imports from other countries.”
“Now it will be necessary to do the same as in the second half of 1998. Then, instead of the new decline in production predicted now, we should revive the growth spurt which the President of Russia is calling for.”
“If our monetary authorities had followed the recommendations of domestic scientists, and not the instructions of the US Treasury and the IMF,there would not have been such a large-scale capital drain and hundreds of billions of dollars frozen in US-controlled offshore accounts would have been invested in the Russian economy, and the ruble would have become a full-fledged world reserve currency.”
When I post about conditions inside Russia I research the thinking of eminent Russians first. I don’t just write something,you should do the same.
I am personally not a Glazyev fan.
He may be a structural man, but he is at the end of the day a theoretician, not a practical man. He consistently ignores the question of how much progress has been made practically, in a purported new financial system. He has no idea of practicalities. He cannot even answer questions from one such as Michael Hudson.
Where are the real systems that he has been building in the EAEU? I see little practical completion, or even real progress of anything. Glazyev consistently ducks the question of – Are you still discussing or are you in a practical implementation phase? i.e., is there anything complete? Have you built anything yet? Its all talks about talks and theoretical gyrations – analysis paralysis. He is not producing as far as I can see.
I think Glazyev’s problem is Glazyev. We have practical progress with China, with India, with Iran and a raft of others, but not so much in Glazyev’s bailiwick.
Really, what has Glazyev accomplished except cry over his mathematical proof? He cannot prove what he says he will prove, because it is not provable – what I mean by that, is that it is not actual, on the ground reality. More theoretical games.
Just a few days ago we see that certain Turkish banks and Russian banks are implementing the use of the Russian MIR card system in Turkey. Real step forward. What has Glazyev accomplished?
“He may be a structural man, but he is at the end of the day a theoretician, not a practical man. ”
The conflation of delegation with “control” is quite popular and of utility, particularly when assuming purpose.
I am on the other hand a great admirer of Glazyev. He like almost all the reformers in Russia have not ,as you say, accomplished much because they hasn’t been permitted to try,for the reasons I outlined in my post. And Glazyev isn’t alone, he is associated with the Anti-Crisis Expert Council which includes the public economist Mikhail Khasin and Duma deputy Mikhail Delyagin . Glazyev and Delyagin, who is chairman of the Duma Committee on Economic Policy, have been sanctioned officially by the US empire, Khasin has been targeted but not sanctioned.There was a similar problem in the Soviet Union as well. There were several times they had a chance to restructure the economy to overcome the problems they were experiencing of slow growth and needed modernization. One promising one in the late 1960’s. But entrenched powerful elements always blocked reform.And we saw what that lack of reform brought them.
The key to Russia’s economy’s recovery and advance for the benefit of the Russian people is to restructure the internal economy. The advances you mention are all concerned with foreign trade. And that trade benefits the wealthy,and to a limited amount the state. But is not what overtly benefits the Russian citizen on the street. And that is the main issue. The Russian people don’t care if the wealthy oligarchs make more money,or recover what they have lost because of sanctions. In fact they are happy that the oligarchs are losing money. Listen to Andrei Martyanov and other writers here on the blog to see that. Or we just need to read Russian social media,and countless Telegram channels. It’s the people’s standard of living that they care about. And that talented Russians are not having to go aboard to make a living. For the economy to become what her resources alone should assure her.
The Chinese are aware of that necessity in China too. And that is why they work so hard to make sure the people see benefit from the economy’s advances. As I said there is a bloodless struggle going on in Russia over the economy. And other than the SMO in Ukraine itself,there is nothing more important for Russia’s future,and ability to survive in this new Cold War she has been thrust into.
“There were several times they had a chance to restructure the economy to overcome the problems they were experiencing of slow growth and needed modernization. One promising one in the late 1960’s.”
That was believed by Messrs Brezhnev, Kosygin and their associates from at least 1962 onwards, facilitating co-operation in their faction’s ascension from 1964 onwards, but rendered illusory in both agricultural and industrial activities through the interactions of agency of the narod, Gosplan, and the agricultural/industrial nomenklatura.
Mr. Gorbachev and his associates also attempted to implement such hopes/wishes based on such illusions, hence perestroika first, glasnost when perestroika didn’t work in the hope of facilitating perestroika, which as before were rendered illusory in both agricultural and industrial facilities through the interactions of the narod, Gosplan, and the agricultural/industrial nomenklatura, since glasnost further illuminated how the narod had been “screwed” for years, that Gosplan had been complicit in telling lies for years, and the agricultural/industrial nomenklatura had similarly been complicit for years, whilst some in various Academies of Science who had understood for some years that “The Soviet Union” was not sustainable for many reasons, increased sectorally interfaced/widened interactive research using different methodologies to facilitate restructuring of the economy when contexts rendered this more possible, a practice that some had been engaged in since at least 1969..
From 1990 onwards with emphasis initially on sectors fundamental to catalyse further development, some began to restructure through forms of “privatisation”/rape which through time and the “influence” of others facilitated transcendence including of the practices of “privatisation/rape from circa 1995 onwards, with acceleration from 2000 onwards, whilst simultaneously in 1990 some others began restructure through various forms of protection and encouragement, since where there is an umbrella shortage, the decision of prioritising which entity to receive umbrellas was key in context.
Unlike the illusions of Erica de Jong and the assumptions of others, the zipless f*ck, was never an option, but patience was always required.
One of the main mistakes Gorbachev made at that time (weakness and naivety being of course his worst) was thinking that you could combine Glasnost and Perestroika at the same time. The Chinese at around the same time made their “Perestroika” style reforms. But they knew that to try and combine any sort of “Glasnost” style reforms with them would be a fatal mistake. And we can see which of the two approaches was correct now. I remember when that was happening thinking to myself what a mistake it would be to try that.In my opinion it caused the collapse of the economy and the Soviet Union.While there were certainly other issues involved as well.That was the proverbial “straw that broke the camel’s back” event.
“One of the main mistakes”
Some would say opportunities but not main, and that Mr. Gorbachev and his associates deserve to be thanked for their services of useful foolery, not crowned with enemies-of-the-peopleness, to facilitate purposes through time.
” Glasnost and Perestroika at the same time”
They were not simultaneous – the routine was perestoika first, glasnost after for purposes described, which was perceived in advance by some to be the optimum sequencing to afford opportunities of transcendence, the straws whose agency broke the camels back primarily being the narod with the co-operation of some others, including through complicity in their encouragement by Mr. Gorbachev and his associates.
“The Chinese at around the same time made their “Perestroika” style reforms. But they knew that to try and combine any sort of “Glasnost” style reforms with them would be a fatal mistake.”
They were not alone, even in 1969 some in “The Soviet Union” understood that, whilst their context was not wholly synomous with the PRC in 1969 or subsequent whilst aspects were converging with the encouragement/complicity of “The United States of America.”
“.In my opinion it caused the collapse of the economy and the Soviet Union.”
Some would suggest that your perspective is very limited through an ignorance of context derived from multiple interactions, and hence understandable.
Some would tend to the view that it was a relatively important factor in accelerating the ongoing transcendence of “The Soviet Union” by the Russian Federation, but not the prime one, and possibly paraphrase Mr. Marx’s observation in his theses on Feurbach – Philosophers here-to-fore have merely described the world, whilst the purpose is to change it.
And some would think that it’s better to refute the points I made with facts, and not just reject them without evidence.But so as to leave no ambiguity about my points,I’ll use the question and answer format:
Question: Do Russians believe Gorbachev made mistakes and was weak and naïve?
Answer -Yes,and that is the best interpretation they put on his actions. The most common words I’ve seen Russians use associated with him are,treason,traitor,and betrayal.I don’t believe that is correct. Which is why I used “mistakes,weakness and naivety” instead.
Question: Did the attempt to open up the state and economic systems in the USSR to public criticism. At the same time as the government was attempting to do a major restructuring of the state system and economy, directly lead to unrest and dissatisfaction among Soviet society?
Answer-Yes it did. The major restructuring under the best of circumstances was going to be unpopular among many. And the first results could easily lead to economic shortcomings that the population would feel directly. To allow/encourage open complaining and attacks on the economic and governmental system while trying to make those other changes was a recipe for disaster. And that is exactly what they got from it. Since they (Gorbachev and his supporters) didn’t believe that would be the result, is why the “weak and naïve” label is accurate.
Question: Did they Chinese see the train wreck happening in the Soviet Union over their Glasnost added to Perestroika reforms. And firmly reject making the same error. Especially after experiencing the Tiananmen Square affair?
Answer-Yes,they did. Many in China foresaw what could come from trying to combine the two as the Soviets were trying to do. And some believed/believe that the Tiananmen Square affair was allowed to develop because some in the CCP did think like the Russians that the two could be combined. After that the Chinese were certain they couldn’t be. And the last 33 years in the two countries (China the world’s major economic powerhouse VS the Soviet Union ceasing to exist) show the Chinese were correct.
Question: Do you believe trying to combine Glasnost and Perestroika directly led to the collapse of the Soviet Union?
Answer- Yes I do. I think a government making major massive changes to the nation’s economy. While at the same time opening that government and those economic changes to open criticism is guaranteed to cause unrest. From which the newly permitted open anti-system forces grow stronger. Using that new openness to attack the system and government. And that is shown to have been the case. Instead of a more tolerant and open economy and governmental system,as they hoped for,they got the collapse of the economy,the governmental system.And then the nation itself. The world and the peoples of the former Soviet Union have suffered for decades from that collapse. The suffering we see today in Ukraine has it’s beginning’s in that collapse.
Question: What did/do you think about the saying, “Philosophers here-to-fore have merely described the world, whilst the purpose is to change it”?
Answer-Without describing the world as it exists,you wouldn’t understand the changes to be made to it. I don’t believe describing the world and changing it are mutually exclusive.I think they can and usually do follow the other. If we want to consider Marx. I believe he was well known as one describing the world as it was in his time. And at the same time well known for listing the changes he believed should be made to it
I cannot even start talking with someone who suggests that foreign trade benefits a few oligarchs and the state only and perhaps a few rich.
Who has been sanctioned? That is not a metric. It does not mean the sanctioned are the ‘clean ones’. Good grief! Putin’s so-called ex-girlfriend that he has not been seen in public with for years, is sanctioned.
In the case of Glazyev, I’m firmly in the camp of Mr Putin, and strangely Martyanov.
I feel the same about those that don’t understand that. But let me remind you it was you that replied to my post first.So I will leave it that we just disagree on that point.
Michael Hudson taught me that the US is bullying everyone to service it’s conspicuous consumption nothing else. The solution is Socialism.i thought the dollar is so powerful but he taught me not to believe in what America is saying
Please send me titles of all Proff Michael Hudson books for me to buy
Here’s Hudson’s link. It should show all the books he’s written on Economy.
Michael Hudson taught me that the US is bullying everyone to service it’s conspicuous consumption nothing else. The solution is Socialism.i thought the dollar is so powerful but he taught me not to believe in what America is saying.please send me Proff Hudson’s book titles or names and writings including this interview to buy
Correction: cultural elites care NOTHING for cultural or religious issues.
Britain, Europe are no longer a people, a culture…they are a brand name in the assets of a bigger nation like the company Cadburys that is now just a brand of Mondolez International.
You now consume Germany like a trip to Disney, their leaders are branch managers of the Corporation…taking direction from the board in Washington.
Europe is flooded with cheap labour to maximize profits. Their lifestyles are sold to the cashed up crooks of the third world -I wouldn’t be suprised if glossy brochures aren’t put in front of these traitors of their people when negotiating away the assets of their country they have been entrusted to manage.
What is now happening in Ukraine is a hostile takeover by the evil empire…using all the assets at its disposal to do so.
How do you fight such an organization of criminals? Dump the managers (traitors) and put people in that have the people’s best interests -as a unique people- at heart…their culture etc.
If Europe doesn’t do that then in 100 years time the world will see that a native of Europe is naturally black!
“The overriding U.S. policy is to fight against China”
Crazy people here. Since Kissinger opened up trade with china, all of our manufacturing has long moved there, resulting in a YEARLY $300+ billion dollar trade deficit, which has been ongoing for decades. The US has been hollowed out, leaving behind nothing but rust belts. We don’t make any thing here but weapons, and wall street ponzi scams.
If china decides to cut us off, most of the population would die of starvation, as everything would come down. quick!
Hudson certainly brings the picture into focus!
“…basically, national parliaments are now subservient to NATO.”
What Hudson seems to be describing is the Ukrainization of Europe; that is, placing Europe in the same dependent position as Ukraine now is vis-à-vis the US. The statement “Ukraine is Europe” is true, but in a different sense than people think.
“placing Europe in the same dependent position as Ukraine now is vis-à-vis the US.”
If you don’t perceive “the US” as a nation state but a network of coercive social relations perhaps perception will be aided by addition of assigning such context.
The strategy in respect of “Europe” was agreed on proof of concept bases in March 1943 at the meeting of The Imperial General Staff in London with participants from the self-misrepresented “The United States of America”, a meeting whose contents, records and sometimes existence has “disappeared” from “public record” in some renditions even photoshopping some “Soviet” representatives into attendance.
The concepts had been developed from 1942 onwards by “British intelligence” educating/mentoring “US intelligence”.
The developed concepts were presented to The Imperial General Staff and their fellow participants for consideration in February 1943, shortly after the German and axis forces had surrendered in Stalingrad and its environs on 1st February 1943.
“The statement “Ukraine is Europe” is true, but in a different sense than people think.”
Perhaps a more illumination rendition would read ….. but in a different sense than some people believe, although some are prone to emulate some lyrics penned by Mr. Diamond – Then I saw her face and now I’m a believer.
Good find, Saker Staff.
Where the Europeans went wrong was that when the USSR broke up, they failed to realize that they had a strong vested interest in having good relations with Russia and the left over pieces of the USSR empire. Meanwhile the imperial interests of the United States was to keep the two groups apart. What the Europeans should have done is warm up to Russia whether we liked it or not, and if need be, let relations with the United States deteriorate if that was necessary. Now they are paying the price for that earlier mistake in policy. It is the realpolitik thing. A wise foreign policy should not be based on having other countries that are permanent friends or enemies.
“Where the Europeans went wrong…”
Your contribution is predicated on the the notion that “The United States of America” is a nation state singular unto itself (exceptional), not networks of coercive social relations not restricted to a “geographical” entity self-misrepresented as “The United States of America”, which through and within “European and other elites/representatives/”organisations” practice and are sustained.
“The Soviet Union” were an emulative network of coercive social relations in some degrees, within which some believed that levels of co-operation could be facilitated with “The United States of America” to affect mutual sustainability, some in “The United States of America” including but not limited to Mr. Stephen Cohen and Mr. John Mearsheimer evangelised that belief on the bases of convergence facilitating detente.
The development of the economies within East Asia, with initial emphasis on Japan, from the Korean War to the Vietnam War – more properly designated the American War by the Vietnamese and others – increasingly put the gold/US dollar relationship and the “reserve currency” under stress, the mode of deflating/precluding such stress chosen by “The United States of America” was by removing the “US” dollar and consequently “the reserve currency” from being underpinned by gold, and hence required detente to facilitate the alchemy of turning gold into paper, subsequently enhanced/secured by turning subsequent dollars into Petro-dollars, Copper-dollars (Angola and Chile refer). etc.
Some in “The Soviet Union” believed in, expected and welcomed detente with “The United States of America” on what they “perceived” as being convergence which was not fully convergently defined – an illusion which underpinned the notions of Mr. Gorbachov and others that “The United States of America” were co-operation capable/”can be trusted although previously apparently they trusted in god”.
From at least 1956 a limited number, but from 1969 onwards an increasing number of others in “The Soviet Union” and “The United States of America” understood that “The Soviet Union” was not sustainable for many reasons, and that throughout these processes opponents including “The United States of America” should/would seek to “profit” from such opportunities, some in “The Soviet Union” and elsewhere understood that the complicity of “The United States of America” could be attained as accelerant in the transcendence of “The Soviet Union” whilst offering opportunities of drowning a drowning man with the minimum of blowback, since attitudes and practices of some of populations of “The Soviet Union” would be catalysed by attempts of outsiders
to “profit” from such opportunities, which was perceived by some in “The United States of America” by 1994 but then discounted after “analysis” of not being “plausible belief”, then by 1995
was perceived as requiring caution hence the donated constitution prepared earlier, and their perceived “facilitation” of Mr. Yeltsin as President as a function of the Mr. Yeltsin/Mr. Zhirinovsky double act, and the acts of others.
Throughout “The United States of America’s European Components” were playing the detente charade in various forms including but not limited to “aid” programmes such as TACIS – (Technical Assistance to the CIS) and associated “non-government organisations” attempting to teach the natives where they went wrong.