by Ramin Mazaheri for the Saker Blog
It is often boasted in the US that they forced the implosion of the USSR via military overspending, as if recklessly creating a dangerous and useless arms race was something to brag about. However, the spoiled American rich kid is about to get his comeuppance and learn that money does not equal virtue.
The coronavirus hysteria, the West’s foolish Great Lockdown and the West’s looming transition from the “Great Recession” to the “Great Depression 2” is revealing that the delayed consequences of this overspending – and the hyperfinancialised economy that effort entailed – is causing a second implosion of historic consequences.
When “the Chinese century” is writing the history books they will correctly say it like this: the decades of success and persistence of the USSR forced the US to take the economic measures which ultimately caused its own demise.
The USSR was not beaten by industrial capitalism – it was more than equal as a competitor there – but by financial capitalism. The coronavirus is but a minor malady compared to that disease, certainly. The USSR was certainly not constrained by rules of Islamic finance, but it certainly did not engage in any of the usurious, Ponzi scheme-like, fake-money amassing financial crimes which the West relied on to defeat the Soviets.
The creation of credit-fuelled financial bubbles may have bought the Pentagon some fancy toys, but it also bankrupted the US economically, ideologically and culturally – how could virtue and success ever be the final result of an insane, sovereignty-violating, global-sized war on other people’s types of socialism?
Despite all the ignored democratic votes, the influence of money and lobbyists and a vast amount of other evidence, Western liberal democracy does not admit that it does indeed have a vanguard party and that this party is bankers. The US vanguard party is in the process of imploding the US system against the will of their people, exactly like the vanguard party of the USSR did in 1991.
Quantitative Easing economic-political policies will become the historical equivalent of perestroika economic-political policies – two steps which should have never been taken, and which will ultimately be seen as the cause of the demise of the 20th century’s two dominant powers.
When the West can’t honestly explain WWI, stagflation, the War on Terror, QE Infinity, etc. something is being repeatedly hidden about their system
In early April’s Corona rewrites capitalist bust-chronology & proves: It’s the nation-state, stupid I pointed out how the corona economic hysteria was giving us more crucial data about “capitalism with Western characteristics” – it was providing a bookend to a new Western economic era within the context of Marx’s correct analysis that capitalism lurches from boom to bust. I sketched five historical cycles, from Boom 1, beginning in 1865, up to the current era, the 2020 beginning of Bust 5.
On May 13, in Scarce jobs + revenue desperation = sure Western stagflation post-corona, I noted the current similarities between the near-term future of the US economy with the beginning of the Bust 3 era – the 1970s. I pointed out that not only was Western capitalist theory incapable of explaining how stagflation could occur, they were similarly unwilling to honestly explain what ended it. Western intellectuals and schoolchildren are also similarly dumbfounded regarding the start of World War One – I related the common leftist analysis on May 4: the cause was high finance collusion. It is to this stagflation era where we must return to, as it contains the seeds of modern QE.
Capitalist-imperialist economies require war to produce the profit and growth which their system is built around – they need stolen wages (slavery), the free resources provided by “new frontiers” (the imperialism-rationalising theory of “Manifest Destiny”), new markets (which must be governed by their own puppets), or a constant war machine. When the Vietnam War ended in 1975 the US economy ground to complete halt because their economy had lost these raisons d’être, and their intellectuals could not explain what to do economically.
Nobody could explain it, because nobody could be honest and say that the 20th century US economy was undoubtedly modelled on corporate fascism (which is why after World War II Washington immediately found a natural alliance with their brother corporate fascist states of Germany and Japan) and guided by the Pentagon in Eisenhower’s famous “military-industrial complex” analysis… but it now had no slaves, no frontiers left and no wars.
Vietnamese heroism had capped similar bravery by Cubans, North Koreans, Chinese and Soviets, and combined with the MAD of nuclear weapons the corporate fascist concept of “economy as war machine (in order to eradicate redistributing socialism)” had failed, thus the endemic stagnation of the 1970s.
End of story/end of history.
Not so: the long-awaited, never-seen open discrediting of “corporate fascism with American characteristics” was put off (for four decades) thanks to the massive, phony “Star Wars” armaments buildup under Reagan, which provided a new morning for the US corporate-fascist economy and culture.
The idea was to outspend the USSR and divert their resources from citizen happiness and stability, but we now see that Washington bureaucrats & NYC intellectuals had no economic endgame: how would the US ever stop spending? They simply did not care that they had no answers, such was (and still is) their rabid anti-socialist/anti-redistribution mentality.
They were also in a very dire situation: back in the 1970s the American/Western Dream was decidedly failing at home, i.e. corporate fascism was failing, and entirely due to the cultural victory of socialist ideology within the West itself. Their soldiers (correctly) had zero desire to keep dying in order to uphold the tenets of corporate fascism in Vietnam – which is to say that the anti-imperialist ideology of socialism had prevailed culturally in a significant manner in the US. At the same time Western labor unions never had so many members and influence – i.e. the labor solidarity ideology of socialism had prevailed culturally in a significant manner as well.
Thus for all the alleged stagnation and corruption in the Brezhnev era, corporate fascism in teh US was even more stagnant, corrupt and domestically delegitimised. Abroad, the Western imperialist war machine had run out of free – but violently wrested – lunches and resources.
Thus the era of Western financial falsification began.
If the USSR and the socialist alternative had not been standing as a viable systemic alternative, the US would not have resorted to such desperate, ultimately suicidal tactics.
How can corporate fascism revive a stagflation economy? Via financial deception, which can’t go on forever
In corporate fascism the military decides how money is redistributed not the civil service (as in socialism), with bankers providing the intellectual vanguard party. Their intellectual vanguardism is not proven like in China or Iran – via devising ever-more efficient and moral governance – but is tested by their ability to devise new financial deceptions in order to keep the US system going.
In 2020 corona is proving that such a tandem, and led by such a foolish war (on socialism), not only was always incapable of sweeping the globe in a Pax Americana but could not even ensure the prosperity of its own citizens.
Reality was first admitted in 1971 when Nixon went off the gold standard: by making the US and their military allies use dollars, not gold, the war in Vietnam stopped being so very unprofitable for the 1%. But one financial deception necessarily begets another, of course.
Absolutely nobody is more reactionary than a monarch, thus the Petrodollar was created. After all, the West doesn’t believe democracy is possible in an Islamic society anyway, right? This was the second instrument of hyperfinancialisation, an ideology which obviously only benefits those connected to high finance, i.e. the 1%.
Both hyperfinancialisation and the desire to break socialism’s cultural gains required the alleged “solution” to stagflation – breaking the housing market by increasing the prime interest rate to 20% in 1981. This rolled back the economic cushion US workers had acquired, and also sucked the value of homes from the owner back into the 1%-dominating system – more profits via financial deception.
The logic of hyperfinancialisation necessarily led to deindustrialisation and delocalisation of production, despite the obvious damage to the nation and its economic independence. Of course, breaking national economic independence within the West as well is the goal of neoliberalism/neo-imperialism, as evidenced by the Eurozone, that “neoliberal empire”. Hyperfinancialisation was the apex of Anglo-English liberal (bourgeois/aristocratic) economics and therefore the greatest pro-socialist proof that capitalism is truly the result of class warfare waged by a colluding international 1%.
By gutting housing assets, breaking labor’s power, permitting inflation in prices of energy and food, and breaking with the traditional sources of revenue, profit and hard, true wealth – necessitated because they were breaking with financial reality – a vast expansion of credit to the 99% was also needed, and credit card use began in earnest.
All of these 1980s-era decisions, including Star Wars, drastically changed the American system but were entirely in keeping with the logic and goals of corporate fascism.
Yes, these decisions did work and did lead to ten good years in the US, Boom 4 (1991-2001), but Bust 4 for the 99% began in 2001 and still continues until today; Boom 5 (2009-19) was only limited to the 1%’s asset classes and termed the “Great Recession” for the 99%. The Petrodollar and all these other fabrications enjoyed major profits, but in liberal/aristocratic democracy and their inevitable corporate fascism these profits are only hoarded among the 1% – this raison d’être could not be clearer from the last great deception from the West’s vanguard party: QE.
Bust 5 is the post-Corona era and will be called the Great Depression 2.
The only good news is: “the Western economy” is not synonymous with “the global economy”, so socialist-inspired nations will ride out Bust 5 just as they have been forced to ride out all the other inevitable busts of capitalism-imperialism.
This historical analysis of recent US economic history is thrown into clear relief by corona and the Great Lockdown. It says much that Western pro-capitalist economic commentators are so existentially distraught at the 2020 implications of the very real “QE Infinity” that only I am asking Why haven’t we called it ‘QE 5’ yet? And why we must call it ‘QE 2.1’ instead. They are so flustered they cannot even count from 4 to 5 right now.
But that is how very destabilised, how very gutted, how very sad Western capitalists are right now – they cannot deal with or describe reality, just as their similarly foolish intellectual ancestors could not deal with or accurately describe World War I, stagflation, the Petrodollar, the phony War on Terror, etc.
The corona overreaction is bringing down a history of lies, and not a short history either.
It’s quite a simple conclusion: the West could neither beat the USSR nor defeat the rising tide of domestic socialism without resorting to the economic suicide/Ponzi scheme inherent in phony hyperfinancialisation.
Hyperfinancialisation is simply no way to run a real economy, and Soviet commentators said the same thing in the 1980s – corona is proving them right.
So I guess it turns out that corona really is as dangerous as the elitist Western commentariat warned….
Conclusion: Down with English liberalism in all its outdated economic & political forms
It is now 100% obvious that the Western system cannot and will not win: if QE is stopped the Western system collapses; if the West gives a debt jubilee or huge amounts of People’s QE this is no longer capitalism-imperialism but socialism.
Salute the Soviets: the martyrs of World War II, the only “empire” which bled the centre to feed the periphery, and soon the martyrs whose final act was to fatally wound – unknowingly – the elitist & racist American empire of corporate fascism.
We cannot really blame early socialists for not seeing this coming – financial capitalism was not as progressed as it is today, so they had less data. Who could have imagined that capitalists would be so stupid as to believe that quantitative analysts/computers using algorithms knew more about real life and the decidedly non-mathematical study of economics than human analysts? A theory (a comprehensive understanding) of capitalism which drew much from Lyonnais silk factories, which employ just 800 people today, needs adaptations to accommodate 21st century hyperfinancialisation stupidities and perpetuations of non-reality – this does not at all invalidate the core theory of socialism, no matter how much the West refuses to even teach and discuss this core theory.
But what is really collapsing? It is not neo-imperialism, because Western domestic belief in that ended with Vietnam: the War on Terror was the phoniest of wars, and also one which was a new type of war – one fought with huge amounts of paid mercenaries, 5th columnists and foreign radicals, as opposed to one fought by a truly national corporate fascist war machine like before. The War on Terror is a neo-imperialist war, but it was the death throes of two centuries of Western imperialism as we know it. The phony War on Islamic democracy (after the West failed to militarily defeat socialist democracy) only enriched the Pentagon-connected 1%, and the proof of that is all over the economic data since 2001.
Thus, what’s collapsing in 2020 in the largest historical sense is “capitalism with English characteristics”.
We can argue about the minority percentages of French, Spanish, Dutch, Austrian, German and Italian capitalism in this ideology, but we must agree that this system never collapsed – it passed from the English to the Americans; it was blitzed, but English liberalism (based around aristocratic privileges/liberties for the leaders of an imperialist & corporate war machine) has never been discredited nor defeated.
But this collapse is bigger than just the US and England, however – thus, “Western” is really the best name for it.
Washington recklessly decided that any risk was worth it in their effort to “win the Cold War”, i.e. destroy the ideology of socialism and its twin pillars of economic and political redistribution of power. In 2020 the Chinese laugh out loud to that possibility; in 2120 they will say that the single victor to the Cold War was not China, but socialism.
When the USSR imploded there was a system available to immediately welcome it – Western capitalism-imperialism. But when capitalism – which falsely views itself as victorious, although corona is teaching many the truth – implodes, socialism is still there, still thriving, and still not resorting to poisonous deceptions which perpetuate illusions.
Corona contrarianism? How about some corona common sense? Here is my list of articles published regarding the corona crisis.
A day’s diary from a US CEO during the Corona crisis (satire) March 23, 2020
If Germany rejects Corona bonds they must quit the Eurozone – March 30, 2020
Pity post-corona Millennials… if they don’t openly push socialism – April 14, 2020
Coronavirus – Macron’s savior. A ‘united Europe’ – France’s murderer – April 22, 2020
The end of globalisation won’t be televised, despite the hopes of the Western 99% (2/2) – April 27, 2020
Ramin Mazaheri is the chief correspondent in Paris for Press TV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. He is the author of the books ‘I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’ and the NEW ‘Socialism’s Ignored Success: Iranian Islamic Socialism’.