Wednesday, August 02, 2017

Time for a More Subtle Approach to Power

Force and Fraud

by Frank Lee - Off Guardian

July 28, 2017

It seems now overwhelmingly apparent that the ‘West’ has entered a phase of terminal decline – a multifaceted and ongoing deterioration at multiple levels: cultural, political, ideological and economic. Such is the way with all civilizations, particularly those based upon empire.

This is not a novel phenomenon; indeed, has become something of a cliché [1]. But the process appears to exhibit a recurring historical leitmotif.

Niccolò Machiavelli Italian politician,
Writer and Author, adviser to the Medicis

As the American writer Morris Berman described it:

With the exception of hunter-gatherer societies which have not been interfered with by more complex ones … the pattern of birth, maturity and decay would seem to be inescapable … Where is the glory of Babylonia now? Or that of Egypt, India, China, Greece and Rome? Gone, all gone – that is the historical record. Why, then, should America escape this fate …? The dissolution of (American) corporate hegemony, when it does occur … will happen because of the ultimate inability of the system to maintain itself indefinitely.” The Twilight of American Culture

Note that Berman is talking in general terms apropos of the fate of empires, but his principal target is the US. This process is also applicable, to a greater or lesser degree, to the rest of the American empire including the rest of the Anglosphere, Europe, Japan, South Korea and various other US client/vassal states around the world. This process of regression notwithstanding, many, even on the left, still regard the US and its empire as an unstoppable economic and geopolitical behemoth, all powerful and irresistible. One such is Tariq Ali who seems to think US decline as either not happening, or is not particularly important, a minor setback, stating that ‘the signs of impending collapse or irreversible decline are few.’ (The Extreme Centre – Tariq Ali)

‘Signs of irreversible decline are few.’ Really! Mr Ali seems to have fallen for all the ‘exceptional people’ hype. See note [2]

For those with eyes to see it seems clearly discernible that all is not well in the empire. Indeed, the signs of imperial over-reach are manifest. Endless imperial adventures whose outcomes have been uniformly negative (and enormously expensive), a pointless, stupid and extremely dangerous confrontation with the Eurasian geopolitical bloc (principally Russia and China), an ongoing political and economic crisis in the US; continuing and increasing political and economic turmoil in the EU; unprecedented levels of global debt; a parasitic global economic system which is based upon wealth extraction rather than wealth creation, and a system where speculation, market rigging and outright criminality are commonplace.

Two further points need to be raised regarding current debt levels. Firstly, these rising debt levels might be sustainable if growth in national income (GDP) from debt-driven investments resulted in a level of output which exceeded the initial investment. This, is not the case however. Each input has resulted in a smaller output which means debt grows faster than income. During the 1970s the increase in National Income was about 60 cents for every US$ invested, by the 2000s this had dropped to around 20 cents for every US$. Now for every US$5 invested, national income will increase by only US$1. This process is usually measured by the (public) debt-to-GDP ratio. The US debt-to-GDP ratio has risen from 30% in 1975 to over 100% currently. Particularly since 2010 the rise has been even steeper, from 60% to 106%. In the UK, the debt-to-GDP ratio stood at 40% in 2006 but has more than doubled 90% in 2017.

(This is generally known as the Law of Diminishing returns pace Ricardo, Tendency of the Rate of Profit to Fall, pace, Marx, decline in the Marginal Efficiency of Capital, pace, Keynes, and the Vanishing of Investment Opportunities, pace Schumpeter.)

Secondly, the steepening curve for public indebtedness suggests that this is an accelerating or exponential process and is probably irreversible without massive debt write-downs, a massacre of the zombie companies, widespread bankruptcies, collapse of asset prices – in short, a game-changing crisis. Schumpeter’s ‘gale of creative destruction’ on steroids.

Existing levels of global public and private debt may now be too high for growth and/or austerity to deal with. Reduction of these levels of borrowings would require implausibly high economic growth, deep cuts in government expenditures or higher taxes and very large asset sales … Instead of being dealt with the problem of unrecoverable debt is disguised by lending more, low interest rates and extending maturities to maintain the illusion of solvency.” The Age of Stagnation – Satyajit Das

All things considered it seems increasingly likely that the debt super-bubble will eventually burst (bubbles usually do) since the debtor countries and individuals will not be able to carry the increasing burden of debt indefinitely. We are rapidly approaching or have already arrived at our ‘Minsky moment’ where our capacity to borrow no longer covers our interest repayments or is no longer underwritten by the ownership of an appreciating asset. This means an eventual default either through the front door, outright refusal to repay, or through the back door – inflation. All of which will give rise to a massive economic, political and social crisis similar if not worse than the 1929 Wall Street Crash.

Given the magnitude of this unprecedented post WW2 global crisis the possibility of holding this ramshackle imperial configuration together is going to take a level of resources and crisis management by the PTB which seems beyond their powers. But of course, this won’t stop them trying. The tried and tested mechanisms of rule (democratic or otherwise) are, in Machiavelli’s words – ‘Force and Fraud’.

He counsels a prince on how to act toward his enemies, using force and fraud in war. However, this methodology of rule, as well as being used against external enemies, is also to be deployed against the internal enemies, namely, the mass of the population.

The operation of an openly repressive state apparatus combined with the ideological state apparatus (to use Althusser’s terminology). Generally speaking democracies tend to rely on fraud rather than force. What has been called the ‘Manufacture of Consent’ – see Chomsky and Herman – a process which was long ago identified by Marx and Engels, and latterly by Marxists such as Antonio Gramsci, as well as other radicals such as the great American social theorist C Wright Mills. The objective of this process of thought-control has been to establish ideological hegemony over society which in its turn gave rise to political hegemony. It is worth quoting Marx/Engels in this connexion:

The ideas of the ruling class are in every epoch the ruling ideas, that is, the class which is the ruling material force in society, is at the same time its ruling intellectual force. The class which has the means of material production at its disposal, has control at the same time over the means of mental production, so that thereby, generally speaking, the ideas of those who lack the means of mental production are subject to it.” The German Ideology

In passing it should also be borne in mind that the relative ‘kid glove’ approach of thought control used in the imperial heartlands does not necessarily extend only to far flung (neo) colonial domains. It was quite inconceivable that the methods used to enforce order in the British empire could have been replicated in Britain itself. Britain used a combination of force and fraud in India, South Africa, Zimbabwe, Kenya, Ireland, Cyprus, Malaya, as well as the US. As for the white dominions, Australia, New Zealand and Canada, these followed a policy playbook of every white settler regime, i.e., localised violence by the settlers against the original domestic inhabitants. Every one of these outposts of empire was subjected to military force and violence to impose British rule, either through direct repression or imperial violence outsourced to white settlers. As for the record of the US and its informal empire the record of violence around the world is off the charts.[3]

However, this is changing and will continue to change. As Thucydides noted, when the crisis deepens, the methods of controlling empire will come home and be used to control the domestic population at the centre of empire. Force will play an increasing role vis-à-vis fraud.[4]

Given the deep structural crisis of western capitalism/imperialism we can expect increasingly desperate attempts of the degenerate elites to keep control the system through open repression, surveillance and thought control. Indeed, this is openly in play at the present time; a gradual slide into liberal utopianism-cum-neo-totalitarianism. And make no mistake the ruling elites will not play by Marquess of Queensbury rules as the gloves come off. As Bertrand Russell once observed visiting Soviet Russia just after the First World War and when the wars of intervention against the young Soviet Union was in full swing.

“It seems evident from the attitude of the capitalist world to Soviet Russia, of the Entente and the Central Empires and of England to Ireland and India, that there is no depth of cruelty, perfidy or brutality from which the present holders of power will shrink if they feel themselves threatened…The present holders of power are evil men, and the present manner of life is doomed.” [5]

All of which sounds chillingly similar to the present day.

[1] Oswald Spengler, ‘The Decline of the West- first published in 1918. Works, Friedrich Nietzsche – passim.
[2] In 1950 the USA produced 50% of world output, and as late as 1983 it produced 33%. By 2015 the US figure has dropped to 22%. This decline is expected to keep falling since Chinese growth rates are three times that of the US. Additionally, China is now the biggest world economy (adjusted for purchasing power parity) and will even overtake the US in absolute GDP in the coming period if growth rates remain the same. China is also the main creditor of the US (the world’s greatest debtor nation) holding US$1.5 trillion in US Treasury bonds.
In absolute terms US GDP is US$18.65 trn, however its public debt is US$19.84 trn which means public debt is greater than national income, debt-to-gdp ratio being 106% and moreover, the gap is getting wider.
Additional public (federal) debt, augmented by City, State, municipal, household, Financial and Business debt – comes to almost 370% of GDP. Roughly US$65 trn. Now add in government pension and health care commitments which are missing from official budget figures and total US debt rises to 400%, of GDP, in round figures this totals nearly US$95 trillion, more than seven times the published figure.
Pace Tariq Ali, these are not just ‘setbacks’. They are the medium and long term palpable indicators of exactly a secular and irreversible economic decline. It might help matters if Mr Ali read both the assets AND liabilities on the US national economic balance sheet.
[3] See “Rogue State” by William Blum. Works, Noam Chomsky, passim.
[4] “History of the Peloponnesian War”

[5] “The Practice and Theory of Bolshevism” (Bertrand Russell – 1920)

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