Re: High Finance & Investment Colonialism Pt 2 Archived Message Posted by Keith-264 on September 4, 2023, 9:42 am, in reply to "High Finance & Investment Colonialism By Michael Hudson" What are you talking about? That was not a wave of globalization. That was a wave of imperialism and the competitive imperialism that was in train at that time, that was occurring at that time, culminated in the First World War and eventually also the Second World War, because the Second World War occurred ultimately, because at the end of the First World War, the Versailles, so-called Versailles settlement, settled nothing. It simply laid the groundwork for a new war to emerge. So taking imperialism seriously involves recognizing that. It also involves recognizing that today’s discourse of human rights and democracy and so on is just the dressed up, the old discourse of the civilizing mission and the white man’s burden and so on in a new dress. So it involves recognizing and seeing right through that, which unfortunately too many people don’t do and which is why we feel we need to keep saying this. Also, the idea of the rules based international order. The fact of the matter is, and this is also quite interesting, because if you take imperialism seriously, you would recognize that the United Nations itself is the formation of the United Nations and the Charter and so on were themselves the result of the struggle of the vast masses of the people and nations of the world against imperialism, the recognition of sovereign equality, etc., even though they were compromised. But the fact that they had to be recognized in principle and only then compromised was an achievement of these groups and institutions like NATO were created precisely because the imperialist countries did not want to have to deal with the unwashed masses of the world in institutions like the United Nations. And one final point, you know, back in the day, in the early days of capitalism and well into the 20th century, the Western world, the imperialist world set a standard of civilization. They said that if a country meets the standard of civilization, which means if they are another imperialist country, then they will be dealt with, you know, with all the respect due to another sovereign country, you know, with limits on how they would be dealt with in war as well as in peace and commerce and so on. But of course, this did not include the vast majority of the countries of the world that were regarded as uncivilized against whom anything could be done. The most brutal acts of warfare, the most life-threatening sanctions and so on could be used. And this kind of thinking continues. It doesn’t take that name, but in the name of human rights and democracy, when sanctions are imposed on people, this is just a new standard of civilization being imposed. So taking imperialism seriously involves recognizing all these things. MICHAEL HUDSON: Well, I think that what neither Marx nor even Lenin anticipated after World War I was that the most problematic international disturbance was going to be not private sector debt but intergovernmental debt. And that’s what led to the, you just mentioned, the Treaty of Versailles, which really meant something radical that Europe had never experienced after any of its wars, the Napoleonic Wars and the early wars. All of the allies would forgive all of the mutual support and the cost of fighting the war together. And they expected that the United States would, there were not going to be any inter-ally debts. But the United States said, well, before we entered World War I, we let you fight it out, you know, so we could come in, send a few troops and then claim that we saved it all and you owe us a lot of money. You owe us so much money that you’re going to, you European countries are going to have to go into depression for the next 20 years. But a debt has to be paid. And the Europeans said, well, our whole Western civilization is based on the principle that all debts have to be paid. If you say we owe you the money, we’re willing to go into 20 years of depression. The silver lining is this is going to really hurt the labor force and we can hold them down and we can get even, the class war will be won in Europe and we can make Germany pay. And Germany was the number of the most potentially industrialized continental European country. Germany was the country that had the most industrialized banking system. And Europe, the Allies were just as happy to crush Germany in order to get the money for the Allies to pay the United States foreign debt. That’s what my whole Super Imperialism was about that. And I don’t need to go over it here again. But all of this role of government, not as leading to socialist development, but as the leading of finance and through government as the mode of imperialism, even more than the private sector, was completely unanticipated. Even Marx, when he gave a speech before the Chartists in the mid-19th century, said, strangely as it might seem, he endorsed free trade with India because he said the structure, the dynamics of industrial capitalism are so powerful that it’s a new mode of production and it’s going to modernize the backward countries like India, Asia, Africa, South America. He thought that somehow British trade and other capitalist countries trading with the rest of the world was going to involve replicating their system and making them industrial capitalist countries too, leading to a kind of equality that would all end up moving towards socialism ultimately. But that isn’t what happened. Instead, the trade has imposed backwardness on countries by supporting client oligarchies, supporting military dictatorships, and making them trade dependent, not independent, and most of all, preventing their governments from playing the role that governments played in the industrial capitalist takeoff in England, Germany, and the United States. This is providing basic infrastructure and natural monopolies for the private industrial sector. Well, finance capitalism has basically taken these infrastructure investments and made them all financial exercises. Nobody expected that countries would all move against what was the financial, the economic self-interest of industrial capitalism to be something as twisted as what’s actually emerged from World War I and especially World War II, and especially the Korean and Vietnam wars of the United States that led to the dollar standard. RADHIKA DESAI: Well, you know, Michael, I think you made two points about Marx and what he thought, which I find I couldn’t quite agree completely. In fact, I couldn’t quite agree. Because, first of all, you talked about how you thought that Marx thought that capitalism and imperialism were going to develop India. That is not so. In fact, if you read the pamphlet, “The Future Results of British Rule in India”, Marx ends by saying that, and not only he qualifies this by saying that the British are not doing this out of any kindness of their heart or anything, but that you and I know, I don’t think you would disagree with that. But he specifically points out that the only way in which India will really enjoy the fruits of development is if there is a socialist revolution in England or equally if India gains independence. So there is absolutely no doubt in my mind that while Marx thought that there would be some inadvertent forms of development in India, he actually, even back then, you know, in the early, late 1840s and early 1850s, Marx was very clear that national independence was a prerequisite to development for the reasons exactly that you have recognized. All I want to say is Marx recognized it too. And of course, what I’ve shown in various of my writings is that Marx actually understood very well the centrality of the role of the state in economic development. And then the second point, I think you, of course, rightly point out that Marx did not anticipate the governmentalization of finance. I mean, at one level, I agree with you, but then, you know, it’s a bit like saying that Aristotle did not imagine that there were airplanes, you know. In a certain sense, it’s really worth reflecting on that a little bit, because I think you raise some very good points. So basically if you look at what Marx, Marx’s conception was, you know, what would how would capitalism develop and why was socialism necessary and how would it come about? Essentially, what Marx is saying, if you examine this clearly and I bring this out very clearly in my latest book, Capitalism, Coronavirus and War, in a fairly long discussion about this, what Marx is basically saying is that capitalism requires competition, competition naturally results in monopoly. And once a capitalist economy reaches the monopoly phase in which most sectors of the economy are dominated by one or a small number of big corporations, at that point, society will have become ready. Capitalism will become ready for socialism. It will because it’s very simple. What he’s saying is that insofar as capitalism is historically progressive, insofar as capitalism, by dragging humanity through much mud and gore and by creating a lot of misery and anarchy, nevertheless develops the forces of production. It is because of the virtues of competition. But once competition is no longer there, there is no reason to keep capitalism. So capitalism had already reached its monopoly phase in the early part of the 20th century. And since then, essentially, humanity has been suffering the cost of keeping capitalism alive in a small number of countries, you see. MICHAEL HUDSON: Well, you’re absolutely right about what Marx said, that there had to be a revolution. But he said a revolution is what industrial capitalism is all about. He said industrial capitalism is revolutionary because in England and Europe, it’s gotten rid of feudalism. It’s the strategy of industrial capitalism is to free economies from the landlord monopoly, from the landlord class and from predatory finance. So when he said he expected capitalism to spread to the rest of the world, he meant the capitalist revolution against backwardness, the revolution against feudal monopoly and the revolution that he thought would indeed lead to socialism. So you’re right. Marx took an overall broad social view of economics and didn’t just limit economics to prices and incomes. It was a transformation of society that Marx thought was going to appear towards socialism. And that’s what has been [derailed] by World War One and everything the last century has seen. RADHIKA DESAI: We’re going to have to reserve this point for our discussions of rent, because I think that the revolution you’re talking about is already Ricardo’s point. And then Marx, of course, goes further than that. But let’s go on. So, of course, we also have already pointed out our next point, which is that our understanding is much closer to Marx, as you will have seen in our discussion we just had about the finer points of Marx. And the key point that people forget about Marx, even many so-called Marxists, is that Marx understood that capitalism was contradictory. This is often forgotten. And if it wasn’t contradictory, then we wouldn’t have to get rid of it and we wouldn’t have imperialism. But both of these things are true. The next point, then, is that we understand that capitalism is contradictory and crisis-prone. MICHAEL HUDSON: The crisis of today’s finance capitalism is not one of domestic overproduction within the production and consumption of the real economy. It’s turned out to be debt deflation. And internationally, the foreign dollar debt burden has become a kind of neocolonial leverage to impose austerity, as we’ve said, and other anti-labor policies on the non-US economy. So the kind of crises and internal contradiction that the international economy is suffering now, as it’s being polarized, is not basically what Marx talked about in Volume One. Although if you read Volume Two and Three, you can see his focus on finance. Certainly I filled that out. So let’s talk a bit about what this crisis is and the way it’s taking form today. The United States government is the world’s largest debtor, and it says, we’re the unique nation. We’re the only country that does not have to pay our foreign debt. And in fact, there’s no way that the government foreign debt, which means the bank reserves of the whole rest of the world that are kept in dollars, none of this can be repaid. It’s just they can trade it with each other, but they’re never supposed to ask to be repaid. Only the U.S. private sector and the U.S. government can ask other countries to repay their debt. That is the internal contradiction that has driven the world economy apart and is splitting it and is forcing other countries to either face permanent sort of neo-feudal dependency on the United States or to say, well, we get to develop, too. It’s not going to be just the monopoly of the European garden keeping our jungle as a jungle. So I think the basic point that we’re making is that the global majority needs public investment in infrastructure. It needs to modernize the economy and it needs to create prosperity. And that means freeing their economies from U.S. dollar debt. It’s bad debt in the sense that it can only be repaid by siphoning off their economic surplus, by forcing them into bankruptcy financially and by stifling their growth. That’s the contradiction, that the European garden can grow and the jungle cannot grow because any growth that it has is going to take the form of paying debt service to holders of U.S. dollar bonds, including their own domestic oligarchy. Most dollar debt of Argentina isn’t really owed to the United States, although it’s in dollars. It’s owed to the Argentine ruling class that holds its debt in the form of dollars. While it wrecks the Argentine economy, it’s been doing that now for an entire century. That’s why I was a little surprised to see Argentina included in the new members of the BRICS yesterday. I’m not sure exactly how you can have Argentina as a full-fledged BRICS member as long as its oligarchy supports the United States and remains in control of the government. RADHIKA DESAI: Well, that’s a very interesting point, Michael, and I would say that it’s very likely that that oligarchy itself has become considerably less powerful and it is also itself running out of options. It can no longer rely on the United States, but we will have to see. But I just want to come back to many of the points you were raising. So the point we’re making is that capitalism is contradictory and crisis prone. And one of the things you pointed out is that, you know, somehow the garden is growing and the jungle is not. But the reality is the opposite. The reason why this BRICS summit is so historic, the reason why the West is essentially so afraid of what’s going on at summits like the Johannesburg summit is precisely that the so-called garden, the European countries, the imperialist countries have been trapped in a syndrome of slow growth for the last several decades. Whereas these other countries, China in particular, which is why, of course, every opportunity is taken in the Western press to tell you why China’s growth is going to end very soon. But China, of course, and many other of these so-called jungle countries or what Trump used to call shithole countries, those shithole countries are doing much better than you, folks. So this is, of course, a major issue. But I also wanted to say, you know, I completely agree with you that the current that at the this moment of crisis in the world. And I would say that, quite frankly, we’ve been living in a crisis ridden world for the last many decades, really going back to the 1970s, because that crisis that hit in the 1970s was never resolved. Neoliberalism was trotted out as a solution to the crisis, but it never resolved the crisis. It never restored capitalism’s vigor. And instead, it simply saddled the world economy with the debt that you’re talking about and with the financial speculation and financialization that you’re talking about. But if you’re trying to understand the whole crisis, I would say, first of all, that any given crisis is never any one thing. Of course, there is a financial crisis today. But today’s crisis is composed both of today’s crisis is composed of a financial crisis. But there is also an underlying productive crisis, a crisis of low investment, low growth, low profits, et cetera. Furthermore, there is a crisis of not sufficiently expanding demand, which has been with us for a long time. So, you know, one of the ways I’ve tried to deal with this is that, you know, Marx and I’ve actually in my latest book, I have the most developed form of that table. I’ve actually created a table, you know, because in capitalism, there are at least two forms of crisis. One is vertical, that is, it has to do with the exploitation of the working class by the capitalist class. And the other is horizontal. It has to do with the various ways in which various capitalists relate to one another, namely via competition. So both the mechanisms of competition and exploitation lead to crisis and they lead to crisis in practically every sphere that capitalism requires for its existence. So there are the two core spheres of value production, namely production and exchange or markets, basically the production and markets. And there you have four different forms of crisis that can occur, contradictions that occur. And then there are other realms that have to be transformed in order for capitalism to exist. Capitalism must create money. It must create credit mechanisms. It must have a state. It must relate to the environment and so on, essentially by privatizing it. And of course, then once you create states, there are international relations. So in practically every one of these spheres, there are forms of crisis. There are monetary management can lead to deflation or it can lead to inflation, etc., etc. There are many crises, there are credit crises and so on. So there are many forms of crisis. And any given capitalist crisis is usually a concatenation of several different crisis mechanisms that are working at the same time. But nevertheless, yeah, I mean, having said that, I completely agree that capitalism is crisis prone and contradictory. And today, the financial crisis we have today is underlain by a crisis of the productive system itself, which is partly also why finance accumulates, because it’s when you don’t have enough investment opportunities, productive investment opportunities that people hold back their money and they invest in speculation rather than production. It’s when companies are not borrowing to invest productively that you have to go out and find all the workers who will borrow from you in order to finance their cars and their education and their houses and so on. So underlying this, there is a productive crisis as well. But yes, on top of that, productive crisis has been built over the last many decades, layer upon layer of financial crises. MICHAEL HUDSON: Well, you can see the crisis in the United States. Why cannot there be investment in the United States? The largest companies, the Standard & Poor’s 500, have spent 92 percent of their profits of their net income on stock buybacks and on paying out of dividends. Only 8 percent is to invest. They can’t find anything to invest in. Apple has said we cannot find a single penny to invest. So we’re paying more money in stock buybacks and dividends than we’re actually investing. We’re asset stripping. And finance capitalism is primarily extractive. It has loaded the economy down with debt so much by debt financed housing, by making its labor have to earn a high enough wage to pay its housing debt, its education debt, its automobile debt, its credit card debt, that it’s unemployable. So, of course, there are no investment opportunities left in the United States and Western Europe. That’s why the garden is deindustrializing and is going to turn into a jungle, because the only way that you can make money is financially by asset stripping, by deindustrializing your economy, by cannibalizing it. And that’s the clearest in the U.S. and British economies. That’s what Thatcherism and Reaganomics is all about. RADHIKA DESAI: Absolutely. And we are nearly at an hour. So I think it’s just as well because we are down to our final point, and that is that we understand in this show, in this geopolitical economy hour, that imperialism is declining. It’s very fashionable to show how radical you are by saying that, you know, imperialism was always very strong and it’s either just as strong today as it ever was or stronger today than it ever was. But the fact of the matter is that the large part of the present crisis, among the many contradictions of capitalism that are part of the present crisis, is the simple fact that imperialism has been declining for a very long time. And today it has reached a point, a very critical point, where it looks as though the kind of control that the imperialist countries could exercise over the rest of the world is slipping from its grasp. MICHAEL HUDSON: Well, down through World War I, the German banking system was highly industrialized. It was working efficiently with governments and heavy industry. But that’s not the way the rest of the world went. It took the Anglo-Dutch-American system. And it’s declining because the system basically is like that of the late Roman Empire. It created great wealth for the wealthiest 1% or the 10%, but it impoverished the 90%. And if you’re going to impoverish the market, then you’re going to have the kind of crisis that Marx described. And yet Marx did not think, see that it would, nobody anticipated that it would be a financial crisis, because Marx hoped that industrial capitalism’s self-interest would lead it to prevent finance from operating the way it used to, by what he called usury capital, and actually become productive. The Western economies since World War I have erased the whole distinction between productive and unproductive investment, productive and unproductive labor. The GDP and national income accounts don’t draw any distinction between production and what is really a transfer payment to the rentier sector, to the finance, insurance, and real estate sector, or to monopolies. So there’s not even a way that the seemingly empirical statistics can explain why imperialism and why finance capitalism is declining. RADHIKA DESAI: Yeah, and you know, too, and again, there’s just so much to say here, but we’ll just end by a couple of more points. But you know, imperialism essentially is declining the way I look at it, because, you know, think about it this way, the high point of imperialism, since which point it has been declining gradually, too slowly for me, but nevertheless declining, is 1914. 1914 was the high point of imperialism. In the previous decades, not only had Britain acquired its big empire, but a number of other countries appeared that they’d also tried to acquire empires. And so the world was essentially divided up into these big empires. So that was a high point of imperialism. But it was also the moment at which the big crisis of the imperialist world order broke. The wars between the imperial powers substantially weakened them. And then that, combined with the rise of communism and the struggles for decolonization in third world countries, essentially put the world onto the long and slow road of the decline of imperialism and so on. But that moment also coincided with, I would say, the peak of capitalism, according to Marx anyway, because really, by this point in time, capitalism in its homelands had already entered the monopoly phase. At that point, capitalism really didn’t have that much more to give to the rest of the world, I mean, to the world in general. That is to say, it had done what it could in terms of developing the forces of production. And now the point was that they would be better developed if we had other forms of production, socialists, whatever, some or the other version of socialism. And this was, by the way, witnessed when you saw that the Soviet Union, once it was stabilized, it managed to become the second industrial power in the world in a matter of decades. From being the most backward country in Europe, it became the second industrial power because it showed you what planned production could do. So and also, of course, the very fact that capitalism had reached the monopoly phase and what Hilferding called the finance capital phase in which large banks essentially controlled vast swathes of the productive apparatus. Essentially, what this told you is that the moment for planning had already come because that’s what a big corporation is. It’s a giant planned economy. So the only question that arises is why should we allow these giant planned economies which only exist because of our labor, which only exist because we create the laws and so on that allow them to exist. So why not socialize? And that was a sense in which the moment for socialism had come. And so, of course, we have had now socialistic experiments as well. And they have also stood up against capitalism. But the point is that in the homelands of capitalism, what we are witnessing today is the cost that both the working people of these countries, as well as the rest of humanity, is paying for keeping capitalism alive in these countries. Coming back to the BRICS in closing, one cannot but be aware that most of the countries of the BRICS are not socialist. But the interesting thing is that in practically every case, you can show that where they have done well, where they have alleviated poverty or industrialized or what have you, they have done so by the adoption of non-capitalist means. And it is the freedom to adopt such means, which is the crucial issue at stake in the confrontation between this group of countries and the G7. MICHAEL HUDSON: Well, I think what we’ve been describing is that U.S. imperialism has backfired to destroy its own economy. And above all, by de-industrializing and de-unionizing the labor force, by focusing on external exploitation of what America can get from other countries. Instead of creating an economic surplus at home and within, the United States has followed the same kind of self-destructive dynamic that destroyed the Roman Empire. It cannot re-industrialize, leaving the debt overhead in place any more than the BRICS countries can industrialize without freeing themselves from their foreign debt overhead. Because the financial system has priced U.S. labor out of world markets as a result of making labor pay for what we’ve described all along, the housing, education, health care, et cetera. And yet the economic historians now say, well, you know, there really wasn’t a dark age, because the wealthiest 1% of Romans in the late Roman Empire got so rich that the economy actually grew. It’s true that 99% of the labor were reduced to serfdom, but that 1% actually made a growing economy. Well, that’s what seems to be happening in, that’s Bidenomics. That seems to be what’s happening in the U.S. economy now. The wealthiest 1% to 10% are making so much money that it exceeds the deprivation and the indebtedness and the reduction and shrinkage of the 99% economy. And so the only hope that the United States has of maintaining this kind of prosperity for the wealthiest financial class is to freeze the status quo, to block any kind of active government policies that promote labor and industry at home or abroad. And the industrial capitalism today is a dinosaur. It’s what was leading the late 19th century onwards to what seemed to be socialism. But instead, we’ve got finance capitalism. And if you have knowledge, if you explain what we’re going to be doing in the coming shows of how this mixed economy strategy, every economy that’s developed has been a mixed economy with the government to play a major role. If you let the private financial interests take over this role of government, you’re going to have the kind of shrinkage that’s de-industrialized the U.S. economy. And that role of government has to be the core focus of how the BRICS economies are going to develop. And that requires freeing themselves from the dynamics of finance capitalism and finance imperialism that we’ve been discussing throughout all of our shows. RADHIKA DESAI: Yes, exactly, Michael. So let me just bring this to a close by making one final comment, which is really many of the secrets of what is the United States, when what is the United States is a long list of industrial decline, financialization, inequality, social breakdown, political lockdown, you name it, cultural decay. All of this is happening. The one clue to understanding why all of this is happening is that the United States got its chance to try to be the leading imperialist country and grabbed it with both hands precisely at the moment when imperialism was actually declining. So with that thought, let’s just let’s bring this to a close. We will be back in September, hopefully with many other interesting shows. So until then, thanks for watching and looking forward to doing this again in a few weeks. Bye-bye. Message Thread: High Finance & Investment Colonialism By Michael Hudson - Keith-264 September 4, 2023, 9:41 am Re: High Finance & Investment Colonialism Pt 2 - Keith-264 September 4, 2023, 9:42 am   Searching