It’s no secret that United Statesians are more ignorant of the world beyond their national borders than the peoples of other countries. That ignorance serves a purpose. How can you keep screaming “We’re Number One” and believing you have it better than the rest of the world if you are in possession of accurate information?
For example, most United Statesians remain blithely unaware that they have among the worst health care outcomes of any advanced capitalist country while paying by far the most money. A Commonwealth Fund report, for example, found that the U.S. “placed last among 16 high-income, industrialized nations when it comes to deaths that could potentially have been prevented by timely access to effective health care.” As one of the few countries on Earth without a national health care system, health care is a commodity for those who can afford it, not a right as it is almost anyplace else.
That was a long introduction to yet more bad news. Not only are wages stagnant and living standards decaying, but working people in the U.S. are working longer hours. A study published in the peer-reviewed journal Socio-Economic Review found that, among 18 European and North American countries, the percentage of employees in the U.S. working at least 50 hours per week is the highest, at about 18 percent for the period 1990 to 2010. The paper, “Extreme work hours in Western Europe and North America: diverging trends since the 1970s” by Anna S. Burger, found that total rising — about 15 percent worked such hours for the period 1970-1989, a time frame in which the U.S. also had the highest rate.
Nonetheless, it is not only in the U.S. that more people are forced to work at least 50 hours per week. The study examined Canada, Switzerland and 15 members of the European Union (including Britain, then a member) and in only one country, France, did the percentage of people working excessive hours decline from 1970-1989 to 1990-2010. France, Sweden and Switzerland had the lowest rates, each less than 5 percent. Canada was second to the U.S. at 17 percent and also showed the largest jump, from about 6 percent in 1970-1989.
Work more or else
European Union law is supposed to prohibit working more than 48 hours per week, but the study by Dr. Burger noted that several countries have adopted opt-out clauses. Working beyond 48 hours, even with the exemptions, requires the employee consent. But given the one-sidedness of working relations, an employee could find it difficult to refuse consent. Dr. Burger wrote:
“[T]he choice whether to work long hours is not entirely, or even mainly, left to the preference of the individual but is guided by policy and collective socio-economic institutions. Contrary to conventional wisdom, the most relevant work time tendencies of the past decades are shaped by liberalizing trends in labour market policies, industrial relations arrangements and labour market structures not only in the Anglo-Saxon world but also on most parts of Continental Europe, rather than by regime-conform developments.” [page 3]
Some of the people working excessive hours are high-paid professionals such as lawyers or investment bankers. But low-wage workers are increasingly forced to work long hours because they can’t survive otherwise.
“At the bottom of the skills scale, an increasing number of workers are becoming labour market outsiders who are in atypical, or precarious, employment or unemployment. … The practice of very long hours is particularly wide-spread among outsiders for two reasons. First, due to a lack of regulatory protection and high replaceability, outsiders are in a vulnerable position vis-à-vis their employers. Not complying with an employer’s request for overtime might result in an outsider’s immediate dismissal and replacement. Secondly, in many cases, outsiders consent to, sometimes even initiate, working very long hours in order for their income to reach subsistence level. In today’s increasingly unequal economies, an ever-larger number of low-skilled workers must compensate for their relatively low hourly pay by allocating more time to work. While this decision is formally voluntary, in substance it is not because the choice is strongly shaped by the restrictive political economy environment.” [page 8]
Working conditions in the EU are deteriorating, but employees in the U.S. have less protection and more meager unemployment benefits. The pressure to work long hours is more intense there than in Europe, and employers often find it more profitable to squeeze extra hours out of employees rather than hire someone to lighten workloads. Another product of the extreme individualist ideology U.S. capitalism fosters.
And although overall working hours have actually declined over the past half-century, the rate of that decline has been far slower in the U.S. than in the European Union. A paper by Robert J. Gordon and Hassan Sayed, “The Industry Anatomy of the Transatlantic Productivity Growth Slowdown,” found that for the period 1950 to 2015, there was a decline of 37 percent in average employee working hours for the 10 largest EU countries (a drop from 2,250 hours to 1,560 hours) as compared to a decline of only 12 percent for U.S. employees (2,020 hours to 1,780 hours). So much for John Maynard Keynes’ famous prediction that we’d be working 15 hours a week in the future.
U.S. working people work 220 hours per year more than do EU workers — that’s five and a half weeks of extra work!
That sobering comparison is no surprise when we make a comparison of mandatory paid days off. Among the 42 countries that are members of the OECD and/or the European Union, there is only one country with zero paid days of vacation or holidays under the law — the United States. Seven countries require workers be guaranteed 25 or more vacation days per year. Another 25 mandate at least 20 days. Each of those countries also mandate anywhere from eight to 15 paid holidays. Among the 42 countries surveyed, 34 legally require 28 or more days, led by Austria and Malta (38 each) and another half-dozen requiring 36. Turkey, with 12 days of mandatory paid time off, is next worst to the zero of the U.S.
Working conditions are not getting better
The pandemic may be making the above conditions worse. Working at home has led to a working day of two and a half hours longer for employees in the United States, Canada and Britain, according to a report by a business technology company, NordVPN Teams. The company, CNN reported, examined data sent via servers to calculate employee working hours. There were “no significant drop of business [virtual private network] usage at lunch time indicating potential short lunch breaks while working remotely.”
Other surveys have reached similar conclusions. A report by the U.S. staffing firm Robert Half said nearly 70 percent of professionals who work remotely because of the pandemic work on the weekends and 45 percent say they regularly work more hours during the week than they did before the pandemic. For front-line workers not able to work at home, stress and mental health difficulties have increased sharply, with problems particularly acute in the U.S. due to its inability to provide coherent responses to Covid-19 and the chaos triggered by extreme right operatives who created the “Tea Party” organizing the anti-science and anti-intellectual spectacles opposing measures designed to combat the Covid-19 pandemic.
Where does all this lead? To health problems and shorter lifespans. A study conducted by researchers at the World Health Organization and the International Labour Organization reported that excessive working hours led to 745,000 deaths from stroke and ischemic heart disease in 2016, a 29 per cent increase from 2000. The study found that, in 2016, “398,000 people died from stroke and 347,000 from heart disease as a result of having worked at least 55 hours a week. Between 2000 and 2016, the number of deaths from heart disease due to working long hours increased by 42%, and from stroke by 19%.”
Austerity and economic dislocation have taken their toll around the world, but the already existing harshness of life in the United States on top of austerity and dislocation takes a particular toll there. Nearly half a million excess deaths occurred in the U.S. from 1999 to 2015 from drug and alcohol poisonings, suicide, and chronic liver diseases and cirrhosis. A paper published in the peer-reviewed scientific journal PNAS found this increase in the death rate was limited to the U.S. among advanced capitalist countries.
We’re perhaps taken in more bad news than we can reasonably digest. It’s understandable to not wish to take in too much bad news at once. For readers with knowledge of the world, none of the statistics presented above make for a surprise. It is thus tempting to ask: Would the particularly toxic brand of nationalism practiced by millions of United Statesians continue as virulently were the above statistics widely known? Sadly, perhaps it would. If we were to summarize the discourse of U.S. nationalists, it would be: “We’re number one! We can kill more foreigners in less time than any other country! USA! USA!” Is being able to cheerlead for the world’s biggest military really worth working so many hours for such dismal results?
Yes, the time for talk is well past and one more report isn’t likely to change minds or induce new action. Nonetheless, it is always useful to have the latest information when dealing with an ongoing emergency. The world’s governments shouldn’t need the latest United Nations report on the state of Earth’s climate to act but if some do care to pay proper attention, the situation is ever more dire.
Officially, the paper under discussion is the Sixth Assessment Report of the Intergovernmental Panel on Climate Change, summarizing the knowledge of the world’s climate scientists. The technical summary of the report spans 150 pages, and that is what we’ll be quoting from. The report is intended “to provide policymakers with regular scientific assessments on climate change, its implications and potential future risks, as well as to put forward adaptation and mitigation options.”
Having paid little more than lip service to past reports, and the ongoing avalanche of scientific papers and the accelerating pace of weather disasters, the world’s governments, beholden as they are to the planet’s industrialists and financiers, aren’t likely to suddenly spring into serious action should office holders bother to read the memos their assistants who might have actually read one of the summaries have sent along.
I wish I could be more optimistic, but consider the recent evidence. At the last gathering of the world’s governments to tackle the issue, the 25th Conference of the Parties to the United Nations Framework Convention on Climate Change in December 2019 in Madrid, otherwise known as COP25, the conference ended with participants announcing the conference “Notes with concern the state of the global climate system” and agreed there would be more opportunities to talk at the next two annual conferences. (Last year’s conference was put off a year and will be held in November in Glasgow.)
The previous year’s COP 24, in Katowice, Poland (the host country’s pavilion featured displays of everyday items such as walls and soap made from coal, for added irony), the conference ended with an agreement to create a rulebook with no real enforcement mechanism. The world’s governments had previously agreed to set goals for reducing their productions of greenhouse gases but to do so on a voluntary basis with no enforcement mechanism, and now those agreements will have guidelines as to how those goals will be reported that also have no enforcement mechanism. And governments will be allowed to use their own methodologies to calculate their progress, a gaping loophole sure to be used to cook the books.
And so it goes, as Kurt Vonnegut was fond of saying. Or perhaps he wasn’t so fond. No matter, the current state of the world’s climate really isn’t a fun topic nowadays. Let’s take a look anyway.
Well on our way to reaching temperature limit
Among the, if you’ll excuse the expression, highlights of the Intergovernmental Panel on Climate Change (IPCC) paper are that the increase in global surface temperature is more than two-thirds of the way toward the 1.5-degree C. limit set by the Paris Accord, the 2015 agreement to reduce greenhouse-gas emissions. Specifically, the IPCC paper states, “For the decade 2011–2020, the increase in global surface temperature since 1850–1900 is assessed to be 1.09 [0.95 to 1.20] °C.” Further, “many of the changes observed since the 1950s are unprecedented over decades to millennia. Updated paleoclimate evidence strengthens this assessment; over the past several decades, key indicators of the climate system are increasingly at levels unseen in centuries to millennia and are changing at rates unprecedented in at least the last 2000 years.”
The report says, “human influence is the principal driver of many changes observed across the atmosphere, ocean, cryosphere and biosphere. … [I]t is now an established fact that human-induced greenhouse gas emissions have led to an increased frequency and/or intensity of some weather and climate extremes since 1850, in particular for temperature extremes.”
If an increase since the early years of the Industrial Revolution of 1.5 degrees is a breaking point, how long do we have until that threshold is breached under business as usual? The report says, “combining the larger estimate of global warming to date and the assessed climate response to all considered scenarios, the central estimate of crossing 1.5°C of global warming (for a 20-year period) occurs in the early 2030s, ten years earlier than the midpoint of the likely range assessed in [a 2018 IPCC special report], assuming no major volcanic eruption.” A decade from now!
And that’s not all. The report noted that the global water cycle is being disrupted and “projects with high confidence an increase in the variability of the water cycle in most regions of the world and under all emissions scenarios.” That means, in plain language, more droughts and more flooding. The report additionally projects ocean oxygen loss “substantially greater in 2080–2099 than assessed in” another IPCC special report released in 2019.
More heat, more melting in future centuries
Wish for more bad news? How about this:
“Levels of global warming … that have not been seen in millions of years could be reached by 2300, depending on the emissions pathway that is followed. For example, there is medium confidence that, by 2300, an intermediate scenario used in the report leads to global surface temperatures of 2.3°C–4.6°C higher than 1850–1900, similar to the mid-Pliocene Warm Period (2.5°C–4°C), about 3.2 million years ago, whereas the high CO2 emissions scenario SSP5-8.5 leads to temperatures of 6.6°C–14.1°C by 2300, which overlaps with the Early Eocene Climate Optimum (10°C–18°C), about 50 million years ago.” [Page TS-11]
Even if humanity were to stop producing greenhouse gas emissions today, our descendants will be faced with rising sea levels. Seas will be at least a meter higher by the end of the century, a forecast that would have to be revised upward if the amount of additional sea level rise that would occur from disintegration of marine ice shelves or faster than expected loss of ice from Greenland is included. The report states, “Although past and future global warming differ in their forcings, evidence from paleoclimate records and modelling show that ice sheet mass and global mean sea level (GMSL) responded dynamically over multiple millennia (high confidence). … Beyond 2100, GMSL will continue to rise for centuries to millennia due to continuing deep ocean heat uptake and mass loss from ice sheets, and will remain elevated for thousands of years (high confidence).” [Pages TS-14, TS-45]
The long-term forecast is for a weakening of the Gulf Stream with centuries necessary for a return to present strength. A near complete loss of Greenland ice sheet and a complete loss of West Antarctic ice sheet are projected to occur irreversibly over multiple millennia. And thus the conclusion that:
“The increase in global ocean heat content will likely continue until at least 2300 even for low-emission scenarios, and global mean sea level rise will continue to rise for centuries to millennia following cessation of emissions due to continuing deep ocean heat uptake and mass loss of the Greenland and Antarctic Ice Sheets (high confidence). … The response of biogeochemical cycles to anthropogenic perturbations can be abrupt at regional scales and irreversible on decadal to century time scales (high confidence). … Continued Amazon deforestation, combined with a warming climate, raises the probability that this ecosystem will cross a tipping point into a dry state during the 21st century (low confidence).” [Page TS-72]
Even with the uncertainty about the future of the Amazon, that clear cutting of the world’s lungs can only have a negative effect on global climate is not in dispute, however difficult it remains to determine the extent or speed of the damage.
There is plenty more material for readers with a strong stomach, but the above paints the picture clear enough.
Setting a goal but doing little to achieve the goal
Under current conditions and scenarios, it would be impossible to keep the global temperature increase below the 2-degree threshold commonly seen as the outer limit before the climate spirals beyond control and catastrophic change is likely, much less the 1.5-degree goal of the Paris Accord. According to Climate Action Tracker, an independent scientific analysis produced by the research organizations Climate Analytics and New Climate Institute, the pledges and targets set by the world’s governments, if achieved, would result in a temperature rise of 2.4 degrees by 2100. Current policies, if not altered, would result in an increase of 2.9 degrees.
Drastic reductions, well beyond what has been committed to, are necessary to attain even the 2-degree target. Two University of Washington statisticians, Peiran Liu and Adrian Raftery, in a paper published in February 2021 in the peer-reviewed journal Communications Earth & Environment, calculate that the world’s governments need to increase the rate of greenhouse gas emissions cuts by 80 percent from current levels. The authors write:
“On current trends, the probability of staying below 2 °C of warming is only 5%, but if all countries meet their nationally determined contributions and continue to reduce emissions at the same rate after 2030, it rises to 26%. If the USA alone does not meet its nationally determined contribution, it declines to 18%. To have an even chance of staying below 2 °C, the average rate of decline in emissions would need to increase from the 1% per year needed to meet the nationally determined contributions, to 1.8% per year.”
Considerably deeper reductions would be needed to attain the 1.5-degree goal, and would require “reaching close to global net zero emissions by 2045.” Even to achieve an increase of no more than 2 degrees would require a 66% reduction in emissions from 2010 to 2070. The world certainly is not on any such course.
We can’t shop our way out of global warming
It should be obvious, but unfortunately needs to be continually restated, that you can’t have infinite growth on a finite planet. The dynamics of capitalism demand that growth be ceaseless; the system can’t function without it. And given that corporations, through their stranglehold on the world’s governments, can offload their responsibilities such as damage from pollution onto society, there is little incentive for them to cut their greenhouse gas emissions or reduce their pollution of the environment. Financial markets demand ever higher profits, and will punish the stock of corporations that fail to do so. Stock prices represent expectations of future profits; if profits don’t rise, the stock price doesn’t rise, making financiers angry and thereby put pressure on executives to do as they are expected.
Every incentive in a capitalist economy is for there to be more production, and a capitalist economy that doesn’t grow also means fewer jobs. Even a small increase in gross domestic product can result in overall job loss because jobs are cut faster by cost-cutting capitalists than tepid growth in demand can create them. Moreover, even if government regulation were to make it difficult or impossible for an industry to remain solvent, capitalism doesn’t guarantee anybody a job. People don’t travel across continents to take jobs at a North Dakota oil well or an Alberta tar sands dig if there are viable alternatives back home. Corporate executives accustomed to taking home gigantic salaries aren’t eager to see their businesses wind down.
“Green capitalism” isn’t going to save us. Green capitalism is an illusion. We can’t shop our way out of global warming nor are there technological magic wands that will save us. There is no alternative to a dramatic change in the organization of the global economy and consumption patterns. Effecting such a change is impossible under capitalism. Not even a total switch to renewable energy, as laudable and necessary as such a change would be, is sufficient by itself to reverse global warming. Solar panels, wind turbines, electric vehicles and other renewable-energy infrastructure require heavy manufacturing and the use of metals and sometimes toxic rare earths to make. And a whole lot of them will have to be made.
The task of any capitalist corporation is to accumulate capital, and it must grow while meeting the rigors of competition to do so. Although greedy or immoral people are certainly not unknown in corporate boardrooms, the personality of the capitalist doesn’t particularly matter. Competition mandates corporate behavior, and the whip of the financial industry is there to enforce that behavior.
As Joel Kovel, in his classic book The Enemy of Nature put it, industrialists and financiers (those who control the economic system and thus exert decisive influence over the political system through their economic power), are structurally incapable of dealing with the environmental crisis. He wrote:
“Each society selects for the psychological types that serve its needs. It is quite possible in this way to mold a great range of characters toward a unified, class purpose. To succeed in the capitalist marketplace and rise to the top, one needs a hard, cold, calculating mentality, the ability to sell oneself, and a hefty dose of the will to power. None of these traits is at all correlated with ecological sensibility or caring, and they are induced by the same force field that shapes investment decisions. … Of course greed plays a role. How could it not when stupendous fortunes can be had for compliance with the rules of the game? But the question is how greed, or the drive for power, or cold and calculating ways of thought, lead to blindness and rigidity. These are the salient traits, and they arise from the intersection of psychological tendencies with the concrete lifeworld of the capitalists. … If you sit at the heart of the world’s financial centers, fly in private jets, manipulate billions of dollars with the tap of a keypad and control a productive apparatus capable of diverting rivers and sending missions to Mars, you are not likely to experience the humility of a St. Francis or the patient tenacity of a Rachel Carson.”
Make the future worthless so tomorrow doesn’t matter
Even standard accounting works against dealing with global warming and pollution. Capitalist economics discounts the future so much that future life is seen as nearly worthless. Thus, in this type of accounting, there is no cost for future pollution.
Authors Richard York, Brett Clark and John Bellamy Foster put this plainly in a thoughtful May 2009 article in Monthly Review. They wrote:
“Where [orthodox economists] primarily differ is not on their views of the science behind climate change but on their value assumptions about the propriety of shifting burdens to future generations. This lays bare the ideology embedded in orthodox neoclassical economics, a field which regularly presents itself as using objective, even naturalistic, methods for modeling the economy. However, past all of the equations and technical jargon, the dominant economic paradigm is built on a value system that prizes capital accumulation in the short-term, while de-valuing everything else in the present and everything altogether in the future.”
Even with a humanistic accounting regime and the needed changes to make the necessary reductions in greenhouse gas emissions, the cost of achieving the goals of averting catastrophic climate change will be high. The idea that all the new jobs created by the transition to renewable energy will somehow mean there will be no cost to the economy as promoted by many liberal environmental organizations is not credible, and it would be better to face up to that. Denying that reversing global warming will be virtually cost-free is not much more realistic than the conservative fantasy that global warming isn’t reality.
Nor should we deny the likelihood that the peoples of the advanced capitalist countries will have to consume less energy in the future. Although renewable energy will become more efficient in the future and the problem of battery energy storage will probably be reasonably solved in the not too distant future, they simply won’t provide the bang for the buck that fossil fuels provide. There is a reason those are used — they provide more energy than alternative sources. This reduction in energy usage needn’t mean trying to read by candlelight. Ending planned obsolescence, making products last much longer and becoming serious about recycling can make up a significant part of the energy gap. Humanity is using natural resources far beyond their replacement rate. Basic mathematics tells us that can’t continue indefinitely.
But what would be the cost of not seriously addressing global warming? That price will surely be vastly higher than the costs of not doing so. What price should our descendants pay if we don’t move to an economic system that values life rather than only profits, a system that produces for human and community need instead of for the profit of the one percent? That price will likely be a very high one, and our descendants are not likely to look kindly upon us for despoiling their world and leaving them with enormous problems, not least drowning cities, a chaotic climate and diminished areas for reliable agriculture. Our choice remains socialism or barbarism.
A crucial argument for the incessantly promoted idea that capitalism will be with us for a long time to come is the idea of inertia in human understanding. Ideas are stubbornly persistent and can only be changed over long periods of time. Slow evolutionary change is the best we can hope for, and the prospects even for that are uncertain and fragile.
If the above were true, then there would have been no revolutions in history. That is quite obviously not the case. Consciousness can change rapidly. It does so exceptionally and under rare circumstances during periods of social upheaval. Yes, not everyday occurrences. But they do happen. “There are decades where nothing happens, and there are weeks where decades happen,” Lenin famously said.
We need not lean on Lenin. A survey of history need not be comprehensive to find examples of dramatic changes in consciousness, even if we exclude, for purposes of this discussion, national movements of liberation from colonialism, which generally didn’t meaningfully change social relations.
France alone offers us two examples: The French Revolution and the Paris Commune. That working people didn’t obtain what they wanted, the bourgeoisie were in a position to gain an upper hand due to material conditions and that a monarchal restoration would later occur doesn’t require us to deem the events of 1789 to 1793 a failure. The dramatic insertion into history of the popular masses is what we can center here, and it can’t be argued there wasn’t an overturning of a rotten ancien régime. Louis XIV’s boast that he was the state (“L’état, c’est moi”) was reality given his absolute powers. Peasants were subject to starvation during poor harvests, and were subject to being strapped to a plow like an ox to pull a cart or forced to spend nights swishing a stick in a pond to keep the frogs from croaking so the local lord wouldn’t have his sleep disturbed. Town laborers worked 16-hour days and wages were codified as “not exceed[ing] the very lowest level necessary for his maintenance and reproduction.” The church provided the ideology to cement feudal relations in place, telling them all this was God’s will.
These conditions were endured, until they weren’t. Rebellions were hardly unknown across feudal Europe, but had tended to be isolated affairs. French peasants and laborers had been acquiescent to their miserable conditions, or so it seemed. As discontent among social classes mounted, the first demonstrations broke out in 1787. Organization and the education movements provide put people in motion. In only two years, the movement went from issuing petitions asking for reforms to overthrowing the monarchy.
There are also the revolutions of 1848 across Europe. It is true these would falter one after another as traditional authorities, mostly monarchal and military, would reassert themselves. But these upheavals could never have occurred without peasants and proletarians ceasing to continue total deference to elites and institutions. Masses were in motion, but the ideas, although temporarily crushed, survived and began to be implemented within decades.
Societies across Europe were rigid class dictatorships, with the elites of their countries horrified at the very idea that common people might be given some say in how they were ruled. Incontestable violence was the frequent response to any stepping out of line. And while demands like a constitution wouldn’t seem at all radical today, they were in 1848 — granting them would have meant at least some rights for common people codified in law. The revolutions were failures in terms of immediate results, but the ideas raised would become common sense not long into the future.
When implemented, these changes were not revolutionary, it is true, as national elites found they could accommodate such demands and not have their rule challenged. But millions previously resigned to bowing their heads and accepting their bitter lot learned to speak up, to organize, to struggle and to imagine that a better world could be brought into being. As Priscilla Robertson wrote in her marvelous account, Revolutions of 1848: A Social History, “Most of what the men of 1848 fought for was brought about within a quarter of a century, and the men who accomplished it were most of them specific enemies of the 1848 movement.”
An early demonstration in the Paris Commune
No account of 19th century uprisings could possibly omit the Paris Commune, the first socialist revolution in history. Consciousness wasn’t simply profoundly changed in 1871; the ideas of that new consciousness were put in action. The Paris Commune enacted several progressive laws — banning exploitative night work for bakers, suspending the collection of debts incurred during the siege, separating church from state, providing free education for all children, handing over abandoned workshops to cooperatives of workers who would restart production, and abolishing conscription into the army. Commune officials were subject to instant recall by voters and were paid the average wage of a worker.
The Commune would be drowned in blood. But we can readily see the difference between the vision of a better world and the ruthless violence used to suppress any attempt at putting such a vision into practice. A National Guard commander freed captured French army officers in a spirit of “comradeship,” to the point where a top army commander was let go in exchange for a promise that the commander would henceforth be neutral — a promise that was swiftly broken. The Communards’ magnanimity was repaid with a horrific bloodbath. An estimated 30,000 Parisians were massacred by the marauding French army in one week. Another 40,000 were held in prisons, and many of these were exiled to a remote South Pacific island where they became forced laborers on starvation diets, eventually barred from fishing in the sea or to forage for food, and routinely subjected to torture. The restored government exerted itself to deny any political or moral content to the Communards’ actions, instead treating them as the worst common criminals as part of what developed into a de facto “social cleansing” of Paris; the French official overseeing the deportations, in his public statements, directly linked socialist politics with chronic petty crime.
The very peacefulness of the Communards was a sharp divergence from ordinary governing practices. Only a people who had rapidly gained new and radical understandings of how society might be organized could have created such a government. Those ideas aren’t extinguished when bloodily suppressed, but remain alive for the next generations.
There are no shortages of examples to be drawn from the 20th century. Start with perhaps the most obvious example, Russia in 1917. Russia was a vast sea of illiterate peasants yoked to the land and held in bondage through superstition and backward social institutions; ruled by a tsar whose every word was incontestable law and backed by exiles, whippings and executions. Agitation by organizers in social democratic parties had made some headway, exemplified in the soviets of 1905, but even that was cut off when Russians accepted their country’s participation in World War I the same as the peoples of other countries. Yet three years later, all of Russia was in motion. Russians refused to accept any longer the brutality and backwardness forced upon them. More than 300,000 Petrograd workers took part in strikes during the seven weeks immediately preceding the February Revolution and mutinies spread throughout the army.
And it is not often remembered that women workers touched off the February Revolution — yet another overturning of social relations that required new consciousness. Women textile workers in Petrograd walked out on International Women’s Day, walked to nearby metal factories, told the men there to join them on strike, and both groups inspired workers in other factories to walk out. In two days, a general strike was underway in Petrograd, with demonstrators shouting anti-war and anti-monarchy slogans. And what could the October Revolution be other than a mass demonstration of changed thinking? Soldiers and sailors disarmed their officers and turned the military’s orientation 180 degrees, and that enabled civilians to disarm the police. The October Revolution took place in the capital city with the city’s residents filling the streets, occupying strategic buildings and electrifying the world with their cascade of motion and unity of purpose, backed across the country by workers, peasants, soldiers and sailors asserting their collective will. That was no “secret coup” as pro-capitalist historians consistently but falsely assert.
From object to subject in Nicaragua and Chile
And there is Nicaragua, the pre-revolutionary history of which was a history of exploitation. There would not have been a Sandinista Revolution coming to power in 1979 if it weren’t for the willingness of activists to adapt ideas developed elsewhere to Nicaraguan conditions and to draw upon local conditions and realities, blending them with the writings of 1930s liberator Augusto Sandino. In just a handful of years, a country at the mercy of the gigantic neighbor to the north accustomed to treating everything south of the Rio Grande as its “backyard” and under the whip of a brutal local family dictatorship maintained through copious amounts of torture and violence overturned both. A mass change in consciousness was created, without which Nicaraguans in huge numbers wouldn’t have had the fortitude to overthrow the Somoza family, defy the United States and create a dramatically different society and governing structure.
The Sandinistas also provided an important lesson, one equally applicable to advanced capitalist countries as underdeveloped ones. Although no theory can be transplanted whole to another place or time, there was an explicit acknowledgement, which was acted upon, that workers are not only blue-collar factory employees, but are also white-collar and other types of employees in a variety of settings, in offices and service positions, among others. Any revolution that seriously attempts to transcend capitalism, which means eliminating the immense power of the capitalist elite, has to include all these varieties of working people if it is to succeed in the 21st century. Mass consciousness would change so thoroughly that the Sandinistas had to go ahead with an insurrection sooner than they had planned because everyday people were moving forward so fast.
A different type of transformation was attempted in Chile, where the movement toward socialism was voted in but soon had profound effects. So profound was the beginnings of that transformation that frightened capitalists used fascistic levels of violence to turn back the clock. But, given the past couple of years of movement work in Chile, culminating in a Left-led writing of a new constitution to replace the Pinochet constitution, the ideas of the early 1970s have not been buried forever. Following the election of Salvador Allende, Chilean workers rapidly learned to manage their enterprises and take control of their lives.
A representative example would be the Yarur textile factory, the enterprise focused on by Peter Winn in his indispensable study of the Allende years, Weavers of Revolution. Those workers had to overcome fear and memories of past repressions before they could band together to improve their conditions. Dr. Winn painted a vivid picture of the Yarur facility at the time of President Allende’s victory: “A passive and isolated work force, carefully selected and socialized, purged of suspected elements, disciplined by the Taylor System, and represented by a moribund company union; a paternalistic patrón who dispensed favors and largesse at his pleasure in return for unconditional loyalty, but who punished disloyalty with righteous anger; a network of informers that covered both the work sections and the company housing; and a structure of scaled punishments for transgressions against the patrón or his social politics that ranged from a verbal warning to summary dismissal and blacklisting.”
Yet in a matter of months, this once-cowed workforce went from clandestine work to create an independent union seeking merely better wages and working conditions to openly making demands such as firing hated foremen and moving to “free the factory.” Dr. Winn wrote, “The roots of revolution might be present, along with the justification for rebellion, but a precondition for this revolution from below was a dramatic change in the workers’ view of themselves, their capacity and power, as well as their perception that for once the state would support them in any showdown between capital and labor.” This leap in consciousness was replicated across the country.
President Allende’s Popular Unity government achieved strong results in its first year. Unemployment was halved, inflation was reduced, the labor share of income increased from 55 percent to 66 percent and not only did the country see strong industrial growth, the growth came from production of basic goods such as food and clothing in contrast to prior years when growth was based on durable goods such as appliances and automobiles. Perhaps the most basic measure of the improvement was that the poor could now afford to eat meat and buy clothes. What might have been created if the U.S. government and Chile’s capitalists hadn’t crushed it?
What might have been created without interference?
Not all the revolutions discussed were successful, and you might disagree with the direction that some of those that were successful took. There can be no guarantees for the future. The point here isn’t that a change in thinking among enough people that a revolutionary situation arises, and is acted upon, guarantees success. Overwhelming power was brought to bear on the revolutions that failed, and overwhelming power was brought to bear on those that did succeed, distorting the results. We can not know what might have been accomplished had revolutionary governments had the space and time to develop peacefully, including in many other examples that could have been cited in this brief survey.
We might also consider non-revolutionary changes on a national level. To cite just one example, consider Germany. Having unified across the 19th century mostly due to the expansionary tendencies of Prussia, and finally achieving unification through Prussia’s lightning victories over Austria in 1866 and France in 1870, Prussian militarism was a dominant ideology in the young country with the military holding strong sway. Although the rise of Hitler had multiple causes, the militaristic ultra-nationalism that was in large part a holdover from Prussia accommodated itself well to Nazi government; indeed, supported it before the taking of power.
But after World War II, those tendencies rapidly receded. Would anybody today see Germans as a nation of Prussian militarists bent on expansion? German national culture is very different today. Ideas changed sharply and rapidly. Yes, under the impact of a second devastating defeat in a continent-wide war. But the potentiality of such a change had to have been there, and we can point to the wide interwar support of the Social Democratic and Communist parties, and the rise of social democracy before the first world war. The treachery of the Social Democrats and sectarianism of the Communists, and their destruction during the Nazi régime, undermined the chances of more profound change (while acknowledging Allied and particularly U.S. impositions from 1945 that limited change in West Germany to capitalism under U.S. suzerainty and Soviet compulsion that molded East Germany).
Changes in consciousness and belief systems don’t need decades, much less centuries, to change. Such changes don’t, and won’t, happen without enormous organizing, which includes gaining the ability to disseminate materials exposing and contradicting standard ideology and presenting alternatives that speak to people’s lives and goals, most importantly conceivable ideas and concepts that lead to a better world. A better world will come about through the everyday work of organizing and campaigning, not through blueprints. Some of the bricks of today will inevitably be used in building the institutions of tomorrow but those bricks can be arranged differently.
What is radical one day is everyday common sense another day, and the time span between those two days is not necessarily distant. The idea that one family was granted the right to rule in perpetuity, the idea that a human being could own another human being, the idea that everyone was born into a particular class and could never leave it, have passed into history. Why shouldn’t the idea that only a minuscule number of people have the ability to manage enterprises and should therefore be paid hundreds of times more than those whose work produces the profits also pass into history?
The idea that capitalism doesn’t work for most people, that a better world is possible, has animated millions and some of those millions have tried to put those ideas into practice. The ability to see through capitalist propaganda arose quickly — the peoples mentioned throughout this article didn’t need centuries. Popular opinion changed dramatically and rapidly.
That shifts in mass consciousness with revolutionary potential have rarely taken place in the world’s advanced capitalist countries does not mean they can’t happen in the future. What forms any such uprisings might take can’t be known, and could take different forms than previously seen. Repressive rule, whether through monarchs, armed force or economics, is not forever. Nothing of human creation is forever. Capitalism isn’t an exception and will be history when enough people decide to make it so. Organize!
Predictions are difficult to make, especially, as the old joke goes, when they are about the future. Particularly fraught have been predictions of the demise of capitalism. Conventional wisdom would have us believe that because capitalism remains the world’s dominant economic system, predictions of the system’s demise are not only wrong, but destined to be wrong in the future.
“Conventional wisdom” here, of course, is nothing more than a display of the axiom that the intellectual ideas of a society are those of the dominant class. Certainly, both industrialists and financiers would like us to believe that nothing fundamental can change. Bourgeois ideology proclaims that through every possible channel every day.
Yet what is of human creation is not permanent; everything of human creation has an expiration date. Capitalism will be no different.
When will capitalism be transcended and what will follow? That central question has been asked for two centuries and, given the increasing intensity of economic crises, mounting inequality and looming environmental catastrophe, is as important as ever. The unending series of protests, uprisings and movements dedicated to either forcing systemic reform or outright replacement are eloquent testament to how capitalism fails most of the world’s population.
Nonetheless, there is no arguing that capitalism remains firmly in the saddle, with no existing social movement anywhere near strong enough today to put the system at risk. Does that mean we should regard past predictions of capitalism’s demise as mistaken or wishful thinking? Perhaps only an ambiguous answer, at least preliminary, is appropriate. For those who wish to see capitalism continue indefinitely — those who benefit and those so frightened by propaganda that anything else is literally unimaginable — there is an easy answer: Yes. For those who wish for a better world, an economic system based on human need and in harmony with the environment, the answer is no.
Whether yes, no, maybe or let’s wait and see, an examination of why predictions of capitalism’s demise are thus far off the mark is a healthy exercise. I thus was interested in a new book wrestling with these issues, Foretelling the End of Capitalism: Intellectual Misadventures since Karl Marx by Francesco Boldizzoni. Foretelling is a curious hybrid as the author is quite critical of capitalism but also has a pessimistic outlook regarding its replacement; it is rare for a book to receive praise from a Wall Street Journal reviewer and New Left Review contributor Wolfgang Streeck. Foretelling provides a strong challenge to the thinking of critics of capitalism and those who subscribe to leading theories, particularly Marxist, of the end of capitalism.
Such a challenge is healthy, and those who are interested in a basic history of economic thought for the past 200 years would do well with this book. Whether it succeeds in its core intention, however, is a separate matter, although any conclusions will partly depend on a reader’s perspective.
Capitalism will end, as do all products of history
We get a good sense of Professor Boldizzoni’s perspective in his introduction, where he writes that capitalism will end, or slowly turn into something new, like all products of history, although there is no guarantee it will be something better. The brutality of prior systems lives on in capitalism. The slow growth rates of a more service-oriented economy has led to more “distributional conflicts,” and the Left must find effective tools to deal with it or the “populist right” will take its place. To all but capitalism’s more fervent apologists, this can hardly be considered controversial. But we also read here a foreshadowing of pessimism with a passage declaring “this battle to ‘overthrow the system’ is lost from the start” — believing it raises false hopes and thus “does not do progressivism any service.”
Capitalism isn’t going anywhere in the near future and past predictions have not been borne out, so a hard look, if we are intellectually honest, is warranted. It is healthy to have ideas challenged, so let us engage with these ideas.
Before getting to the heart of its argument, the first four of the six chapters of Foretelling the End of Capitalism are a wide-ranging survey of thinkers from the early 19th century to the early 21st, across the full political spectrum. These are not deep excavations but do provide basic understandings. These are mostly solid introductions to the evolution of thinking on the topic of political economy and important theories that have arisen, except for weaknesses with some Marxist writers. For example, a brief discussion of fin de siècle German social democracy — Eduard Bernstein vs. Karl Kautsky vs. Rosa Luxemburg — is shallow; the author only sees the surface of Kautsky’s writings and does not grasp what lies below the surface, nor how to interpret the evolution of Kautsky’s thinking, without which it is impossible to understand why Kautsky would come to draw close to Bernstein, an outcome the book entirely misses.
That is no more than a minor point. More serious is what this reviewer considers among the most bizarre interpretations of fascism he has ever come across. Professor Boldizzoni writes that fascism, or more specifically, Nazism, was “the middle ground between the liberal and Soviet worlds.” He presents the ideas of several writers on fascism, but all but one are hopelessly confused and serve only to obfuscate. Incredibly, there is not one word from Leon Trotsky, the preeminent analyzer of Nazism during the 1930s — an inexcusable omission. Nor is the orthodox communist conception as handed down by Josef Stalin presented. Although that conception was badly mistaken with tragic circumstances, it should have been discussed, given the consequences of that line being put into action.
It is true that fascism is notoriously difficult to diagnose, but if approached from a class standpoint, it becomes understandable. At its most basic level, fascism is a dictatorship established through and maintained with terror on behalf of big business. It is a phenomenon squarely at the far right of the political spectrum; it is not an ersatz “third way” precursor. Fascist movements have a social base, which provides support and the terror squads, but which is badly misled since the fascist dictatorship operates decisively against the interest of its social base, rooted in middle class white-collar professionals and small business owners. (That is still true today; look at the profile of the Trump followers who have been arrested for participating in the January 6 attack on the U.S. capitol building.)
“In National Socialism, everything is as contradictory and as chaotic as in a nightmare,” Trotsky wrote in a vivid 1932 essay, using the intentionally misleading formal name for the Nazis. “Hitler’s party calls itself socialist, yet it leads a terroristic struggle against all socialist organizations. It calls itself a worker’s party, yet its ranks include all classes except the proletariat. It hurls lightning bolts at the heads of capitalists, yet is supported by them. … The whole world has collapsed inside the heads of the petit bourgeoisie, which has completely lost its equilibrium. This class is screaming so clamorously out of despair, fear and bitterness that it is itself deafened and loses sense of its words and gestures.”
Militarism, extreme nationalism, the creation of enemies and scapegoats, and, perhaps the most critical component, a rabid propaganda that intentionally raises panic and hate while disguising its true nature and intentions under the cover of a phony populism, are among the necessary elements. Despite national differences that result in major differences in the appearances of fascism, the class nature is consistent. Big business is invariably the supporter of fascism, no matter what a fascist movement’s rhetoric contains, and is invariably the beneficiary even though its beneficiaries will not directly control the dictatorship; it is a dictatorship for them, not by them. The massive profits pocketed by industrialists in Hitler’s Germany, Mussolini’s Italy, Pinochet’s Chile and elsewhere speak volumes, as do the draconian anti-labor laws implemented. Fascism is capitalism stripped of all democratic veneers.
Are the reasons behind capitalism’s staying power psychological?
Nonetheless, these early chapters are useful for other theorists who are discussed, including John Stuart Mill, Joseph Schumpeter, John Maynard Keynes, Jürgen Habermas and several writers of the late 20th century. The author skillfully dismantles the apologia for capitalism’s inequality offered by publicists masquerading as economists. In the final two chapters, Professor Boldizzoni explicates his core arguments. Here we find no illusions about the nature of capitalism nor misunderstandings of its social relations. Capitalism is a socio-economic system, not a type of economic activity, imposed by force; an “institutionalized social order” in which even human labor is reduced to a commodity. Capitalism is kept together through hierarchy and individualism, upholding new forms of previous master/slave and lord/serf relations.
So why have forecasts of capitalism’s demise been so far off the mark thus far? Or, perhaps, we might better phrase this question as: Why does capitalism persist despite the misery and opposition it continually spawns? Foretelling the End of Capitalism begins to answer this question by offering three factors — “cognitive distortions that affect the forecasting process,” faults in the construction of social theories and, decisively, “the faith in progress that underlies modern thought.” This is further teased out through two mistakes — overgeneralization through drawing overly broad conclusions or magnifying specific events and “black and white thinking,” an example of which is ignoring that there are “many varieties” of capitalism. Seeing the next system only in terms of the negatives of capitalism and, finally, a misunderstanding of culture underlie mistaken forecasts, the book asserts.
All this comes down to “cognitive distortions” and “theoretical flaws,” working together and in conjunction with “a more general mental disposition” common to those who attempt to predict what may happen in the future. “The entire history of social forecasting and its mistakes is intertwined with faith in progress,” Professor Boldizzoni writes. All of his reasons are psychological. There is nothing material!
This is the reasoning of someone who believes the current world is the only possible world that can be, whether that belief is conscious or hidden in the unconscious. Capitalism has not fallen; therefore those who forecast its eventual end are dreamers outside reality. It is as if there are no material reasons for the continued life of capitalism, some of which have to do with the very pillars of capitalism that the author himself explicates well.
It is certainly possible to draw up a list of theoretical failings far more specific than flawed enlightenment thinking. No single or small group of developments can possibly encompass all the factors that have kept the world economic system in place. I have previously written that no serious discussion of this question, however, should exclude these factors:
The early pioneers of the socialist movement seriously underestimated the ability of capitalism as a system to adapt and therefore did not foresee the ability of working people to extract concessions for themselves.
The early pioneers failed to understand the buoying effect that would be provided by imperialism (for the leading capitalist countries).
Many of the early pioneers clung to an overly mechanical (mis)understanding of social development that led to a passive belief in an automatic unfolding of revolution that implied, incorrectly, that powerful capitalists would simply sit back and allow themselves to be overthrown. (Kautsky and Bernstein are emblematic here.)
Many leaders during the Soviet era continued to hold to a similar overly mechanical belief in future revolution while at the same time failing to grasp the nuances of capitalist development.
An overly centralized world movement that retarded the theoretical developments needed for local conditions, blocking the creation of innovative leadership while at the same time discouraging existing local leaderships from attempting revolutions.
A too narrow conception of “working class” or “working people” — a tendency to visualize only blue-collar manual workers as working people, a declining percentage of the population in increasingly technological capitalist societies. Such narrow horizons served to exclude a large proportion of wage workers, with the result that movements purporting to be organizations of working people instead divided them at the start.
I am under no illusion that the above list exhausts the catalogue of factors. Obviously, the ability and willingness of the governments over which capitalists hold decisive sway to use violence to keep industrialists and financiers in power; the ability to disseminate propaganda in a variety of forms through an array of media, schools and institutions; and the willingness to invade, overthrow and impose military violence and sanctions against any country that challenges capitalism’s masters so as to make life there difficult are indispensable factors as to capitalism’s staying power. The last of this paragraph’s factors goes a long way in itself as to why alternatives to capitalism have faltered.
Every attempt at constructing a post-capitalist economy has been met with overwhelming military, financial and other forms of force, putting them on a war footing. We can not know what might have been created if those countries had been allowed to peacefully develop, and this factor is indispensable if we are to seriously ponder the acceptance of “there is no alternative” propaganda. Despite the acknowledgements of bourgeois culture’s orientation toward wealth accumulation and cultural processes, Foretelling the End of Capitalism offers lectures on the weaknesses of enlightenment thinking rather than analyzing material conditions.
Culture as the glue holding together capitalism
Professor Boldizzoni puts forth the thesis that political, economic and social structures are all held together by “a powerful glue”: culture. Capitalism, he writes, is the product of a particular Western family of cultures, with hierarchy and individualism the most important factors. Behavior standards “change slowly”; it “may take several centuries” for culture to transform. He writes, “The emergence of a new system will be possible when the circumstances under which the old one was formed have eventually ceased to exist. It will reflect the changes in the material circumstances as well as in the culture sphere that are to occur over the next few centuries. The transition, however, will be so gradual that it will be barely noticeable.”
There is plenty to unpack in the preceding paragraph. That culture is a “powerful glue” keeping capitalism is indisputable, and that changes in “material circumstances” will facilitate a transition to a new system is also not in dispute. But these assertions, which certainly would not be controversial to a Marxist, are odd in light of the author’s criticisms of Karl Marx. It is unavoidable to note that those criticisms are rooted in a shallow understanding of Marx’s body of work. The author makes the common mistake of seeing Marxism as overly mechanical, teleological and offering a “perfect society,” nor does he grasp the subtlety of the “dictatorship of the proletariat,” admittedly a confusing phrase that might better be retired. (“Dictatorship of the proletariat” simply means the predominance of working people, the vast majority of people in capitalist society, without reference to any particular governmental form. All capitalist societies constitute a “dictatorship of the bourgeoisie,” the predominance of industrialists and financiers, which has taken many forms, including formal democracy and fascist.)
These misunderstandings are possible because Marxism’s 20th century practitioners in the Soviet bloc presented it in overly simplified terms, seeing it themselves in a mechanical manner. And that was not new. Friedrich Engels, in an 1890 letter to Joseph Bloch, lamented that he and Marx had put so much emphasis on economics. “Marx and I are ourselves partly to blame for the fact that younger writers sometimes lay more stress on the economic side than is due to it,” Engels wrote. “We had to emphasize this main principle in opposition to our adversaries, who denied it, and we have not always had the time, the place or the opportunity to allow the other elements involved in the interaction to come into their rights. … Unfortunately, however, it happens only too often that people think they have fully understood a theory and can apply it without more ado from the moment they have mastered its main principles, and those even not always correctly.”
We can conceptualize Marxist materialist philosophy like this: The flow and movement of any phenomenon or idea takes varying directions, and far from always in an expected direction. As the concept of “flow” implies, history and social development do not consist of discrete steps or stages. Philosophical, political and religious ideas (which are built on the materials of their predecessors); the prevailing culture (which include traditions shaped in the conditions of the past that have survived into the present); and local geographic factors influence not only each other but also influence economic conditions. What was a cause can become an effect, and an effect can become a cause. These forces are given concrete form within a state, the form of which (including its legal structure) is based on the material conditions of life — the economic structure is the foundation on which society is built and which therefore shapes social consciousness.
Properly understood, Marxism is not, and has never been, a reach for utopia; its founders were scornful of the utopians of their time. Still more puzzling is Professor Boldizzoni’s bizarre aside that Swedish social democrats were “seeking the achievement of a perfect society.” That would certainly be news to them. The post-World War II Swedish model sought full employment, equality and the transfer of excess profits to the collective ownership of employees. Better than ordinary capitalism and envisioned as an evolutionary route to a future socialist society, but hardly nirvana.
How high should movements aim?
Nordic social democracy is what the author seems to have in mind when he references “many varieties” of capitalism. Yes, there are national differences in capitalism, sometimes significant, but given the domination of the United States and its ability to dictate to the rest of the world, it is unrealistic to see that there is anything other than a single world system. And Swedish capitalism is far removed from any “perfect society” — dominated by corporate power and subject to the pressures of corporate globalization the same as other small or midsized capitalist country, Sweden today has inequality and poverty levels above the European Union average.
Sweden’s failure to institute even the most rudimentary beginnings of an evolutionary path to a socialist economic democracy under the 1970s “Meidner plan” of forcing companies to issue stock to public agencies until the public had majority control succumbed not only to the might of local capitalists and the pressures of corporate globalization, but because of the failure of working people to organize. Without a massive movement, no project of socialism, or, if you prefer, economic democracy, can succeed.
If we are dwelling on disagreements here, it is because these areas of dispute are central to the author’s thesis. What should be done? Professor Boldizzoni forecasts that although capitalism will be replaced, it will last for centuries to come. No mention of the environmental crisis — humanity doesn’t have one full century, never mind several, to wait! There is also the matter of the inability to achieve endless growth on a finite planet, and capitalism’s need for continual growth in a world into which it has expanded to almost every corner. (But it should be acknowledged that he has the intellectual honesty to make his own forecast and thus risk being as wrong as those he’s discussed.) He concludes by lamenting “we must come to terms with the limits of the possible” and declaring “the social democratic experience” the height of achievement. This conclusion brings into sharper relief why he is so insistent on seeing any attempt to move past capitalism as utopian.
What is the possible? A standard list of social democratic reforms, such as the “power to tax,” the power to pursue industrial policy and “monetary sovereignty,” offered as counters to European Union policy and centralization. Public ownership of infrastructure and banking is also put forth. These would be welcome reforms, but more than a century of working for reforms within capitalism rather than overcoming it has put the world in precisely the place it is today. Reforms can be won through social struggle, but once movements stand down, the reforms are taken back. Movements must aim higher.
If we believe the world can’t be better, that it can’t be meaningfully changed, that we have no choice other than tinkering around the edges as capitalism destroys the environment, then nothing will get better. Our conditions will actually get worse because there is no stasis. A better world is possible and speculating on what some basic concepts of a better world might look like is necessary if we are to get there. Giving up is not an option. Study of material conditions and the multitude of factors as to why predictions of capitalism’s demise have yet to come to pass — or, to put it in a better way, why capitalism has proven so resilient — are indispensable to achieving an understanding of our present and providing ourselves with the tools necessary to build the movement of movements, working across borders, that is the path toward any possible better world. Lamenting the weight of enlightenment thinking isn’t that route.
Foretelling the End of Capitalism is correct that there won’t be a sudden collapse of capitalism. If no social movement intervenes, capitalism has several more decades of life and would likely be followed by something worse, in a world of environmental disaster, rising seas and dwindling resources. Decades, not centuries — the present path of humanity is unsustainable. There is no substitute for a post-capitalist future, and the past need not dictate the future.
As always, the value of a book isn’t measured by whether we agree with everything in it. If Foretelling didn’t have much of interest to offer, I wouldn’t have written this essay. The question the book attempts to answer is a challenge that must be confronted because it is a question that remains all too relevant. But although the author in good faith sought to interrogate the predictions of the past to provide an understanding of today, he instead produced a cry of defeat and despair.
Here we go again. Listener democracy at the Pacifica radio network is in deep jeopardy again because the same people who violently shut down WBAI in 2019 and forced an expensive referendum that was soundly defeated in 2020 have forced a second bylaws referendum.
Having lost last year’s referendum by a 2-to-1 margin — losing by lopsided majorities in both staff and listener balloting — that should have been the end of it. Especially as the 2019/2020 escapades cost Pacifica and its five stations hundreds of thousands of dollars in legal and other expenses and in lost fundraising.
Instead of accepting that listeners of Pacifica’s five stations were not interested in a corporate-style takeover that would have placed uncontested power in the hands of coupsters, the same people are attempting another takeover. The tactics are different this time and they’ve adopted a new name (“New Day Pacifica”) but make no mistake, the goal is the same. Listeners didn’t fall for it last time and we shouldn’t this time, either.
We’ll get to some of the details below, but the summation of this latest takeover attempt is this: If the “New Day Pacifica” bylaws referendum were to pass, a small self-selected elite would assume unaccountable power for three years with the ability to control a majority of the National Board. Each of the five station’s local station boards would be stripped of all power, reduced to toothless advisory committees, and diversity would potentially cease to exist on the National Board. The coupsters have advanced no plans for how they will miraculously reverse Pacifica’s difficult financial situation, simply insisting that power be centralized in their hands (while denying that is what they are asking for).
That New Day Pacifica has been less than forthcoming in promoting its referendum doesn’t lead to confidence. Nor does a parallel December 2020 lawsuit attempting to take over Pacifica through the courts — once again diverting listeners’ donations to defending frivolous legal maneuvers — inspire confidence that they have the interests of Pacifica at heart. Put simply, based on the actions of the past two years, there is ample reason to believe the goal is to either take over the Pacifica radio network or destroy it.
Unaccountable boards have led to disastrous results
The past history of self-selecting board members at Pacifica is instructive. Two decades ago, the national board of Pacifica had become unaccountable, with board members with corporate backgrounds selecting like-minded people to fill board seats and trying to rewrite the bylaws to not only sell off one or more Pacifica stations but to be able to personally pocket some of the proceeds. That unaccountable National Board led to crises that culminated in the lockout of KPFA in 1999 and the Christmas Coup at WBAI in 2000, triggering a long struggle that culminated in the current democratic bylaws structure.
Flash forward to 2019, and a rogue minority faction on the National Board, intent on selling the New York station, WBAI, and use the proceeds to benefit the Western stations in the network, launched a coup. Farcically insisting they were attempting to “save” WBAI, coup mongers, led by since fired Interim Executive Director John Vernile (then on the job for all of two months!) and National Board Secretary Bill Crosier, removed WBAI from the air in the midst of a fund drive.
The fund drive was stopped, the web site at which listeners could make donations was disabled and all local programming was taken off the air, replaced with canned programming from California with no local content. The team led by Mr. Vernile that descended on WBAI the morning of October 7, 2019, dismantled the equipment, rendering it impossible to broadcast; immediately fired all employees; confiscated the station bank account; took checks left in the office; put padlocks on the doors; and told the station’s landlord she should find a new tenant while cutting off rent payments. The WBAI web site, including all archives of past shows, was wiped clean and replaced with a one-page site with a propaganda message justifying the coup. Not the actions of people with the interests of listeners at heart.
That coup would be reversed a month later, but the other half of the coup attempt, a referendum on bylaws proposed by those behind the WBAI shutdown, remained to be contested. It was defeated by a nearly 2-to-1 margin by both listeners and staff a year ago.
Nonetheless, we have to go through this again, instead of putting energy into tackling Pacifica’s problems. This time the proposed bylaws, while still undemocratic, are written a little more subtly to better disguise the intentions. Once again, those wishing to put an end to listener accountability at Pacifica cite the network’s financial difficulties and point to questionable fundraising premiums. Financial problems do exist and some fundraising programming should be condemned. Those are real issues, although the current National Board has reported progress in stabilizing the finances. New Day Pacifica claims that centralizing power in its leaders will magically solve the network’s problems but have not offered any specifics. Three of the four New Day leaders who would be given the top four positions on the National Board should the bylaws referendum pass are current or former members of the Pacifica National Board and/or local station boards, so it is reasonable to ask why they haven’t already used their superpowers to help solve the network’s problems.
Plan would eliminate local control
One subtle difference with last year’s proposed bylaws is that instead of outright eliminating each of the five Pacifica stations’ local station boards, which currently are democratically elected by members through ranked-choice voting, which ensures that different factions and perspectives are represented, this time the LSBs would be retained, but stripped of all powers. Instead, they would become advisory bodies with no responsibilities. All power would be centralized in a new National Board, which the New Day coupsters have designed to virtually guarantee their dominance.
New Day’s early tactic was to claim that the four leading positions on their proposed board would be elected by a direct vote of listeners. What they conveniently “forgot” to say was that those four positions would be handed to four pre-selected faction leaders for three years before there would be any elections. This would be a profoundly undemocratic board, and not only for the preceding reason. Each station is currently represented by four board members, each of which was elected to their local station board, and seated in such a way that major voting blocs earn at least one seat. Under the New Day proposal, each station would have only one representative, putting an end to diversity. Affiliated stations — those that aren’t part of the network but which carry programs originating on Pacifica stations — would have their representation cut in half to one seat. Paid and unpaid staff would each get one seat — again assuring that there won’t be a diversity of viewpoints. Finally, in an echo of the 1990s self-selecting board, three seats would be appointed by a board majority.
That’s a total of 15 seats. Each of the self-selected people for the four top seats are from the three Western stations, where this coup attempt is originating, and given that the two California stations have by far the biggest staffs, they would likely fill the two staff seats. If pro-New Day people win those seats — or even one of the two — then they would have a board majority before selecting the appointees, and would be able to pack the board with their allies. Thus New Day’s proposed bylaws changes would install the coupsters as an unaccountable management for three years, an amount of time in which the entire character of Pacifica could be altered. The two East Coast stations, WBAI and WPFW in Washington, could be reduced to having only two of 15 seats on the National Board, a drastic change from the current system of equal representation of all five stations.
Once again, it must be asked: What do those behind New Day propose to do with their centralized power? Ann Garrison, writing for Black Agenda Report and CounterPunch, suggests that erasing anti-imperialist voices may be on the agenda. She is far from alone in raising that issue. She writes:
“In the late 1960s and early ’70s, Pacifica was a radical, antiwar, anti-imperialist network, perhaps most admired when WBAI sent the first American reporter to broadcast from North Vietnam during the Vietnam War. Today, however, much of Pacifica has—like the rest of what now passes for the left—given way to identity politics, Democratic Party politics, Trump Derangement Syndrome, and even national security state narratives. … The network still has an anti-imperialist wing and I’m on it, but the list of Pacifica staff endorsers makes me think that our days will be numbered if the New Day Pacifica bylaws proposal passes. … Many Pacifica programmers wouldn’t sound out of place on NPR, and some have moved on to NPR employment.”
Contrasting those for and against democracy
Among those endorsing a “no” vote on the bylaws referendum are Mumia Abu-Jamal, Leonard Peltier, Oscar Lopez Rivera, Danny Glover, John Samuelsen (International President of the 150,000-member Transportation Workers Union), Medea Benjamin, Cindy Sheehan, Abby Martin, Michael Parenti, Sharonne Salaam and Fernando Velázquez. One of the leading “yes” proponents, backing New Day, is KPFK’s Ian Masters, one of those hosts who would indeed be right at home at NPR; he would actually be one of the relatively more conservative voices on NPR were he a host there. He stands shoulder to shoulder with the Philadelphia Fraternal Order of Police, declaring Mr. Abu-Jamal guilty despite the massive evidence of innocence and well-documented decades of legal railroading. And that tells us what we need to know about who and what are behind New Day.
That the New Day faction is a minority intent on hijacking the network can be seen in the repeated advisory board votes opposing their referendum. The Pacifica National Board voted 16-4 against it, with one abstention — even a majority of the representatives of the Western stations voted against. The local stations boards of WBAI and WPFW both voted unanimously against it; it is a rare day when the WBAI board, composed of three distinct factions, votes unanimously on anything. KPFK in Los Angeles voted against it, 14-7. KPFT’s vote fell short of the necessary majority and thus failed. Out of six boards, only one, KPFA, voted in favor.
Alex Steinberg, chair of the National Board (but here stressing he is speaking only in a personal capacity) and a long-time activist, notes that New Day’s leaders have refused to work with others to tackle Pacifica’s problems. He writes:
“What has New Day proposed to solve our problems? Nothing at all really except the vague promise that unknown ‘Professionals’ will be hired to fix everything. This is either a deliberate fantasy or delusional thinking. Will the ‘Professionals’ that New Day wants to hire be people like former iED John Vernile, who was responsible for the illegal shutdown of WBAI? There is no way to know since they are not saying, but one has to be a little suspicious since two of the named officers who will be running things, Aki Tanaka and Jan Goodman, were enthusiastic supporters of Vernile and his illegal shutdown of WBAI.
If New Day was working in good faith they would have worked with the PNB to come up with a few well crafted amendments that we could all have agreed on. But instead they went behind our backs and in secrecy rewrote the entire bylaws which they are trying to impose on us through a well funded propaganda campaign. That is the height of arrogance and elitism.”
The lawsuit paralleling the bylaws referendum
It also shouldn’t be forgotten that there is an active lawsuit also seeking control of Pacifica, part of a “good cop/bad cop strategy” as Building Bridges host Mimi Rosenberg succinctly puts it. Three KPFA board members — Christina Huggins, Andrea Turner and Donald Goldmacher — along with a former KPFA board member, Craig Alderson, sued Pacifica in Los Angeles Superior Court, demanding all of the network’s assets be placed in the hands of an independent party appointed by the court, a process known as “receivership” in which the court-appointed party can dispose of assets at will. The filing made a series of wild, factually incorrect assertions in an attempt to claim Pacifica is irretrievably riddled with “malfeasance and breach of fiduciary duties by directors.”
The lawyer for these four, Stephen Jaffe, issued a press release repeating the wild accusations contained in the lawsuit and added a few more, including wrongly asserting that Pacifica is “at an immediate risk of loss to foreclosure by one or more creditors,” an allegation incessantly put forth by New Day. A large loan that was to have been due in 2021 was well in the process of a renegotiation postponing payment for 18 months, a fact well known at the time. So what we have here is a naked attempt at a takeover, through different means. The immediate bid for a receivership was swiftly denied by the court but legal proceedings will continue and will cost the network money to defend.
Ms. Rosenberg notes the “contempt for democracy” behind these actions.
“Whether adherents of New Day Pacifica’s principles proceed by ‘hook or crook,’ either to imposing a costly second referendum in less than two years to dismantle Pacifica’s governance structure, or by court action to impose receiver over the network, they are antagonists of inclusive governance, radio by the people and for the people. They reject the principle that elected representatives from the gorgeous mosaic of listeners, who with their sweat and finances, along with the workers, drawn from Pacifica’s 5 stations, and hundreds of affiliates across the country, with their unique cultures should govern the network they created. NDPers reject the idea of inclusive democracy, where the marginalized, disenfranchised, discriminated against and historically locked out of power from the multi-racial working class get to speak for themselves and together formulate the policies and practices that make real radio by the people for the people.”
A lack of transparency also raises questions about New Day. One of the four to be handed a National Board seat without election should the referendum pass recently penned an article promoting New Day, but conveniently “forgot” to mention his self-interest. Later, New Day refused to participate in a WPFW broadcast debating the proposed bylaws, but another one of the four self-selectees called in and spoke in favor without identifying herself; several people listening, however, recognized her voice. (In the spirit of transparency, I have never held any position within Pacifica but I am active with WBAI Fightback and was also active in the fight to undo the 2000 Christmas Coup.)
“New Day has deep pockets, slick propaganda, and is trying to buy this election on a ‘rule or ruin’ basis,” an analysis of the bylaws referendum published by Pacifica Fightback notes. “Centralization of power will lead to gentrification of the airwaves, marginalizing the voices from communities in struggle that are shaping the future and developing solutions to inequality and injustice! Don’t buy the hype — it’s more democracy, stronger ties to the communities we serve, and developing multi-media and social media platforms that will save Pacifica, not ‘white-knight’ progressive investors or management appropriate to commercial radio or commercially-underwritten ‘public’ radio.”
Listener-members and staff of the five stations can vote from June 7 to July 7. Both listeners and staff must each vote “yes” for New Day’s bylaws to take effect, and the numbers of those voting must reach a quorum. If you are a Pacifica listener or staff member who values community radio, hearing alternative voices and democratic accountability, please vote “no” on the bylaws referendum.
It is not unusual for critics of United States foreign policy, whether or not they feel free to use the term “imperialism,” to express regret that a previously rational system has soured. Such sentiments are routine for liberals and hardly unknown among social democrats.
Such sentiments are, to anyone who cares to pursue a study of history, quite ahistorical. Violence, force and coercion — exemplified in widespread use of slave labor, imperialist conquests of peoples around the world and ruthless extraction of natural resources — pervades the entire history of capitalism. The rise of capitalism can’t be understood outside slavery, colonialism and plunder. To follow up on my previous article discussing how U.S. domination of the world is rooted in the stranglehold Washington has over the world’s financial institutions and its possession of the dominant currency, let’s conduct a further examination of the history of how capitalism functions, this time highlighting imperialism and violence.
My inspiration for this examination is my recent reading of John Perkins’ Confessions of an Economic Hit Man. Mr. Perkins, for those not familiar with his book, provides a first-hand account of how the U.S. government employs debt, financial entanglements, bribes, threats and finally violence and assassinations of national leaders who won’t place their economies and resources under the control of U.S.-based multi-national corporations. That is no surprise to anyone paying attention, but the book became an improbable best seller, meaning there must have been many eyes opened. That can only be a positive development.
But even Mr. Perkins, who is unsparing in drawing conclusions and under no illusions about what he and his fellow “economic hit men” were doing and on whose behalf, shows a measure of naïveté. He repeatedly draws upon the “ideals of the U.S. founding fathers” and laments that a republic dedicated to “life, liberty, and the pursuit of happiness” has morphed into a global empire. Given the outstanding service he has provided in writing his book, and the physical danger that he put himself in to publish it (he postponed writing it multiple times fearing possible consequences), least of all do I want to imply criticism or raise any snarky accusations against Mr. Perkins. My point here is that even a strong critic of U.S. imperialism with eyes open can harbor illusions about the nature of capitalism. The all-encompassing pervasiveness of capitalist propaganda, and that the relentless dissemination of it across every conceivable media and institutional outlet, still leaves most people with a wistful idealization of some earlier, innocent capitalism not yet befouled by anti-social behavior and violence or by greed.
Such an innocent capitalism has never existed, and couldn’t.
Horrific, state-directed violence in massive doses enabled capitalism to slowly establish itself, then methodically expand from its northwestern European beginnings. It is not for nothing that Karl Marx famously wrote, “If money … ‘comes into the world with a congenital blood-stain on one cheek,’ capital comes dripping from head to foot, from every pore, with blood and dirt.”
Markets over people from the start
Although the relative weight that should be given to the two sides of the equation of how capitalism took root in feudal Europe — feudal lords pushing their peasants off the land to clear space for commodity agricultural products or the capital accumulated from trade by merchants growing large enough to create the surpluses capable of being converted into the capital necessary to start production on a scale larger than artisan production — is likely never to be definitively settled (and the two basic factors reinforced one another), force was a crucial midwife. English lords wanted to transform arable land into sheep meadows to take advantage of the demand for wool, and began razing peasant cottages to clear the land. These actions became known as the “enclosure movement.”
Forced off the land they had farmed and barred from the “commons” (cleared land on which they grazed cattle and forests in which they foraged), peasants could either become beggars, risking draconian punishment for doing so, or become laborers in the new factories at pitifully low wages and enduring inhuman conditions and working hours. The brutality of this process is glimpsed in this account by historian Michael Perelman, in his book The Invention of Capitalism:
“Simple dispossession from the commons was a necessary, but not always sufficient, condition to harness rural people to the labor market. A series of cruel laws accompanied the dispossession of the peasants’ rights, including the period before capitalism had become a significant economic force.
For example, beginning with the Tudors, England created a series of stern measures to prevent peasants from drifting into vagrancy or falling back onto welfare systems. According to a 1572 statute, beggars over the age of fourteen were to be severely flogged and branded with a red-hot iron on the left ear unless someone was willing to take them into service for two years. Repeat offenders over the age of eighteen were to be executed unless someone would take them into service. Third offenses automatically resulted in execution. … Similar statutes appeared almost simultaneously in England, the Low Countries, and Zurich. … Eventually, the majority of workers, lacking any alternative, had little choice but to work for wages at something close to subsistence level.”
Additional taking of the commons occurred in the early 19th century, when British industrialists sought to eliminate the remaining portions of any commons left so there would be no alternative to selling one’s labor power to capitalists for a pittance. As industrial resistance gathered steam, the British government employed 12,000 troops to repress craft workers, artisans, factory workers and small farmers who were resisting the introduction of machinery by capitalists, seeing these machines as threats to their freedom and dignity. That represented more troops than Britain was using in its simultaneous fight against Napoleon’s armies in Spain.
Slavery critical to capitalist accumulation
Nor can the role of slavery in bootstrapping the rise of capitalism be ignored. The slave trade, until the end of the seventeenth century, was conducted by government monopolies. European economies grew on the “triangular trade” in which European manufactured goods were shipped to the coast of western Africa in exchange for slaves, who were shipped to the Americas, which in turn sent sugar and other commodities back to Europe. Britain and other European powers earned far more from the plantations of their Caribbean colonies than from North American possessions; much Caribbean produce could not be grown in Europe, while North American colonies tended to produce what Europe could already provide for itself.
Britain profited enormously from the triangular trade, both in the slave trade itself and the surpluses generated from plantation crops produced with slave labor. Proceeds from the slave trade were large enough to lift the prosperity of the British economy as a whole, provide the investment funds to build the infrastructure necessary to support industry and the scale of trade resulting from a growing industrial economy, and ease credit problems.
Spain’s slaughter of Indigenous peoples and Spanish use of the survivors as slaves to mine enormous amounts of gold and silver — the basis of money across Europe and Asia — also was a crucial contributor to the rise of European economies, both by swelling the amount of money available and enabling the importation of goods from China, which was not interested in buying European products but had a need of silver to stabilize its own economy. The Spanish priest Bartolomé de las Casas, horrified at what he witnessed, wrote in 1542, “the Spaniards, who no sooner had knowledge of these people than they became like fierce wolves and tigers and lions who have gone many days without food or nourishment. And no other thing have they done for forty years until this day, and still today see fit to do, but dismember, slay, perturb, afflict, torment, and destroy the Indians by all manner of cruelty — new and divers and most singular manners such as never before seen or read of heard of — some few of which shall be recounted below, and they do this to such a degree that on the Island of Hispaniola, of the above three millions souls that we once saw, today there be no more than two hundred of those native people remaining.”
When the Spanish were kicked out by Latin America’s early 19th century wars of liberation, that did not mean real independence. The British replaced the Spanish, using more modern financial means to exploit the region. The era of direct colonialism, beginning with Spain’s massive extraction of gold and silver, was replaced by one-sided trading relationships following the region’s formal independence in the early nineteenth century. George Canning, an imperialist “free trader” who was the British foreign secretary, wrote in 1824: “The deed is done, the nail is driven, Spanish America is free; and if we do not mismanage our affairs sadly, she is English.”
Canning was no idle boaster. At the same time, the French foreign minister lamented, “In the hour of emancipation the Spanish colonies turned into some sort of British colonies.” And lest we think this was simply European hubris, here is what the Argentine finance minister had to say: “We are not in a position to take measures against foreign trade, particularly British, because we are bound to that nation by large debts and would expose ourselves to a rupture which would cause much harm.” What had happened? Argentina flung its ports wide open to trade under British influence, flooding itself with a deluge of European goods sufficient to strangle nascent local production; when Argentina later attempted to escape dependency by imposing trade barriers in order to build up its own industry, British and French warships forced the country open again.
The “right” to force opium on China to maintain profits
Imperialism was not confined to any single continent. Consider Britain’s treatment of China in the latter half of the 19th century. (We are concentrating on Britain for the moment because it was the leading capitalist power at this time.) British warships were sent to China to force the Chinese to import opium, a drug that was illegal back home. This was done under the rubric of Britain’s alleged “right to trade.” Under this doctrine, underdeveloped countries had no choice but to buy products from more powerful capitalist countries, even products that caused widespread injury to the country’s people. This could also be considered a “right” to force opium on China. Where else but under capitalism could such a preposterous “right” be conjured? U.S. smugglers also made enormous fortunes selling opium to Chinese as well.
A 2015 Medium article detailing the background and results of the two opium wars, noted the huge amounts of money that were made:
“Opium was big business for the British, one of the critical economic engines of the era. Britain controlled India and oversaw one million Indian opium farmers. By 1850, the drug accounted for a staggering 15 to 20 percent of the British Empire’s revenue, and the India-to-China opium business became, in the words of Frederic Wakeman, a leading historian of the period, the ‘world’s most valuable single commodity trade of the nineteenth century.’ Notes Carl Trocki, author of Opium, Empire and the Global Economy, ‘The entire commercial infrastructure of European trade in Asia was built around opium. … [A] procession of American sea merchants made their fortunes smuggling opium. They were aware of its poisonous effects on the Chinese people, but few of them ever mentioned the drug in the thousands of pages of letters and documents they sent back to America.’ ”
Eventually, Chinese authorities ordered foreigners, mainly British and U.S., to hand over all opium. After a refusal, Chinese authorities destroyed all the opium they could find. In response, British warships were sent to bombard coastal cities until China agreed to the one-sided Treaty of Nanking, in which it was forced to pay Britain an indemnity of millions, to cede Hong Kong and to open five ports to trade, where foreigners were not subject to Chinese law or authorities.
When further demands were refused, the British, French and U.S. navies launched the second opium war, attacking coastal and interior cities. They invaded Beijing, “chased the emperor out of town, and, in an orgy of fine-art and jewelry looting, destroyed the Versailles of China, the old Summer Palace.” A new treaty, more unequal than the first, was imposed, forcing open the entire country. A British lawyer enlisted to provide justification for this behavior wrote, as the first opium war was developing, “Our men of war are now, it is to be hoped, far on their way towards China, which shall be ‘our oyster, which [we] with sword will open.’ Then may we extract from the Emperor an acknowledgement of the heinous offence — or series of offences — which he has committed against the law of nature and of nations, and read him a lesson, even from a barbarian book, which will benefit him and all his successors.”
Fantastic profits for European capital; death for Africans
Nor was Africa spared exploitation. Far from it. The exact number of Africans kidnapped and forcibly transported across the Atlantic will never be known, but scholars’ estimates tend to range from about ten million to twelve million. The human toll, however, is still higher because, simultaneous with those who were successfully kidnapped, millions more were killed or maimed, and thus not shipped across the Atlantic. This level of inhumanity cannot be accomplished without an accompanying ideology.
Walter Rodney, in his outstanding contribution to understanding lagging development in the South, How Europe Underdeveloped Africa, pointed out that although racism and other hatreds, including anti-Semitism, long existed across Europe, racism was an integral part of capitalism because it was necessary to rationalize the exploitation of African labor that was crucial to their accumulations of wealth. “Occasionally, it is mistakenly held that Europeans enslaved Africans for racist reasons,” Dr. Rodney wrote. “European planters and miners enslaved Africans for economic reasons, so that their labor power could be exploited. Indeed, it would have been impossible to open up the New World and to use it as a constant generator of wealth, had it not been for African labor. There were no other alternatives: the American (Indian) population was virtually wiped out and Europe’s population was too small for settlement overseas at that time.”
Exploitation did not end with the end of slavery in the 19th century, Dr. Rodney pointed out. Colonial powers confiscated huge areas of arable land in Africa, then sold it at nominal prices to the well-connected. In Kenya, for example, the British declared the fertile highlands “crown lands” and sold blocks of land as large as 550 square miles (1,400 square kilometers). These massive land confiscations not only enabled the creation of massively profitable plantations, but created the conditions that forced newly landless Africans to become low-wage agricultural workers and to pay taxes to the colonial power. Laws were passed forbidding Africans from growing cash crops in plantation regions, a system of compulsion summed up by a British colonel who became a settler in Kenya: “We have stolen his land. Now we must steal his limbs. Compulsory labor is the corollary of our occupation of the country.” In other parts of colonial Africa, where land remained in African hands, colonial governments slapped money taxes on cattle, land, houses and the people themselves; subsistence farmers don’t have money to pay money taxes so farmers were forced to grow cash crops, for which they were paid very little.
The alternative to farming was to go to work in the mines, where wages were set at starvation levels. European and North American mining and trading companies made fantastic profits (sometimes as high as 90 percent) and raw materials could be exploited at similar levels. (A U.S. rubber company, from 1940 to 1965, took 160 million dollars worth of rubber out of Liberia while the Liberian government received eight million dollars.) Another method of extracting wealth was through forced labor — French, British, Belgian and Portuguese colonial governments required Africans to perform unpaid labor on railroads and other infrastructure projects. The French were particularly vicious in their use of forced labor (each year throughout the 1920s, 10,000 new people were put to work on a single railroad and at least 25 percent of the railroad’s forced laborers died from starvation or disease). These railroads did not benefit Africans when independence came in the mid-20th century because they were laid down to bring raw materials to a port and had no relationship to the trading or geographical patterns of the new countries or their neighbors.
The entire territory that today constitutes the Democratic Republic of Congo was, in the late 19th and early 20th century, the personal possession of Belgium’s king, Leopold II. At least 10 million Congolese lost their lives at the hands of Belgian authorities eager to extract rubber and other resources at any cost. This genocidal plunder — the loss of life halved the local population — rested on a system of terror and slave labor. This system included forced labor requiring work in mines day and night, the chopping off of hands as punishment and “the burning of countless villages and cities where every individual who was found was killed.”
As the U.S. grew to prominence, becoming a leading capitalist power itself as the 20th century began, overthrowing governments to ensure undisputed “profitable investment” became routine. The U.S., incidentally, was the first country to recognize King Leopold’s claim to Congo.
If it’s your “backyard” you do what you want to do
The U.S. has long considered Latin America its “backyard.” Cuba’s economy was based on slave-produced sugar cane under Spanish rule, and when a series of rebellions finally succeeded in freeing the country from Spanish colonial rule, Cuban independence was formal only as the United States quickly became a colonial master in all but name. U.S. forces left Cuba in 1902 after a four-year occupation but not before dictating that Cubans agree to the Platt Amendment. The amendment, inserted into the Cuban constitution as the price for U.S. withdrawal, gave the U.S. control over Cuban foreign and economic policies and the right to intervene with military force to protect U.S. corporate interests. By 1905, U.S. interests owned 60 percent of Cuba’s land and controlled most of its industry. Just four months after the 1959 revolution took power, the U.S. government was already viewing the potential success of the revolution as a “bad example” for the rest of Latin America. The U.S. State Department defined U.S. goals in Cuba as “receptivity to U.S. and free world capital and increasing trade” and “access by the United States to essential Cuban resources.” Those goals have not changed to this day.
That follows naturally from what the pre-revolution U.S. ambassador to Cuba, Earl T. Smith, had said of the island country: “I ran Cuba from the sixth floor of the US embassy. The Cubans’ job was to grow sugar and shut up.”
When a strike broke out against the United Fruit Company in Colombia in 1929, the action was put down through a massacre of the workers. The U.S. embassy in Bogotá cabled the State Department in Washington this triumphant message: “I have the honor to report that the Bogotá representative of the United Fruit Company told me yesterday that the total number of strikers killed by the Colombian military exceeded one thousand.” Honor. Think about that.
For much of the 20th century, the effective ruler of Guatemala and Honduras was the United Fruit Company. The company owned vast plantations in eight countries, and toppled governments in Guatemala and Honduras. For many years, United Fruit had an especially sweet deal in Guatemala. The company paid no taxes, imported equipment without paying duties and was guaranteed low wages. The company also possessed a monopoly on Guatemalan railroads, ocean ports and the telegraph. When a president, Jacobo Arbenz, moved to end this exploitation and orient Guatemala’s economy toward benefiting Guatemalans through mild reforms, the CIA overthrew him. U.S. intelligence agencies declared Arbenz’s program had to be reversed because loosening the United Fruit Company’s domination of the country was against U.S. interests. The U.S. instituted what would become a 40-year nightmare of state-organized mass murder. A series of military leaders, each more brutal than the last and fortified with U.S. aid, unleashed a reign of terror that ultimately cost 200,000 lives, 93 percent of whom were murdered by the state through its army and its death squads.
But not outside ordinary policy. The United States has militarily invaded Latin American and Caribbean countries 96 times, including 48 times in the 20th century. That total constitutes only direct interventions and doesn’t include coups fomented by the U.S., such as Guatemala in 1954 and Chile in 1973. Most of these invasions were for reasons along the lines articulated by former U.S. president William Howard Taft: to ensure profits for one or more U.S. corporations or to overthrow governments that did not prioritize the maximization of those profits.
But not outside ordinary policy. The United States has militarily invaded Latin American and Caribbean countries 96 times, including 48 times in the 20th century. That total constitutes only direct interventions and doesn’t include coups fomented by the U.S., such as Guatemala in 1954 and Chile in 1973. Most of these invasions were for reasons along the lines articulated by former U.S. president William Howard Taft: to ensure profits for one or more U.S. corporations or to overthrow governments that did not prioritize the maximization of those profits.
The U.S. invaded and occupied Nicaragua multiple times. One of these occasions, in 1909, came as a result of a Nicaraguan president accepting a loan from British bankers instead of U.S. bankers, then opening negotiations with Germany and Japan to build a new canal to rival the Panama Canal. The U.S. installed a dictatorship, and President Taft placed Nicaragua’s customs collections under U.S. control. The disapproved British loan was refinanced through two U.S. banks, which were given control of Nicaragua’s national bank and railroad as a reward. These developments were not an accident, for President Taft had already declared that his foreign policy was “to include active intervention to secure our merchandise and our capitalists opportunity for profitable investment” abroad.
All these atrocities — and countless others — all happened before the assassinations in Ecuador, Iran and Panama of heads of state who refused to do as they were ordered to by U.S. government operatives (and, in the case of Omar Torrijos, refusing the bribes that were the first tactic to get local leaders on side) recounted by Mr. Perkins in Confessions. No, those atrocities — and the author leaves us in no doubt that those were not “accidents” but were assassinations carried out by the U.S. government — do not represent an unprecedented turn to the dark side. Those acts, as are the present-day sanctions that kill in the hundreds of thousands, are business as usual for the U.S. government and the capitalism it imposes around the world. Imperialism, brutality and violence are nothing new; they are essential tools long wielded in abundance.
Far more examples could be cited; the above represents a minuscule fraction of atrocities that could be told. Such a long history of systematic violence and brutality speaks for itself as to the “morality” of capitalism.
The United States government is able to impose its will on all the world’s countries. The rest of the world, even some of the strongest imperialist countries of the Global North, lie prostrate at the feet of the U.S. What is the source of this seemingly impregnable power? Which of course leads to the next question: How long can it last?
The U.S. moves against any country that dares to act on a belief that its resources should be for its own people’s benefits rather than maximizing profits of multinational corporations or prioritizes the welfare of its citizens over corporate profit or simply refuses to accept dictation in how it should organize its economy. The military is frequently put to use, as are manipulation of the United Nations and the strong arms of the World Bank and International Monetary Fund (IMF). But sanctions are a frequently used tool, enforced on countries, banks and corporations that have no presence in the U.S. and conduct business entirely outside the United States. The U.S. can impose its will on national governments around the world, using multilateral institutions to force governments to act in the interest of multinational capital, even when that is opposite the interests of the country itself or that country’s peoples. And when a country persists in refusing to bend to U.S. demands, sanctions imposing misery on the general population are unilaterally imposed and the rest of the world is forced to observe them.
In short, the U.S. government possesses a power that no country has ever held, not even Britain at the height of its empire. And that government, regardless of which party or what personality is in the White House or in control of Congress, is ruthless in using this power to impose its will.
This power is most often wielded within an enveloping shell of propaganda that claims the U.S. is acting in the interest of “democracy” and maintaining the “rule of law” so that business can be conducted in the interest of a common good. So successful has this propaganda been that this domination is called the “Washington Consensus.” Just who agreed to this “consensus” other than Washington political elites and the corporate executives and financial speculators those elites represent has never been clear. “Washington diktat” would be a more accurate name.
Much speculation among Left circles exists as to when this domination will be brought to an end, with many commentators believing that the fall of the U.S. dollar is not far off and perhaps China will become the new center of a system less imperialistic. On the Right, particularly in the financial industry, such speculation is far from unknown, although there of course the downfall of the dollar is feared. In financial circles, however, there is no illusion that the end of dollar supremacy in world economics is imminent.
There are only two possible challengers to U.S. dollar hegemony: The European Union’s euro and China’s renminbi. But the EU and China are very much subordinated to the dollar, and thus not in a position to counter U.S. dictates. Let’s start here, and then we’ll move on to the mechanics of U.S. economic hegemony over the world, which rests on the dollar being the global reserve currency and the leveraging of that status to control the world’s multilateral institutions and forcing global compliance with its sanctions.
Europe “helpless” in the face of U.S. sanctions
A February 2019 paper published by the German Institute for International and Security Affairs, discussing the inability of EU countries to counteract the Trump administration’s pullout from the Joint Comprehensive Plan of Action, the multilateral nuclear deal with Iran, flatly declared the EU “helpless”: “In trying to shield EU-based individuals and entities with commercial interests from its adverse impact, European policy-makers have recently been exposed as more or less helpless.”
The legislative arm of the EU, the European Parliament, was no more bullish. In a paper published in November 2020, the Parliament wrote this about U.S. extraterritorial sanctions: “[T]his bold attempt to prescribe the conduct of EU companies and nationals without even asking for consent challenges the EU and its Member States as well as the functioning and development of transatlantic relations. The extraterritorial reach of sanctions does not only affect EU businesses but also puts into question the political independence and ultimately the sovereignty of the EU and its Member States.”
No such open worries are going to be said in public by the Chinese government. But is China better prepared than the EU? Mary Hui, a Hong Kong-based business journalist, wrote in Quartz, “China is actually far more vulnerable to US sanctions than it will let on, even if the sanctions are aimed at individuals and not banks. That’s because the primary system powering the world’s cross-border financial transactions between banks, Swift, is dominated by the US dollar.” We’ll delve into this shortly. As a result of that domination, Ms. Hui wrote, “the US has outsize control over the machinery of international transactions—or, as the Economist put it, ‘America is uniquely well positioned to use financial warfare in the service of foreign policy.’ ”
In 2017, then U.S. Treasury Secretary Steven Mnuchin threatened China with sanctions that would cut it off from the U.S. financial system if it didn’t comply with fresh United Nations Security Council sanctions imposed on North Korea in 2007; he had already threatened unilateral sanctions on any country that trades with North Korea if the United Nations didn’t apply sanctions on Pyongyang.
So neither Brussels or Beijing are in a position, at this time, to meaningfully challenge U.S. hegemony. That hegemony rests on multiple legs.
The world financial platform that the U.S. ultimately controls
The use (or, actually, abuse) of the two biggest multilateral financial institutions, the World Bank and the IMF, are well known. The U.S., as the biggest vote holder and through the rules set up for decision-making, carries a veto and thus imposes its will on any country that falls into debt and must turn to the World Bank or IMF for a loan. There also are the U.S.-controlled regional banks, such as the Asian Development Bank and Inter-American Development Bank, that impose U.S. dictates through the terms of their loans.
Also important as an institution, however, is a multilateral financial institution most haven’t heard of: The Society for Worldwide Interbank Financial Telecommunication, known as SWIFT. Based in Brussels, SWIFT is the primary platform used by the world’s financial institutions “to securely exchange information about financial transactions, including payment instructions, among themselves.” SWIFT says it is officially a member-owned cooperative with more than 11,000 member financial institutions in more than 200 countries and territories.
That sounds like it is a truly global entity. Despite that description, the U.S. holds ultimate authority over it and what it does. U.S. government agencies, including the CIA, National Security Agency and Treasury Department, have access to the SWIFT transaction database. Payments in U.S. dollars can be seized by the U.S. government even when the transaction is between two entities outside the U.S. And here we have a key to understanding.
Beyond the ability of U.S. intelligence agencies to acquire information is the status of the U.S. dollar as the world’s reserve currency, the foundation of the world capitalist system of which SWIFT is very much a component and thus subject to dictates the same as any other financial institution. What is a reserve currency? This succinct definition offered by the Council on Foreign Relations provides the picture:
“A reserve currency is a foreign currency that a central bank or treasury holds as part of its country’s formal foreign exchange reserves. Countries hold reserves for a number of reasons, including to weather economic shocks, pay for imports, service debts, and moderate the value of its own currency. Many countries cannot borrow money or pay for foreign goods in their own currencies—since much of international trade is done in dollars—and therefore need to hold reserves to ensure a steady supply of imports during a crisis and assure creditors that debt payments denominated in foreign currency can be made.”
The currency mostly used is the U.S. dollar, the Council explains:
“Most countries want to hold their reserves in a currency with large and open financial markets, since they want to be sure that they can access their reserves in a moment of need. Central banks often hold currency in the form of government bonds, such as U.S. Treasuries. The U.S. Treasury market remains by far the world’s largest and most liquid—the easiest to buy into and sell out of bond market[s].”
If you use dollars, the U.S. can go after you
Everybody uses the dollar because everybody else uses it. Almost two-thirds of foreign exchange reserves are held in U.S. dollars. Here’s the breakdown of the four most commonly held currencies, as of the first quarter of 2020:
U.S. dollar 62%
EU euro 20%
Japanese yen 4%
Chinese renminbi 2%
That 62 percent gives the U.S. government its power to not only impose sanctions unilaterally, but to force the rest of the world to observe them, in conjunction with the use of the dollar as the primary currency in international transactions. In some industries, it is almost the only currency used. To again turn to the Council on Foreign Relations explainer:
“In addition to accounting for the bulk of global reserves, the dollar is the currency of choice for international trade. Major commodities such as oil are primarily bought and sold using U.S. dollars. Some countries, including Saudi Arabia, still peg their currencies to the dollar. Factors that contribute to the dollar’s dominance include its stable value, the size of the U.S. economy, and the United States’ geopolitical heft. In addition, no other country has a market for its debt akin to the United States’, which totals roughly $18 trillion.
The dollar’s centrality to the system of global payments also increases the power of U.S. financial sanctions. Almost all trade done in U.S. dollars, even trade among other countries, can be subject to U.S. sanctions, because they are handled by so-called correspondent banks with accounts at the Federal Reserve. By cutting off the ability to transact in dollars, the United States can make it difficult for those it blacklists to do business.”
Sanctions imposed by the U.S. government are effectively extra-territorial because a non-U.S. bank that seeks to handle a transaction in U.S. dollars has to do so by clearing the transaction through a U.S. bank; a U.S. bank that cleared such a transaction would be in violation of the sanctions. The agency that monitors sanctions compliance, the Office of Foreign Assets Control (OFAC), insists that any transaction using the dollar comes under U.S. law and thus blocking funds “is a territorial exercise of jurisdiction” wherever it occurs, even if no U.S. entities are involved. Even offering software as a service (or for download) from United States servers is under OFAC jurisdiction.
Two further measures of dollar dominance are that about half of all cross-border bank loans and international debt securities are denominated in U.S. currency and that 88 percent of all foreign-exchange transactions in 2019 involved the dollar on one side. That forex domination has remained largely unchanged; the figure was 87 percent in April 2003.
Dollar dominance cemented at end of World War II
The roots of the dollar as the global reserve currency go back to the creation of the Bretton Woods system in 1944 (named for the New Hampshire town where representatives of Allied and other governments met to discuss the post-war monetary system as victory in World War II drew closer). The World Bank and IMF were created here. To stabilize currencies and make it more difficult for countries to reduce the value of their currencies for competitive reasons (to boost exports), all currencies were pegged to the dollar, and the dollar in turn was convertible into gold at $35 an ounce. Thus the dollar became the center of the world financial system, which cemented U.S. dominance.
By the early 1970s, the Nixon administration believed that the Bretton Woods monetary system no longer sufficiently advantaged the United States despite its currency’s centrality within the system cementing U.S. economic suzerainty. Because of the system of fixing the value of a U.S. dollar to the price of gold, any government could exchange the dollars it held in reserve for U.S. Treasury Department gold on demand.
Rising world supplies of dollars and domestic inflation depressed the value of the dollar, causing the Treasury price of gold to be artificially low and thereby making the exchange of dollars for gold at the fixed price an excellent deal for other governments. The Nixon administration refused to adjust the value of the dollar, instead in 1971 pulling the dollar from the gold standard by refusing to continue to exchange foreign-held dollars for gold on demand. Currencies would now float on markets against each other, their values set by speculators rather than by governments, making all but the strongest countries highly vulnerable to financial pressure.
The world’s oil-producing states dramatically raised oil prices in 1973. The Nixon administration eliminated U.S. capital controls a year later, encouraged oil producers to park their new glut of dollars in U.S. banks and adopted policies to encourage the banks to lend those deposited dollars to the South. But perhaps “encourage” is too mild a word. The economist and strong critic of imperialism Michael Hudson once wrote, “I was informed at a White House meeting that U.S. diplomats had let Saudi Arabia and other Arab countries know that they could charge as much as they wanted for their oil, but that the United States would treat it as an act of war not to keep their oil proceeds in U.S. dollar assets.”
Restrictions limiting cross-border movements of capital were opposed by multi-national corporations that had moved production overseas, by speculators in the new currency-exchange markets that blossomed with the breakdown of Bretton Woods and by neoliberal ideologues, creating decisive momentum within the U.S. for the elimination of capital controls. The ultimate result of these developments was to make the dollar even more central to world trade and thus further enhance U.S. control. Needless to say, bipartisan U.S. policy ever since has been to maintain this control.
U.S. sanctions in action: The cases of Cuba and Iran
Two examples of U.S. sanctions being applied extraterritorially are those imposed on Cuba and Iran. (There are many other examples, including that of Venezuela.) In the case of Cuba, any entity that conducts business with Cuba is barred from doing business in the U.S. or with any U.S. entity; foreign businesses that are owned by U.S. companies are strictly prohibited from doing any business with Cuba. Any company that had done business in Cuba must cease all activities there if acquired by a U.S. corporation. Several companies selling life-saving medical equipment and medicines to Cuba had to cease doing so when acquired by a U.S. corporation.
Meanwhile, U.S. embassy personnel have reportedly threatened firms in countries such as Switzerland, France, Mexico and the Dominican Republic with commercial reprisals unless they canceled sales of goods to Cuba such as soap and milk. Amazingly, an American Journal of Public Health report quoted a July 1995 written communication by the U.S. Department of Commerce in which the department said those types of sales contribute to “medical terrorism” on the part of Cubans! Well, many of us when we were, say, 5 years old might have regarded soap with terror, but presumably have long gotten over that. Perhaps Commerce employees haven’t.
The sanctions on Cuba have been repeatedly tightened over the years. Joy Gordon, writing in the Harvard International Law Journal in January 2016, provides a vivid picture of the difficulties thereby caused:
“The Torricelli Act [of 1992] provided that no ship could dock in the United States within 180 days of entering a Cuban port. This restriction made deliveries to Cuba commercially unfeasible for many European and Asian companies, as their vessels would normally deliver or take on shipments from the United States while they were in the Caribbean. The Torricelli Act also prohibited foreign subsidiaries of U.S. companies from trading with Cuba. … The Helms-Burton Act, enacted in 1996, permitted U.S. nationals to bring suit against foreign companies that were doing business in Cuba and that owned properties that had been abandoned or confiscated after the revolution. Additionally, the Helms-Burton Act prohibited third-party countries from selling goods in the United States that contained any components originating in Cuba. This significantly impacted Cuba’s major exports, particularly sugar and nickel.
[T]he shipping restrictions in the Torricelli Act have increased costs in several ways, such as Cuba sometimes having to pay for ships carrying imports from Europe or elsewhere to return empty because they cannot stop at U.S. ports to pick up goods. Shipping companies have partially responded by dedicating particular ships for Cuba deliveries; but in most cases, they tend to designate old ships in poor condition, which then leads to higher maritime insurance costs.”
However distasteful we find the religious fundamentalist government of Iran, U.S. sanctions, which are blunt weapons, have caused much hardship on Iranians. The same restrictions on Cuba apply to Iran. The Iranian government said in September 2020 that it has lost $150 billion since the Trump administration withdrew from the 2015 nuclear deal and that it is hampered from importing food and medicines.
The Trump administration’s renewed sanctions were imposed unilaterally and against the expressed policies of all other signatories — Britain, France, Germany, China and Russia. With those governments unable to restrain Washington, businesses from around the world pulled out to avoid getting sanctioned. EU countermeasures were ineffective — small fines didn’t outweigh far larger U.S. fines, European companies are subject to U.S. sanctions and favorable judgments in European courts are unenforceable in U.S. courts.
Sascha Lohmann, author of the German Institute for International and Security Affairs paper, wrote:
“Well ahead of the deadlines set by the Trump administration and absent any enforcement action, major European and Asian companies withdrew from the otherwise lucrative Iranian market. Most notably, this included [SWIFT,] which cut off most of the more than 50 Iranian banks in early November 2018, including the Central Bank of Iran, after they again became subject to U.S. financial sanctions. … [T]he exodus of EU-based companies has revealed an inconvenient truth to European policy-makers, namely that those companies are effectively regulated in Washington, D.C. … [T]he secretary of the Treasury can order U.S. banks to close or impose strict conditions on the opening or maintaining of correspondent or payable-through accounts on behalf of a foreign bank, thereby closing down access to dollarized transactions — the ‘Wall Street equivalent of the death penalty.’ ”
The long arm of U.S. sanctions stretches around the world
The idea that sanctions can be the “Wall Street equivalent of the death penalty” is not a figment of the imagination. Two examples of sanctions against European multinational enterprises demonstrate this.
In 2015, the French bank BNP Paribas was given a penalty of almost $9 billion for violating U.S. sanctions by processing dollar payments from Cuba, Iran and Sudan. The bank also pleaded guilty to two criminal charges. These penalties were handed down in U.S. courts and prosecuted by the U.S. Department of Justice. The chief executive officer of the bank told the court “we deeply regret the past misconduct.” The judge overseeing the case declared the bank “not only flouted U.S. foreign policy but also provided support to governments that threaten both our regional and national security,” a passage highlighted in the Department’s press release announcing the settlement.
Why would a French bank agree to these penalties and do so in such apologetic terms? And why would it accept the preposterous idea that Cuba represents any security threat to the U.S. or that a French bank is required to enforce U.S. foreign policy? As part of the settlement, Reuters reported, “regulators banned BNP for a year from conducting certain U.S. dollar transactions, a critical part of the bank’s global business.” And that gives us the clue. Had the bank not settled its case, it risked a permanent ban on access to the U.S. financial system, meaning it could not handle any deals denominated in dollars. Even the one-year ban could have triggered an exodus of clients in several major industries, including oil and gas.
This was completely an extraterritorial application of U.S. law. An International Bar Association summary of the case noted, “the transactions in question were not illegal under French or EU law. Nor did they fall foul of France’s obligations under the World Trade Organization or the United Nations; no agreements between France and the US were violated. But as they were denominated in dollars, the deals ultimately had to pass through New York and thus came under its regulatory authority.”
It does not take direct involvement in financial transactions to run afoul of the long arm of U.S. sanctions. A Swiss company, Société Internationale de Télécommunications Aéronautiques (SITA), was forced to agree to pay $8 million to settle allegations that it provided blacklisted airlines with “software and/or services that were provided from, transited through, or originated in the United States.” Among the actions punished were that SITA used software originating in the U.S. to track lost baggage and used a global lost-baggage tracing system hosted on servers in the United States. Retrieving baggage is a service most people would not consider a high crime.
Can the EU or China create an alternative?
Dropping the widespread use of the dollar and substituting one or more other currencies, and setting up alternative financial systems, would be the logical short-term path toward ending U.S. financial hegemony. The German public broadcaster Deutsche Welle, in a 2018 report, quoted the German foreign minister, Heiko Maas, “We must increase Europe’s autonomy and sovereignty in trade, economic and financial policies. It will not be easy, but we have already begun to do it.” DW reported that the European Commission was developing a system parallel to SWIFT that would allow Iran to interface with European clearing systems with transactions based on the euro, but such a system never was put in place. In January 2021, as the new Biden administration took office, Iran dismissed it entirely, Bloomberg reported: “European governments have ‘no idea’ how to finance the conduit set up two years ago, known as Instex, and ‘have not had enough courage to maintain their economic sovereignty,’ the Central Bank of Iran said in comments on Twitter.”
It would seem that Teheran’s dismissal is warranted. The European Parliament, in its paper on U.S. sanctions being imposed extraterritorially, could only offer liberal weak-tea ideas, such as “Encourage and assist EU businesses in bringing claims in international investor-state arbitration and in US courts; Complaints against extraterritorial measures in the [World Trade Organization].” Such prescriptions are unlikely to have anyone in Washington losing sleep.
What about China? Beijing has actually created a functioning alternative to the World Bank and IMF, the Asian Infrastructure Investment Bank. Just on the basis of the new bank representing a bad example (from Washington’s perspective), the U.S. government leaned heavily on Australia and other countries sufficiently firmly that Canberra initially declined to join the bank despite its initial interest, nor did Indonesia and South Korea, although all three did later join. There is a possibility of one-sidedness here, however, as China has by far the biggest share of the vote, 27 percent, dwarfing No. 2 India’s 7 percent, giving Beijing potential veto power. And with US$74 billion in capitalization (less than the goal of $100 billion set in 2014), it can’t realistically be a substitute for existing multilateral financial institutes.
China has also set up an alternative to SWIFT, the Cross-border Interbank Payment System (CIPS), a renminbi-denominated clearing and settlement system. CIPS says it has participants from 50 countries and regions, and processes US$19.4 billion per day. But that’s well less than one percent of the $6 trillion SWIFT handles daily. The Bank of China, the country’s central bank, is on the record of seeking an alternative to the dollar system so that it can evade any U.S. sanctions. “A good punch to the enemy will save yourself from hundreds of punches from your enemies,” a 2020 Bank of China report said. “We need to get prepared in advance, mentally and practically.” The report said if Chinese banks are deprived of access to dollar settlements, China should consider ceasing the use of the U.S. dollar as the anchor currency for its foreign exchange controls.
That is easier said than done — China holds $1.1 trillion in U.S. government debt issued by the U.S. Treasury Department. That total is second only to Japan, and Beijing’s holdings comprise 15 percent of all U.S. debt held by foreign governments. The South China Morning Post admits that China holds such large reserve assets of U.S. debt “largely due to its status as a ‘safe haven’ for investment during turbulent market conditions.” Although Beijing seeks an erosion of dollar dominance and fears that U.S. economic instability could result in another world economic downturn, its use of the safe haven is nowhere near at an end. “While it is clear that China is keen to lessen its dependence on US government debt, experts believe that Beijing is likely to continue buying US Treasuries, as there are few risk-free low cost substitutes,” the Morning Post wrote.
Coupled with the restrictions on renminbi conversion, Chinese institutions are today far from a position of challenging current global financial relations. The U.S. investment bank Morgan Stanley recently predicted that the renminbi could represent five to 10 percent of foreign-exchange reserves by 2030, up from the current two percent. Although that would mean central banks around the world would increase their holdings of the Chinese currency, it would not amount to any real threat to dollar dominance.
No empire, or system, lasts forever
The bottom line question from all of the above is this: Will this U.S. dominance come to an end? Stepping back and looking at this question in a historical way tells us that the answer can only be yes, given that there has been a sequence of cities that have been the financial center. Centuries ago, the seat of a small republic such as Venice could be the leading financial center on the strength of its trading networks. Once capitalism took hold, however, the financial center was successively located within a larger federation that possessed both a strong navy and a significant fleet of merchant ships (Amsterdam); then within a sizeable and unified country with a large enough population to maintain a powerful navy and a physical presence throughout an empire (London); and finally within a continent-spanning country that can project its economic and multi-dimensional military power around the world (New York).
No empire, whatever its form, lasts forever. But knowledge of the sequence of capitalist centers tells us nothing of timing. Each successive new financial locus was embedded in successively larger powers able to operate militarily over larger areas and with more force. What then could replace the U.S.? The European Union has its effectiveness diluted by the many nationalisms within its sphere (and thus nationalism acts as a weakening agent for the EU whereas it is a strengthening agent for the U.S. and China). China’s economy is yet too small and retains capital controls, and its currency, the renminbi, isn’t fully convertible. U.S. Treasury bills remain the ultimate safe haven, as shown when investors poured into U.S. debt during crises such as the 2008 collapse, even when events in the U.S. are the trigger.
There are no other possible other contenders, and both the EU and China, as already discussed, are in no position to seriously challenge U.S. hegemony.
Here we have a collision of possibilities: The transcending of capitalism and transition to a new economic system or the decreasing functionality of the world capitalist system should it persist for several more decades. Given the resiliency of capitalism, and the many tools available to it (not least military power), the latter scenario can’t be ruled out although it might be unlikely. Making any prediction on the lifespan of capitalism is fraught with difficulty, not least because of the many predictions of its collapse for well over a century. But capitalism as a system requires infinite growth, quite impossible on a finite planet and all the more dire given there is almost no place on Earth remaining into which it can expand.
Although we can’t know what the expiration date of capitalism will be, it will almost certainly be sometime in the current century. But it won’t be followed by something better without a global movement of movements working across borders with a conscious aim of bringing a better world into being. In the absence of such movements, capitalism is likely to hang on for decades to come. In that scenario, what country or bloc could replace the U.S. as the center? And would we want a new center to dictate to the rest of the world? In a world of economic democracy (what we can call socialism) where all nations and societies can develop in their own way, in harmony with the environment and without the need to expand, and with production done for human need rather than corporate profit, there would no global center or hegemon and no need for one. Capitalism, however, can’t function without a center that uses financial, military and all other means to keep itself in the saddle and the rest of the world in line.
Yes, the day of U.S. dethronement will come, as will the end of capitalism. But the former is not going to happen any time soon, however much millions around the world wish that to be so, and the latter is what we should be working toward. A better world is possible; a gentler and kinder capitalism with a different center is not.